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Economics of Setting Up a Economics of Setting Up a Perfect Bar


“I love this bar, It’s my kind of place, Just walkin’ through the front door, puts a big smile on my face, It ain’t too far, come as you are, Hmm, hmm, hmm I love this bar,” says Toby Keith in his classic country track. “I love this bar.”

Bars could be of many types, ranging from high-end wine bars to night clubs and neighbourhood drinking holes, but the economics of fine bars are based on great atmosphere, great people and great products.

Research is the key to start up a place where people would throng every evening. A good research means homework well done. Depending on the budget, target audience and what style of bar one intends to set up, one can spend some quality time on research of places that fit into the scheme of things. Research for a bar starts from the location, concept, cost of setting up the bar and, lastly, the product in the offering. Research could mean visiting the areas where good bars exist, observing what they serve, identifying where these bars score (food, beverage, service, et cetera) and, most importantly, checking for repeat customers in the bars. Remember, the success of a bar is completely based on repeat clientele! Research is also very critical to analyse the target audience. This will help to get the financial sheet in place and also help in working towards the cost of setting up the place and operation afterwards. Research could take time and one should be in no hurry. Sometimes, it could take a few more weeks before closing in on the final plan, but that kind of time should be allowed before a final decision is arrived


The location is critical and comes first in the list while setting up a bar. It is important to think of a location where there are a few important elements present. If you want to attract customers immediately, then it is a good idea to choose a location with strong footfalls. However, this method might not always work out for a lot of concept bars. The decision is a strong one, and one needs to take a call on what comes first. A location with high footfall is always preferred as it is assurance to getting customers early on. Rental is directly related to the upfront cost and the fixed cost once operational. So, it is rather critical, as it could play the spoilsport to great concepts.

The Bar Environment

Imagine visiting bars for different reasons. Unlike restaurants where you decide your evening based on the type of food you want to eat, bars are totally based on the atmosphere that prevails in the place. The environment is an amalgamation of a great setting combined with good music. It defines the place and what the latter stands for. Some places have very confused settings, too overdone, or nothing at all. Music purely defines the atmosphere of a bar – from night clubs and lounge bars to jazz and cocktail bars. Some bars are loud while others are quiet. Some bars have soft music playing in the background that allows you to talk comfortably. Therefore, while deciding on the concept of the bar, one needs to strongly consider the type of music with the overall setup, be it lighting, colour, seating, and space to move around the place. To provide the right atmosphere to the place, the concept has to be well defined and well balanced from the overall décor, music or the bar counter and drinks.

I Know the Bartender

Most bars lack good people (bartenders, servers, and managers) in India and I strongly back this point as the primary reason for failures of many bars. Lack of the right kind of people also affects sales and leads to poor performance of the place. People are the reason that could make or break a place. For a successful bar, it is not just the making of cocktails using fancy ingredients that could excite the customer. The challenge is to make the beer or the whisky taste better in your bar. So how can you do that? The answer is simple. Great bars have great people and they hire the right staff to serve the guests. A lot of emphasis should be laid on training the staff in making them understand the place, the products and, most importantly, to make that extra effort to satisfy the customer. It is an important investment and the most delicate and difficult one too. This cannot be let loose at any time before or after but needs to be given due priority. One of the things we miss out on most of the time is to encourage all our employees to taste every product on the menu, if not make them. This helps in giving them the confidence to talk about it and explain it well to the customer. Remember, good drinks are best made and served when we do not take orders from the menu but customise them. Not many bars can do that!

Great Drinks Make My Day

Finally, a fine product is what we all look for every time we go out for food or drinks. Fine drinks combined with great service and good atmosphere make the experience complete. A beverage menu with a long list of whiskies, vodkas and cocktails does no good but would, at times, confuse the customer. The variety of drinks offered may not necessarily have to be elaborate all the time but a decent choice and good options based on target customers can do the trick for you. If you think your bar is a ‘no cocktail’ place, stick to the straights but do it right. I have seen cocktail bars using bad quality mint leaves to make their Mojitos and it is quite a turnoff to sip a drink that is badly made. It speaks a lot about the image of the place and compromises on such ingredients should be avoided at all times (it does not cost a lot). Good food offering to compliment great drinks is the ultimate mantra and, hence, enough emphasis should be given to the kitchen and the food in the offing. Again, this does not mean going elaborate but a good choice of salads, starters and main course menu can be fitting to most bars.

Greed is Bad

Lastly, it is important to remember that greed is bad. Bars are places where people need to enjoy and not just drink; they need to have a sense of belonging. If you can make a customer feel that the place is great value for money, you have achieved your target. After all, a good drink should not make you feel cheated; instead, it should make you feel like coming back over and over again.