Opening restaurant/bar/night club and I need help with estimated income

[jimbo69ny]

Hello Everyone,

I just came across this website in my search for my restaurant/bar related questions.

First a little about me and my project, Im 29 and hoping to open my first restaurant/bar/night club. I will be opening it in Ithaca NY which is a huge college town. You may have heard of Ithaca College and Cornell University. The restaurant industry is very competitive around here. We have more restaurants per capita than NYC. However we do not have a dance club and sorely need one.

The location I want to open is an old, 20,000 square foot, Masonic Temple. It is smack dab in the middle of downtown. It is an ENORMOUS, stone building and its location couldn't be better! There have been 3 past attempts to make this location a dance club and they have all failed.
1st one did good. They were open for just shy of 2 years but they always charged a cover and never served food.
2nd one did well but again, no food. They also got into trouble with the ABC for underage drinking among a few other complaints, then they stopped paying their rent and were evicted.
3rd Another person tried to open it but failed after 2 months because he was denied a liquor license due to a felony on his record.
All of them charged big covers (people HATE paying covers in Ithaca) and did not serve food even though the building has a huge kitchen designed for feeding 1000 plus people.

The city wants this place to get rented because of its prominent position in the heart of downtown. They are 100% behind me and they assure me that I will have no problem getting a liquor license. Ive contacted the Liquor Authority of NYS and they too said there will be no problem.

With that said, I need to make sure this will work before I risk everything I own to do it.
Because there is nothing like it in the area I am having a hard time with the numbers. Most of the other restaurants are teeny tiny compared to this place. Despite the fact that there are so many restaurants/bars almost all of them are consistently busy! How can I estimate how many people will walk through my doors and how much they will spend on average?

Ithaca is a very expensive place to go out considering its size. A burger and fries will cost you $10-$16 BEFORE tax and tip. A draft Stella will cost you $4.50-$5.50. Draft Blue will be around $3.50-$4. It doesnt have to be this way. My vision is to open a nice place with a high end feel that is 10-20% less costly. The way I plan on doing this is by purchasing the building at a good price. One of the biggest reasons everything is so expensive at the competing restaurants is because rent is enormously expensive here!

What percentage should I subtract from the gross alcohol and food income to represent alcohol and food costs? Im using 25% for alcohol and 35% for food currently. Is that right?

Ive already estimated all of my other costs. Im just having trouble with this.

Thank you for your help!!!!

[casabar]

OK I stopped reading that after the first paragraph and skipped to the back of the book to find out what happened.

1. Be prepared to invest at minimum twice your educated calculation and then factor in 6 months of operating costs.

2. If it was easy everyone would do it. It is only easy to lose money!

3. Get a cat or a dog. If this is gonna be your life until it is successful then get a dog and then you will always have 1 friend that is 100% true. If it is less than that then get a cat and you will have a 100% true friend, but when it comes time to bail you can pack them up with some kibbles, say your goodbyes and both be well on your way and your karma is intact.

I have a cat named Johnny Cash and he knows the deal and is good with it.

[jimbo69ny]

Thank you but that didnt answer either of my questions. I assure you that I am not just another wanna be bar owner. Unlike many people I have planned this out in detail.

1. I understand your point however I remodel houses and I know what its going to take to do the small renovations Im planning. I realize there are always surprises but I have over estimated the cost on almost everything and Ive build in a little cushion just in case.

2. I understand the risks. That is why Im trying to prepare myself for as much as I possibly can.

3. Im happy you have little kitty Cash but Im not sure what that has to do with anything. I realize you need to hire trustworthy and reliable people. I am a Property Manager and I am used to analyzing applicants who want to live in my apartments. Ive saved myself a lot of money by weeding out the people who are trouble before letting them into my home.

[MatthewAlan]

Hi Jimbo

I believe you and I are on the same Path towards domianting a particular area... I believe thats what you want to do in Ithica. Eliminate all other venues and make 20,000 sq.ft. structure the one and only place to go in town.

there are so many factors with opening up a Bar/club. Basic pricipals suggest that 10% of your gross sales should be for Rent. So if the space is $25,000 per month you should be making $250,000 gross every month or close to it.

your facility is so large that i think the beverage cost should go up. beverage should be closer to 35%.

if this is your first venture, i dont recommend starting so Large without an operating Partner. You will get burned out.

