Budget & Checklist — Noraebang Startup Guide

PART 1

Budget — fill in the blanks with quotes

There are no reliable official statistics on the cost of opening a noraebang in the United States. The "reference range" in the tables below is a rough estimate drawn from industry sources and general commercial build-out rates. Use it only to check that no item is missing before you get quotes.

The site can change the cost several times over

Industry blogs put the initial investment for a karaoke business at $150,000–$500,000. By contrast, if you take general commercial build-out rates ($200–$300 per square foot, industry source) and calculate the conversion of a 3,000-square-foot former clothing store into a ten-room noraebang, construction and design alone come to $600,000–$1,000,000. Most of this difference comes from whether the space was already a bar or restaurant, and whether sprinklers, restrooms and electrical service are already in place. The same industry source estimates that a former restaurant space costs 30–50% less. Choosing the site is, in effect, setting the budget.

One-time costs before opening
Item	Reference range and basis	My quote
Entity formation · lawyer · accountant	Varies by state and by firm. Includes lease review and liquor license representation
Security deposit · first rent	Lease terms
Rent during construction	The remainder after any free-rent period. Increases if permits are delayed
Design (architect · engineer)	5–15% of construction cost (industry source)
Permit fees	About 1–2% of the construction valuation, plus plan review fees (example from a city fee schedule)
Construction (soundproofing · HVAC · electrical · restrooms · fire protection)	National average for general retail build-out about $155 per square foot; bars $200–$550 (industry source). Varies widely with the condition of the building
Liquor license	Example: California application fee for a new distilled-spirits license, $19,840. Market price if you buy an existing license
Conditional use permit · health review	Example: City of Los Angeles conditional use permit for alcohol, $13,000 or more (2020 report)
Karaoke machines	Korean commercial units, about $1,000 each × number of rooms
Amplifiers · speakers · microphones · screens	Quote from an audio vendor
Furniture · signage · booking and point-of-sale system	Quote
Opening marketing	Set an amount and spend within it
Contingency	10–15% of the total
Working capital	Fixed costs for at least 3–6 months after opening

Monthly fixed costs
Item	Reference	My quote
Rent + NNN	A warning sign if it exceeds 10% of projected revenue
Wages · payroll taxes · workers' compensation insurance	State minimum wage and tip rules (the Staff & House Rules section)
Insurance	General liability, property, liquor liability
Electricity · water · internet	HVAC and ventilation are a large share
Song updates	$25–$40 per machine per month (per a court decision)
Music licensing fees	Songs administered by ELOHIM EPF USA: $30 per room per month for venues that do not sell alcohol. U.S. performing rights organizations: each organization's quote
Alcohol · food supplies	Tied to revenue
Marketing · booking system fees	Adjust based on results
License renewals · accounting	Divide annual costs by 12 and set that aside each month

Sources for this section

Build-out rates (industry source) — GrowthFactor (citing Cushman & Wakefield), The Restaurant Warehouse
Design fees — Architizer · Permit fee example — City of Vancouver, WA
Karaoke business startup costs (industry blog) — Rex
California ABC fees — abc.ca.gov

PART 2

Final checklist

You may print this out and use it. The items run in order from the top.

Before you sign the lease

I have calculated the funds needed to last about one year from lease signing to opening.
I have confirmed with a lawyer that a liquor license can be issued in this state with my immigration status.
I have decided whether to sell alcohol and which license to pursue.
I have formed a business entity and obtained an EIN and a business bank account.
I have checked the zoning and existing permit conditions for this address at city hall.
I have measured the distance to housing, schools and churches, and checked parking.
I have walked the site with an architect and received in writing the occupancy limit, sprinklers, exits, restrooms and electrical capacity.
I have collected competitors' price lists and counted how busy they are on Tuesday, Friday and Saturday nights.
The lease contains a use clause, a right to terminate if permits are not obtained, a rent commencement date and a cap on the personal guarantee, and a lawyer has read it.

Construction and permits

I have filed for the liquor license, use permit, building permit and health review in parallel.
I have looked up the contractor's license and insurance, and have a written contract and a progress-payment schedule.
The design has no locks on room doors and does not cover the windows.
I have received fire-rating test reports for the sound-absorbing and finish materials.
I checked the voltage and certification marks of the equipment before ordering.
I have passed final inspection and received approval for occupancy. I received a lien waiver with every payment.

Before opening

I have completed sales tax registration, city business tax registration and insurance coverage.
I have taken care of employees' I-9s, workers' compensation insurance and alcohol service training.
I have written the license conditions, closing time and the ban on hostesses (doumi) and drink solicitation into staff rules.
I have obtained permission to use music. U.S. performing rights organizations and the rights holders of Korean songs; contracts and receipts kept.
The Google Business Profile, price list and online booking are live.
I have put the renewal dates for licenses, insurance and music licenses on the calendar.

Limits of this guide

This guide is general information intended to help people preparing to open a business. It is not legal, tax, immigration or real estate advice. Permits and regulations differ by state and city and change frequently, so before any contract or application, be sure to confirm this content, written as of October 2026, with the relevant agency and with a lawyer and an accountant. If you tell us about an error or a rule that has changed, we will correct it.

Budget and Final Checklist