Aussies living the dream of owning a bar – and why it might be the perfect time to follow them
Many people dream of running a bar and while the venture can be tough and costly to get up and running, now could just be the perfect time to jump in.
The industry has literally been shaken and stirred by the Covid pandemic. Venues have gone bust, people have exited or entered the business, and many bars in the planning phase are finally opening up.
There’s a wealth of opportunities for those looking to buy or rent a venue and so far, our thirst for a tipple doesn’t seem to have been affected by interest rate rises.
However, rising costs and staffing issues are providing ongoing challenges for operators.
Phil Anderson decided at a young age he wanted to own a bar, but with no small bar scene in Sydney at the time, his dream seemed beyond financial reach.
“There weren’t many bars available – just pubs worth millions and millions of dollars,” Mr Anderson said.
“There was a huge array of options available to rent, either existing bars or large commercial spaces that you’d have to adapt, but it was all too expensive.”
As Sydney’s small bar scene emerged, Mr Anderson rented a space with an existing bar in Chippendale, an eclectic city fringe suburb of hi-tech start-ups and creative agencies.
Sneaky Possum opened in January 2017 – a bold corner block venue promising “food, booze, and mates”.
It was a bumpy ride during Covid, as it was for many hospitality business owners, but things are now steady.
“We’ve had a few record weeks, which is fantastic,” Mr Anderson said.
More drinkers, more bars, more opportunities
David Spanton, publisher of Australian Bartender magazine and owner of Piccolo, a tiny bar in Sydney’s Kings Cross, said there’s been “a real explosion of bar openings in the capital cities, especially Sydney and Melbourne”.
“There became a bit of a bottleneck during Covid, and now it’s going all guns blazing,” Mr Spanton said.
For wannabe bar owners, there are plenty of venues available. Mr Anderson said the market’s the busiest he’s ever seen it.
“There are places available to rent and buy now that haven’t been available for decades, and there’s a lot of interest in them.
“The bar scene is really coming to life again, which helps everybody. Where it maybe wasn’t the best idea to open a bar previously, now might be a great time.”
Vanessa Rader, head of research at Ray White Commercial, agreed consumer demand for pubs and bars is “elevated” post-Covid.
“The market is strong, with quality offerings still in high demand,” Ms Rader said.
The real estate market for drinking holes is also buoyant and last year saw the highest number of pubs sold on record, with many of them in regional areas.
“After pressure from Covid, there has been some increase in assets available for sale or lease, that could house a bar,” Ms Rader said.
But if the venue isn’t already operational as a bar, obtaining a liquor license can be difficult and council approval is required, she added.
Listings generating huge interest
Many of those wanting to open a bar decide to lease spaces when they start up with the hope of eventually buying a venue down the line, while others lease with an option to buy later.
For those ready to buy now, there are plenty of listings, which agents say are attracting huge interest from buyers.
On the market for $950,000, the striking Fam Hotel in the small South Australian city of Port Prie is attracting good enquiry numbers, according to agent Allan Edmonds at Harcourts Smith.
It’s available for owner-operators or for those seeking a leased investment, with the current tenant paying $75,000 a year plus outgoings.
Meanwhile, Table Cafe and Wine Bar in Lyndoch in the Barossa Valley is a reputable business going to auction on 16 December, with price guide undisclosed.
It’s attracting quite a buzz, said agent Jamie Wood at Ray White Barossa.
Mr Wood said it’s ideal for someone who’s either starting out or has been working in hospitality for a long time and is ready to take the next step.
“This is a great location and great price point for them to get in at,” he said.
For $2.2 million, buyers can nab the recently renovated Romsey House in Romsey in Victoria’s Macedon Ranges. It offers multiple dining and leisure zones hosting over 600 people and a large courtyard ideal for summer cocktails.
“It’s a pretty cool space and it’s attracting that hipster crowd,” agent Debra Watchman of Ray White Romsey said.
“The space is crying out for a husband-and-wife team in hospitality who can bring their own people in. If they know what they’re doing, it would be a fantastic success.”
Regional assets can be cheaper and tend to benefit from less competition, though more small bars are now appearing in regional and suburban locations, Ms Rader said.
“We are seeing a strong local bar trade not dissimilar to the local pub market.
Lack of staff and rising costs
Owning a bar is not all sunset daiquiris and happy hours.
The biggest current challenge is staffing, with hordes of hospitality workers having left the sector during Covid and finding work in other industries, and a lack of overseas workers coming in.
“They’re slowly starting to come back now,” Mr Spanton said.
“But it’s going to take a lot longer than people think for that to trickle into the suburbs and regional areas.”
Costs are also rising. Venues are having to pay more to attract and retain good staff while the prices for food, alcohol, energy, and loan repayments are on the rise.
“Nothing is going down – those costs are all creeping up,” Mr Anderson said.
“People are trying to keep their margins as healthy as they can and put their prices up, but there is a limit to what you can charge.”
Do something different
When it comes to advice, Mr Anderson said the three most important considerations when looking for a bar are finding a location with good exposure and foot traffic, an internal space that holds a decent amount of people, and a fair price.
He warns that bar owners should expect a financial slog until they get established.
“Once you hit a certain mark, you can generate a lot of money and it’s really rewarding,” he said.
“But until you make that mark, which generally takes a while, it’s a very hard road and that’s why the attrition rate is so high.”
There are plenty of things he loves about the life, such as establishing himself in a community.
“It’s the people that I’ve met, the staff and the customers. And the creative side of it is exciting.”
Even though it may be a great time to open a bar, Mr Spanton said a successful operation still needs a good concept, excellent service, a great location and the ability to stand out.
This means you’ll do well no matter how many venues are opening, he said.
“Cream always rises to the top.”