Net profit?

[gaag1436]

I have been seaching but haven't had ant luck finding what the national % average is for a bar. I found an article (not here) that said somthing like 12%. This cant be true is it? If it is then why would anyone want to work so hard for so little? I hope this # is wrong. Because I cant see doing $200,000 in sales and only getting to keep $24,000 for myself.

[Country Guy]

The net profit usually is determined after paying the owner (assuming they are working as the manager) a reasonable salary and benefits; as if you were paying another person as manager and you were sitting home.

"the oldest guy at your party"

[gaag1436]

The net profit usually is determined after paying the owner (assuming they are working as the manager) a reasonable salary and benefits; as if you were paying another person as manager and you were sitting home.

"the oldest guy at your party"

What would be consideered a reasonable salary for a bar doing $200,000(assuming they are working as the manager)?

[Country Guy]

What would you expect to earn if you were hired as the full-time manager for the place "down the street"?

I think this is a better way of coming up with a number.

Of course, it makes a difference if you are open 7 days a week, or only open Fri, Sat & Sun (or Thur, Fri & Sat.) You get the idea.

"the oldest guy at your party"

[gaag1436]

What would you expect to earn if you were hired as the full-time manager for the place "down the street"?

I think this is a better way of coming up with a number.

Of course, it makes a difference if you are open 7 days a week, or only open Fri, Sat & Sun (or Thur, Fri & Sat.) You get the idea.

"the oldest guy at your party"

I wouldn't make very much because I dont own the place down the street. LOL.
Maybe I am asking the wrong question. Where can I look to find out a rough est. on the % that SHOULD be left over (assuming the place is run like a well oiled machine) after ALL expenses are paid?

[Barry Chandler]

10-20% is to be expected

[gaag1436]

10-20% is to be expected

I just want to make sure I understand you. 10-20% is to be expected before or after paying yourself?

[bruce]

I own a restaurant/bar and your 10-20% sounds completely out of line to me. I have had good years and bad years and 1-3% is more in the ballpark. I am of coarse in a small town(1200) market with a glut of bars(5). We have almost no manufacturing base and rely mostly on retirees. You can write off so much that you should never have to pay taxes.

[gaag1436]

I own a restaurant/bar and your 10-20% sounds completely out of line to me. I have had good years and bad years and 1-3% is more in the ballpark. I am of coarse in a small town(1200) market with a glut of bars(5). We have almost no manufacturing base and rely mostly on retirees. You can write off so much that you should never have to pay taxes.

I'm sorry but I cant believe you. You are telling me you own a restaurant that only has a profit of 1-3 %? On $100,000 thats $100-$300 a year. No one would or could keep there doors open with those #s.
Is this 1-3 % after you have paid yourself?

[Rainee]

First of all "net profit" to the owner should include any salary you pay yourself, any product are other goods and services from the business that you use personally, and any actual corporate profits. Different people take their profits in different mixes of these things depending on their tax situation, preferences, etc.

Now I would say that a successful bar should be generating more like 25% "net profit" as defined above. That is, if you are doing $200K in annual sales you should be able to take out about $50K in some combination of salary, business profit, and goods. That is of course before income taxes, which can vary quite a bit depending on your personal situation.

Very small operations probably have lower percentage, as there are certain fixed costs that don't scale with size. Very large operations also probably have a lower percentage, as you have to add significant overhead for security, management, promotion, etc once you get beyond a certain size.

I think 25% is about as good as you will get, and this assumes you have high revenue relative to your capacity, and that your loss numbers are very low, and that you have average capital costs for plant and equipment.

I'm not sure where your 12% national average comes from. Does this include bars that are have gone out of business in the sample? Many establishments don't survive, and have negative profits the entire time they are open. You probably don't want to include these in the average, as you expect to be one of the survivors!

I agree that at a profit of 1-3% it doesn't make sense to stay open. It's a lot of work for basically no money, and even if it's just a tax write-off there are better and less labor intensive ways to achieve that. Bruce, would you care to clarify?

[Barry Chandler]

I'm sorry but I cant believe you. You are telling me you own a restaurant that only has a profit of 1-3 %? On $100,000 thats $100-$300 a year. No one would or could keep there doors open with those #s.
Is this 1-3 % after you have paid yourself?

First off, 1-3% of $100k is $1k-$3k and not $100-$300, second, running a restaurant with a $100k turnover and generating 1-3% means you must be paying yourself before you come up with this figure.

On another point, the question was about the average net profit for a bar and not a restaurant. The two vary greatly as do the different service types within each category.

My 10-20% net profit figure is before the owner has taken out a salary/dividend.

This is the normal return from bars I work with.