[casabar]

Big rents can be a killer and if possible I would try to own the building first and foremost. You have a huge rent and factor in Murphy's Law and what is your paying that rent and takes you 10 months to open because of Mr. Murphy. What could go wrong will go wrong and many other things. I can not even get into this since I would writing until Saturday and it just is not worth it too me.

Under age drinking in a college town that does not have an 18 to enter 21 to drink law. How are you going to avoid that Jimbo? Your not!

College students get tanked on campus then go dancing. Why? It is cheaper!

No cover charge? Your crazy! Not up on the recent laws in the Empire State, but if possible charge what is called a minimum consumption - meaning you pay at the door for redeemable tickets to be used same as cash. If you do not these folks will grab a quick bite at White Castle through the drive thru and then take up space ( occupancy is money ) in your great new club and not spend a dime, while there is a line outside with spenders that cannot get in because your at capacity.

My take on large venues. They suck if they are not filled to capacity. How ya gonna do this at minimum 3 nights per week? Oh yeah you have it all worked out.

Serving food is IMO the future with all establishments that serve alcohol. Do you have a restaurant background? It's a tough and costly business to serve even the simplest menu and aside those inspectors are worst that the booze patrol. Nah it is simple as pis I'm just being a hard azz.

I will cut off now since I am pooped and BTW I am a licensed General Contractor have licenses in the 3 most hard azz states in the U.S. and have built shit the world over and often with nothing but a shovel. This means nothing nor does being a property manager. What means something is having cash period.

As for the cat comment you will understand that if you ever get this pig up and running and become the Nightclub & Bar Man of the year and I do wish you all the best.

Life is like a box of chocolates. Chocolates cost money. That's why you can tell the successful people. They are all fat!

[jimbo69ny]

Thanks for the input.

My rent actually wouldn't be bad at all considering the size of the building. Negotiations sort of fell through yesterday. I was led to believe that they were open to the idea of selling it and they even offered seller financing. I offered assessed value of $650k (they were asking $870k) at 6% for 20 years and they countered with a 3 year lease with a first right of refusal to buy at the end. They offered a stepped rent of $5500 to $5850 to $6200 but I want to buy it. There is no guarantee that they would even want to sell it after 3 years. Its just a first right to buy. They could also ask whatever they wanted. They would have me by the balls! The landlord is notorious in this area. They own a ton of properties and many of them sit vacant because they'd rather let it sit empty than lower their rent.

My big concern is that I dont know how many people I could actually get through the door. My break even point is 175 people day with a ticket price of $13.52 each. My gut tells me I will blow the competition out of the water with my prices that are 10-25% lower, the fact that I will have the ONLY dance club within an hour drive and the fact that I will have much better service. Ithaca is Super expensive. I went out two nights ago with my girlfriend and I spent $50 on 2 burgers and appetizer, and 2 drinks each. The competition is out of control! But without the proof its hard to take the leap and risk everything Ive already acquired.

The previous night club that was there was packed all the time. I read in an article that they had 2000 people go through the doors in one night. Im guessing but Id say they had 500 people go through each day on average although I have zero proof of that. They were 18+ (Im going to be 21+) and they didnt have serve food. It was just a nightclub.




For those of you who own night clubs how many people walk through your door and what is your average ticket?

What is the population in your area?

[kmhunt]

Jimbo,

Personally I believe you need to be walking into your competition's doors and head counting and learning your market. Pick one or two competitors a night and keep track of what you see. Count how many people are coming in, are they paying covers? What time do they come in, do any bars get them early if they do what are they offering? What they are doing for entertainment? How long does it take to be served on a busy night? Does the staff seem friendly? Of the bars that stay busy for your demographic what traits do they have in common? Does location seem to matter, in some towns college students do not regularly venture outside their campus.

If you do the above you should be able to estimate how many people will come through your doors; you will have an idea of the market, you should notice what trends are popular, and you should be able to notice any opportunities you have.

