I've never managed a bar but I've got pretty good exposure to bar and restaurant management.
20% on a freestanding bar isn't impossible but it's also not very common.
The most common mistake that people make going into restaurant/bar ownership is having zero experience in the industry. This deserves some serious emphasis; If you have zero experience as an employee in a bar or restaurant, I would say do not get involved as an owner or investor. You simply will not be able to sniff out the thousands of quality control checkpoints that need attention that will give you an informed conclusion as to whether or not you want to be an investor in that operation.
As an investor, you will have any number of people selling you a dream about their establishment. How talented their team is, how well thought out their business plan is, how detailed their critical path is. None of that shit matters. It's the exact same thing as a car salesman trying to sucker you into a deal. Imagine if you didn't know how to locate the fuel cap or know how to check tire pressure. The same thing goes for bars and restaurants. If you have zero experience, don't do it.
The ONLY situation in which I would suggest getting involved, is if someone that you know that comes from an incredible pedigree of bars and restaurants wants to strike out on their own and need some up-front capital. I would not suggest that you be friends with this person as I've seen the friends/business partner relationship sour way more often than not. I'm simply talking about an acquaintance who has an absolute sparkling clean 100% proven track record of success at each of their management positions. You want to see charts and figures detailing how they improved profit margins for their operators, and now this person wants some ownership of their own.
But even that's a bigger risk than you might want, and those places flop all the time.
What you would want to invest in is a group that already has a few outlets with proven profitability, but they probably wouldn't have any opportunities for you unless you've got a few mil to drop into a really big project.
The best case scenario is to work for at least a year in a very reputable bar. Getting your foot in the door might be a problem, but just talk to the right people and tell them you're new in town and really need the work and you'll do anything; scrub floors, unclog the toilet, polish glassware for 3 hours straight. Your starting position in a bar is barback. This guy basically ensures that the bartenders have everything they need to keep the night flowing; clean glassware, restock bottles of liquor, restock juices, keeping the bar clean. You'll learn almost all of the nitty gritty details of bar operations as a barback; it'll really give you the opportunity to snoop around and see how a bar works. You'll need this, because that's what a lot of managing a bar is; the small details, and it's only through that toil that you learn THAT'S what it's all about. Knowing the best commercial plumbing company in town, getting the best deal on contracting a dish machine with the best price-per-wash on dish chemicals. Getting the best pest control company, the most efficient security system that doesn't cost a fortune, because you are handing a LOT of cash. Being on top of trends and having a bar manager that understands those trends, offers the correct spirits to your demographic and knows how to make a Perfect Manhattan. If you don't know how to manage or ensure these things, find something else to invest in. You want 20% profits on your bottom line? You and the rest of the operators better be well versed in all these things. Bars are constantly falling apart and you can easily blow your profits just keeping the place open.
I do agree with the above commenter that quick, cheap and easy is very often the most profitable. If you can open a dive bar near a college with dollar shots, by all means do it, but make sure you have a very strong security team, surveillance cameras, and cleanup crew.
20% on a freestanding bar isn't impossible but it's also not very common.
The most common mistake that people make going into restaurant/bar ownership is having zero experience in the industry. This deserves some serious emphasis; If you have zero experience as an employee in a bar or restaurant, I would say do not get involved as an owner or investor. You simply will not be able to sniff out the thousands of quality control checkpoints that need attention that will give you an informed conclusion as to whether or not you want to be an investor in that operation.
As an investor, you will have any number of people selling you a dream about their establishment. How talented their team is, how well thought out their business plan is, how detailed their critical path is. None of that shit matters. It's the exact same thing as a car salesman trying to sucker you into a deal. Imagine if you didn't know how to locate the fuel cap or know how to check tire pressure. The same thing goes for bars and restaurants. If you have zero experience, don't do it.
The ONLY situation in which I would suggest getting involved, is if someone that you know that comes from an incredible pedigree of bars and restaurants wants to strike out on their own and need some up-front capital. I would not suggest that you be friends with this person as I've seen the friends/business partner relationship sour way more often than not. I'm simply talking about an acquaintance who has an absolute sparkling clean 100% proven track record of success at each of their management positions. You want to see charts and figures detailing how they improved profit margins for their operators, and now this person wants some ownership of their own.
But even that's a bigger risk than you might want, and those places flop all the time.
What you would want to invest in is a group that already has a few outlets with proven profitability, but they probably wouldn't have any opportunities for you unless you've got a few mil to drop into a really big project.
The best case scenario is to work for at least a year in a very reputable bar. Getting your foot in the door might be a problem, but just talk to the right people and tell them you're new in town and really need the work and you'll do anything; scrub floors, unclog the toilet, polish glassware for 3 hours straight. Your starting position in a bar is barback. This guy basically ensures that the bartenders have everything they need to keep the night flowing; clean glassware, restock bottles of liquor, restock juices, keeping the bar clean. You'll learn almost all of the nitty gritty details of bar operations as a barback; it'll really give you the opportunity to snoop around and see how a bar works. You'll need this, because that's what a lot of managing a bar is; the small details, and it's only through that toil that you learn THAT'S what it's all about. Knowing the best commercial plumbing company in town, getting the best deal on contracting a dish machine with the best price-per-wash on dish chemicals. Getting the best pest control company, the most efficient security system that doesn't cost a fortune, because you are handing a LOT of cash. Being on top of trends and having a bar manager that understands those trends, offers the correct spirits to your demographic and knows how to make a Perfect Manhattan. If you don't know how to manage or ensure these things, find something else to invest in. You want 20% profits on your bottom line? You and the rest of the operators better be well versed in all these things. Bars are constantly falling apart and you can easily blow your profits just keeping the place open.
I do agree with the above commenter that quick, cheap and easy is very often the most profitable. If you can open a dive bar near a college with dollar shots, by all means do it, but make sure you have a very strong security team, surveillance cameras, and cleanup crew.