Setting up a bar or restaurant is a complicated process wrought with hoops and hurdles, never mind the day to day chores required to keep it running. The average bar patron would get little idea from what they see by drinking and hanging out in their favourite place, even if for decades. It is certainly easy to sit on one’s duff and say "my city needs a new Gay Bar," but if a person understood just how much that is to ask, they might think twice about pressuring others to go forward with it.

We wrote this article to give an appreciation of the fact that opening a bar isn’t such a trivial matter. As you read this article, ask yourself if you would be willing and able to put up with all of these steps yourself. You’ll find that it takes a great deal of knowledge, experience, and patience to even get a project started.

Having a Vision and a Plan – you need to know exactly what your bar is going be. Give it a name and a "face", and decide on who is your target audience. If you keep it as an idea in your head, then it is nothing – put it down on paper so that you can:

• Assess if you have enough resources to pull it off,

• Not waste money on things you’ll later realize that you don’t need,

• Not waste valuable time dwelling on tough decisions only as you come to them.

• Ensure that your bar will attract and satisfy the audience that you intended.

Make sure your plan has room for compromise, because you will probably have to. Observe other similar businesses – understanding what they do wrong may come in handy, but focus more on what they do right. Sometimes you can’t control the mistakes that lose customers, but you can control the things that bring new customers in, and old customers back.

Gathering the Capital - make sure that you have the financial resources to carry your bar to opening, even if you begin at bare minimum. You can reinvest later on to bring it closer to your original vision. Unless you can get your bar to a point where it can start making money, you will only be wasting yours. Make sure that your funding is solid before you start out, because there is little help down the line.

• Banks will not give loans to bars and restaurants because they are considered high risk. If they do, expect pretty heavy collateral – your house may not even suffice.

• Some landlords may even ask for your house as collateral in case you bow out on your lease.

• Adding more investors may patch early financial shortcomings, but that’s less money in your pocket once the bar starts running.

• Investments are made in a business, not in an individual. Protect yourself; you can’t even trust your own father! All deals should be in writing and passed by a certified lawyer, otherwise you may lose out if something goes wrong.

Now is where the nightmares begin – all you have to do is find a space that is the right size for the right price, right? Well it’s not that simple.

• The landlord must give approval for you to be a gay bar. If they say no, you are out of luck. Worse, if you mislead them and pour money to build your bar only for them to find out down the line, you can have your lease revoked, and again you are out of luck (and money).

• The City controls what kinds of businesses can go into which buildings – this is known as zoning. If the building is not zoned for a bar, only the landlord can make an application to have that zoning changed. The City can refuse that application if they don’t find a bar is appropriate for that part of town.

• Your establishment must have sufficient parking to handle your estimated customer base. Prime areas of town can run you a yearly rate of $3000 per parking stall.

• The lease may lock you in for a number of years. This can be good – if property prices go up, the landlord can’t change the rent on you for that period of time. If your bar fails, however, you will be stuck paying out the remainder of time on the lease – and if you can’t, remember that collateral?

• Regardless of your square footage, the building’s entrances and exits may limit your bar’s capacity. Contact the fire department to learn how they calculate fire capacity, and make sure you can fit the crowds that you are expecting.

• You must purchase insurance even before your bar opens. This can run from thousands to the ten thousands of dollars depending on your bar’s size and intended use.

Make Smart Decisions – there are good times and bad times to try to open bars. It all depends on the real estate market, and how much landlords are charging for square footage.

• Pull out a calculator and crunch some numbers, come up with a ballpark figure for your monthly expenses, and see if your sales will cover those expenses and your rent, and still bring you a profit.

• Make a realistic estimate of how many people you would have in your establishment per month. Friday and Saturday nights are usually going to be your money-makers. Assume the best case scenario that you will put through more people than is your capacity (not all at once, of course). According to the sales figures of some past and current gay bars, we figure for a liquor primary establishment that each person would spend an average of $16-$18 per night on alcohol. Now see if you can survive the slow months by dividing that number of customers in half.

• You may need to charge cover or raise your drink prices to offset your costs. Unfortunately, if a customer spends too much on cover they may not spend as much on alcohol. Furthermore they may not come in as often if things are too expensive. Remember, gay bars don’t charge as much for alcohol as the straight bars get away with – this makes it even more difficult to remain competitive.

• Also factor in your target audience – the older crowds tend to spend more money, but the younger crowds may be out more often.

• The right space isn’t just out there for the taking – you may be waiting several years before something reasonable becomes available. If you jump the gun and blow your capital, you may ruin your chances for good.

Get Ready to Move Quickly – time is money, and every day that your bar is not open, money goes down the toilet. As fast as you think that you can move, remember there are bottlenecks beyond your control that you will be waiting on.

