Home Articles How to open a bar

    How to open a bar


    As a former public relations consultant, Matt Mullins once made a living telling stories. Now, as a publican, his job is more about listening to them. When he and three friends decided to quit their corporate day jobs to become a team of bar owners, it was clear from opening drinks that life was about to turn a more golden shade of amber.

    You currently have three bars. I like the name of your oldest, Holliava. How did you come up with that?

    We built Holliava about seven years ago. Back then, we were in our mid 20s, surfing most days, listening to an amazing new sound from this awesome dude called Jack Johnson, who no one had ever heard of! It turns out he lived on an epic surf break in Hawaii, called Haliewa – pronounced holli-ava. We loved it, and thought instantly it would be a cool name for a bar!

    Why did you decide to trade in your old life to open a bar?

    I was working in Public Relations. Doug (Maskiell) was managing hotels for a large national company. Tom (Birch) and my brother, Andy, were working in the city as brokers. At about the same time, despite loving what we were doing, and who we were working for, the four of us began to talk about living and working smarter. We began talking about ways to build freedom into our work lives – freedom to work to our own schedules, freedom to finance the lives we wanted to lead, freedom to holiday when we wanted. Ultimately, we were seeking the freedom and money to spend time with friends and family, rather than find ourselves middle-aged and trapped in an 80-hour work week.

    Where did you start?

    We first decided to ‘do it’. That was the starting point. Ground zero. Everything else after that was just fine tuning. Well… sort of! We decided quickly that hospitality would be the first industry we’d take a stab at. We each had some background working in bars, restaurants and hotels – and, of course, there were all those years at university in which we did little else but study the inner workings of various pubs and bars. Most importantly, we recognised that hospitality was a game that could work for us, rather than the other way around. We figured if we got it right, it was an industry that would give us a flexible working week, some cyclical and seasonal down time, and an industry where even when we went to work, we’d be around friends, socialising, laughing, chatting, having fun.

    How long did it take you to open your first bar?

    We opened our first bar – the Commercial Club Hotel – precisely 30 days after we settled it. We worked 20 hours a day, seven days a week, and finished three minutes before we opened the doors on opening night. Our most recent venue, the Post Office Hotel, we opened about a year after we settled it. Eight years and six venues down the track, we’re more ambitious, more refined, more particular, and more able to invest the time – and money – over a long gestation period. But don’t ever let that happen the first time out. You’ll haemorrhage time and money and that can sink almost any first time bar owner.

    What was your most successful marketing exercise?

    Easily our most successful marketing exercise was our very first. We took 20 investors into the Commercial Club Hotel. They had stakes ranging from $500 up to tens of thousands. Every one of them ‘owned’ the hotel. They were a marketing machine! Most were young and excited, and inspired by the chance to be involved in something so fun and so different. They filled our venue week after week after week.

    What were the obstacles you faced?

    The greatest obstacle we faced was making that first decision, ‘Should we do it.’ I firmly believe that’s the greatest obstacle facing anyone thinking about going out on their own. After that, the greatest obstacle we faced was structuring our partnership, then managing it and developing it. Partnership is very difficult. For many people it proves simply impossible. We’ve been blessed to have a partnership that is perfectly balanced, perfectly equal, in which the partners have grown in the same direction, at the same pace. It’s taken enormous work though. We’ve had to survive difficult times, where the pressure of a new business weighs heavily on us and our loved ones. Ultimately, though, we never forget that we’re friends first.

    Matt’s tips for opening a bar

    Don’t over capitalise. Our industry is full of bars, restaurants and pubs that fell over after a year because the owners couldn’t service their debt. Not because the place wasn’t making money – because it wasn’t making enough. Tragically, this often happens just as the new business is starting to turn around from loss-leading, to profit. Your first venue doesn’t need the most expensive fitout, the best glasses, brand new fridges and ovens. Buy second hand. Buy at auctions. And do not, do not, do not write a blank cheque to designers and builders!

    Work your arse off early on, but actively plan to scale your working hours back as soon as you can – remember the work habits you form now will probably last your lifetime. Yes, you have to be able to – and be prepared to – work an 80 hour week when you have to. But you shouldn’t have to often. And when you don’t have to, don’t do it. There’s nothing sadder than a person who goes into business to live the dream of a free life, but then allows herself to be trapped in the nightmare of all-consuming small business hell.

    Choose your partners carefully. If the partnership doesn’t work, nothing else will ever work. If at any point we can’t sit together, drink a beer and chat about life outside work, we know we’ve got a problem, and we fix it as priority number one. We started our business life with a simple creed: “Laugh. Learn. Live. Love life.” This idea guides every decision we make. If we’re not living up to that creed, we stop, work out why, and do it better.

    Start Up Costs
    Bond: $10,000 (or 3 months rent)
    Startup inventory: $20,000
    Licences/Permits: $10,000
    Fitout: $300,000
    Total: $340,000

    Monthly Expenses:
    Rent: We want the rent to sit at eight to 10 percent of total takings. That means if the landlord wants 100k a year rent, but we reckon the place can only generate $500k in income, the rent’s too high and we’ll look somewhere else.

    Staffing: Bar labour should be 17 percent of bar takings. Food labour should be 30 percent of food takings.

    Inventory: Bar cost of goods should be 30 percent of bar takings. Food cost of goods should be 30 percent of food takings.

    Insurance: $1,000 per month, but this number varies radically depending on the size of the venue and the cover you require.

    Marketing: $1,500. Again, this varies enormously depending on the size and style of venue.

    Maintenance: $1,000. Older buildings cost more to maintain, as do cheaper renovations. As a general rule, the cheaper the reno, the more it’ll cost to maintain in the long run.

    Profit: We aim for a net profit of approximately 20 percent of total takings.