Where to open a bar?


Ok, I'm like everyone else who exists, I think it'd be cool to open a bar at some point one day. My friends know it, and we've all talked about how we'd do it.

I've had a little free time and I've been researching this excessively. There are a lot of factors, what kind of bar are you looking to have? Will you be a restaurant too? Will you be able to afford a liqueur license? What about rent?

So a lot of my questions led me down the path of first finding a location. More than anything, the location seems to determine what you'll be spending and how much you might stand to profit! I read on a TON of sites that you should talk to other bars that aren't in your immediate area (since you won't be competing with them, they're more likely to share their experiences good and bad with you). That was great advice for running a bar, but it doesn't help me decide where to place it. Oddly enough, I couldn't find too much research on that. It started to feel like people just sat down and said, "There should be a bar here", and that's where they'd put it.

Well, I'm also a web developer, so I decided to nerd it up a little. I'm really starting to love visual data in any way I can think to produce it. I first checked my home state for a public listing of Class C liqueur licenses, and was able to find them, so I mapped them out. Seeing where there were lots or bars/restaurants vs a only a few, definitely sounded pretty helpful. I wanted to tackle the big fish in a little pond or little fish in a big sea question. The next idea I had was to map out zip codes and pair it up with census data. It took some digging but I did find the coordinate data for Michigan zip codes, which is the smallest consistent area that I could find census data for. Yeah, we have a city with national level sports teams, and not too far we have some top tier college teams, and obviously, we have their colleges. We have a lot of people, so I wanted to compare to see if there was a balance of things. Maybe I didn't need to be the 51st bar on the street, maybe I could find a location that provided it all.

While it's not a true measure of profit, I was able to get how much an establishment had spent on alcohol last year and this year (through August). Basic logic tells you that the more a bar spends on alcohol, the more they're making in profit. Now this isn't any kind of exact formula, one place may purchase $1000 in beer and do dollar beer nights, while another purchases $100 in hard liqueur and does $5 shots. This is definitely not a solid formula for profits, but it does show you who's spending more to keep the lines moving. 

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Legend $0-$50,000 $50,000-$100,000 $100,000-$150,000 $150,000-$200,000 $200,000+

I want to stress that the numbers above don't represent the profit margins for any venue. They are the publicly listed values for how much a venue has spent on alcohol. There's no way to distinguish profit from these, just a general rule of thumb that if a venue purchases a lot of alcohol, then they're probably selling a lot of alcohol.

What I found was this:

  • The most profitable bars were near the sports teams.
  • The next most profitable bars were near colleges
  • Lastly, a bar alone doesn't seem to generate nearly as much revenue as ones that can also exist as a restaurant.

This is a very rough look, where I took a lot of data that may or may not be complete and mashed it all together, but it does give a nice perspective. The next question is, "What will I name the bar!?"