Why the figures you will read are no use
Almost everything published gives a total range. The problem is that three things inside that total vary more between themselves than everything else combined: the leasehold premium, the deposit and the building work.
A venue already fitted out for hospitality with its licence in order can open for a fraction of what it costs to convert a shop, where you have to put in an extraction flue, soundproofing and accessible toilets. Comparing the two under one range does not inform: it confuses.
The items, one by one
This is the full list. Filling it in with quotes from your own area gives a number that actually means something.
PREMISES Leasehold premium (traspaso) ______ € Deposit (usually 2–6 months) ______ € First month's rent ______ € WORKS AND INSTALLATIONS Refurbishment and fit-out ______ € Extraction flue and ventilation ______ € Electrics and plumbing ______ € Technical project and site oversight______ € EQUIPMENT Kitchen, refrigeration, machinery ______ € Dining room and terrace furniture ______ € Crockery, glassware, utensils ______ € POS, printers and connectivity ______ € LICENCES AND FORMALITIES Activity and opening licence ______ € Company formation and notary ______ € Public liability insurance ______ € GETTING STARTED First stock order ______ € Signage, menus, wayfinding ______ € WORKING CAPITAL ← the forgotten one Months of fixed costs with no income______ €
The five nobody budgets for
All of them turn up after signing, which is the worst possible moment to discover them.
- The rental deposit. In hospitality landlords commonly ask for considerably more months than for a retail unit, and that money stays locked up for the whole lease.
- The technical project. An activity licence requires a signed project, and its cost is not inside the builder's quote.
- The extraction flue. The item that blows up budgets most often, and the one that most often stops you opening where it looked possible: it depends on the residents' association and the height of the building.
- Licence time. You pay rent from the day you sign, not from the day you open. Every month of processing is a month of rent with no till.
- Insurance and self-employed social security contributions for the months before you invoice anything.
Working capital: what really closes venues
What sinks most openings is not overspending on the fit-out: it is opening with no money for the months when you are not yet selling enough. A venue takes between three and six months to settle its clientele, and through those months payroll, rent, suppliers and utilities have to be paid all the same.
The prudent rule is holding back the equivalent of several months of all your fixed costs, and not touching it even if the first month goes well. A good first month is usually curiosity from the neighbourhood, not clientele.
Traspaso: what you are actually buying
With a traspaso you pay for three different things and it is worth separating them before negotiating: the right to take over the lease, the machinery and fittings that stay, and the clientele.
The first two can be valued. The third is what inflates the price and what comes with no guarantee: a bar's clientele usually belongs to whoever is behind the counter, not to the premises.
- Ask for the lease and check remaining years and assignment terms.
- Check the activity licence is in order and transferable.
- Value the machinery separately, with its age.
- Ask for the last few years of accounts, not the takings from one good month.
Frequently asked questions
What is a traspaso?
A payment to the outgoing tenant for taking over their lease, the fit-out and machinery that stay behind, and the goodwill. It is standard in the Spanish market and has no exact equivalent in the UK, where a leasehold premium usually covers less. It is often the single largest line in the budget, and the part with the least guarantee.
What does it cost to open a bar in Spain?
There is no useful figure: it depends on the traspaso, the city, and whether the premises are already fitted for hospitality. Any range you read mixes cases that are nothing alike. What works is filling in the list of items with quotes from your own area.
Is taking over an existing bar cheaper than starting from scratch?
Almost always in money and always in time, because you skip the works and the licence. What to examine closely is how much of the traspaso you are paying for clientele, which is the part that comes with no guarantee.
How many months of buffer should I have?
Several months of all your fixed costs, not just the rent. Payroll and social security are usually the largest item and the one that cannot be deferred.
What licence do I need?
The activity licence, and its requirements are set by your town hall, so they vary from one municipality to another. It is the first call worth making, before you sign anything at all.
How much should I budget for the POS?
Depends on whether you buy terminals or use devices you already have. A system that runs in the browser turns that item into a monthly fee rather than an upfront investment, which in an opening is not a small detail.