How to Start a Profitable Local Bar Business in Kenya

Local bars have become very popular in Kenya, especially in urban residential areas. There’s almost a bar in every corner of the street. And more are yet coming up. Why do you think so? Well, the answer is simple. Bar business is profitable.

That said, you must be curious and thinking, how do I get started.

Well, in this guide we take you though the process of starting your own bar local business in Kenya. We list all the licences involved in operating a legal bar in Kenya; we discuss the operations – challenges, survival and trends to follow to make it in the business.

And our hope is that by the time you finish reading this post, you’ll be ready to start your own successful business.

To start a successful local bar, first you need to;

How to start a bar business in Kenya

a. Obtain Licenses

Licenses of businesses with alcohol involved are guided by “Mututho Laws”,  officially known as the Alcohol Drinks Act, 2010. Each county has it’s own guidelines but these rules never stray too far from Mututho Laws.

County governments have been in between a  rock and a hard place when it comes to making regulations. While they may want to curb excessive consumption of alcohol to find a place in the moral scale, alcohol does bring its revenue. This has led to so much corruption in the scene. Bribery and having the county turn a blind eye on some of these businesses are not so uncommon.

As dictated by law, here are the fees that are involved in running a local bar;

  • For premises situated within a city or municipality, the fee is 30,000 for 6 months and 50,000 for 1 year
  • For premises in urban areas that are not a city or a municipality, the fee is 18,000 for 6 months and 30,000 for a year.
  • As for premises outside cities, municipalities or urban areas, the fee is 9,000 for 6 months and 15,000 for a year

More licenses

Other licenses needed to run a bar include;

County Single-Business Permit: –  Every single business needs it and the price ranges from county to county.

Public Health License: – Budget for at least 6,000 shillings. Public Health officers issue it after inspecting the business and making sure it is fit.

Medical certificate: – This certificate involves individual workers. Every member of staff needs a medical certificate which goes for around 500 shillings.

Fire clearance certificate: – This involves seeking advice in terms of protection against fire, installing the necessary equipment usually fire extinguishers and paying for an inspection.

Music Copy Right Of Kenya: –  All establishments involving music need this. It is based on sitting capacity. For 25 people, you’d need 2,331 Kenyan shillings.

Performers Rights Society of Kenya: – It is a collective management organization licensed by the Kenya Copyright Board to represent performers in musical and dramatic works. Their main objective is to collect and distribute royalties to artists.

National Environment Management Agency: – It costs 3,000 Kenyan shillings. It is used largely to ensure you don’t make too much noise.

b. Choose The Best Location

When it comes to choosing the location for a bar, you should consider;

Cost: – By this, I refer to rent. For some, it’s easy because they may have land that they already own, but for most, it involves negotiating the rent price. Be strategic

Demographics: – Bars in more populated urban areas tend to charge more. It is normal to do so since demand is more and the rent they pay is also more.

Style: – Look at the style of the bar. Do you want a nyamchom zone with beer or do you want to style it to a certain mood? This will influence the neighborhood you want it in or the other way around.

Competition: – In some populated areas bars thrive near each other, but for a local bar, the best advice is to place where there is minimal competition. Pick a neighborhood where there is the need for something different.

Accessibility: – This should probably have been the first point. Your bar needs to be accessible if it’s local, somewhere many in the neighborhood can notice it. Most of the times bars are not placed within the neighborhood but at the periphery to avoid noise complaints and give the customers the level of privacy they deserve.

c. Capital – How Much Do You Need to Start a Local Bar Business?

The capital required for a bar is broken down into several parts;

The Licensing: – As discussed above, location and size mainly influence the cost of licensing, though the difference it makes at the end of the day is not much.

Premises: – This involves the cost of setting up a bar and the cost of having the bar in that location. Consider things like the rent of the area.

Equipment: – This involves all you need, from chair, utensils, music to the alcohol itself.

Operations: – Operating the business will cost in terms of staff compensation, security. utilities like water and electricity etc.

d. Operations – Managing a Local Bar Business to Profitability 

Operating a bar is very tricky. there’s a lot to look at. There’s the music, the food, the service, the finances, etc. Even the energy of the room matters. If the mood is low, you have to find a way to lift it, otherwise, it could mean the beginning of the end for your business.

The most important thing when considering the operation of your bar is picking out the staff. The staff plays a big role in ensuring your bar meets the standard. From the bar manager to the cooks, the DJ, the waitresses, guards and cleaners, the choice has to be meticulous.

Fast quality service is very attractive and it needs to be the priority of the manager. Marketing should also be considered. Every single word that gets out should be positive a word to attract people. The choice of music, of course, doesn’t have to be yours. It just has to match the taste of the audience and the DJ should understand that.

e. Challenges Facing Local Bar Businesses in Kenya 

The biggest factor that challenges bars is legislation. over the past 20 years, there have been so many changes to laws regarding drinking and bar ownership.

First, there was the regulation of noise. Bars operating in residential areas have to match these limits. The rule is less observed in areas outside Nairobi but the penalty is the same.

Then there is the constant change in the taxation of drinks. There are always arguments on taxation in the country and most of the time, that doesn’t work very well for bars as it always seems the best cause of action is to increase taxation on alcohol.

Fortunately, other advancements like Alcohol blow have worked to the benefit of local bars. people fear more, being caught driving under influence, so they prefer using local bars as they get to avoid highways.

More factors that may lead to the fall of a local bar include low capital, poor location, poor service, poor operations, mismanagement, poor food, and poor music. If music and food are bad, it will fail because the alcohol is pretty much the same – regardless of the bar you drink at.

f. Survival – How to Beat Competition in The Kenyan Bar Business Industry 

A challenge in starting a bar business today is that the number of bars has significantly increased, which makes it significantly easier for bars to shut down due to losses. This is why starting a bar requires one to develop a careful strategy for survival in the business.

Realistic pricing will help you stay relevant in your bar business. Since it’s a local bar, you have to charge less than a high-end club. Pricing generally depends on competition, branding, value attached to your bar, demographics, and style.

In summary, always strive to provide something different, that matches your target customers. Keep and follow trends too because bars are all about the “hype” sometimes and not the business.

g. Business Trends for Local Bars in Kenya 

Estate bars now have larger capacities. Before, local bars could only accommodate around 10 to 15 people, but now, they do 50.

Some local bars like 1824 have even grown and established themselves enough to be considered clubs.

Local bars have picked up on social media advertising to ensure they remain relevant. The image portrayed on these media sites has to remain positive but catchy enough for it to become an attraction. Engage the existing customers by always showing them the experience that they could have at your bar is essential.

Even more important for relevance, bars are now organizing their own events — themed as either: karaoke or reggae nights.

In some cases, they even invite artists to give mini-performances. Sometimes the events are as simple as celebrating existing holidays in simple but enjoyable ways.

Conclusion 

In total, you will need about Ksh. 800,000 to start your local bar business.

Broken down, you will spend an average of: –

  • Ksh. 80,000 for licences. Including – NEMA, MCSK, Business Licence, Public Health Licence and other licences required by Mutotho Law.
  • Furniture Ksh. 100,000 – Estimate expenditure
  • Music System plus TV for entertainment – Ksh. 100,000
  • Stock Ksh. 300,000
  • Initial rental charges – Ksh. 100,000
  • Security and other miscellaneous costs – Ksh. 120,000 

Also Read: – How to Start a Mitumba Retail Business in Kenya

READ  21 Untapped Business Ideas for Budding Entrepreneurs in Kenya

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