My wife and I were chatting tonight and the subject of running a bar came up. Thinking about rent alone, not to mention taxes, utilities, paying workers, making a profit, etc – it seems impossible.
A little back of the envelope calculation/estimate for the biggest expenses – and two part time workers available 20 hours a week:
**Rent:** 300000 a month (based on ads I’ve seen for small bars in Tokyo)
**Labor:** 20 hrs a week x 4 weeks x 1000 yen per hour x 2 workers = 160000
So, to just cover that, you’d need to sell something like a 1000 beers at 500 yen a pop. That doesn’t include the cost for the beer, refrigeration, taps, etc. I’m also ignoring taxes, electric, gas, etc. I know bars also sell food so there are costs and profits there as well..
So, just curious, how do small bars stay in business and/or make enough profit for the owner(s) to live off of? I know my estimates are just that – estimates, but it does make me wonder how small businesses like that survive.
Anybody out there with experience and can shed some light on this?
20 comments
Money laundering
If you ask my buddy with a small bar it’s by not having other employees and asking your parents and in-laws for more money.
And working during the morning at a grocery store.
I think the key with any small food or beverage establishment is too operate it yourself as a sole proprietor and you might make a decent wage but no more than that.
1000 beers a month is only ~33 per day. Not impossible.
I don’t know anyone that runs a bar, but I am close personal friends with someone that runs a very small izakaya. She has one employee, the hours are 5pm to 11pm and I know that the owners salary is about ~300k a month. They do also sell alcohol.
A lot of the small places I know are owned and operated by a family with 0 employees. The family lives upstairs and rents rooms since they own the building. You could probably get by without owning the building but you’re not going to make more than you would working for someone else and probably do worse per hour since you’re literally working all the time.
I didn’t know that they did make money
1000 beers a month is only like 30 a day. 3 beers each for 10 customers? Not too difficult, especially on weekends!
You might be overestimating the labour costs too. If a bar is so small they’re not even averaging that many beers sold they’re probably not employing anybody and it’s just family working there.
Taxes wouldn’t be an issue. Taxes are usually on profit, so if you’re not making profit you don’t have to worry about paying them.
I wouldn’t be surprised if some own the land too, if you’ve got no rent to pay that certainly makes things a lot easier. There may be some that are just being run to pay off a mortgage for the place while the owner works a separate job with the bar setup to be fully owned by them for their retirement or something too.
Sell drugs
I have a family friend who ran a “snack” for many years (she’s retired now). She had 1-2 employees, and the business was largely supported by a few big spenders who were “fans” of the owner. And no, no sexual favors were exchanged AFAIK.
Having a loss-making business in your portfolio is highly profitable when it comes to tax bills.
I had this thought, but with hair and nail salons. And to a lesser extent cafes. Fukuoka has the most hair salons per capita, or per sq meter in Japan (some figure like that). There’s so much competition, it must be challenging to get new clients and to stand out. I figure it must be different streams of income through investment, shared income with a partner (business or marriage), family, or a second job.
They don’t make much money. Alot of them are really just so the owner can break even drinking with his friends a few night a week. My friends who own a bar lose money constantly but he’s well off enough that it’s not an issue.
Many business are the losing side of a tax write off for another business. For example the wife runs a successful hair salon and makes a lot. The husbands hobby bar loses . Many small businesses are rented from close family.
No idea these bars have like 2 customers on level 6 in some random building on a Friday night.
I heard from some friends the slightly bigger ones get customers who just spend a motza one night but don’t see that happening in small dingy bars. And there’s so many of these smalll bars upstairs
What bar in Tokyo is selling beer for only 500 yen?
Edit: given OP is defining was is needed to be sold in alcohol only, I think the definition of “bar” here are places that either server no food or it’s expected that 90%+ of patrons don’t order food.
I imagine most own the building and make fuck all, or they’re friends with the owner and can get a good rate (and still make fuck all). What I’m more curious about is when these businesses go under, what does the owner then go on to do?
Chatting with a small bar owner in Chiba earlier this year – his rent was only 70k/mo, this in a bar district near Chiba station, so not inaka.
He was also the only employee, so other costs were low.
They don’t pay taxes per drink serve. So they can declare that this month only sell 4 bottles of whisky when in reality is 200
A Japanese friend has a bar, and the cheapest beer is probably 500 yen. Average is maybe 800, but they import some international beer and have interesting new ones rotating in every month. Over a month 1000 beers is really doable, that’s about 30 a day. Can probably easily do that in 30 minutes if you’re somewhat popular on a Friday night. My friend also sells other things like food (at a huge markup, but not 3x or more like the beers). I’m pretty sure some of the food is just from frozen packages. My friend runs the bar with her husband. They sometimes bring in part time workers, maybe 2 or 3. But I’ve never seen them last more than a year, if that. They also host private parties where the party reserves the whole bar. That can easily be 10-30 or more people having to order drinks and food all night. Maybe special “party sets” marked up even further.
It seems really profitable to me, and my friends are pretty wealthy. However, you have to run everything. Set everything up, handle logistics, take orders, make drinks/food, do dishes, clean up, or hire part timers who aren’t going to stay forever to do that for you and lose chunks of profit. You also have to work evenings, maybe 5pm to 2am or later, which isn’t a good schedule for a lot of people. Also customers can be really annoying when they drink. The average Japanese seems to up the volume quite a bit when they visit bars.
Add a 500 yen door charge and a 500 yen food dish and you’re done to 333 beer a month.