Posted on: March 7, 2024

How Much Does it Cost to Start a Bar in California?

How Much Does it Cost to Start a Bar in California?

Starting a bar in California is exciting for anyone looking to escape the traditional work routine. The Golden State offers a vibrant nightlife scene, a diverse population, and a love for unique drinking experiences. However, the journey from concept to opening night involves various costs and challenges. 

In this blog, we’ll explore the key expenses and steps involved in opening a bar in California, helping you understand how much it costs to start a bar business and how hard it is to open a bar in this state. 

How to Open a Bar in California 

Before diving into the numbers, it's crucial to understand what opening a bar in California entails. This process involves several steps, including obtaining a bar license in California, finding a suitable location, designing your space, hiring staff, and marketing your establishment. Each of these steps comes with its own set of expenses, which we will break down in detail.

Step 1: Create a Business Plan 

A crucial first step in how to start a bar business is developing a robust business plan. This plan should outline your bar's concept, market analysis, financial projections, and operational strategies. 

While the cost of creating a business plan can vary (ranging from minimal if you do it yourself to several thousand dollars if you hire a professional), it's an investment that can significantly aid in obtaining financing and guiding your business decisions. 

Step 2: Obtain a Bar License in California 

The first step for opening a bar in California is acquiring the appropriate license. The type of license you need depends on the nature of your bar - whether you plan to serve only beer and wine or full liquor. 

In California, liquor licenses are regulated by the Department of Alcoholic Beverage Control (ABC), and the cost can range anywhere from $12,000 to $400,000, depending on the type and availability in your desired location. 

Step 3: Find a Location to Rent

The cost of renting a space for your bar varies greatly depending on the location within California. Prime areas in cities like San Francisco or Los Angeles can demand high rental prices, sometimes upwards of $10,000 per month for a decent-sized space. However, more suburban or rural areas might offer more affordable options. 

Step 4: Renovate and Focus on the Design

Once you have your location, setting up your bar to match your vision can be one of the most expensive parts. Renovation costs can range from $50,000 to over $200,000. This includes interior design, bar setup, kitchen equipment (if you plan to serve food), and purchasing furniture. 

Step 5: Organize Inventory and Supplies

Stocking your bar with a wide range of alcohol, mixers, and other beverages is essential. Initial bar inventory costs can range between $5,000 and $15,000, depending on the size of your bar and the variety of drinks you plan to offer. Additionally, you'll need to invest in glassware, bar tools, and other supplies. 

Step 6: Invest in Marketing and Promotions

Creating buzz about your new bar is crucial for its success. Marketing expenses, which can include social media advertising, traditional advertising, and promotional events, can range from a few hundred to several thousand dollars.

Step 7: Consider Insurance and Miscellaneous Costs

Don't forget about insurance, which is a must for any business, especially in the hospitality industry. General liability insurance, property insurance, and workers' compensation can total around $2,000 to $6,000 annually. Additionally, you should allocate funds for unexpected expenses and emergencies. 

Step 8: Hire Staff 

Hiring skilled bartenders, servers, and possibly kitchen staff if you're serving food is another significant expense. Labor costs can vary, but they generally account for about 30% of a bar's ongoing operational costs. 

Moreover, in California, specific alcohol training and certification requirements are in place for bar staff, particularly those who serve alcohol. These requirements are governed by the Responsible Beverage Service (RBS) training program, which is mandatory for alcohol servers and their managers at on-premises licensed locations like bars, restaurants, tasting rooms, clubs, stadiums, movie theaters, hotels, and caterers. 

According to CA Assembly Bill 1221 Compliance, bartenders, servers, and managers must have valid Responsible Beverage Service (RBS) Training from an ABC-accredited license provider. They must also pass an exam within 60 days from their hire date. Once the exam is passed, the license is valid for three years. 

How Much to Open a Bar in California? 

So, how much does it cost to open a bar in California? Considering all the factors above, the total cost can range from $175,000 to $850,000 for a bar that purchases its location and pays a mortgage or $110,000-$550,000 for a bar that rents or leases its location. 

This wide range is due to the varying costs of licenses, locations, and personal choices regarding the size and style of your bar. 

How Hard Is It to Open a Bar in California? 

Starting a bar in California is a considerable undertaking, with costs varying greatly based on location, license type, and personal choices in design and operations. 

While the financial investment is significant, the potential rewards of owning a successful bar in a state known for its vibrant culture and nightlife can be immense. 

Opening a bar in California is not just about financial investment; it also requires time, dedication, and a deep understanding of the industry. 

Compliance with state and local regulations, creating a business plan, understanding your target market, and managing ongoing operations are all part of how to start a bar business successfully. 

With careful planning, a clear understanding of costs, and a solid business strategy, your dream of opening a bar in California can become a reality. 

Get Your California RBS Training With TIPS! 

As an online compliance training provider for over 20 years, TIPS offers California Responsible Beverage Server (RBS) training. Our course is approved by the California Department of Alcoholic Beverage Control to help you meet RBS regulations. You can also bundle it up with ANAB-accredited Food Handler training. 

Ready to make your dreams a reality? Sign up for training with TIPS today!