How much does a liquor license cost?

Liquor license costs vary wildly depending on your state and municipality, ranging from $500 in open-license states like Texas or Florida to $15,000+ in quota states like New Jersey, California, or Connecticut where the number of licenses is capped. In quota states, you often need to purchase an existing license on the secondary market, which can run $50,000-$300,000+ in high-demand areas like New York City or San Francisco. The application process itself takes 2-6 months in most states, so start early and budget for legal fees to navigate the paperwork. Beer-and-wine-only licenses are significantly cheaper everywhere, typically $300-$1,500, which is why many bars start with limited licenses and upgrade later.

What's the most expensive part of opening a bar?

The buildout and liquor license are almost always the two largest expenses, together often consuming 40-60% of your total startup budget. Bars cost more to build out than many people expect because the atmosphere is the product — customers are paying for the experience, not just the drinks, so lighting, sound, finishes, and the bar counter itself all need to be done right. A custom bar top with foot rail, back bar shelving, plumbing for multiple sinks, and draft beer line installation can easily cost $15,000-$40,000 alone. The smartest way to reduce buildout costs is to take over an existing bar space with infrastructure already in place, which can save $30,000-$80,000 compared to building from a raw commercial shell.

How much profit does a bar make?

A well-run bar typically nets 10-15% profit margins, which is significantly better than the 3-5% margins most restaurants achieve, because beverage-only operations have lower labor costs and higher markups on drinks. The key metric is pour cost — the cost of the liquor in each drink divided by the drink's selling price — which should land between 18-24% for spirits and 20-28% for beer. A $0.50 shot of well vodka sold in a $10 cocktail represents an 80%+ gross margin, compared to a food dish where ingredient cost alone eats 30-35% of the sale price. The bars that fail financially usually do so because of over-investment in buildout, poor inventory control leading to shrinkage and over-pouring, or underestimating the monthly rent and labor burn.

Do I need a bouncer and security?

Whether you need security depends entirely on your bar type, hours of operation, and local regulations. A craft cocktail lounge closing at midnight probably doesn't need a bouncer, while any bar open past 1 AM that serves a high-volume crowd should absolutely have at least one security person at the door. Many cities require licensed security staff for venues with entertainment permits or occupancy above a certain threshold, and your insurance company may mandate it as well. Beyond legal requirements, having a bouncer reduces your liquor liability exposure significantly — if an intoxicated patron causes harm, your defense is much stronger if you can show you had trained security checking IDs and monitoring behavior. Budget $15-$25/hour per security staff member.

What's the failure rate for bars?

The often-quoted statistic that 60% of bars fail in the first year is largely a myth — actual research from the Bureau of Labor Statistics and industry studies puts the first-year failure rate for bars and restaurants closer to 20-30%, which is comparable to most small businesses. The bars that do fail almost always share the same problems: undercapitalization (running out of cash before building a customer base), choosing a location with insufficient foot traffic, or poor financial controls leading to inventory shrinkage and over-staffing. The keys to survival are having at least 6-9 months of operating expenses in cash reserves beyond your startup costs, obsessive tracking of pour costs and labor percentages, and building a loyal regular customer base through consistent quality and community engagement. Bars that make it past year two have a much stronger survival rate, with only about 10% closing annually after that point.

Home / Bar Startup Costs

How Much Does It Cost to Start a Bar?

$50,000 – $500,000

Opening a bar typically costs between $50,000 and $500,000 depending on concept, location, and licensing. The biggest cost drivers are the liquor license (which varies wildly by state), the buildout to create the right atmosphere, and specialized bar equipment like draft systems and commercial refrigeration. A neighborhood dive bar on the low end and a full nightclub/lounge on the high end represent very different financial commitments.

Last updated Feb 2026 · Based on National Bar & Restaurant Management Association data (2024-2025), State liquor authority fee schedules and regulations, Bar equipment supplier pricing (Krowne, Glastender, Perlick)

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Where This Data Comes From

National Bar & Restaurant Management Association data (2024-2025)
State liquor authority fee schedules and regulations
Bar equipment supplier pricing (Krowne, Glastender, Perlick)
IBISWorld Bars & Nightclubs industry report

All figures are estimates based on publicly available data and industry benchmarks. Actual costs vary by location, timing, and business decisions.

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