In the past 6 months, I estimate that there have been over 200 bars listed for sale in the Denver city area. Many of these bars have closed their doors and the landlord/owners are looking for a new tenet to make the lease payments.
There are many incentives to considering these opportunities such as low start ups since the trade fixtures are included with signing a new lease. Some bars are being offered as take over payments, no buy-in for business, etc.
For the new bar owner, this can look like a great opportunity to start their new dream job, however there are some very obvious issues these new bar owners do not figure into their calculations.Many of these new bar owners do their due dilligence only at their accountant or bankers office and miss important facts.
(By the way when was the last time you saw a banker or accountant at a bar, or leave a tip?)
On paper these bars for sale appear to be a super value. Minimal cost for trade fixtures, start-up costs, low initial lease rates, NNN rates,and other monetary concerns. A new bar owner could enter a newer bar envision the opportunity and have their enthusiam carry them to signing into a nightmare deal!!
REMEMBER there is a reason why this bar went out of business!! There is a reason there are over 200 bars for sale with the same options! Poor management begins with poor cash flow!!! Cash flow is essential for any business and can erase most bad management mistakes!! Good management and no cash flow is worse than poor management with some cash flow!!
Buying a closed bar is like buying stock on Wall Street that is not performing!! The risks are high and the chances of doing well are slim to none. Only bar owners with extensive experience will consider these bars, so why are there so many closed bars for sale and in inventory? The answer is they are bad deals at any price!!!
IF you are in the market to buy a bar, use common sense!! Liquor is bought at the same price by ALL bars in Colorado and the only variable in cost are the utilities, employment, and food costs! If a bar cannot keep its doors open, the only way to stay in business is to increase the clientele!! Increasing clientele is an expense that is overlooked and is usually much higher than anticipated. Comp drinks, advertising, free meals, free drinks, bands, entertainment are not cheap!! AND there are over a hundred bars competing for your business every night and weekend!!
Those bars that are operating in today’s market seem to be weathering the bad economy and some bars are doing well during this time to drink away your problems. You can still pursue your dream of having a bar but here are some common sense bar tips to “live the dream”
1)Buy a bar that is established and making money at a fair price. Make your millions by improving on what is already working!
2) Ease into the business! The bar you are buying is making money NOW! No need to rush and change everything overnight. Get to know your clientele, establish relationships with your clients and slowly ease in yours and their ideas that can make you money!!
3) Look at your neighborhood, demographics and reach out to those that are in your immediate area!! Create excitement and let those in your area know there is a new owner, new food selections, events at your establishment.
4) Infuse your likes, personality into your place!! You will be working alot of hours to get your bar the way you want it! Smile, take your time with renovations, and do the changes you want to do. Remember, if change and fix everything too quickly you might come across as a rich investor and not that neighborhood owner that needs all the business he can get!!
5) Have a commercial agent help you with structuring the lease and terms. Your goals and wants can be attained much quicker if you have your lease structured properly!!
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