5 Reasons Bars Fail (And How to Stay Successful)

Treat your bar like a business, not a party.
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Gaining support and respect from your neighbors and community can make or break your bar.(Photo: Monkey Business Images/Shutterstock)

Running a successful bar is a dream job — you host the town’s hottest party, every night, while reaping major profits. But if you bar’s online reviews are slumping, key staff members are calling it quits and you’re having trouble staying out of the red, there’s a good chance you’ll have to close up shop.

Here are some of the top reasons bars fail and what you can do to keep from being one of the bars that do.

Forgetting it’s a business, not a party

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“Do regular block parties and charity events. Remember that the community has a lot of power over your liquor license.” -Tim Borden (Photo: Tim Borden)

It’s easy to get caught up in the excitement of your bar, but neglecting your finances or management duties will squander your success, according to Tim Borden, a hospitality consultant at A-List Marketing Solutions who has worked with more than 40 bars, restaurants and nightclubs.

“[Your bar] can be busy and you can still lose money,” said Borden. “People don’t think it’s like running another type business, but it really is.”

Pay attention to basic business practices, said Borden. That means developing efficient operations to keep things running smoothly, adhering to employment laws to avoid a costly lawsuit and keeping a close eye on your books and your cash flow to make sure you can pay your bills and stay (or get) on the road long-term financial stability.

“It’s easy to go out of business, especially if you’re new to the industry,” said Borden. He recommended that first-time bar owners team up with experienced professionals, such as marketing consultants and accountants, to keep them on track. (Check out these basic accounting procedures every business owner should follow.)

Letting the atmosphere stagnate

Putting in tons of effort to perfect the atmosphere, lighting, entertainment, mixology and music shouldn’t stop once you launch your bar. Nightlife lovers get tired of concepts quickly and might stop frequenting your bar if the atmosphere grows stagnant, said Borden.

“Look around your bar. Are people having fun and enjoying themselves? If your bar has a feeling of boredom to you, it’s definitely boring to customers.”

The best bars constantly refresh the experience for customers. It doesn’t mean you have to give your bar a full makeover every season. Instead, update your drink menu every couple of months, host special events often, switch up the entertainment and perk up your music playlist at least weekly.

“You don’t want to let [monotony] happen in the first place. It’s really hard to pull out once it happens,” said Borden.

If customers have already stopped coming, it might be time for a major concept overhaul and investment in consultants to address what’s going wrong before it’s too late.

Souring community relations

Community relations can make or break a bar. Gain the support of your neighbors, and your bar will have a positive buzz and tons of regular customers. But soured community relations could lead to regular visits from enforcement officials and a potential loss of your liquor license.

“If they have a problem, the neighborhood will kill your bar,” said Borden.

Bar owners should conduct adequate research to make sure the community will be friendly toward their establishment before it opens. Then, run community-focused promotions to build a positive relationship.

“You want to meet your neighbors. Have a neighborhood block party. Do a mailer in the direct area around the bar,” said Borden. “Set up a special party just for your neighbors. Give them your card and let them know they can call you if there is ever any concern.”

Community initiatives should continue as your bar matures. “Do regular block parties and charity events. Remember that the community has a lot of power over your liquor license.”

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(Photo: Kondor83/Shutterstock)

Losing your liquor license

Let’s state the obvious: The vast majority of revenue at bars comes from sales of beer, wine and cocktails. Losing your liquor license is the fastest way for a bar to go out of business.

“Protect your license like it’s gold,” said Borden. “BYOB [Bring your own beverage policies] won’t sustain your bar.”

Make sure your staff serves responsibility — that means checking customers’ IDs, declining drink orders from intoxicated patrons and following all rules outlined by your local authorities. Don’t let fights break out. And keep open lines of communication with your community and law enforcement.

Missing marketing opportunities

Failing to spread the word about your business could keep bar stools — and cash registers — empty. Borden recommended allocating a decent budget to social media marketing and occasional magazine ads.

“Radio, print and billboard ads aren’t as good as social media,” said Borden. “Analytics are the biggest gift to marketers. Use them to target people who live nearby, customers who visit your competition and patrons who have interests [that relate to your bar].”

The easiest people to market to? Current patrons of your bar. “People forget about four-walls marketing,” said Borden, referring to marketing campaigns within the establishment. “It’s cheaper to keep customers and get them to come back often than to get a new customer.” Market special events and promotions on every table and even in restroom stalls.

Borden also recommended developing a VIP or loyalty program for regular customers, and building a customer email list (easy to do with a POS system) so you can send them reminders and offers.

“Don’t drop the ball on marketing,” said Borden.

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