[bruce]

The 1-3% figure is the corporation profit after all wages and expenses for the last 5.5 years. This is not a great game unless you are taking someone for a ride. The total gross was about 1.4 million and the food was about 74% of total sales. Since October 2010, numbers and method of generating sales have changed. Both appear to be increasing. Competition is set to start increasing also. So changes are in the works.
Others on here have made a big splash with their hype and shown some great numbers on the forum. However they don't seem to be as readily available as they were when building. Each state has different rules and if you are willing to bend some of those rules you can make considerably better numbers than I have.
Pick the right location, location, location and bypass taxes, pay under the table, and you can make a lot of money in a hurry and you will need to. The law will eventually catch up to you. Those that have been in one place for more than 3 years without ownership changes, are not the norm.
Add in all the places that go under in this business and the numbers are totally low. This business is a lot of work and a lot of hours. Anyone assuming that that is not the case is a fool and should just stick to government jobs. You will never work more for less, and enjoy yourself so much, as you can in this business.
That being said, all numbers reported by some one not in the business are suspect. I (the corporation) own all the equipment, furnishings and the building(half paid for after 5.5 years) and have not failed to pay all employee taxes etc. since starting the business. The last year was very rough because of the recession.
Good luck to anyone trying this line of work. Bruce

[bruce]

One more point that should be explained. In the state of Washington, places that serve hard alcohol are required to be restaurants and have food available at all open hours. Part of the time they are required to have 5 entrées that must be eaten with a fork, and prepared on premises( five hours a day, five days a week, I think). You can get a nightclub license now and only be open 3 days a week and not serve food.

[gaag1436]

Thanks, it's making more sence now. I am still doing alot of research and will probly be another year before I have all my ducks in a row. But I think I am leaning toward a bar & grill type setting. So I will be serving some food.
Again, thanks to all of you who have answered to this thread. I am greatful to have found this place.

[scott1988]

I'll just agree with what's been said but again say that this business (bar or restaurant) is difficult to be profitable in. The proof is in the history that a lot of bars and restaurants fail and do so in the first 2 or 3 years. It's not BS.

The problem is, when people go out to a few places that seem busy or their favorite nightclub/hangout and see how busy it is, they have a tendency to "assume" that it's making a load of cash. As well as, they also think that a lot of places are making a ton of money but the reality is, they forget about all the places that are struggling to get guests in their place or have shut down. These places unfortunately far outweigh the few that are "making" it so yes, the numbers are low.

And for the places that "seem" to be busy, you have no idea how much FREE BOOZE the bartenders are giving away or an extra shot to the cuties at the bar. This booze isn't free to the bar owner so there are a lot of expenses that are "lost" which is why a lot of places close. Same goes for food at a restaurant. Or not to mention the employees that come 10-15 minutes early and punch in on the clock only to just sit around until their shift begins. Or not punch out to take a break. Sure, this might seem "tedious" but it's not "tedious" to your pocketbook. It breaks it so you gotta watch these little money drains.

So if someone was to say that a place could "net" a profit of 10%-12% (after paying ALL EXPENSES including manager's wages) then I would agree with this number. If it's a large place that has say 3 or 4 total investors and they all wanted their "chunk" I would assume that this number would be what would be left over AFTER they decided on a predertimined amount to be reserved or invested back into the business.

In other words, say that a place made a total revenue of $3 million in a year and they determined that they were going to have 30% of total profits reserved for "back investment" back into the business if the total profits BEFORE this were 17% (gotta save some for a rainy day, future renovations, etc.) and that was roughly $150k or so, I could see that they would all have to split $300k to $360k between 4 of them. Which would come out to about $75k to $90k. These are rough numbers and not specific but just generalize here. Sure it doesn't sound like much but that's why they call it risk. Now, of course if you were the sole owner and could take the whole $300k to $360k profit (after paying your manager(s) ) then that would be a nice "chunk" of change but most investors have their hands in other ventures so the little bit they might be making here might be the same at 5, 8 or even 10 other ventures they're involved in.

[gaag1436]

Thanks scott1988.
This has always been a dream of mine. I already work 6 days a week at my job. Almost 70hrs a week between work & drivetime to and from. Tat doesnt count the small vending machine company I run on sundays. So long hours wont be a problem. But I still have a long way to go before I make the final move. I understand I will make mistakes along the way. but hopefully this board will help me minumize them.
And thanks again to all the others that commented on this thread.

[Joe]

This is a pretty long thread, so I'll keep it brief. A 10% net before taxes and after payroll is a reasonable number to shoot for. It really all depends on how many "add in" expenses you choose to have your business pay for you. As in auto leases, health insurance, retirement account, cell phones, meals, and on and on and on. Unfortunately there is NOT just one answer.