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View Full Version : Future Revenues/Profits for a small Bar/Music Venue



delphonic
04-21-2005, 10:06 AM
Does anyone know a good source for numbers on potential revenues & profits for a small bar / music venue. I'm looking into opening a place (around 150-300 capacity) in a college area. It will be a "hip" music club with live music in the mix.

I know that success and management plays a large role in revenues and profits, but I'm trying to figure out what kind of numbers I can bring in with a moderately successful establishment. I've yet to find a good source for this sort of thing - actual numbers - I'm assuming because there's a wide variation.

Bottom line: "How much can I make on a smaller successful bar (if I owned about 75% of it)?" How do most owners go about pulling their salary vs. rolling it back into equity... and what's typical about giving a return to investors and paying them off completely? I'm just starting this ride & thought I'd get some input from those that have wrestled with it.

I'm currently a design engineer, and by the time I start the bar I'll have some capital to work with and about 3/4 of my MBA degree. I have good contacts with promoters that bring in quality acts and the local bands that draw (no cover bands... but that's a whole other topic). I'm fairly confident I have an idea that will sell, I just don't know what kind of numbers to expect... realistically. Quitting a job at my level is risky business.

delphonic
04-22-2005, 10:45 AM
Is this a taboo or stupid question? I don't want to know anyone's personal numbers... just a broad dose of reality to get an idea of what an efficiently running bar can do (of a smaller non-dance type). What's a typical profit margin & ROE? I'll likely be running the bar along with a partner (who won't have much capital invested, but has experience). The amount of my capital vs. investors will be determined largely by how much profit I can pull... I need to make a living while I get it up & running.

I searched the forum & didn't really see an answer, but if this has been covered elsewhere please let me know. I'm new to the process & haven't worked the idea extensively, so if I'm being naive about something feel free to point it out.

Thanks!

katnox
04-26-2005, 12:23 PM
[QUOTE=delphonic]Is this a taboo or stupid question? I don't want to know anyone's personal numbers... just a broad dose of reality to get an idea of what an efficiently running bar can do

Hey Delphonic,
I am relatively new to this too. Its not that its taboo or even stupid, its just that it won't do them any good to tell you their numbers. Unless they have the same kind of bar/etc, and are in the same area, your #'s may be completely different. Keep in mind that cost of living varies greatly depending on where you live. So, Allen out in CA is going to have a much different list than me in the southwest. You need to research your competition. My husband and a buddy went to one of our competition and flirted with the waitress a little. Explained what he was wanting to do, and she gave him some info. Also, i was told in a previous forum that you can call a franchise and ask for info. Make it seem like you are interested in opening one of their places in that area, and they will give you some #'s. As far as percentages and stuff, i was told by SBA to go to www.bizstats.com, they can give you some of that. You plug in what your average monthly income you think will be(get that from the competition) and it breaks down a general cost list. I showed my copy to a SCORE rep and he said that the percentages that bizstats gives are pretty close to your actual. And that you can increase or decrease some of your costs depending on what you need or don't need. Hope this helps. I have gotten some wonderful advice from the people at this site. Kathy :D

allanjustallan
04-26-2005, 01:39 PM
Very true katnox,

I am currently on track to gross 240,000 for the year and estimate that I am keeping almost 50% of that in profit. I know this is not usual however because I own the land and building, and also work the bar myself. Am currently installing a dance light format, so will know fairly shortly if this is going to add additional revenue.

I imagine being in a more urban area ones costs may be significantly higher, however gross revenues may also be much higher as well. Would be very hard to average out costs without looking into a particular location,

Allan.

delphonic
04-26-2005, 07:09 PM
Hey, thanks a lot for the info.

I know that numbers vary widely, which is why I'm lost getting a basic idea. This site seems more geared towards dance clubs, instead of my interest in neighborhood bars/pubs, but I'm hoping there's still info to be had here.

I can estimate how many people I can bring in weekly - it's just the profit margin and figuring out revenues I'm having problems with because I'm not familiar with costs involved & average customer spending (though I've seen $10 as a good number for customers). I'd like to know, on average, what margins are... all that jive.

I'm trying to figuring out if I can support myself & pay my mortgage... assuming the bar is successful. I'm 27, no family or kids (that i know of ;)), and in Ohio where the cost of living isn't high. The place will be near dowtown metro or college campus, so population shouldn't be a problem. If I can afford it, I'm looking at buying a small building instead of leasing.

If I can pay myself a $25k salary & bring in $50-100k in (clear) profit, it's worth it to me at this point in my life. Enough of this corporate crap. :)

thanx again guys.

delphonic
04-27-2005, 12:29 PM
So, according to bizstats under the closest category I can find, for those places that are actually earning a net income the average profit is only 10.9% ??? ...and that's considered the owner's salary. I know it varies from place to place, but that sucks. With those numbers a small bar owner could barely survive.

wygk
04-27-2005, 01:54 PM
Small business owners of ANY kind barely survive. You work long, hard hours for very little money. You only do it if you love the business or you have no other options.

If you want to make more money, you need a plan to *grow* the business.

Having said that, the figures from bizstats seem pretty strange... I'd certainly look for more data. SCORE is always a good resource.

Oxrock
04-27-2005, 10:55 PM
50% of Gross sales is what I get...but and a big but my (silent) partner and I own the building, land and liquor license out right (no mortgage). If I had to pay a mortgage or lease, then I'd be running around 25 - 30%. Also, my wife is GM, so I don't take even an owners draw. We do quarterly distributions. I do have an advantage....retired military.

mquillen
04-28-2005, 05:46 PM
There are many variables in the business, but there are some pretty good rules of thumb regarding income and profits in the Ohio area. One of the important things to remember when you're listening to people talk about how much their place makes--most all of them lie, or they give numbers that don't include everything.

If the building is owned outright, they have to apply an imputed rental expense amount into the calculation. Bar rents need to be below 12% of sales, and ideally no more than 10% (restaurants shoot for 6 to 8%).

If they work the place themselves, they have to include the fair value of their labor, if it's not on a W-2. This includes sons, daughters, husbands, wives and friendsthat might help run the place (cleaning, etc). It's amazing how these expenses disappear when someone decides to sell their place.

These are all on the expense side, likewise on the income side things like cars, insurance, and any and all cases of dipping in the till for personal expenses has to be added back in--not that anyone does that of course.

Most published numbers that allude to 10 or 11% net are for restaurants. Successful small bars (<150 capacity) can easily average 15%+, medium (<250) can do 20%+, and moderately large can do 25%+. Before anyone wails on me, there are too many variables to list them all here, but my experience tells me that these are reasonable numbers for an efficient operation, based on expenses as I know them to be here in Ohio. Also, this is for a successful, moderately busy establishment. Your mileage may vary.

Michael Black
04-30-2005, 05:01 AM
Mquillen,

I believe your numbers/statements make sense.Anyone with experience understands there are variables.I always start with the rent if not owned. If rent of a small place is say $5000 per month including triple net (rent+taxes,insur &maint.) then I would roughly estimate that I would need to do at least $50,000/month on average to make it worth while. If it were a smaller, say 3000 square foot nightclub, I would conservatively then estimate the number of heads I think I could get on each night and across the board per week on avg.. Depending on the possible concepts and target market and drink prices and cover and other revenue streams I would then estimate the average check/revenue from each person. In this example off the top of my head, and capacity limits and probable turnover on Fridays and Saturdays, I would have to have a very high end market and concept with high drink prices to make sense of it.And would the high end market deliver these numbers on a regular basis and where are they coming from? In most cases (not all) this rent would probably be too high. Often very high end restaurants are in fairly small spaces or it's a quick and flip fast food place because of the rent and numbers. Obviously there are many variables like a possible seasonal location that could have very high summer or winter spikes. And high revenue over fixed costs with good controls means higher profit margins like your 25+%.Huge mega clubs with market domination and economies of scale can see unbelieveable profit margins IF controlled well.Things like rent and even labor can shrink greatly in terms of percentages.On the flip side lower number toward the break-even point will mean much higher percentages and near death trouble.But if you have a small bar and are willing to do massive hours and perhaps bartend yourself, you can make a pretty good buck if your rent is reasonable or you preferably own the property.Overall, I think most would shoot for 20% of real book income and with actual normal expenses . If you were to do $300000 ($6000/wk) you would shoot for about $60,000+ possibly bartending tips. You should include a reasonable manager salary for yourself for accurate numbers and if you actually have to ever pay someone when you move on to your 2nd or 20th place! Depending on the situation, mgmt. and control, this salary may reduce the $60,000 profit.THESE NUMBERS ARE FOR EXAMPLE ONLY-YOUR SITUATION , CONCEPT,AND MARKET MAY VARY GREATLY!!!!

-Mike Black

PS,Delphonic, Joe contributed a nightclub business plan to a business software company a few years ago that should give you a rough idea.Check out nightclub-business.com or search "nightclub business plan"on Google or Yahoo.

Michael Black
04-30-2005, 05:07 AM
www.bplans.com