Bars: Great Businesses To Own In Tucson
SIC Code: 5813-01
Critical Success Factors:
Location, Lease, Liquor License
The bar business is one that generally seems to do well, in good economic times and bad. If you’re considering buying a business in Tucson or elsewhere in Southern Arizona, it may be a category you should consider.
Unless you’ve owned a bar previously, we suggest that you complete the Buyer’s section on this website in order to determine if your skills and experience could be a good match for becoming a bar owner. I’ve you’ve already done so, and concluded that the answer is “yes,” then another factor to consider is “what kind of a bar?” It is important that the bar owner be a good fit for the type of clientele that the business attracts, which has more to do with personality and personal interests and style than with purely business considerations.
If you’ve decided to take a step further in exploring buying a bar in Tucson, then here are some key factors to keep in mind:
Location is of paramount importance. As you explore different locations, take careful note about the general attractiveness of the area, the presence of competitors, and the availability of parking. A Tucson bar for sale in a great location should bring more traffic flow and visibility, but is also likely to bring more competition. Competition is not necessarily a bad thing, but it will likely require you to be more active in keeping your offering up to date, and more aggressive in the area of marketing and promotions.
Lease terms and options for renewal are critical as well. Building a bar business in Tucson and establishing a regular clientele takes time, and is not very portable should you be required to move to another location as a result of inability to extend a lease. Additionally, ensuring that your renewal options will allow you to keep the cost of occupancy in the 6-10% range as a percentage of gross sales is a critical metric for ensuring that this fundamental lever of profitability is under control.
Liquor Licenses in Tucson are hard to come by these days. Most communities have placed a cap on the total number of licenses they will issue, and generally these caps have already been reached. As a result, buyers wishing to get into the bar business in Tucson generally must purchase an existing Tucson bar business in order to gain access to a license. The license, therefore, has strong residual value and is a saleable asset on its own that makes up a part of the purchase price. Investigate the value of a liquor license in Tucson to make sure you comprehend this component of price, as well being sure to clarify the type of liquor license included and whatever restrictions may be placed on it. Not all licenses are created equal.
While location, lease and licenses are the three most important considerations when buying a bar in Tucson, there are many more aspects of a successful bar operation that you will need to delve a bit deeper for during due diligence in order to develop a complete picture about any bar you may be looking it. Here are just a few:
◾ Cost of Goods sold should be in the 20-30% range, lower if you serve a smaller percentage of food. Before you buy a bar in Tucson, carefully consider the role food plays in the operation.
◾ Vending machines, including games, can be an important source of operating leverage. If present, check to see if they’re owned or leased.
◾ Serving size is a key driver of profitability. Check to see if servers pour by hand or use a measured pour system. Just a half ounce variation in pour size in spirits spread across the contents of a single bottle is equivalent to the cost of replenishing 1.5 full bottles!
◾ Employee theft is a common problem. Check to see if systems are in place for inventory control. Additionally, with the rise in credit card fraud, having a system in place that ties servers to transactions can be a safeguard to the owner in the event such fraud is being conducted by your employees.
◾ Statistics show that bar buyers today prefer locations that only offer light food, that comprises less then 25% of gross sales. What is your preference as potential Tucson bar owner / operator?
◾ Unreported (cash) revenue is common at bars. It is also very hard to judge what percentage cash receipts represent of total revenue. An owner trying to sell a Tucson bar should not get credit for unreported cash in the sale price.
◾ Bars for sale in Tucson are also highly scrutinized by police and municipal governments, and for good reason. Many fights, crimes, drug deals and general disturbances of the public seem to occur at or near bars, in Tucson and elsewhere. What is the history of the Tucson bar for sale that you’re considering, in this regard?
◾ Finally, consider the impact of bar ownership on your personal life. It usually involves long hours, and certain distractions and temptations that we will leave it to you to imagine. Are you prepared to handle them?
For more valuable information to assist you in planning to buy a bar in Tucson, try to get your hands on a copy of “Running A Successful Bar,” by Bob Johnson, available at www.barproducts.com.
Keep in mind that not all businesses available for sale in Tucson are actually listed for sale. As licensed Arizona business brokers with a large network of local, regional and national business relationships, Allen & Young have access to many confidential business for sale listings in Tucson and Southern Arizona, and beyond, as well as access to powerful database and research tools. In other words, if you don’t find the bar you’re looking for listed on the market for sale, that’s one more reason to Contact Us. We can help you find it.