outright—an initial outlay that most new nightclub owners couldn’t afford anyway—Bowyer instead opted to lease the space with an option to buy. Still, he needed more than $150,000 in seed money to cover the costs of his lease ($8,900 a month), renovations to the club ($70,000), permits/liquor license ($5,000), equipment ($50,000), food ($10,000), liquor ($7,000), and promotions ($10,000).
Using $50,000 in personal savings, a $20,000 bank loan, and a $100,000 investment from Maroon Bachare, a real estate developer he had met years prior, Bowyer signed the lease for the property. He renamed it The National Grill in March 2004 and quickly started renovating the space. It opened for business in July. Bowyer created fliers, ran newspaper ads, and bought radio time to advertise the club, but he also formed alliances with on-air personalities at radio stations that reached his demographic, creating special events at his venue.
The costs for all the materials, manpower, permits, and other essentials required for a successful opening can mount quickly. NBRMA experts say typical startup costs for a nightclub include the following:
Rent: Rates vary depending on a number of factors, including city, state, size of space, and proximity to residential areas, and can range from $2,000 to $30,000 per month.
Liquor license: This is a requirement for any nightclub. Costs range from $1,200 to $170,000 depending on the market. You can’t acquire a liquor license if you have a criminal record. Liquor License Specialists (www.liquorlicense.com) is a national organization that assists nightclub owners and other hospitality professionals with locating, negotiating, and purchasing or selling their liquor license.
Other permits/licenses: There are a host of other legal documents that new club owners must acquire. These may include cabaret, patio/zoning, restroom, and live music permits, as well as health, tobacco, outside/sidewalk café, and food and beverage licenses. Fees vary for each but can range from $400 to $1,000. Check with your local municipality for the exact documents required for your club.
Equipment: For a small club with few frills, equipment replacement can run from $2,500 to $7,000 to start. For more elaborate clubs, owners can spend upward of $50,000.
Insurance: For nightclubs, battery and assault insurance is very important. You will also likely need general liability, liquor liability, property, fire, workman’s compensation, flood, vandalism, and equipment insurance. Premiums vary and are based on a club operator’s projected gross revenues for a given period. Taylor Rau, editor of Nightclub & Bar, says a nightclub that’s doing well may spend at least $10,000 per year, but it is not unusual for some to shell out as much as $40,000 a year.
Food and beverage: Costs vary greatly depending on the menu and types of beverages served. “A bar carrying mostly ‘well’ or ‘call’ liquors will have a much less expensive inventory than a bar carrying mostly top-shelf spirits. The same applies to food,” says Rau. New club owners can expect to spend anywhere from $20,000 to $50,000.
Promotions/advertising: These budgets depend on a number of factors, including club size, marketing resources, target audience, and scope of