I think you are making a mistake suggesting that just because you will be serving food and offering lower prices you will beat the competition. I realize college students usually don't have large incomes, however their discretionary/disposable income is at a higher percentage than most people. Given that Ithaca hosts an Ivy league college one can make the assumption that there are a large portion of students from privileged families attending. Those students probably have some money to play with and when they go out just want to have a good time. Btw, if all bar patrons were extremely sensitive to price they would just purchase from the liquor store and drink at home.

People go to bars for socializing and to be entertained; find a way to facilitate that and be the best at it and you are golden. It sounds as though you already know you would be one of the only game in town to offer a good dance floor. I would focus on that and brainstorm how you can make a unique experience every night with that offering. College students want memories, they have to go out into the real world soon this is their time to have fun-offer them fun.

[TheAuteur]

They own a ton of properties and many of them sit vacant because they'd rather let it sit empty than lower their rent.

It is my understanding that if someone owns many properties it is economically advantageous to keep a certain amount of their properties artificially vacant so they can claim a loss on those "lost earnings" as hedge for tax purposes. This happens a very often in big cities like Los Angeles & New York City, but I don't know about Ithaca. It sucks, unless your the owner. :p

My vision is to open a nice place with a high end feel that is 10-20% less costly.

High-end but cheap to me is a contradictory statement. Lower your prices and your clientele goes with it. Raise prices and your clientele will shrink, but pay more per drink. Those that frequent high-end businesses also do so to avoid the low-end patrons. I'm not saying it's right or that high-end patrons won't cause problems, it just is.

All of them charged big covers (people HATE paying covers in Ithaca) and did not serve food even though the building has a huge kitchen designed for feeding 1000 plus people.

People hate cover charges everywhere. They also hate paying for anything. This why we're they land of the free. :D

However we do not have a dance club and sorely need one.

I don't know about that. If there isn't one already... it's not like your inventing the wheel here. Other dance clubs in the area would be a good sign of potential business, but a place without obvious competition? It just sounds to good to be true.

There have been 3 past attempts to make this location a dance club and they have all failed.

A very ominous sign. :p But seriously, their failures can be your gain as long as you learn from their mistakes.

1st one did good. They were open for just shy of 2 years but they always charged a cover and never served food.

If they did so well then why did they close? Or do you really believe not charging a cover
(almost pure income) and adding food (income at a cost) will allow you to fair differently?

Because there is nothing like it in the area I am having a hard time with the numbers. Most of the other restaurants are teeny tiny compared to this place. Despite the fact that there are so many restaurants/bars almost all of them are consistently busy!

It sounds to me like the paying demographic of the area prefers these tiny restaurants to larger ones. Some areas dislike the mega stores (ie Walmart) moving in. If there isn't already a large club or restaurant in the area, it may be for a reason.

My recommendation is to re-work your demographic research untill it's so tight you get a true feel for how many people you can realistically pull through your doors.

I wiki'd Ithaca (city population 29,000), Cornell (13,000 undergrads) and Ithaca College (6,000 undergrads). Of the undergrad population, the entry to college age is 18 so they would graduate around 22 or 23. That leaves you with about 1/4 or so undergrads at the drinking age or about 5,000. That doesn't include the town's population of club goers or master's students however.

You should go with your gut since only you know your area and we don't however I really think you should try a smaller place, say 3/4 smaller or 5,000 sq feet (That still seems plenty large to me). That'll lower your rent and your threshold for how many people you need to get in the door. Location is important, but it isn't the whole equation.

Hope I stirred some ideas. Best of Luck! :cool:

[modjoza]

No cover charge, cheap drinks but an upmarket establishment in a college town?

I'm thinking something is amiss dude.

Based on the size of the venue I think perhaps it would be best to subdivide it into sections each for a specific purpose, all with revenue potential.

For example sub divide it into the following sections: pool hall/game centre, restaurant/sports bar, dance area,. Each of these sections can generate a profit and will offer something different.

Pool Hall/Game Centre

Put in a buch of pool tables, beer pong tables, dart boards and the like. You can attract a daytime clientele with the pool tables as well as have darts and pool competitions! The tables and the boards will pay for themselves over a period of time. Also being a college town I think beer pong could provide a unique selling point. Don't forget frat house competitions and the like.

