How to Open a Lounge With No Money (2024 Guide)

How to Open a Lounge With No Money

It’s not unusual to have big dreams about opening a food establishment. Anyone who loves food or entertainment has dabbled with the idea of opening a restaurant or bar. 

But, of course, any brick-and-mortar store can be difficult and expensive to open, and restaurants are no different. 

While opening a lounge rather than a full-scale restaurant is a decent way to try to save money, you still need money. Even bar opening costs can easily run hundreds of thousands of dollars, and investors for nightclubs and lounges may not exactly knock down the door.

If you don’t have money to open your lounge, you need to find it somehow. Fortunately, there are a number of things you can do to open a lounge with no money. You’ll just need guts, vision, and determination in spades.

In this article, you will learn creative ways to find capital to open your lounge with no money.

What do you need to open a lounge with no money?

If you’re short on money to open your lounge, you need an abundance of everything else — especially work ethic. Opening a lounge can be a long and complicated process. Here’s what you’ll need:

• A lounge concept: This is the easy part! You wouldn’t even be as far as this article if you didn’t have some idea of what you wanted to do.

• A lounge business plan: The first major step is writing your business plan. You have an idea, you can talk about it, but now you need to get into the details of how you will operate each day, how you’ll draw in customers, and how you’ll maintain a sustainable profit margin in a competitive space. Your business plan will be vital to finding capital.

• Lounge capital: We’ll get into this later, but you need to find money somewhere.

• Licenses and permits: Licensing and permit rules vary from state to state. You’ll need to explore what’s needed in your location and the feasibility of getting in done on a certain timeline.

• Menu: When thinking up your concept, you’ve probably had some bar menu ideas. But now you need to document it, cost it, and figure out exactly how much you’ll need to sell and at what price to turn a profit.

• Bar staff including FOH, BOH, and managers: You don’t need to start hiring immediately, but you should understand from early stages what kind of staff your lounge will need and what that will cost.

• Bar technology: In recent years, restaurant technology has exploded in popularity and complexity. While it’s easier than ever for lounge owners and managers to streamline operations and financials, it can be overwhelming just how many options there are in the marketplace. If you’re looking for more information, check out our rundown of the 9 most important types of restaurant technology you need to run your business more efficiently.

• A marketing or promotional plan: It’s a competitive world out there! Your lounge marketing plan will show investors how you plan to stand out, attract customers, and turn them into loyal patrons.

• An opening date/launch plan: As an addendum to your marketing plan, your launch plan will lay out any special events or offers you plan to activate to build excitement for your lounge and keep people coming in through the first 30, 60, and 90 days.

How much does it cost to open a lounge?

A lounge and a bar are pretty similar, so we’ll use the estimated average cost to open a bar here. That number, according to Investopedia, is between $110,000-$850,000, depending on whether you’re renting or buying. It’s more affordable to buy an established bar or lounge than it is to start a new one.

How to open a bar with no money?

So, you probably don’t have hundreds of thousands of dollars readily available. Let’s talk about how you open a lounge with no money.

Use a restaurant incubator

Restaurant incubators are shared spaces that offer the kitchen facilities you need to practice your concept while gaining mentorship and guidance from experienced experts.

The benefits of an incubator may include:

• Equity-free capital

• Business development training

• Mentorship programs and workshops

• A community of supportive culinary professionals

There are incubators all over the country, from giants like yogurt company Chobani Incubator to more local program like Boston, MA’s Foundation Kitchen.

Apply for restaurant loans or explore capital opportunities

There is no shortage of restaurant financing options available to lounges, but you can get into the weeds pretty quickly when discussing them. It’s important to explore any potential financing option with a financial advisor with your best interest at heart before committing to anything.

But to speak generally, there are business loans, community development loans, alternative lending programs, or even micro-lending programs (like the Small Business Association [SBA] loan program) available to aspiring lounge owners. There are also many local resources available to small business owners, so spend a little time researching what’s available in near you.

You could explore a peer-to-peer lending service to find a loan that works for you, although you’ll likely spend a lengthy time in a review process before locking in a loan.

Alternative lenders who specialize in the restaurant industry are also becoming increasingly popular. These lenders understand the nuances and challenges of the restaurant industry and can serve both as mentors and provide loan terms that make sense for your lounge.

Find an investor

Unfortunately, many professional investors avoid food establishments as they can be high-risk and low-reward. You can certainly explore finding a restaurant investor and attempt to blow someone away with your idea, but expect a long journey.

In an ideal world, you can find a deep-pocketed person in your community who believes in your potential and idea. Angel investors invest in vision more than potential returns, and might just be lurking in your midst. Approach friends or family with your idea and leverage your existing network to learn of people who might be willing to invest in local talent or businesses.

Get creative with crowdfunding

Opening a lounge with crowdfunding? It’s definitely possible. Sites like Kickstarter, Indiegogo, GoFundMe, and Wellfound have successfully funded food establishments before and may provide you with a nice chunk of cash to get started.

The thing with crowdfunding is that you really need to get people excited. When it comes to opening a lounge, you need to tap into a local community and build enthusiasm for your idea by showing how it will make a positive impact. You probably aren’t going to get contributions from people 1,000 miles away, so you need to go grassroots with your marketing campaigns to pitch your business plan to influential locals. Plus, you should offer great incentives to your backers to encourage as many people as possible to chip in.

Start small

A pop-up lounge may seem like an odd idea, but it never hurts to start small to test a concept. Throughout the COVID-19 pandemic, pop-up bars became especially popular ways to try out ideas and prove to investors that a specific bar could work. National bars as well as small, local haunts have started this way.

Consider Greg Boehm’s Christmas-themed Miracle pop-up, which started as a single event and evolved into an annual takeover of more than 100 bars worldwide every December. Truly, if you’re ever in doubt if pop-ups work, just take note of all the seasonal pop-ups that arrive in your city at certain turns of the calendar.

Taking out a short-term rental is a great way to find a proof of concept, test menu items, and discover learnings about your potential customers without investing a boatload of money.

Reach out to your local restaurant association

Finally, there are local and national organizations that exist to help new and established food industry workers alike. These can be invaluable resources for those trying to open a lounge with no money. You could find potential investors, find leads on spaces for your lounge, or get resources and guidance to develop your business plan.

Some worthwhile resources to check out are:

• The National Restaurant Association, where you can find events and webinars about restaurant growth and advice for small businesses.

• Your state restaurant association, which may have specific programs or perks to help new lounge owners.

• Local groups like rotary, which encourages dialogue and idea exchange about businesses from all over the world.

***

Don’t be dissuaded by the high cost of opening a lounge. If you want to open a lounge with no money, you can do it, you just have to be ready to work hard and get creative. Make sure you have an awesome concept, a demonstration that you understand the financials and operations of the business, and be ready to defend your idea passionately to get others as excited about it as you are.