How Much Money Kava Bars Actually Make

Further Reading

The 3 Reasons Why Kava Is Becoming So Popular

Thousands of kava bars are opening right now across the United States. This is because of the absolutely insane amount of money that some business owners can make by creating a good kava bar in an upscale location. We know a thing or two about kava bars having helped people open theirs across the United States. Here is an entire article on the profitability of these bars.

On average kava bars across the United States run at around a 15-20% profit margin in total. This is because the average cost to manufacture a kava drink at a bar is around $3.50 and most bars sell the drink for $5.00. Once you factor in labor, overhead, tax, and other expenses your total profit margin comes to around 15%. This is not much for a bar but since kava has no legal limitations right now in the U.S some bars are making absolute insane amounts of money in high-traffic areas.

Generally speaking a kava bar in the United States will do pretty well right now. To start a good bar up will cost the owner around $200,000-$400,000 depending on the location. We tend to recommend starting the bar in up-and-coming cities and buying out the land if you can afford it. Places such as Orlando, Seattle, Portland, Washington D.C, and Boston are all great places to look into. However, these locations are expensive.

This article is going to go over just how much money a good kava bar can make. Let’s jump right in.

Cost To Open And Run The Kava Bar

Generally, opening a kava bar is going to have several large upfront costs. These costs need to be baked into the overall profitability of the project and depending on the location you can see a large investment of capital.

There really are only 4 major costs to opening up a kava bar here in the United States. Depending on your location this could be a massive investment or a pretty small one.

• Obtaining the building
• Hiring the staff
• Obtaining raw resources
• Decoration
• Marketing
• Legal fees

When it comes to the location this is going to determine the rest of the costs. If you have the capital it is a pretty good idea to buy the building. Normally if you did your homework properly you will know that land and building will increase in value. You should always be looking to locate the kava bar in a high-traffic location. Costs here can range from $20,000 up to around $1,000,000. This will be your largest investment.

Hiring the staff is pretty simple. Find some locals who are looking for a chill job and match the vibe of the place you’re trying to create. Generally, each kava bar only has two people running the store at a time. The first one is the bartender and they are in charge of the register, pouring drinks, and interacting with customers. The second is a barback who is in charge of cleaning up the bar, cleaning glasses, and making sure the bartender can stay completely focused on the guests. Try to stick to around 3-5% of net profit here until your larger, a budget of around $40,000 should be good for the first year depending on location.

Obtaining raw resources is a bit tricky. The Kava powder in bulk is pretty cheap at around $100 for about a pound or so. However, shipping is going to be costly. This is why you should advance order in bulk to lower shipping costs and then price out the kava powder as it comes in. For opening up, a new bar should have around 10-15 lbs on standby. Water is another source of expenditure, depending on your location this can add up. Budget around $2,000 of kava here.

Decoration can be either cheap or costly. Most kava bars tend to stick to a cheap form of decoration. However, if you can make a fancy kava bar in the high traffic area you can start to increase the cost of the drink to cocktail prices and sell an experience. However, this will take a custom bar, lighting, cups/glasses, and chairs. It is also a good idea to have a social game or two such as pool, checkers, or ping pong. This will keep people in the bar. Costs here can be about $10,000-$15,000 or higher depending on your goals.

Marketing can be tricky. Most people are not familiar with the concept of kava and it should be marketed as such. Some bars run with the traditional approach and offer a whole experience of shells, chants, and other forms of emersion. However, the best-selling bars normally create a ‘chill’ environment that is high quality and has low lighting. These bars will use television, newspapers, and blogs to create a marketing presence in their local area. Costs here range from about $3,000-$5,000 per year.

Legal fees are another location-dependent thing. I don’t know where you are trying to open your bar. Luckily with kava, you will not need a license but there might be other fees and legal stuff you should be aware of. For this, you should consult a business lawyer to look into this for you. Normally this is around $5,000.

The total cost to open a kava bar in the United States will range from $130,000 to around $400,000 on average. It all depends on the location, laws, and decor. You can open the bar with a much smaller upfront cost but from our clients, this is typically what we end up seeing in owners who are serious about succeeding in the brutal bar scene.

Profitability Of Kava Bars

As always the answer is “it depends on location.” You are going for foot traffic when you open a kava bar. A vast majority of new kava drinkers in the United States come in either off a whim while walking by or are referred to by a friend. Your #1 goal is to capture each customer and return them to a repeat customer. This is because a kava bar can be a crafted experience that people will want to take their friends to.

As such we should discuss the profitability of the average kava bar in the United States. For a single serving of kava in the range of 6-8 ounces, the cost should be about $5 depending on location. The cost to manufacture this drink is around $4.00 once you factor in everything to keep the business running. While this is not much if you are in a high-traffic area such as a major city you can get away with charging around $7 for a single serving and $14 for a double. The profit margin should still be the same at around 15-20% however on the basic drinks.

So how do you make more money? The answer is offering a tailored drink. A vast majority of kava bars don’t do this and just serve basic kava. You should be offering high-quality kava drinks that are paired with different types of fruit and additives. If your bar can create a good experience with just the basic kava drinks then you will start to sell the specialty cocktails like wildfire. This is where most kava bars make their money and the profit margin here can go upwards by around 50-60%.

One of the easiest ways to do this is to use traditional bowls to serve specialty cocktail kava mixtures. Kava bars in large cities are currently doing this and making massive amounts of money. This is because when your bartender comes out with a large amazing drink other people start ordering it. The trick is to not make the kava bar about the kava itself but rather make it about the experience of drinking kava with new friends.

Several of the most popular large kava bars in the U.S do this and make millions of dollars per year from one or two bars. Create an atmosphere and sell specialty drinks all while creating a lasting experience. Doing this will allow you to sell kava drinks with a profit margin of around 50-60%.

Conclusion

Thinking of building out a kava bar the correct way? Chances are you have some major questions on location and the method of going about it. There are some amazing bars in the United States that are super creative and their owners make millions of dollars per year. The trick is to make your entire bar an experience that is inviting and designed to pull people in over time. After you have loyal customers then you can start selling kava drinks at a 50-60% profit margin.

As always when you drink kava make sure you respect the drink. It is a cultural drink for many people out here in Hawaii and across the Pacific. Here at Kava-Bula, we aim to provide the best kava information on the internet, this includes how to make your own kava bars properly. Always remember to say ‘bula!’ when drinking your kava, this translates to wishing your local community and those around good health and prosperity.