Restaurant/Sports Bar

Offer very basic foods that are quick and easy to prepare. I would go just with pizza for example, there are companies out there that sell pre-prepared pizza bases that can cook within 2 minutes, all you need to do is pop it in the oven and its done. Start out small like this on your food operation and if the demand increases then slowly start increasing the menu size and buy the equipment necessary. Crawl before you walk.

Having a sports bar requires just having a few big screens and the like where people can get together and watch the big games. Create an atmosphere - when there are no massive sports events do the cheesy things like pub quizzes and karoake.

Dance Area

Pretty much self explained, here your DJ plays and your punters dance. Naturally have a bar available as well in this area.

---------------------------------------------

By sub dividing you ensure targeting the different demographics at different times. You open purely a nightclub then you will be buys a few nights of the week, with sub division you increase the profit centres.

Also a nice little trick:

Have a cashiers desk at the front of the establishment on the busy club nights. Sell tokens at the cashiers that are bar currency. For example 10 dollars gets you 5 tokens, a beer costs 1 token. Therefore you have your cash at a centralized area (accountability for missing funds solely at the cashiers), the barmen wont take that extra time giving out change and the punter when immediately entering the business will be forced to buy tokens in order for drinks - which means they HAVE to spend the entire amount purchased (have a no refunds policy).

If you want any further info on promotions ask me for my mail, would be great for us to bounce ideas off each other.

[gilbi]

If your rent is only $6200/mo you need one big night a week that brings in 1,200 people spending on average $15 each. Depending on the condition of the space you will need $300,000-$1M starting capital. That said, if you don't have any experience managing or promoting a night club then I'd suggest you not open one by yourself.

[Rainee]

I would echo the points raised by others, and add that I don't believe you have actually thought this project through and come up with a viable plan for a successful business.

According to you, there are no other similar sized venues in your area. In addition, a similar model was attempted 3 times before in the space you are looking at, and all 3 times it has failed. What makes you think that your attempt will succeed where others have failed?

The main business plan you have proposed here seems to boil down to providing an upscale dance-club venue, but with no cover and cheap food and drinks. That doesn't make any sense. If you have no competition in your category, you should be charging more, not less. If you want your place to be upscale, you should be charging more, not less.

A bunch of random people, almost all of whom have no familiarity with your local market, are not going to have any information about how many people will walk through your door or what they will spend. You need to study the local demographics, the local competition for entertainment, and get the ground by actually spending time at places around your area and doing head counts and estimated sales counts.

Unless you have a lot of capital to provide an operating cushion for a long time while you figure this stuff out, it is very dangerous to go big like this. How long can you afford to run at a loss? Because it sounds like it may take a while after you open your doors to figure out the price structure, promotion, etc that works in your market.

Even if you think you can handle that, you would be on a three year lease. That's a VERY short amount of time to try to make back your money. And if you are putting a lot of money into renovation, which I'm sure you would have to, the owner knows he has you by the balls when the lease term is up.

If you do decide to do this, I would recommend 1) partner up with someone who can bring both money and expertise to the table, and 2) get at the very least a 5yr lease with a 5yr renewal option.

Good luck.

[TheBarNation]

Some GREAT GREAT ADVICE on this thread from seasoned experts who have their own money on the line. ANYONE getting into the bar trade should read this thread before handing over a dime. Reality hurts sometimes, but it's easier to take than bankruptcy...

Cheers,

Barry

[jimbo69ny]

You all are so negative.

I dont have time to respond to each individual point so i will try a shot gun approach.

Yes I have thought this out. In excruciating detail. I have spoken to many professionals and gotten their opinions. This can most definitely work. Everyone I talk to about it gets extremely excited about it because I am filling a niche in Ithaca that does not exist currently. As long as I can average 202 people per day with a ticket price of $13 I will break even. I think I will crush that but I am figuring worst case scenario.

To clarify, I am not opening exclusively an upscale night club. My business is going to wear many hats so to speak. Because of the size of the building I am going to do something similar to what modjoza was talking about. Mainly it will be an upscale yet affordable American-Italian style restaurant. There will be a dance club in my 2200 square feet amphitheater Thurs-Sat 10pm - 1am. The 2200 square foot great room on the second floor and the amphitheater will be available for weddings, corporate events/parties, etc. I will also be able to host theater companies and large live bands in the amphitheater.

