How to Start a Beer Garden

Part 1 - How to start a Beer Garden business - Background

Starting a beer garden can be an exciting and rewarding business venture for entrepreneurs who are passionate about offering unique beer selections and providing a space for people to gather and enjoy quality time.

Having said that, you should keep in mind that launching a successful beer garden requires careful planning, significant investment, and a wide range of skills.

In this comprehensive guide, we’ll walk you through all the essential steps you’ll need to take to start your own beer garden, from conducting market research and securing funding to obtaining licenses, setting up your garden, and attracting customers.

Our guide is in 3 parts:

• Part 1 - How to start a Beer Garden business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

Industry Overview

The U.S. beer market is a booming industry that was valued at over $106 billion in 2022 and which is projected to reach $154.72 billion by 2032. Growing at a steady rate of 3.80% annually, this market offers significant opportunities for aspiring entrepreneurs looking to open a beer garden.

Beer has long been a staple in Western culture, yet in recent years the market has been shaped by the rise of craft beer, health-conscious trends, and demand for diverse beer varieties, with consumers seeking unique flavors and high-quality ingredients.

In particular, the expansion of the craft beer industry has been primarily driven by millennials who favor local, artisanal brews with distinctive characteristics. While the beer market remains competitive, especially with large-scale breweries dominating distribution, the craft beer sector has opened doors for new businesses like beer gardens to thrive.

Startup Costs

If you’re considering whether a beer garden is right for you, the first thing you’ll need to know is whether it’s a) affordable, and b) worth the investment. I mean, how much can you actually make running your own beer garden?

Well, it depends. The initial investment for a beer garden varies widely based on factors such as the location you end up choosing, the size of your garden, and the products it intends to offer:

• Location and Lease: One of the biggest expenses associated with starting a beer garden is the cost of securing a suitable location for your business. You should expect to spend between at least $2,000 and $10,000 per month on renting an adequate space, though the exact amount will vary depending on the area and size of the property. While this may seem a little steeper than the cost of renting a standard bar, this is unsurprising given that beer gardens require outdoor space, meaning you’ll likely need more square footage than a typical bar.

• Furniture, Fixtures, and Equipment (FFE): Depending on the state of the property that you purchase for your beer garden, possibly the largest cost you’ll face when starting out will be that of setting up the physical space itself for customers. In particular, you’ll be required to obtain durable outdoor furniture (e.g., picnic tables, chairs), bar equipment (e.g., draft beer systems and refrigerators), and decor and lighting — all of which can easily total between $10,000 and $30,000 depending on the quality and size of your setup.

• Licensing and Permits: The final key cost to be aware of when establishing your beer garden is the expense associated with acquiring the permits you’ll need to operate — especially the liquor license. Depending on your location, the cost for a liquor license alone can range from $1,000 to $15,000, and this doesn’t even include all the other permits you’re likely to need (see Step 8), such as those for outdoor dining, health and safety compliance, and possibly even entertainment licenses.

In addition to these core upfront expenses, beer gardens often also face fluctuating ongoing costs associated with inventory replenishment, as well as marketing and event hosting to attract and retain customers.

Earning Potential

The primary way in which your beer garden will generate revenue is naturally through the sale of liquor, beverages, and food — though you’ll also be able to obtain additional income by using the garden to host live entertainment and as a venue for private events.

The earning potential of your business can vary widely, though you can typically expect a functioning beer garden to earn around $20,000 to $30,000 per week on average. This means that, with typical startup costs, you could break even and start paying off loans or investors within two years.

Ultimately, the key to maximizing the profitability of your business is to correctly price your products. While beer sold at a bar is typically marked up by 200% to 300% (with some varieties reaching a markup of up to 500%), you’ll need to bear in mind the typical prices charged by local competitors as well.

If customers feel that the pricing of your beer garden’s menu is too high without justification, it can drive them away to competitors instead — so try to maintain a profit margin of 75% to 80% on the drinks you sell, ensuring a balance between profitability and customer satisfaction.

In order to further increase profitability, focus on improving the experience you provide customers with — while you may have limited control over the cost of your products compared to competitors, you have full control over this.

Furthermore, things like regular events, great service, and a comfortable ambiance can help you to build a loyal customer base that comes back week after week, boosting both your sales and overall profitability.

How to Start a Beer Garden FAQs

Who is the target market?

The target market for a beer garden business is beer lovers and locals looking for a place to unwind. Some are looking for special, unique beers to sample, while others are seeking a space to hang out with their friends — whether they are college students, seniors, or someone in between.

How much can you charge customers?

It is important to price your products correctly, which can be challenging at first when you don’t realize just how much markup is necessary. Beer at bars is typically marked up by 200% to 300%, with some beers even being marked up to 500%.

Your profit margin should be somewhere around 75% to 80% for the beer you sell. Just make sure to strike the right balance between turning a profit and keeping your customers happy, because if your beer is too expensive customers are unlikely to stick around.

How much profit can a beer garden make?

A bar can make around $20,000 to $30,000 a week on average, although many variables can alter this amount. With average startup costs, that means that a bar can pay off investors and loans in about two years — after which the business will start making a profit.

How can you make your business more profitable?

You can make your beer garden more profitable by attracting more customers and more regulars in particular. If you can make your beer garden a preferred spot for your target market, they may show up every week or even several times a week to purchase your beer and food.

You don’t have too much control over your costs and how much you charge because your competitors have many of the same products. However, you do have control over the atmosphere and experience of your customers.

Part 2 - Is a Beer Garden business the right fit for you?

Part 3 - Action plan to launch your Beer Garden business in 90 days