How to Write a Bar or Lounge Business Plan

How to Write a Bar or Lounge Business Plan

The bar and lounge industry has been a growing industry over the last several years, which has resulted in the need for more and more bar and lounge business plans, bar and lounge business plan templates, and even bar and lounge pro forma financial projections.

There are numerous reasons for the continued growth of the bar lounge industry which has spurred the demand for business plans.  For example, an impressive trend in this industry would be the growth of microbreweries.  Microbreweries offer local beer craft aficionados the ability to create their own brews and offer them for sale through their own bar and lounge or through local establishments.  This action alone provides bar and lounge business owners with a competitive advantage over other competitors.  Regardless of why the popularity of bar and lounge businesses as well as the need for bar and lounge business plans, having an already prepared business plan is almost always an excellent strategic move.  From this, our bar and lounge business plan writer has prepared some tips and tricks for owners to use when writing their own bar and lounge business plan or preparing a bar and lounge pro forma financial projection (1/22).


Executive Summary for a Bar and Lounge Business Plan.

In the executive summary section of the Bar and Lounge business plan, make sure to first discuss what type of business your organization will be.  Common legal business strategies for the bar lounge industry are usually limited liability corporations.  This structure is chosen by bar and lounge entrepreneurs because of the need to protect the owner on an individual basis.  Specifically, accidents happen all the time in bars.  When these accidents happen, people tend to seek out compensation from far and lounge owners.  A limited liability legal structure may assist with protecting lounge business owners from these types of repercussions.

Also, in the executive summary section, make sure to discuss how your business will look and feel for customers.  Patrons at bars and lounges often choose a venue based on decor and theme.  From this, the more appealing a bar or lounge is to the customer, the more likely they are to have patrons that appreciate the decor.  As a result, in the executive summary of your bar and lounge business plan, make sure to touch upon the ambiance and aura you would like to present to your customers.

Company Information for a Bar and Lounge Business Plan.

The company information section of a Bar and Lounge business plan should start by explaining the problem that the company will solve for the client, then address the “Who, what, where, when, why, and Hows.”  The problem that a bar or lounge sells for a customer may vary depending on the theme of the bar.  For example, some bars like to play loud, live music.  In this setup, a problem that the bar may be solving is that patrons want to enjoy good drinks while listening to their favorite songs.  In contrast, a wine bar may cater to the after-work crowd.  From this, the problem that they may be solving is a quiet place for coworkers to meet, relax, and work through problems of the day.  Regardless of structure, make sure to specifically state and align your company’s problem that you seek to solve with your overall bar in lounge theme.

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Product Description for a Bar and Lounge Business Plan.

Bar and Lounge businesses generate revenues from the sale of alcoholic beverages.  Because of this, our business plan writer has found that having a wide selection of alcoholic beverages is often beneficial for bar and lounge owners.  Further, bar and lounge entrepreneurs may also benefit from selling complementary products or services like finger foods or appetizers.  A final revenue source for a bar could also be cover charges when live bands are performing.  No matter how you structure your revenue channels, just keep in mind, that when writing a bar and lounge business plan, each revenue source should be explained in detail to help the reader understand the thoughts and ideas behind differentiated ideas.

Competitive Advantages for a Bar and Lounge Business Plan.

The Bar and Lounge industry has been growing substantially over the last several years thanks to the introduction of microbreweries.  Microbreweries may take several forms.  Some microbreweries make their own beer at the location.  Also, the microbreweries sell their products to visiting customers in a bar setting.  Other microbreweries may choose to, again, make their own beer at the location.  Then, the organization distributes its products on a wholesale basis as well as through retail sales.  On a final note, because of the popularity of microbreweries, wineries have taken on a similar business model.  As this trend continues, expect competitors to continue to differentiate this competitive advantage in hopes of gaining market share in the area.

