How can I tell if a bar is profitable before I buy it?

Sales show how busy a bar is. They do not show what it keeps. To judge that, you need to see each cost line and ask whether it is complete and realistic for the way you would run the place. Our page on verifying a bar’s sales covers the top line. This page covers what comes out of it.

Product cost against sales

Ask how the bar tracks what it pours and what it sells, and whether stock counts are taken at regular dates. A wide gap between what was bought and what was rung in can point to waste, over-pouring, free drinks or loss. Ask for supplier invoices and compare them with the statements. Have your accountant ask about how the seller values stock on hand.

Labour and scheduling

Look at who works which shifts and what each is paid. Ask whether the seller or a family member works behind the bar without a wage, because you will have to pay someone to do that work, or do it yourself. Check how the schedule changes between slow and busy nights, and whether tips and wages are recorded the way your accountant expects.

Rent, repairs and equipment

Read the occupancy cost in full, including shared charges. Ask for repair records and a list of equipment close to replacement, such as coolers, draught lines and kitchen gear. A bar that has put off maintenance can look strong on paper and then ask for a large cheque from you in the first year.

What the statements may leave out

Ask about insurance, security, music and entertainment licensing, card processing, cleaning, marketing and the cost of any manager. Ask whether any personal costs run through the business, and whether any bar costs are paid outside it. An accountant can restate the figures on a consistent basis and tell you what they show, which is better than relying on a seller’s own summary.