How to close a bar follows the same general framework as closing a restaurant, but with three areas where the differences are significant enough to change your sequence and your financial exposure: liquor license disposition, equipment liquidation, and the specific vendor relationships that bars carry.
The liquor license is your most valuable asset -- and your biggest liability
A bar's liquor license is often worth more than all of its physical equipment combined. In major markets, a full liquor license can be worth $50,000 to $500,000 on the secondary market. In smaller markets, it may be worth $5,000 to $20,000. In states where licenses are issued by quota, the secondary market value can be substantial.
The critical mistake bar owners make is surrendering the license back to the state before exploring the secondary market. Once you surrender a license, it is gone. You cannot get it back. If there is any secondary market value, you want to sell it rather than surrender it.
The process for transferring a liquor license varies by state. In most states, the buyer of the license must apply for approval from the state liquor control board, and the transfer must be completed before your license expires. This process typically takes 60 to 120 days. If you are closing on a specific date, you need to start the license transfer process at least 90 days in advance.
If you cannot find a buyer, or if the license has no secondary market value (common in states with unlimited license issuance), you surrender it to the state. The surrender process is typically straightforward -- a written notice to the state liquor authority and return of the physical license.
The restaurant liquor license closing guide on this site covers the state-by-state rules in detail.
Equipment liquidation for bars
Bar equipment has a different liquidation profile than restaurant kitchen equipment. The good news is that some bar-specific equipment holds its value better than kitchen equipment. The bad news is that the market is narrower.
What liquidates well: Draft beer systems in good condition, commercial refrigeration (back bar coolers, keg coolers), commercial ice machines, and POS systems. A well-maintained draft system from a major manufacturer (Perlick, Micro Matic) can recover 30 to 50 cents on the dollar.
What liquidates poorly: Custom bar tops, built-in cabinetry, decorative elements, and anything that was custom-fabricated for your specific space. These items have essentially no secondary market value.
The alcohol inventory question: You cannot sell your remaining alcohol inventory to the general public. You can sell it to another licensed establishment (with state approval in most states), return it to your distributors for credit (distributors are often willing to take back unopened cases), or surrender it to the state. Do not simply discard alcohol inventory -- it has real value and the disposal process has legal requirements.
Contact your distributors early in the closing process. Most major distributors (Southern Glazer's, Republic National, Breakthru Beverage) have processes for buying back inventory from closing accounts. The credit you receive reduces your final accounts payable balance.
Lease considerations for bars
Bar leases often have different provisions than restaurant leases. Specifically:
Use clause restrictions. Your lease may specify that the space can only be used as a bar or tavern. This limits the pool of potential assignees or sublessees to other bar operators, which is a smaller market than the general restaurant market.
Noise and nuisance provisions. Bars often have specific lease provisions related to noise, hours of operation, and nuisance complaints. If you have had issues with these provisions during your tenancy, your landlord may have claims against your security deposit or personal guarantee.
Liquor license contingency. Some bar leases include provisions that tie the lease to the maintenance of a valid liquor license. If you surrender your license before your lease expires, you may be in technical default.
Review your lease carefully before making any decisions about the liquor license. The sequence matters: in most cases, you want to resolve the lease situation before or simultaneously with the license transfer, not after.
The closing sequence for bars
- Assess liquor license value and begin transfer process (90+ days before close)
- Negotiate lease exit or assignment with landlord
- Contact distributors about inventory buyback
- Notify employees per state law requirements
- Arrange equipment liquidation (auction, direct sale, or liquidator)
- Handle gift cards and outstanding tabs
- File final sales tax returns and pay any outstanding tax obligations
- Surrender or transfer the liquor license (after lease is resolved)
- Dissolve the business entity
What bars typically cost to close
The cost structure for closing a bar is similar to a restaurant of comparable size, with one important difference: the liquor license may generate significant proceeds that offset other closing costs. A bar with a valuable liquor license may actually net positive on the closure if the license sale proceeds exceed the lease buyout and other closing costs.
For bars with licenses that have no secondary market value, the closing cost structure mirrors a restaurant: lease buyout (typically 3 to 6 months of rent), final payroll, vendor settlement, and legal/accounting fees.
Related guides: Restaurant liquor license: what happens when you close | Restaurant equipment liquidation: what your kitchen is actually worth | What does it actually cost to close a restaurant?