A bar sells the highest gross margins in hospitality — 70-80% on beverages — yet nets only 5-15%. The gap is absorbed by build-out, a liquor license that can cost more than the lease, and pour-cost creep. The business is won at the speed rail, not the door.
The bar cost stack
| Line | Range (% of revenue) |
|---|---|
| Beverage cost (blended) | ~21% (liquor 17-24%, bottled 23-25%, draft 21-28%, wine ~30%, soda 6-8%) |
| Food cost | 29-32% |
| Labor | ~30% (20-30% of turnover) |
| Rent / occupancy | 5-10% (never exceed 10-15%) |
| Stock + utilities + other | 25-35% + 3-6% + 6-12% |
| Net profit | 5-15% |
Gross margins
| Stream | Gross margin |
|---|---|
| Beverage (wet) | 70-80% (target 60-70% wet GM) |
| Food | 60-65% |
Startup ranges
| Scale | Total opening range |
|---|---|
| Small leasehold bar | $39K-$124K |
| Mid-range pub | $124K-$332K |
| US build-out + inventory | $150K-$850K+ |
| Liquor license (wild card) | $3K-$400K+ |
Dram-shop liability is real: over-serving carries legal exposure that liquor-liability insurance exists to cover. Do not skip it — a single claim can exceed the entire net of years.
Verify the license before the lease: some addresses simply cannot be licensed. Confirm the jurisdiction, the license type, and the wait before signing anything. A license delay of months is a rent you pay with no revenue.
Sources (retrieved 2026-08-13): Restohub bar/pub cost ratios (beverage ~21%, food 29-32%, labor 30%, net 4-10%); Zenbusiness bar-and-tavern guide (pour cost 18-24%, net 10-15%, license $3K-$400K+); startup-cost bar 2026 (blended gross 70-80%, break-even ~14 months); Epicure Digital pub playbook (wet GM 60-70%, food GM 60-65%).