By Yaroslav Ulianov – Chief Development Officer, Bar Consulting
Over the last few years, new bars are constantly opening up in Moscow. Yet in the US or Europe a bar is a fundamental, often a family run establishment. Moscow is different since bars open and shut down daily. There are plenty of reasons for them to leave the market. Some bars fail because of an ill-conceived concept, others because of a wrong location, personnel problems, poor quality, etc. Besides, competition has intensified too.
Making investments in a bar or opening a bar of their own is often a wish of the people who have never been involved with the industry. They look at successful bars and want to open something similar. It’s often a dream people have cherished for a long time but never knew what they should start with.
Concept development
Any establishment must be based on a trending and well-elaborated concept.
The market is constantly developing with preferences and trends incessantly evolving. Five years ago, Moscow catering market was overpopulated with pizzas, sushi bars and hookah bars. The next wave to hit the market was about coffee shops and burger joints. It’s fun to watch the industry evolution and to make forecasts for the further developments.
When launching a bar, one must identify one’s niche primarily depending on one’s financial resources. Everything else is only limited by one’s ideas. It should be remembered though the ideas must be hot here and now and meet the demands of the prospect consumers. Once you’ve done with the concept, follow it. If you know who your guests are, do not spread yourself too thin. That may seem plain and commonly known, yet look around to see there are bars opening up with a la carte cuisines from all over the world and a bar menu made up randomly of every drink a barman could remember.
Premises identification
Another major problem with launching a bar is finding an acceptable accommodation for it. A bad surprise may be encountered at every step, be it improper proprietary documents, lack of public facilities, restrictions on displaying signs, renovating the premises, etc When launching bars, I faced a great deal of most diverse specifics and issues. Premises in Moscow which are leased for catering needs, are usually in really poor conditions. There are lots of subtleties, hence everything is to be checked out up to the max. And there are always some technical details and a human factor. For instance, there is no point to trust your counterpart unless all papers are signed. With some establishment, we believed the owner that a summer terrace may be put in operation. So we started building it and spent a great deal of money. Ultimately, local authorities ordered us to destroy it altogether. With some other site, we inserted a provision in the agreement on it becoming effective only after the Property Inventory and Registration Authority approves all intended rearrangements and registers the agreement. Thanks to that provision we did not have to pay rent until the agreement which turned out to be problematic was registered.
If a bar intends to offer hard liquors, it’s advisable to check it beforehand if a license to sell strong spirits can be obtained in view of the bar’s location, since in case there is a medical, sports, or educational establishment nearby, a license will not be granted.
Team value
One more important factor with opening a bar is a team. Any room will only come to life when there are people in it. In the restaurant business, teambuilding is an absolute priority and your bar’s success is fully dependent on your team’s performance.
At the initial stage, it is very important for your team to get some people with practical experience in the industry who know ins and outs of running a bar and can train other employees. In case you have got no such experienced people, do not hesitate to approach professional consulting companies. Attempting to do everything by oneself often results in a backfire, whereas a professional and detached view may help avoiding some risks and mistakes.
When hiring employees for positions of barmen or waiters, make sure they, apart from being professional, are able to communicate with visitors and enjoy that. A barman would always translate his emotions onto a visitor who would immediately notice if a barman does not fancy communicating.
Never attempt to save on staff. Unfortunately, many bar tenders think of increasing their establishment’s profitability in terms of raising prices, cutting feeds and firing personnel. Yet, lowering quality is the first step to losing money and reputation.
Bar investments
A bar is an interesting business, if its operation is arranged properly. At the moment, the bars in greatest demand are about wines, craft beers and unique offers in food and beverages.
When opening a bar, one needs, on the average, RUR 5 mio ($80K). Such an amount would suffice to open an inexpensive beer hall. Launching an inexpensive wine bar will require RUR 7 to 10 mio. Investment in a cocktail bar starts at RUR 10 mio. Generally speaking, inexpensive formats are now most trendy and demanded.
The major costs are rent, personnel and food/drinks. Personnel costs may amount to 1/3 of the overall turnover while rent can be over RUR 1 mio a month depending on the establishment’s size and location. Quite regularly, a total overhaul is also required along with replacing ventilation and utilities which bring about substantial expenses.