Can a small wine bar/store be successful?

[emillika]

Hi All,

I have been peeking in here for a few days after finding such a resource for us less-initiated in the entertainment industry.

Here are the quick facts:


~ 1000 sq. ft usable
outdoor area for lounging and smoking
connected to a very high traffic Italian prepared foods location (i.e. food is already made for dine-in/take out)
patrons of deli must walk past wine bar/store
great traffic counts on major road (80,000+ cars per day
Great signage
easy entrance and exit from parking lot
good mix of full scale fine dining within 1 miles
large Cineplex 1/4 mile away
surplus parking -no issues
Needs build/modification to the existing deli style counter.
needs flooring/bar back/lighting and paint-decor/seating/etc.
Potential access to great existing kitchen from the deli

The idea is to start small and learn while keeping the very well paid day job. J I am getting burned out after 20 years with a Fortune 2 company. I want something to call my own. Many other variables here but I have had the entrepreneurial calling for many, many years and now I have the resources, albeit limited, to give it a go.

We will be a on-premise beer and wine facility with off-premise wine sales. In addition we will have daily/weekly food pairings to complement the wines. Trying to decide if the food will be prepared on-site or partner with local ethnic restaurants to provide the food and serve it at our location. Thoughts?

Regular daily menu will include some wine bar "staples" such as cheese and fruit plates, hard meats, chutneys, chocolates, etc.

Average bottle prices for carry-out in $15-25 dollar range with some availability above the $25 range. We will not be able to compete with the Costco's and LARGE retailers in this segment so we are searching for lesser known value wines from boutique vineyards. We spent the month of July in Italy and France as well as some time in Napa doing research. We are also going to look at the Finger Lakes New York region and other spatterings in Michigan, Illinois (home state) and Virginia for some wine gems.

Average glass of wine will be $6-7 for on-premise consumption. Craft beer on tap only (I think). Only quality stemware will be used at a fairly large expense I know. A wine preservation system has been purchased to prolong the life of an open wine (still or bubbly) bottle to 3-5 weeks. This will allow us to open expensive wines and give patrons the opportunity to have a glass that might be out of their reach price wise. Or they simply just want one glass of said wine. This high-end wine would rotate each month to keep things interesting for those in this demographic.
Décor will be upscale while not over-the-top. Rustic hardwood planks for flooring, open ceiling painted black to open the small room up a little. Nice wine red or similar paint. Wine storage around the perimeter walls that will allow it with some free-standing wine racks spread around the room. Comfortable seating is key.
There will be one or two flat screens and of course music piped in (Sonos system for some novelty. This will allow the patrons to pick from a library of music) . For Thurs/Fri/Sat nights there will be live entertainment… Small 1-2 person setups with Jazz/Blues/light rock/etc. themes.
There will also be a wine club run from this location. The basement has an area that will be used for monthly processing of wine club orders.
Looking at local deliveries with XX amount minimum.
Our sub-market (western Chicago suburbs) that we will draw from has an Average household income in the $80,000 range and average age is 32. There is also is a decent Hispanic market which is an up-and-comer in this wine segment.
We will cater special events to:
· Corporate parties
· Bachelorette Parties
· Retirement Parties
· Local golf/private club events
· In-home tasting parties
· Wine trivia parties with give aways (store credit and/or promotional shirts, etc.)
· PTA, local sports organization fundraisers
· Local vineyards to sponsor on-site tastings/learning events
I have more but I hope that you get the idea on the premise of what we are envisioning. Our rent will be fairly low as this site has been empty since the building was completed as the owner has only been approached by people that want to open a competing business to his. Expected to be in the $15 per sq ft. triple net range. I am still working on a build out allowance or free rent in lieu of that. I don’t know if a 3 or 5 year initial lease term is better for me.
Total initial investment expected to be in the $100,000-$120,000 range with no debt service (personal savings).
Please provide your thoughts on any of this as I truly appreciate such a community’s willingness to share its collective knowledge.

Take care,

Elmer

[Emerson]

To clarify - my original post was too vague, whilst you have a range per sq ft and rough time of lease, what does the rent need to be based on your projections to keep your occupancy costings below the 11% mark.

With only a 3-5 year lease w/no options do you not lose your resale value should you need an exit strategy to your concept - or do you risk being stuck with no location X years down the line should your venture become profitable enough to be a full time job - and your lease runs out!!?

Many first time operators skim over the lease in a race to secure the space but forget about all the items they will need down the line. The assignment of the lease and the extended options are two key issues not to be forgotten.

I cannot speak to the value per sqft without the comparables report and so forth, so i assume you have done your diligence and know what your neighbour is roughly paying. If the space has been empty for as long as you suggest is there an option for the landlord to provide TI if you sign into an extended lease. Maybe a reduction in rent for a small piece in your business? Whilst we all want 100% of the equity i always suggest that if you can lower your monthly "nut" by bringing the landlord onto your team you gain a valuable strategic partner and are providing pre-investment protection on your venture.

Even small operations need to remember that this market is just as tough for the property owner as it is or maybe for the business owner and many are willing to work creative deals in return for a longer lease.

[40 Thieves]

I think you posses maybe a bit more qualities than most of the start up guys; you've taken time to research, you obviously have a passion and the funds - also your question is not typical of this forum which is normally(nightclubs, nightclubs, and nightclubs) It seems like you've done a lot of leg work. Your initial start up seems a bit high but I don't posses the knowledge for equipment neccessary. I would imagine your success will rely a lot on your ability to remain hungry and stay consistant. Good luck. If not now... then when?

[Michael Black]

You have done very well already in researching and planning your concept.

I think your thoughts and numbers are good.

Normally, a small bar of this size would have a hard time turning a decent profit, but wine bars with stores are a fast growing segment in major cities and certainly Chicago. You have an edge of being open more and getting more business in the early hours with store wine sales. This makes up for the usually low turnover in a smaller bar. I would normally suggest a fast food or high end restaurant or champagne and caviar for only a 1000 sq foot place. In a small place you need higher prices and/or higher turnover. But, the wine bar/store is an excellent idea in the right location. You seem to have the right location at a reasonable cost feeding off the movie theater, adjacent prepared food/deli, and the neighborhood. The target market for this is a little older and experienced drinkers with much more disposable income. They are looking for a place of taste to hold a conservation without the loudness and all the negatives of a typical bar. I am guessing it is near Oak Park?

Later, be concerned with the possible ethnic food pairing. First, get the primary plan going strong with the basic cheeses and appetizers. Then add possible food, wine class and even cooking school promotions, a champagne night, etc. I've looked at a couple of similar concepts and also feel strongly that the owners should add the specialty and micro beers in the setting. There is also a growing trend of beer connoisseurs that are very much like the wine connoisseurs. They can be easily added within the same space and will greatly add to your potential market. You often have couples and friends where one like wine and one like beer. Later , some wine bars even add fine spirits to try such as groups of fine scotches or cognac. How you market and present it is key as to clearly differentiate yourself from the average bar and that crowd.

I would be concerned about the prepared foods offering more wine after you launch to compete. Do they currently have a liquor license or sell takeout wines with the food? You should also be realistic with how much time and work this will take in addition to keeping your full time corporate job. You will need a good manager to help take the load off you.

Please check out and consider contacting the owners/management for valuable insight from these 3 successful wine bars in Chicago that I am familiar with:


Webster Wine Bar (across from movie theaters):

http://www.websterwinebar.com/

Randolph Wine Cellars:

http://www.tlcwine.com

http://www.randolphwinecellars.com

And Bin 36:

http://www.bin36.com/index.php


I am sure they will help you as long as you are far away from their market.

[emillika]

Thanks for all the input guys!

My liquor license meeting is next week and it will get crazier from there. I will ensure I get options on a lease renewal in addition to the initial 5 years. The lunch foot traffic at this place is incredible even in these down times. I counted 40+ people in less than 20 minutes every time I have been in there over the last three weeks. This is not a sit and linger type place. It is spartan in it's seating and decor. He turns over the tables quite nicely.

The lease terms are a little higher than I expected but after looking at some of the local alternative locations and their associated rents I feel this is the best bet for us. The landlord is paying all utilies except the electricity (and my phone/cable/etc.) with CAM included for $24/ft first year escalating to $27/sf in years 2-5. He is adamant and I don't think I can get him much lower. He is also not including the basement storage area in the square footage so it's a "freebie", if there's such a thing. Also, there is an existing burgular alarm and fire sprinkler system so I don't have that expense to worry about.

I have made many contacts over the last 30 days and traveled/visited with many wine bars and distributors in the area including Juicy, Chocolate Grape (not really wine bar but related), Swirl and some of the suburban offerings which leave a bit to be desired from my viewpoint.

The corp job for me is somewhat flexible (read, I don't do much :) ) and I have the luxury of a wife that brings home the bacon!

Turns out we will have about 1800 sq ft to work with and have added a nice small pantry kitchen. This will allow us to keep the front bar area a little more appealing to the eye. This will also allow us to have some more in-house food items that we might have had to bring in from outside vendors adding to expense. The location is actually near the intersecting points of Bloomingdale, Itasca, Medinah and Addison on Lake St. for these that are familiar with the area.

I am finding a LOT of great deals on near new kitchen equipment and fixtures. It might be this economy or just the normal business cycles but it's crazy how many places are selling equipment...

I.e.

2-3 month old True 6' pizza/salad prep table new ~$3000 paid $1600
New Barclary Bar wine preservation system new $9000 paid $2300
True T-49F freezer New ~ $3500 paid $1800
150 bottle wine collection for under $1500 :) retails is about $5000
1 year old Hobart 2912 automatic slicer new $6500 paid $900

The biggest issue for me to date is determine what POS to use. There are a lot of good systems for restaurants and bars and some decent ones for retail wine stores but in my case I need a hybird of the two. For example, the retail oriented systems are geared for a counter checkout when the customer is done shopping. In my case I will have customers who are strictly grabbing items to go and then there are the "wine bar" customers that will sit with an open tab as they enjoy their beer/wine/food. Any insight on whether I should lean towards a rest/bar style POS or a retail oriented system? The other thing that the retail wine store systems have is the ability to run a wine club from them.

Take care.

[emillika]

Oh ya... I also got 60 days free rent up front so no rent during the build-out.

[emillika]

To clarify - my original post was too vague, whilst you have a range per sq ft and rough time of lease, what does the rent need to be based on your projections to keep your occupancy costings below the 11% mark.

I am not familiar with the 11% occupancy cost rule. Can you fill me in on this as well as the guidelines for the other 89%?

Thanks.

[R&KStreacker]

Upon stumbling into this post, it read like the business plan the wife and I put together. Just interested in how things turned out for you and your Bar?

[landlord]

He is also not including the basement storage area in the square footage so it's a "freebie", if there's such a thing

I rent a bar in NY (im the landlord, i dont run the buisness) and the basement was not part of rent. in other words, i don't add the sq footage from the basement or the garden when calculating the rent. I just go by the usuable indoor space.

[JDT]

Quote:
¨Later , some wine bars even add fine spirits to try such as groups of fine scotches or cognac.¨

Michael,
I´m on a similar project in South Florida. If you´re operating a Wine bar with a 2COP license, don´t you need to upgrade it to serve fine spirits? If not, would you know what are the limitations on beverages you can serve with a 2COP license?

Many Thanks,
Juan

[Michael Black]

JDT, yes, I believe that you would need to change the license to serve it in Florida. I am not an expert in Florida licensing. I was hoping one of our Florida operators would chime in, but it's probably better that you call the liquor authorities and ask them directly imo:

http://www.myfloridalicense.com/dbpr/abt/index.html


Emillika, what's your status, how is it going?

[NewBar]

Quote:
¨Later , some wine bars even add fine spirits to try such as groups of fine scotches or cognac.¨

Michael,
I´m on a similar project in South Florida. If you´re operating a Wine bar with a 2COP license, don´t you need to upgrade it to serve fine spirits? If not, would you know what are the limitations on beverages you can serve with a 2COP license?

Many Thanks,
Juan

Yes, to upgrade to spirits you need a 4COP license (they were $150k, down now to approx 115). P.S State no longer issuing

[shama]

hi elmer,
my wife and I are opening a wine bar at a ski resort of a similar size and I would love to talk with you about your experience. any chance we could connect, virtually.
thanks,
chris