• Permits and inspections are your obstacles. Make sure you also have enough money for several months of rent, just in case you have to sit on your hands for that long.

• If you are lucky, your landlord may give you a few months of grace while you set up. Don’t count on it though. They may very well ask for three months of rent payment in advance. You’ll be paying even though you’re making nothing back.

You have now signed the lease. Hopefully you hired a lawyer to make sure everything is in order. Here begins the race for time.

Renovating – maybe the prior renter of your space has it already set up as a bar or a restaurant. In that case you may only have to spend hundreds of thousands to get things up to code and arranged the way you need them. If you are starting from scratch and having to worry about plumbing, electrical, fire suppression, and ventilation, you can easily spend millions.

• City permits are required for construction and demolition. Applications can take months to be processed, and may get denied in the end. The City requires you to submit a floor plan before you can get your construction permit and city licensing.

• Once you receive your building permits, you must post notice on the exterior of your building to allow other businesses in your area a chance to express any objection. Though you can begin construction immediately, the notice must be shown for a certain period of time before the renovated area can go into use. If nearby businesses, residences, schools etc. voice valid objection to the intended use of your space, your permit can be revoked, or conditions may be imposed in order for you to proceed.

• All permits are public information - their existence and details can be accessed by anyone through the City. If you’re thinking about starting construction without a permit, it doesn’t take much to find out that you’re bending the rules. Aside from that, many builders won’t even touch your place unless you can show them a valid building or demolition permit.

The Costs

• Even small renovations can get pretty steep, as you are paying for materials and labour. You can save a little on labour by getting your friends and family to help with construction, but they may not have the time or the skills you need.

• To serve drinks to your customers you need to install a good deal of hardware and appliances: lines and guns if you want to dispense various drinks, taps if you want draft beer, bar fridges, storage fridges, dish washers, and an ice machine (unless you have a huge fridge to stockpile pre-bought ice). These are industrial-grade appliances built for high usage, and can easy cost tens of thousands of dollars.

• As a drinking establishment you are obligated to provide food to your customers in some reasonable form, for some reasonable period of time during your hours of operation. This can mean installing a full kitchen to properly cook a variety of food, or simply a microwave with a stock of instant frozen foods.

• Don’t forget about furniture – you can’t just walk into a store and buy large quantities of tables and chairs. You’ll need to order them, and wait for them to arrive.

• If you are building a dance club, don’t forget about your DJ equipment, sound system, and lighting. Those electronics alone will cost tens of thousands of dollars, which is why a lot of businesses lease rather than buy. Your DJ will need to stock up on music and subscribe to record pools to make sure they are up to date with the latest tunes. This might be a charge that is passed off to you.

Licensing

• Permits and inspections cost money – if you fail, you not only have to pay to fix the problems, but also to have the inspections done over again. Some permits depend on you possessing others, so if you fail one, you can’t get another type in the meantime. Your licenses must be renewed each year.

• Before you can open, you must have your establishment inspected and approved by the fire department and health department. You must also receive security clearance from the city police. Then you can apply for your city licensing, and only after everything else is in place, can you get your liquor permit from the Alberta Liquor and Gaming Commission (AGLC).

• To pass the fire department inspection your building needs to have proper fire detection and monitoring systems in place, along with a fire suppression system (fire extinguishers, or a sprinkler system if necessary) especially in the kitchen. You must have clearly marked exits for your patrons that can, under no circumstances, be blocked. Seek official documentation for exact guidelines.

• The Health Department can turn you down if your bathrooms are not satisfactory, if your fridges aren’t cold enough, if your dishwashers aren’t hot enough, and more. Obtain official documentation for exact requirements.

• When it comes to city licensing, you have some room to choose the specifics: liquor primary vs. food primary, with additional options such as live entertainment, strippers, dancing, and so on. Each licence add-on costs money, and has its own rules that you must adhere to.

• The City does extensive background checks on all owners and investors – credit history, criminal records, and taxes – and may refuse permits if they find anything they don’t like.

• The AGLC can refuse to issue a liquor permit if your drink serving and kitchen facilities are not appropriate to your particular city license. AGLC also puts you and your investors under the microscope. Obtaining your liquor license is usually the last thing you do before you open.

• Your establishment requires a SOCAN license if you are playing any copyright protected music for your customers. Visit www.socan.ca for more details.

• Failing to get proper licensing can result in hefty fines and legally enforced closure times now or down the line, which can seriously hurt your chances.

Staff - in most cases you can’t do everything yourself.

• You may need to hire bartenders, bussers, waiters, cooks, door staff, and security.

• Also remember you may need to hire staff to provide entertainment: DJs, bands, drag performers, strippers, and so on.

• Don’t hire staff until you’re certain you have a job for them. They have bills to pay. If it takes too long for their jobs to begin, they may simply move on – or worse, stick around and put themselves at risk. Your bar should be within days of opening before you start them on payroll; otherwise you are haemorrhaging money for them to sit on their hands.

