Newbe wants to lease closed bar

[drilliam]

Hi Forum
First I want to tell everyone the level of generosity and good advice is amazing, kudos.

OK looked at a 19' by 165' space that was a bar, has a main bar and some loose table and chairs approx 20 chairs and 6 tables.
Ceiling is a drop ceiling with numerous flouresent lights that give the impression of a cold and uninviting feeling. The walls are painted dark green so the space feels narrower than it really is
the bar area has 4 sinks 2 ice wells 1 reach in cooler and a tall reach in cooler. No ice machine but the hook-up is there.
Front has no signage with limo tint on the glass store front.

hard wood floors through out both bathrooms are fresh remodel and ada compliant.
the place is right next door approx 5' from the entrance of the only sports bar in town. It is more of a restaruant that serves booze than a bar that serves snacks.

Landlord proposes $700 per month for the first 3 mon. 800 for the next 3 mon. then finally capping at 900 per mon.

Town of 10,000 with a growing small college of 6900 students. Currently 1 franchise bar, 2 towny bars, 3 college bars

I am guesstimating $5000 startup expenses run with a skeleton crew till established.

Finally my question is this a doable lease price or is it out of line?

Do the demographics work for another bar?

What have I missed as far as potential pitfalls?

Any help would be appreciated.

;)

[BadMonkeyBistro]

Hey drilliam! First of all, good information in your first post.

You posed 3 direct questions, so I will answer them first.
1 - Lease Price: By my calculations, you have 3,135sf and therefore, your rent calculates to $3.16 per sf. That is SUPPER cheap (at least from where I am). What you should do to make sure that this rate is a good rate is simply call a local Commercial Real Estate Broker and ask he/she what the current market rate is for retail space in your town.
2 - Demographics: Very good question. In my opinion, it really depends on a few things: How big are the other bars? How busy are they on Thursday, Friday and Saturday nights? How will your bar be different? Will you have offerings or decor that will draw customers away from the other bars?
3 - Potential Pitfalls: Well, first get a draft copy of the lease from the Landlord and find out what is and isn't included in rent. Second, have you put together a forecast model for budgetting build-out/remodel costs, as well as operating costs? I'm sure I can come up with plenty more questions, but let's start with those.

Looking forward to your reply.

[owneroper]

what about liquor license? I dont think 5000 would be enough to start. And what crowd would you go after? and why would they leave their favorite place

[drilliam]

Hi
Thanks BM good suggestions will contact local real estate for comps. Owneroper liqour license is $300 for state and $300 for the city. Plus business license. The landlord is an elderly asian and never produced a lease on my first inspection. What my concept is to offer live music open mike night stuff comedy nights. I have been a musician in this area and have a good working knowledge of the local venues, no other bar in this town has open mike nights some have live music at homecoming, special events only, nothing on a consistant basis. No comedy at all. I know my initial guesstimate is low for startup ( they always are) but I am a designer, cabinetmaker, creative type that really can stretch a dollar. Working capital is another thing since that is the unknown for me right now. I have been involved with a couple of start-up clubs either behind the bar or in the construction design phase. My weakness will be the day to day stuff ordering, staff, customers, police politics etc.

Will get more answers and do a follow-up

Drill

[BadMonkeyBistro]

Hey Drill,

Another thought for you. Check with your local municipality regarding requirement for fire sprinklers. I'm in Washington State and we have a new law, that went into effective July 1, 2007, which is paraphrased like this:
Night Club Law
Under the new night club law, the requirement to install fire sprinklers will apply to nightclubs, restaurants, taverns and bars in which the area of the concentrated use space designated for dancing and viewing performances exceeds three hundred fifty square feet. Businesses excluded from this requirement are banquet halls, theaters with fixed seating, and lodge halls. The deadline for compliance is extended to December 1, 2009.

If I think of more, I will repost.

Cheers,
Daniel

[originolsin]

An ice machine alone can cost you $2k new and almost impossible to find used. So with licenses that puts you at $2600.
Now you have $2400 to try and get all of your beer and liquor(My place is 2/3 your size and we have an inventory of around 6K with beer and liquor). Also, paint for the green walls. 20 chairs and 6 tables doesn't sound like very much.
I am guessing $10-$15k conservatively. That is stretching the dollars.
Your said weaknesses in day to day activities could be a money problem in the future. Over ordering, under ordering, employee theft or over-pouring. That is something that can definately be learned.
Sounds like an awesome price for rent, and location right next to another place isn't too bad at all either.

[drilliam]

Thanks Originalsin your estimate is well priceless, I can have a better number now for the business plan. The tables and chairs are not great but I might be able to doctor them up to use at first. I want to get back in there and do some measuring so I can play with the layout. If anyone does design work out there by all means download a free copy of Sketchup from Google simply the best 3-d layout tool.

cheers

[The Comedy Zone]

I will be able to help you out with the Comedy Night!

Just google "The Comedy Zone"...you will see we are the real deal!

[beach1]

Front has no signage with limo tint on the glass store front.
Check and make sure it is zoned correctly. Usually no sign is a sign of something else unless the sign was removed for some reason.

Owneroper liqour license is $300 for state and $300 for the city.
That is extremely cheap. No sure about your state but where I'm at you also have to have a food service license from the Health Dept., also have to pay a few hundred to Alcohol , tabacco, and firearms, put up a liquor bond, etc. , etc., etc. Also need to get a certificate of occupancy. On top of all that you'll need product, glassware, juice, soda, toilet paper, bevnaps, etc., etc., etc. Should have a few months rent incase things don't go well in the beginning. It goes on and on. I wouldn't even consider walking into any situation with only $5000.00 . You will burn through 5 grand before you even knew what happened. Not trying to burst any bubble just being realistic.

[beach1]

I forgot to mention that most leased space requires you to have liability insurance as well. If that's the case the down payment will eat up a good portion of your 5 grand. Sorry for the double post but I'm not familiar with the edit feature yet.