Since my last posts I have been doing extensive research. I have been very busy going out to restaurants and bars to take notes on everything from the service, food quality, food prices, quality of cloth napkins, silverware, atmosphere, and employee attire. I have also done a lot of head counting and talking with bar tenders, waitstaff etc. I believe now more than ever that my place will definitely work.

Oh and the reason I am going to be an affordable, high end restaurant/bar/nightclub is because there are already enough expensive high end business in the area. There isnt a single place you can go for a meal and keep it under $20. I went to one of the newest brewpubs in town and for two burgers, two PBR's, and an app it cost me $50! The average price of a burger and fries in Ithaca is $12 before tax, tip or drinks. Ive eaten at places in Boston and Times Square that have cost me less than eating out in Ithaca. If you think Im joking come to Ithaca and find out what its like here. Its crazy expensive. If I charge $8-9 for a burger and fries i will make a killing.

The lease is a 3 year lease because that is the shortest lease they would do. I wanted to purchase the property but they didnt want to sell it. So I negotiated for a 3 year lease with a guaranteed option to buy for $xxx,xxx at 6% interest for 20 years. The owners will be financing the purchase.

Lastly, the reasons the other places failed....

Europa Slovakian restaurant 1/95 – 6/95 – 6 Months - Ran out of capitol as they discovered the local population did not like their food.


Europa Dance Club 96`- New owners but retained the Europa name. They charged insanely high covers. They marketed themselves as a high end dance club like one you would find in a major city. The problem was the $20 covers and $8 drinks. Ithaca has way to many options for people to want to go to a place like this and pay those prices


Odyssey 9/7/00 – 3/7/02 – 18 Months - Same problems as Europa. They charged $10-$20 covers and had ultra high drink prices. They also had 3 noise complaints and 4 underage complaints filed with the Liquor Authority. The owner had zero experience running a business. He was from New Jersey and had never lived in Ithaca before. He got into cocaine, stole money from his mother, stopped paying his employees, got beat up by his employees, then sued by the property owner for $45,000 in back rent and taxes.


Euphoria – 2 months - He couldnt get a liquor license because he had a felony on his record. He told people that he could not get a license because of the "red flags" on the property from Odyssey but that was a lie. Ive spoken with the NYS Liquor Authority and the property owners. He just didnt want to look like a looser and blamed it on someone else. He had a DWI. He was open for about 2 months as a night club with a "juice bar". No one went and he closed. He also tried charging $15 covers.

[gilbi]

This is tough-love. If we sound negative it's because this is a tough biz. You can be the most experience operator in the world and have a new venture fail. Personally I wouldn't be thinking in terms of 202 people per day. The place is too big. With a big night club you should expect to make all your money during one or two days in the week. Oh, and food don't make no money, fyi.

[casabar]

Jimbo ( Jimbo says it all to me ) get off the fence and do it and stop yapping about what your gonna do. We are so negative! Just do it and make it work. I personally think you full of shit based on this thread and won't do anything and this was nothing more than mental fiscal drill for shits and grins. If you did get this thing going I bet you would bail once you found not only that the numbers do not add up and that it is a harder and not as much fun as you thought and will resort back to flippin economy rentals.

Ithica just my opinion.

hahahahha

Suerte

PS I am interested in buying in on franchise 15

[mikejohn860]

hi........guys
my name is mike
i like webposting so much

i like this forum
it is amazing
______________________-
Want to get-on Google's first page and loads of traffic to your website?
Hire a SEO Specialist from Ocean Groups seo specialist (http://www.oceangroups.org)

[TheAuteur]

Im sorry I asked for help.....
You all are so negative.We are complete strangers on the internet discussing your proposed business in a bar & nightclub forum. Sorry if we are blunt, but this is honest, conservative business advice. You will learn far more from those who challenge you then those who easily agree with you. Hopefully the advice found here will help you make and save money which I why I assume your came here to begin with.


Everyone I talk to about it gets extremely excited about it because I am filling a niche in Ithaca that does not exist currently.Unless these people have some vested interest in your business, be wary. Your family and friends and local representatives will always back you.

I sincerely look forward to hearing of your successful nightclub/restaurant/bar/venture. As always please come back and tell us what lead to your success so that others might learn.

Best of Luck

:cool: