Expert Answers to Biz Questions
Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
The Biz Question
Hi! My name is Jon K. and I'm 21. I'm investigating opening a bar in my hometown that will cater to the patrons of a thriving street of restaurants.This is my first business venture and I'm having a lot of trouble finding information on costs like shop and bar fittings, licensing, stock etc. Any information or experiences on this venture would be greatly appreciated!
Answer from our Guest Expert Kent Capener of Capener Consulting
Well, Jon, belly up to the bar, my friend, and we'll try and answer your questions.
Restaurant and bar equipment are a lot like cars. Your options are to buy new, buy used from a local restaurant equipment dealer, or buy used on the open market.
Where to Start?
To find out what type of equipment you'll need, one of the first places to start is the local health department (or the government agencies responsible for inspecting and passing establishments that serve the public.) Most municipalities have specific requirements that need to be met in a new building or operation. You'll find requirements like stainless steel sinks, separate wash basins for every X number of employees in the kitchen, and so on. You might even encounter health regulations regarding the serving of alcoholic beverages, such as minimum equipment types and measured drinks.
Once you know what it takes to pass the health inspection, you can look at your location in the proper light. If you're looking to lease or operate in an existing physical location that was previously operating serving food and beverage, determine whether you have to remodel to bring that facility up to meet the current codes or not. Some cities allow for a bare minimum requirement for businesses that have operated for some time, which they also sometimes transfer to new operators. If you're looking to build a new facility, you'll have to make it fit the current health codes.
Going to the Open Market
The open market? This means start talking to other bar and restaurant owners about equipment, and I'll bet you'd be surprised how much of it is tucked away in the back, in storage, or in the garage at home. Hopefully, you're a good barterer; good negotiating skills will get you the best price! If you can go the used equipment route, you can save a considerable amount of total cash. Keep these cost(s) in mind when it comes to determining how much money you'll need to purchase your equipment.
Go Straight to the Horse's Mouth!
Hang your hat at those establishments that are doing what you'd like to do, in terms of equipment, and ask questions. They'll dish you up good info. Local restaurant and bar equipment suppliers can supply you with brochures and price lists. And don't forget about equipment purveyors either. It isn't untypical to be able to obtain the equipment you need by contracting to purchase supplies.
Lease or Buy Your Goods
You also have the option of leasing or buying the equipment, whether new or used. If you lease used equipment, the leasing company will purchase it and lease it back to you. There are advantages either ways. With purchasing, you at least have the asset on your financial statements, even if you have loan payments. With leasing, you have a fixed monthly cost for all your equipment -- which is nice on the budget -- after down payments. (But you don't have the assets because you don't own the equipment.)
Find a Good Consultant
Check out your local Yellow Pages for "restaurant" consultants in your area who could assist you. This can be a very effective way to start-up an operation. It does require capital; however, these people are experts at designing and costing both the physical facility and everything else relating to operating a bar. Since this is your first venture, you may want to look into this to save you numerous headaches later. (Some of them will be migraines I can assure you. So buy lots of aspirin and hang tough!)
To find out what's required for licensing your new bar, contact your municipality, county, and state governments for any requirements for both business and bar businesses. Some states require bars that serve hard liquor be operated by non-profit corporations. There can be all kinds of "interesting" things you may have to deal with when licensing your bar. For example, one requirement -- which probably sinks more new bars than any other -- is a distance regulation from churches, schools, and other bars. So do your homework on this one.
Stocking the Shelves
Depending on your niche, your bar will likely feature beer (foreign & domestic), wine, and/or hard liquor. Your establishment's theme will dictate part of the inventory you carry in this area.
Beer is generally sold by "route" trucks from distributors. They also sell signs, lights, coasters, and other promotional items. If there's one dominant brand in your area, or two, have those on tap and complement your domestic inventory with bottles of other beers. Pay special attention to any local brews.
Wine is typically sold by brokers, as is hard liquor in states where alcohol isn't controlled by the government. Some counties control alcohol as well. If you're in a controlled area, you'll have a central outlet from which to purchase your supplies and a price list should be readily available. If you're in an uncontrolled area -- where brokers and representatives operate -- find out who reps the products you want in hard liquors and wines.
So Jon, the secret here is finding all these sources in your area and asking them your questions! Most will be happy to chat with you and give even more juicy tips!
They went thatta way.... cut 'em off at the pass! Good luck!
Kent Capener of Capener Consulting
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