How Do I Value or Price My Bar for Sale!

Bars are a unique business. I'm not talking about clubs or flashy places where the young hang. I'm talking about that special place which is both a watering hole as well as a psychological therapy hang out for the locals that are 21+. 

These are rare to find being sold and when they do come on the market, they usually don't last long and they sell for a higher multiple than the standard restaurant and bar. Why?

First, there usually is one product being served - Alcohol! That makes doing inventory easy. That makes cost control easier than a full restaurant. It is easy to know the ounces in a bottle and the price being charge per ounce. These are relatively easier businesses to operate. 

Second, the clientele tend to be loyal. People like to hang out with people they know and a neighborhood bar is the best place to do that. 

Finally, there tends to be more cash involved in these businesses, making them more attractive to buyers. 

I often see these business selling for between 2.5 and 3.0 times cash flow depending on how strong the numbers are, the condition of the bar, the growth of the area, and if a lease is involved the strength of the lease in terms of time remaining and the rent factor. clearly the strong on each point will demand a higher multiple. 

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