• The Health Department requires you to have at least one staff member who has undergone a two-day food safety training course. You may have to pay for members of your staff to undergo this training. This person is then supposed to teach what they know to other employees, and monitor that they are following those guidelines.

• The AGLC requires one bartender per shift per licensed room to be certified by their new ASIP training. In 2010, all bartenders must have undergone this training – which you may have to pay for. Visit www.aglc.gov.ab.ca for more details.

Operating Costs – the good news is that you can recoup a small amount of your costs through bottle returns. The bad news:

• Any bar you ask will agree that insurance costs are murder. Each year, small bars pay in the thousands, larger clubs pay in the tens of thousands. The majority of insurance companies demand the full amount up-front even before you open, and then yearly after that.

• To serve drinks you will need to buy an initial stock of cups, shot glasses, martini glasses, shakers, straws, pouring stoppers, and more.

• Your bathrooms will need to have soap, toilet paper, and maybe paper towels if there are no hand driers.

• Glassware and plates break and chip, plastics wear down from use and washing, and cutlery can get damaged or just disappear. These things need to be frequently replenished and replaced.

• You will regularly need to replenish your stock of consumables such as pop, juice, beer and liquor, food and ingredients, and even lemon and lime slices.

• You will need to buy equipment, chemicals, and even pay for labour to keep your establishment clean.

• Things deteriorate over time. Machinery may break down, pipes may burst, circuits may blow, and your fire detectors may malfunction. Be prepared to pay for experts to come out and resolve these problems.

• Paint chips, carpets fester with gum and spilled drinks, walls and surfaces get dented and damaged, mirrors and glass gets broken. Be prepared to pay money if you want to keep your establishment from looking run down.

Spot Checks – don’t forget that AGLC, the Health Department, and the Fire Department will perform spot checks at the worst moments possible. Going over your fire capacity is a minimum $15,000 fine. Serving alcohol after last call, leaving liquor circulating after 3am, and the presence of minors will also result in a large fine for your bar, and the staff member(s) that caused the infraction. Fines get more severe the more you incur them, to the point of shutting down your bar or revoking your licences.

Advertising – you need to get people into your establishment to spend money. Advertising makes people aware of your existence, and notifies them of upcoming events.

• You may need to hire a graphic designer to create professional-looking ad work and website designs. Amateur designs may appear messy and it may be difficult for people to get the information they need from it – or it may reflect badly on your establishment due to lack of professionalism.

• For internal advertising (ie. promoting events to customers within your own venue) you will need to cover print costs for posters and flyers on a monthly basis.

• For external print advertising (ie. in magazines like ours) you have to pay for ad space on an issue-by-issue basis. GayCalgary and Edmonton Magazine has relatively low costs, but higher-end magazines can charge thousands, and even tens of thousands of dollars for a single full-page ad.

• A website is another good form of advertising, but again people have to find your site amongst billions of others. Creation of the website will be a one-time expense, but you may need to pay to keep it updated.

• Advertising isn’t a guarantee – there is a whole industry devoted to understanding and harnessing the market to your advantage based on past statistics. Marketing Agencies charge huge amounts of money, and may end up telling you little more than what you would have surmised out of common sense.

Taxes

• Property taxes can easily run you for the cost of a month’s rent.

• Don’t forget about income tax, GST, and employee remittance.

• Hope you have a good accountant that has been keeping your book in order. Otherwise it’s your time and sweat to get everything submitted in time.

Now, if you are even still reading up to this point, there may be a lot of factors that you had not considered. The costs are endless, so a $4.75 bottle of beer may only make $0.25 profit or less.

The sad part is that this article did not even go into much detail – there are enough intricacies to easily make a book – or several books, such as the handbooks provided by the AGLC and the Health Region. How good are you at following instructions, because there are lots – and they are the law.

So if you have ever pressured your rambunctious buddies to step up to the plate, would you have done so knowing the amount of grief it could cause them? Maybe they really do have the expertise and motivation to get into this unforgiving industry. But my question is: are you asking for a new bar because there’s not enough room for you now, or because you are unwilling to get past your excuses for not going out to the existing ones that do have room?

It is human nature not to be satisfied with what we have, but as the saying goes, "a bird in the hand is worth two in the bush." (In gay-man-talk that would be "a cock in the hand is worth two in the tush.")

If anything, gay Calgarians should be giving the Backlot, The Calgary Eagle, Money Pennies, Texas Lounge and Twisted a big pat on the back for getting through these ordeals, as should gay Edmontonians do the same to Boots, Buddys, Prism, The Roost, and Woodys. Enjoy them while they’re here, because not one of them will last forever.

You’ll get your new bars in due time, so what’s the big rush?