Beer and Wine Bars
We have years of experience in this industry for the valuation of the business, equipment and real estate. Let us help you with our valuation consultation in all areas of the valuation of beer and wine bar and brew house businesses. Below is a brief synopsis of the industry.
Description of Business
Establishments primarily engaged in the retail sale of alcoholic drinks, such as beer, ale, wine, and liquor, for consumption on the premises.
General Industry Information
According to the recent US Census, there were 48,855 Drinking Bar businesses in operation. Product sales came to approximately $15 Billion, and this industry provided work for over 335,000 employees.
This industry is associated with high levels of competition, including direct competitors (beer taverns), restaurants serving alcoholic beverages, and at-home consumption of alcohol. Ownership of these businesses is most often private, enabling owners to offer a wide array of operation styles. Businesses typically carve out a niche market, and cater their bar to a particular patronage (sports, singles, pool table bar, etc.). Attributes such as a good location (high foot traffic, ample parking) and loyal customers often drive up the sales price of a given business.
A very important aspect of operating a beer or wine bar is the inventory control mechanism. This industry is particularly vulnerable to undetected losses brought about by employee “skimming” and other abuses. In addition to the raw value of inventory, inventory information is useful to track the consumption patterns of patrons. Effective owners can utilize this information to ensure optimal product offerings and appropriate menu prices.
An operator’s foundation for success lies in the infrastructure of the bar’s control systems used to track all liquor, food and cash transactions. Today’s bar rely on technology, computer systems used to analyze, report and store vital sales and internal cash flow information.
Theft is the primary source of loss in most bars. Unfortunately, an operators inability to control theft will determine the degree of profitability. On a daily basis, operators must prevent theft from customers and from employees. Customers leaving without paying their check, passing counterfeit money or even stealing empty beer mugs are all potential problems an operator will face on a daily basis. These customer oriented thefts pale in comparison to the damage employees can do by stealing from you. Repeatedly, bartenders if unsupervised are inclined 8 times of 10 to steal, according to the book, “The 49 Ways Bartenders Steal.”
Many operators actively participate in the use of “spotters”. Bar managers who suspect employees of stealing will hire experienced spotters, often ex-bartenders themselves, who pose as customers to come and catch the thief red-handed.
Red Flags and Risks
As noted above, it is important to understand the inventory controls, and improve them as necessary. Training workers to carry out these measures may be a substantial expense, depending on the required training and automation. The business’ status with regulatory agencies should be a topic of consideration for a buyer. Validity of the liquor license and its transferability to new ownership should be a key aspect of the acquisition’s due diligence, along with a comprehensive history of any past violations. Lastly, potential owners should consider the quality of staff. Bartenders and servers should be comfortable with basic math and be competent to handle an operation’s cash income. They should be attentive to customers and be mindful of customers’ safety, particularly if security staff is not employed on the premises.
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