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Although they may be British in origin, pubs are now well established in American culture. They typically feature a family-friendly atmosphere, American-style food, televisions airing sports games and a full bar. All of this appeals to many people, which is why pubs have become so popular in the U.S.
For the entrepreneur, the widespread popularity of pubs creates a promising business opportunity.
Who is this business right for?
Anyone who enjoys food, beverages, and other people may be well-suited for owning a pub business. A passion for food and beverages will help when creating and preparing menu offerings. Being a people-person is important because pubs are in the business of serving patrons.
What happens during a typical day at a pub?
Every day at a pub is busy. The work that needs to be done includes:
- prepping ingredients that will be used that day
- making menu items as they’re ordered
- serving customers the foods and beverages they order
- cleaning up after customers leave
- reordering and restocking supplies that are used
Whenever an event is being held at a pub, there is also set-up and take-down for the event.
What is the target market?
A pub business might attract business professionals, graduate students, families, couples, and single adults. Exactly who comes to a particular pub will depend on the pub’s location, so it’s important to consider the surrounding demographic when forecasting sales. Ideally, a pub will attract patrons from at least a few of these groups, and they’ll come at different times of the day or night.
How does a pub make money?
A pub business makes money by selling food items and beverages to customers. Most pubs offer appetizers, entrees, sides, desserts, alcoholic drinks, and non-alcoholic drinks that customers can purchase.
What is the growth potential for a pub?
A pub business may have just one location, or it can grow into a regional or national business that has multiple locations. Fraser’s Pub and Casey’s Tavern are two examples of pubs that have a single location. HopCat and Keegan’s Public House are two pubs that have multiple locations.
What are some skills and experiences that will help you build a successful pub?
The importance of experience in the foodservice industry can’t be overrated when starting a pub business. Business owners sometimes rush into starting a pub without having worked in the industry before, and this can be devastating for a pub. Without firsthand experience, business owners may struggle to manage workflows and inventor, effectively market and properly staff their pub.
Thus, working in the industry is one of the best ways to prepare for owning a successful pub business. Business owners should plan on spending several months working at someone else’s pub so they gain an understanding of the day-to-day operations.
What are the costs involved in opening a pub?
The startup expenses for a new pub are substantial. Business owners who are leasing space should expect to spend between $125,000 and $550,000 up front. Those who own the space their pub will be in spend more initially, often fronting between $175,000 and $920,000.
These funds are used to pay for a variety of necessary expenses, such as:
- The build-out of a space
- Kitchen and bar equipment
- Smallwares and dishes
- Initial staff salaries
- Marketing and advertising
Because opening a brand-new pub is a costly endeavor, many business owners opt to purchase an established pub instead. Entrepreneur Magazine reports that an existing pub in a small town can cost as little as $20,000.
What are the steps to start a pub?
Once you're ready to start your pub, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your pub is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your pub keeps your finances organized and makes your business appear more professional to your customers.
- Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
- Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers. Save 15% when you create a business website with Weebly.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I find a business mentor?
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a pub?
A pub business’ menu must offer more than alcoholic drinks and party food. Pubs attract a wide variety of patrons, and new pubs need to appeal to as many people as possible. To ensure there’s something on the menu for everyone who comes, a pub’s menu should include:
- a variety of alcoholic beverages
- water, soda, coffee and fancy non-alcoholic drinks
- meat, vegetarian, and gluten-free menu offerings
- meals and snacks for kids
How to promote & market a pub
One of the most effective ways to promote and market a pub business is via social media and online review sites. When going out for drinks or a meal, many people will search online for a nearby establishment to go to. Having a robust online presence and lots of positive reviews will help a pub come up in searches.
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How to keep customers coming back
A pub business can keep regular customers returning by offering special events. Trivia nights, happy hours, concerts and holiday-themed parties all give patrons a reason to return to a pub. For some of these events, such as concerts and parties, a pub may even be able to charge a cover fee or have a drink minimum that further boosts revenue.
How and when to build a team
Most pub businesses have at least a small staff of bartenders and servers when they open. Employees are needed to maintain the long hours that a pub is open and to provide fast service during peak times.
State & Local Business Licensing Requirements
Businesses involved in the sale of alcoholic beverages are required to obtain a liquor license from the appropriate state or local agency.
A comprehensive list of laws by state (including necessary licenses, zoning laws, etc), curated by the Alcohol and Tobacco Tax and Trade Bureau, can be found here.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Here are some tips for faring well on a health inspections.
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
Certificate of Occupancy
A pub restaurant is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a pub restaurant.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your pub restaurant will be in compliance and able to obtain a CO.
How much can you charge customers?
Menu items at pubs tend to be less than $15. Some pubs have certain entrees that command higher prices. Patrons who visit a pub, however, are usually looking for affordable fare.
Despite having relatively low prices for individual items, tickets at pubs can become quite high. As an example, consider a couple that comes for drinks and a hamburger. Each person might order a $6 drink and a $10 burger, bringing their total bill to $32. If they stay for a few beverages, get an appetizer, or bring friends, the bill will be even more.
What are the ongoing expenses for a pub?
The ongoing expenses for a pub business are significant. They include rent, ingredient costs, equipment costs, employees’ salaries, utilities, and insurance premiums. For one pub, the ongoing monthly expenses were $24,740 per month.
How much profit can a pub make?
A successful pub business can earn a significant profit. A well-planned new pub can be profitable within six months, and it’s possible for pubs to bring in six- and seven-figure revenues annually.
How can you make your business more profitable?
Pub businesses can increase how much they make during slower parts of the day by offering space for private events. Pubs can be great places to hold company meetings, family celebrations, and bachelor and bachelorette parties.