How to Build a Financial Model For a Bar (+ Video)

Every business needs a financial model. Whether you want to understand what’s your breakeven, your valuation or create a budget for your bar business plan, you’ve come the right way.

In this article we’ll explain you how to create powerful and accurate financial projections for a bar. We’re also including a the end of this posts a tutorial video of our financial model template.

1. Forecast Customers

The first thing you must do to create a financial model for your bar is to forecast the number of customers you will serve over time.

Forecasting customers can be done as follows. You must set the number of:

  • Customers you expect to serve on average on a weekday
  • Customers on a weekend day instead
  • Days you are open in a week on average (for example 3 weekdays and 2 weekend days if you are open Wednesday to Sunday)
Tip: the values you enter can be set over time, for example for each year as shown in the example below.
Source: Bar financial model template

That way, you will be able to forecast accurately the number of customers you can serve over time, and so the revenues which we will now see.

Source: Bar financial model template

2. Forecast Revenue

Now that we have the number of customers, we can calculate revenue easily.

Yet, before we do so, we must break down the number of customers into the different products they may buy. Indeed, most of you customers may buy a beer at an average price of $5.50, yet some may instead buy pricier products such as cocktails for a average price of $11.00, etc.

It’s very important to break it down right. Indeed, as you know all these products have very different unit economics (prices and profit margins) you need to forecast accurately. Let’s see now how.

First, break down the products into a percentage of your total customers. For example:

  • 35% of the customers may choose to buy a beer at an average price of $5.50;
  • another 20% buy cocktails to go at an average price of $11.011
  • 15% buy a wine glass for $6.50, and so on..

That way, you can now multiply the number of customers for each product by their respective price to obtain revenue.

Now you can obtain your revenue projections broken down by the type of product as shown below:
Source: Bar financial model template

3. Forecast Expenses

The third step is to forecast all expenses to run and operate a bar.

There are 2 types of expenses:

  • Startup costs: these are all the expenses you must pay upfront to set up operations before you can open your business to customers. It includes things like the building, the renovation costs, the furniture and tableware, etc. It does also include intangible assets like licenses, legal costs, etc.
  • Operating costs: these are the recurring and one-time costs you pay to run the business after you have opened your bar to customers

The main costs you can expect for a bar are rent, salaries, COGS (the cost to purchase the liquor and drinks from your suppliers, utility bills and other admin costs).

We are including below the cost breakdown of a typical bar. For a full review of how much it costs to start and run a bar business, make sure to read our article here.

Bar financial model template

If you want to save time and effort, we have prepared a financial model template you can download and use for your bar. We’ve included all the metrics and pro forma financial statements investors asks for.

Want to see more? Have a look at our video tutorial below.

Any questions? We’re here to help, contact us and we’ll answer your questions within 24 hours.