Location Description for a Bar and Lounge Business Plan

The location of a new Bar and Lounge facility is critical for the success of the business.  For the interior of the business, the bar and lounge area should be about 1000 to 2500 ft.², based on research from our business plan writer.  In this area, typical bars will include lounges, a common bar area, smaller tables, as well as outside seating.  Approximately 25% of the interior space is dedicated to storage for various alcoholic beverages like rum, beers, and wines.

As for the general location of the Bar and Lounge facility, our business plan writer has found that these types of businesses do well in locations with a lot of foot traffic.  From this, make sure to stay in your bar or lounge business and plan how you expect patrons to know where your location is.  For example, foot traffic will build brand recognition due to the appeal of other amenities or businesses in the area.  Without foot traffic, bar and lounge entrepreneurs need to spend significant funds on advertising to build brand recognition and draw patrons.

Target Market for a Bar and Lounge Business Plan.

A common Bar and Lounge target market is working-class individuals between the ages of 25 and 40.  This demographic tends to be more social as compared to other demographics.  Also, these individuals appreciate the growing trend of micro breweries with a lounge/bar component, as compared to other demographics.  However, differentiated bar themes may be constructed to draw in other demographics.  From this, when starting a bar or lounge, think about utilizing your target market as an excellent starting point for diversifying your business from other competitors.

Also, a bar and lounge business may exploit geographic opportunities as a target market.  For example, a bar or lounge may be located near an office park or university.  Based on geographic closeness, targeting students or office workers makes perfect sense from a target market perspective.

Industry research for a Bar, Lounge, and Night Club Business Plan

Based on quick research from our business plan writer, the main industry in which Bar, Lounge, and Night Club competitors compete in the bar and nightclub industry.  This industry has generated approximately $27 billion in the last 12 months in the US.  In the last five years, the bar and lounge industry has grown by approximately 3% annually.  In the next five years, industry experts predict that the annual growth rate should fall to about 1.3% annually.  There are about 69,000 bars, lounges, and nightclubs throughout the US.  Wages paid out by these entities may exceed $7.8 billion in the next year.  Fortunately, there are significant profits in the industry.  Projections for next year’s profits are about $1.5 billion.

Owner and Management Section of a Bar, Lounge, and Night Club Business Plan

Owning and managing a Bar, Lounge, and Night Club business is quite different from other organizations.  This is because owners of bars and lounges tend to be investors or restaurant entrepreneurs seeking to expand into the bar and lounge industry.  In these situations, business owners tend to lack specific experience in the bar and lounge industry.  As a result, the learning curve for owners tends to be higher than in other industries.

Funding Request for a Bar, Lounge, and Night Club Business Plan

Starting in the Bar, Lounge, and Night Club business is actually quite expensive.  Business owners need to invest significant money in buildout, inventory, and advertising.  Buildout for bar and lounge would include designing the interior of an establishment to best attract the company’s target market.  Also, buildout may include purchasing tables, barstools, and electronics like televisions and video games.  Inventory for bars and lounges would mainly include alcoholic beverages like rum, beer, wine, and mixers.  As for advertising, startup bar and lounge entrepreneurs should create advertising strategies using multiple outlets like social media, Internet, and traditional marketing.  Finally, this information should be summarized in the advertising section as well as the startup funding section of a well-prepared bar and lounge business plan.

Financials for a Bar, Lounge, and Night Club Business Plan.

Financial projections and financial models for a Bar, Lounge, and Night Club business plan should first start with determining sales prices for alcohol and aligning these prices with the cost of goods.  For the most part, bar and lounge owners should have significant gross profit margins on products sold.  Once this is compiled, then make sure to estimate the number of patrons monthly and align this information with fixed costs in the same period.  After subtracting the fixed costs from your gross profits, business owners should then apply various growth estimates to expand this information into a monthly and annual financial projection for bars and nightclubs.

Hopefully, these insightful tips and tricks for writing a business plan were helpful.  As always, if you need help with a business plan or financial projections, just send us an email or give us a call. 

Author: Paul Borosky, Doctoral Candidate, MBA., Author

Owner of: Quality Business Plan, Quality Business Consultant

Date: 1/5/2022