Opening a bar and lounge in Budapest

[Tom in Budapest]

Greetings all,

I am in the planning process of opening a bar and lounge here in Budapest, gateway to the East. The short story is that the city is paying for the development of a square behind the National Museum. Several buildings are already renovated, the streets have new cobblestone, and the new parking garage is clean and safe. The centerpiece of the square will be five freestanding terraces with glass walls that slide open in the summer and closed in the winter. There will be a Hungarian restaurant, an Illy cafe, and a Belgian beer pub for sure; the last two are still unknown.

http://img167.imageshack.us/img167/53/pstorb13pq6.jpg


My idea is to create a comfortable space with 2000 square feet of romantic food service, comfortable lounge, and a 20 foot bar; live small jazz ensembles for a casually refined air to dinner time and upbeat lounge music for low key dancing as night turns to the early hours of the morning. Service will be top notch—a rarity here—and the wine and spirit selections extensive and unique. Our garden and bar menu will carry high quality tapas, sandwiches, and pizzas while our dinner menu will be fresh, inventive, and contemporary.

Our lounge will be sleek but not cold, raised a few inches above the ****tail bar and food service areas. We will be known for having the best ****tails in Budapest and an environment comfortable enough to enjoy them all night long. Prices will be modest but high enough to keep the clientele classy--somewhere around 6 euros per drink should be about right. Our wine list will be international and always available by the glass.

http://img516.imageshack.us/img516/8519/31007of7.jpg (http://imageshack.us)

Obviously there's more, a lot more, but I wanted to get this thread started. I'm going to try to keep it going the way that alllanjustallan has, very inspirational! I hope to offer some learning points to everyone that is just beginning, and to learn from everyone else!

All the best,
Tom


edit: hmm, no pictures? OK...

[excellentbars]

Tom

Thanks for making the great post....I love the Store front very European...The floor plan is great with good flow and a nice food and lounge layout.....I love the long sleek bar great POS area.......It brings lots of energy into the room....

Great job...

[Tom in Budapest]

Thanks for the kind words Chris. Getting flow right is high on my mind right now because the city just took 50 sqm (500 sqft) away from us, screwing up our plans royally. So I'm glad that the new look is still good!

***

A few words on financing. Initial costs project to about 140k Euros; I'm sitting on about 50k and want to raise 200k from investors. I've valued the business a couple of different ways. The easiest to present looks like this:

yr1 500k HUF/day 20% profit = 144k EUR
yr2 800k HUF/day = 230k EUR
yr3, 4, 5 1mm HUF/day 30% profit = 288k EUR/yr
250 HUF = 1 EUR

~1mm EUR valuation

What I'm considering offering is a 40% share of that million euro business for 200k EUR, using the suggestion that was here recently to pay back 60% of profits until 120k (60%) has been paid back, and then continue with a 40% share until a predetermined exit strategy.

For those of you who have done this before, is my thinking backwards?

Cheers
Tom

[excellentbars]

Tom

Hey Buddy...

Lets look at your numbers....... :)

First Looking at your project I am thinking you are more of a "Dinning Spot" that is a lounge than a straight Bar or Club "Am I Correct?"

If this is the case you are close on the gross revenue projections of your project...BUT...

I would look at a 20% max increase in business over the next 4 years to a peek...In which all operations and promotions and patron loyalty and instinct factoring has achieved its maximum effectiveness....
(Whew! That was a mouthful :D )

yr1 500k HUF/day 20% profit = 144k EUR (Profits look good for food based)
yr2 600 to 625k HUF/day = 172k EUR
yr3, 4, 5 700 to 900 HUF/day 30% profit = 200k EUR/yr
250 HUF = 1 EUR

This equation looks like a safer bet...As I would not want to scare any investor away but show that you are conservative and confident in the numbers..........

Wisdom note: Showing smart and savy investors huge returns and profits will often make them fearful.....because anything that looks to good to be true OFTEN IS!...Many Smart and Savy Investors want a Solid, Reliable and Steady return on their investment.....

Showing huge numbers that are estimates with nothing to be based on such as another existing venue is best done at a reasonable rate. What is reasonable and how do I find those numbers, Research of the surrounding businesses is a good way. Find an employee, Manager, Owner to share some knowledge with you.....Another way to find numbers in the states is to base it on square footage....Big box chains in the states use square foot numbers to describe their gross sales such as the Cheese Cake Factory/Grand Lux?PF Changs would say "in Chicago we do $1000 per square foot...."

Sorry got of track........ :o


As for your payout structure to Investors this is the formula that I recommend unless you have an establised venue already open with a track record.... Good Job...I also have the formula for this is you want me to E-mail it to you?


Tom you are on track and looking good

[Tom in Budapest]

Sure, thanks Chris! I'll take any and all help.

Made a mistake in there; left the 30% for years 3, 4, 5 but actually calculated 20%. I hear you on overstating numbers...the first way that I built projections, I had to fight to show profit below 30%. Including an extra ten grand per month "unknown" expenses! I'm hoping to put most of that towards promotions and salaries...

Daily projections are based on an existing business in the part of town that is closest to what we are going into...entertainment square, 30 bars, mostly rely on outdoor terraces. The test case is my manager's current venue, with ~one third the space we're going to have at the new location and having to close at midnight and essentially shut down for the winter time. He started around 400k HUF/day and now (three years on) is 700-900k. This is the most popular district in town, but we're still talking one third the size, and half the opening hours! By year three the square we're going to SHOULD compete with Liszt Ferenc square, the current trendy spot, but probably won't overtake.

Every decision I make, I ask myself..."will this make me look too much like a restaurant?" I see the kitchen as a way to get people in buying booze, and expect food to be somewhere south of 50% of revenues. But if the customers want more food, they've got it...

Here's the current leading design. 34 dinner seats, roughly 30 in the lounge, 6 in the cigar corner, 35 in the ****tail bar. We have mixed feelings about connecting the raised lounge area to the cigar corner, because that leaves a step up and then down for anyone trying to walk behind the bar. Also, in the summer time those two couches at the far right will be removed and the 4 meter sliding glass door opened to 50 sqm (500 sqft) of outdoor seating.

By the way I highly recommend www.floorplanner.com as a great way to do some basic layouts. I'm artistically challenged so being able to get in a set the size of couches, move things around, make and save changes has been invaluable.

[excellentbars]

We have mixed feelings about connecting the raised lounge area to the cigar corner, because that leaves a step up and then down for anyone trying to walk behind the bar.

Tom
I would recommend that the flow be kept intact without the step to hinder the flow...Also the patrons on the raised areas feel more comfortable and VIP'ish I would also recommend lowering the ceiling over the raised area with a drywall header...or large lighting fixtures....

[Tom in Budapest]

Tom
I would recommend that the flow be kept intact without the step to hinder the flow...Also the patrons on the raised areas feel more comfortable and VIP'ish I would also recommend lowering the ceiling over the raised area with a drywall header...or large lighting fixtures....

Also, safety! I don't need a drunk customer or harried waitress to miss the step and end up bleeding all over some pretty young thing. We have the light for the cigar corner picked out, and may use the same one for the lounge. Simple, classic, sexy.

*****

Questions that are open for debate with my manager right now:

Dinner service seating vs. lounge seating. I'm ok with only 30ish dinner seats, he's not.

Music, and by extension "who are our customers." He insists that the 40-60 age group will stick around until the wee hours and that we need to play the kind of music they want to listen to--smooth jazz, some light funk, etc. I can't imagine (and more importantly have never seen) the older set staying past 11 or 12, and figure that we're going to have to cater to a younger audience later at night--acid jazz, light electronica, just enough to get people moving around and swaying.

Sommellier.
Cons: expensive. unusual. that's about it.
Pros: dedicated to selling wine, highest margins for us. Unusual!
We'll probably hold off and hire someone once we're running well.

Costs in general. I see some things as being worth an investment: furniture that's not out of a restaurant supply catalog, wines by the glass, top shelf liquor, block ice, good design. He doesn't see the direct ROI and wants a pizza oven instead (representative case, I'm convinced on that one.)

In all it's a great relationship because we're both completely stubborn and both out to achieve the same thing: making money. He's doing it from a cruise ship and restaurant background. I'm doing it from a typical "I go to lots of bars and know what I like" background, with lots of management and logistics experience thrown in for fun.

Cheers all!
Tom

[excellentbars]

Hey Tom.....


Also, safety! I don't need a drunk customer or harried waitress to miss the step and end up bleeding all over some pretty young thing. We have the light for the cigar corner picked out, and may use the same one for the lounge. Simple, classic, sexy.

The step is a hazard.....Good call......

Cigar corner...I would recommend getting a "Smoke Eater" unit they run about $1000 to $2500 each and will help to keep the cigar smoke from bothering the other patrons......

[excellentbars]

Hey Tom.....


Also, safety! I don't need a drunk customer or harried waitress to miss the step and end up bleeding all over some pretty young thing. We have the light for the cigar corner picked out, and may use the same one for the lounge. Simple, classic, sexy.

The step is a hazard.....Good call......

Cigar corner...I would recommend getting a "Smoke Eater" unit they run about $1000 to $2500 each and will help to keep the cigar smoke from bothering the other patrons......



Dinner service seating vs. lounge seating. I'm ok with only 30ish dinner seats,

The issue is often not the seating but the Table this defines the use...

I would recommend looking at the Revenue and deciding on the seating and Tables based on the revenue stream's..... Food vs Liquor.....

Food-7 days a week open to close....open to 10 pm

Liquor- Bar top/stools-7 days a week open to close
Lounge-7 days a week 7pm to close


"who are our customers." He insists that the 40-60 age group will stick around until the wee hours

Wee hours to a 21 year old are 9am the next day

Wee hours to a 40-60 year old is 9pm 11 pm max


kind of music they want to listen to--smooth jazz, some light funk, etc. I can't imagine (and more importantly have never seen) the older set staying past 11 or 12, and figure that we're going to have to cater to a younger audience later at night--acid jazz, light electronica, just enough to get people moving around and swaying.

Music----This is easy you need only do local market research and find the venues with your demographic's and similar local venues to find the popular music for the local area......

Sommellier.
Cons: expensive. unusual. that's about it.
Pros: dedicated to selling wine, highest margins for us. Unusual!
We'll probably hold off and hire someone once we're running well.

Tom--This needs to be part of your/Manager/Staff training and responsibility..Every staff member should be trained and updated on the Wines as they come in..Set up a testing with the wine maker and they will train and edjucate your staff and you....


Costs in general. I see some things as being worth an investment: furniture that's not out of a restaurant supply catalog, wines by the glass, top shelf liquor, block ice, good design. He doesn't see the direct ROI and wants a pizza oven instead (representative case, I'm convinced on that one.)

I will defer to a food guy for this answer...I love Pizza ovens....... :) Cheap, versital and pizza is high margin....


In all it's a great relationship because we're both completely stubborn and both out to achieve the same thing: making money. He's doing it from a cruise ship and restaurant background. I'm doing it from a typical "I go to lots of bars and know what I like" background, with lots of management and logistics experience thrown in for fun.

Partnerships.... :( Dont forget one of the first sections in my book is about partnerships............... :( First Put EVERYTHING in writing...EVERYTHING>>>>>>>>>Everything......How you are going to run things, Music, Food, Seating, Hour's, Liquor costs...Everything...This will save lots of arguing in the future.......

I have some good advice on partners...Different topic

Cheers

[Tom in Budapest]

Hey Chris, you think anyone else is reading this thread? No matter. If my goals are in writing you guys can help to hold me to them. 12 step plan, haha!

Partnerships yes. Remember that I am coming into this as a new new new newbie. The guy who will manage for me is experienced, successful, and of course hesitant to leave the great gig he's got going. But yeah, I'm not going into anything without ironclad contracts. For anyone who has military experience, this is basically a Commander-First Sergeant relationship. He has the experience, I have the last word. I've gone through a dozen people who I've considered as partners...friends, acquaintances, enemies. This is the first time that we actually see eye to eye and balance one another's weaknesses well.

But I'm still on the "kitchen" chapter, so who knows!

There's a place in town where supposedly the mature, well to do crowd has decided to congregate. It's a temporary, make-due location in a shopping mall (common here). I'm going to check it out this weekend, see where these phantom 60 year olds who party like it's 1999 (or 1969) hang out!


Wishing everyone good libations,
Tom

[excellentbars]

Hey Chris, you think anyone else is reading this thread? No matter. If my goals are in writing you guys can help to hold me to them. 12 step plan, haha!

You have 105 views...so you are not Britney Spears famous yet...YET! but better than nothing.....I think they only look for the HOT Hungarian Chick comments and soon some greta pics of the bar open and full of Hot Hungarian Starfish :D

[Tom in Budapest]

In all it's a great relationship because we're both completely stubborn and both out to achieve the same thing: making money.

So as of yesterday afternoon, he officially disagrees, and bailed on me. He's in a good situation at a bar/restaurant where the owners speak to him once a month, and only to ask how much money he's making for them. He decided that he's not interested in having someone with strong opinions along for the ride.

Is it a case of "the guy who doesn't know what he's talking about just getting in the way of the professionals?" Could be, sure. I'm taking a couple of days to step back and look at my own conduct, see where we screwed up. But like he said, better to make the decision now than after a screaming match four days before opening. Recruiting someone new just became priority number one.

It's discouraging, but I can't quit yet. That would be too easy.

Tom

[excellentbars]

Tom

Hey Buddy...."IF THIS WAS EASY EVERYONE WOULD BE DOING IT!"

Listen to me Tom you need to focus and move forward, "THIS IS LIFE" no matter what you do in life you will have setbacks! They are one of the gaurentee's in life :( Yes this SUCKS! but their are thousands of other qualified people in your area all dreaming and hoping to get this opportunity :D

The best and most constructive thing you can do now is "LEARN FROM YOUR MISTAKES" and move on quickly! you have learned alot from this experiance and need to find a personality for inline with your goal...

Partnerships SUCK! and you will need to find this out the hard way, Better he left now than days before opening or right after, this gives you a much better ability to correct the situation....Remember, I have been there with you before..... :(


Cheers Chris