Serving food and drinks in a convivial atmosphere, “where everybody knows your name” sounds like an inviting career choice.

There are many advantages to owning a lounge or club. For one, you are not trapped working in a cubicle 9-to-5 and you get to set your own dress code. Additionally, you get to pick the music and the volume level, participate in your customers’ socializing and celebrations and contribute good entertainment to the party.

Helping people relax and enjoy themselves sounds great, but that is not the whole picture. If you want to succeed in the club or lounge business, you will also need the moxie to deal with drunk and belligerent guests, dishonest or lazy employees and the high turnover rate.

On top of those hurdles, you will also deal with legal regulations and safety concerns surrounding liquor establishments.

If you can juggle the business and legal end of your establishment while maintaining the inviting atmosphere and personal touch that your patrons are looking for, you may have what it takes to start a lounge or club business.

How Big Is The Lounge And Club Business?

The sale and distribution of liquor or distilled spirits exceeds $110 billion annually in the United States alone. The industry employs more than 1.2 million people. Last year’s revenue from bar and nightclub businesses was expected to exceed $24 billion, continuing a five year trend of climbing profits. The Distilled Spirits Council of the United States reports that more than 110 million Americans consume some form of liquor on a regular basis.

Why Starting A Bar Or Club Right Now Is A Good Idea

The market for alcoholic beverages is thousands of years old and growing every year. The demand fuels great potential for significant profit, if you can avoid the pitfalls and make it through that critical first year that makes or breaks any startup in the food and beverage service industry.

Bar and Club Business Facts

Here are some facts and figures about the bar and club business you should consider:

Bar/Club Business Startup Costs

According to Entrepreneur, bar and clubs startup capital needs run between $142K to $432K.

How much do bar and club owners make?

According to Payscale.com, bar and club manager salaries range from $28K to $48K a year. Inside Jobs reports that a successful bar owner can take home from $65K to $142K.

How much do bars and clubs charge?

Approximately five times the cost of the ingredients in the drink. Keep the beverage cost to about 20 percent of the charge for the drink. If you serve food, the industry standard is to keep food costs to about 30 percent of the menu price. The markup covers overhead operations costs and taxes.

How do bars and clubs find customers?

Quickly establishing a good reputation for quality drinks, food, service and atmosphere brings in the power of word of mouth. Throw theme parties and book name performers that will attract customers. Establish a social media presence to keep customers aware of your events, attractions and special offers. Hire a promoter to plaster your city with posters, business cards, and direct mail advertising to get your name out there and drive interest. Or, you can do these things yourself.

What skills are required?

Conviviality and an outgoing personality capable of establishing personal relationships with your regular customers, especially in smaller establishments. Knowledge of the laws and regulations surrounding bar and club operations, including licensing, taxes, workplace safety, liability, insurance and sexual harassment. A head for business legalities and financials.

What do I need to operate a bar or club business?

Supplier relationships for food and drink ingredients, tables, chairs, stools, equipment and supplies. All the local and state required health and liquor licensing and inspection. Computer system, storage space, internal and external security system, an accounting and payroll system.

Detailed Startup Costs

Rent/Deposits: $3,200 – $6,200

Renovations & Improvements: $18,000 – $65,000

Equipment & Fixtures: $43,000 – $212,000

Licenses & Permits: $35,000 – $45,000

Starting Inventory: $22,000 – $38,000

Phone & Utilities: $150 – $375

Payroll: $5,500 – $19,000

Marketing: $1,000 – $3,000

Legal Services: $400 – $1,200

Accounting: $250 – $650

Insurance: $450 – $2,400

Miscellaneous: $13,000 – $40,000

Total Startup Costs: $142,000 – $432,000

Bar and Club Business Ideas

Consult with a lawyer during setup and regularly during your business operations to be sure you are fully compliant with all current liquor laws and business regulations for the industry. Set firm boundaries for customers and employees to avoid tragedies, scandals and lawsuits.