Arz al-Lubnan Hookah Bar will specialize in non-alcoholic, organic drinks, and healthy appetizers and snacks of both Middle Eastern and American origin. The initial menu includes:
Prices for drinks will range from $3 for simple teas or small coffees to $12 for certain mocktails. Prices for appetizers will range from $5 to $8 for single servings and $12 to $25 for group dishes (serving 4-6 people).
Flavored tobacco for hookah pipes will be sold as well for $15 for the first round and $12 for subsequent rounds. flavors include:
The facility will include a stage area where performances, talks, and films can be presented. These will be organized by customer groups who will book the space free of charge for events that are acceptable to Arz al-Lubnan Hookah Bar management.
The market for hookah bars in the United States has grown significantly in the past decade. Hookah-bars.com reports that, as of October 2008, there were at least 470 hookah bars in the U.S. and an average of five new hookah bars were opening every month. From these numbers, it can be estimated that between 2-5 million current hookah smokers live in the United States. Of these hookah smokers, approximately 10% are of Middle Eastern origin and the remaining groups are of American origin but have grown to embrace hookah culture.
In Trendytown, Arz al-Lubnan Hookah Bar will focus on locals in the greater Trendytown area of Middle Eastern origin and young professionals.
Arz al-Lubnan Hookah Bar has determined the following market segmentation for potential customers:
College Age Residents: College students who seek an alternative to bars and parties on their campuses seek out different experiences. Hookah bars provide such an experience because of their exotic ambiance, colorful atmosphere, focus on group dynamics, and the element of danger/risk provided by smoking. Furthermore, those between the ages of 18 and 21 can frequent hookah bars while they cannot go to many bars that serve alcohol.
Young Professionals: 22-35 year-old professionals who are tired with bar culture sometimes react against it by looking for other activities. They seek locations where they can congregate with friends, talk, and share a new experience. However, they are turned off by hookah bars with a high percentage of college age customers.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
Middle-Eastern Americans | 3% | 500 | 515 | 530 | 546 | 562 | 2.97% |
College Age Residents | 3% | 15,000 | 15,450 | 15,914 | 16,391 | 16,883 | 3.00% |
Young Professionals | 3% | 30,000 | 30,900 | 31,827 | 32,782 | 33,765 | 3.00% |
Total | 3.00% | 45,500 | 46,865 | 48,271 | 49,719 | 51,210 | 3.00% |
Arz al-Lubnan Hookah Bar will target Middle Eastern Americans and young professionals, and not college age residents. By seeking the target market segments described here, Arz al-Lubnan Hookah Bar intends to establish a base of Middle Eastern devotees who will serve to give the bar credibility and authenticity. These devotees will feel comfortable bringing their non-Middle Eastern friends to Arz al-Lubnan Hookah Bar. These additional customers must be sought to prove Arz al-Lubnan Hookah Bar as a franchisable model for American consumers. Therefore, Arz al-Lubnan Hookah Bar will be positioned for young professionals as an alternative to bars where community can be developed, as well as a non-threatening fusion of American and Middle Eastern cultural aspects, rather than a total immersion in Middle Eastern culture.
These markets exist throughout the United States and the Trendytown location will serve as a proving ground for the Arz al-Lubnan Hookah Bar model.
Over 470 hookah bars are in existence in the United States, spread throughout the country with some concentration in cities. From 2000 to 2004, at least 200-300 new hookah bars opened for business, according to the journal Smokeshop . Generally, as long as 80% of sales are derived from tobacco, smoking within hookah establishments can be permitted by law.
The hookah bar industry is highly fragmented, with most bars being independent establishments. A small percentage open a second or third location. There are currently no national hookah bar franchises.
Indirect competitors to hookah bars are coffee shops, bars that serve liquor, and cigar stores/tobacconists.
Typically, hookah tobacco is sold and pipes are provided to customers in hookah bars. Tobacco is sold in rounds which serves a group of four to six for about an hour. Food and drinks are sold via waiter or bar service while customers sit in groups and smoke. While some attend hookah bars alone, customers typically attend with groups and sit at round tables with their group.
Hookah bar customers in the United States judge between establishments based on location (they will not be willing to travel too far out of their way for a hookah bar) the variety of flavors served, the atmosphere, and the additional food and drink options served.
Specific competitors for Arz al-Lubnan Hookah Bar include Ali Baba Hookah Bar, Babylon Hookah Lounge, Desert Cafe, and Zee’s Smoking Corner.
Ali Baba Hookah Bar : With DJs and dance parties on weekends, Ali Baba’s serves a younger crowd who enjoy meeting others.
Babylon Hookah Lounge: Also has DJs and tends toward a young consumer base. Older customers complain that the lounge is loud, much like a rave concert.
Desert Cafe: Loved by regulars for its owner and its atmosphere, Desert Cafe has plasma TVs, outdoor seating in summer and atmospheric lighting. The location is faulted for its low quality tobacco and lack of upkeep on their hookahs.
Zee’s Smoking Corner: With an extensive list of flavors, Zee’s also focuses on college age residents and drives away others with its loud music and party atmosphere.
The website for Arz al-Lubnan Hookah Bar will offer a standard “brochure-style” presentation with details on the products, services, location, and concept of the bar, as well as an extended social community component, tied in to Facebook. The website will serve casual customers interested in the bar as well as fans who become involved in creating cultural events and groups at Arz al-Lubnan Hookah Bar through the social portal, which will include a basic calendar visible to all users and extended features reserved for members who log-in.
The website for Arz al-Lubnan Hookah Bar will be promoted through PR, direct advertising, search engine optimization, and the growing community of customers.
Development of the website requires an experienced Web development firm with past success in developing social networking components for businesses. The website will include the following in its basic, front end:
The social portal of the site will include:
Furthermore, the developer will create a Facebook Fan Page, and a back end for the site including:
The focus for implementation will be on establishing the quality of the offering, its suitability for the 22+ target market, and the infrastructure to allow for community-driven culture. The fostering of the Arz al-Lubnan Hookah Bar community will be important to the growth of the business and its proof as a franchisable model.
Arz al-Lubnan Hookah Bar’s competitive edge will be established through its community organizing ability via its website. This website will present an interface for users to:
The party-like atmosphere at other hookah bars does not allow for easy conversation and for performances and events of the type expected at Arz al-Lubnan Hookah Bar.
The marketing strategy of Arz al-Lubnan Hookah Bar will be to establish a base of Middle Eastern American customers first, and using these customers to bring in other young professional as friends. To that end, the following tactics will be employed:
The bar’s grand opening will be marked by an event featuring live music, free food and drink offers, and door prizes.
After the launch, promotional incentives for customers will be advertised in newspaper advertisements, on the website, and in the store for:
These expenses are included in the Profit and Loss statement for Arz al-Lubnan Hookah Bar as marketing expense.
Arz al-Lubnan Hookah Bar will sell its products through attentive wait staff and bar counter staff. They will be compensated through base hourly wages and tips and will work to provide the best customer service possible. Wait staff will use wireless tablets to place orders which are sent over the bar’s wireless network to kitchen staff and bar staff to prepare dishes and drinks.
Sales will be predominantly through tobacco revenues, which also has a relatively low cost of sales. Secondary revenue streams are food and drinks which will be sold to some, but not all, customers who order tobacco. Sharp growth is expected over the first three years of operation as the community aspect of Arz al-Lubnan Hookah Bar is developed and customer-directed programming begins to take place.
It is expected that a customer will return to Arz al-Lubnan Hookah Bar on average 15 times a year, taking part in 20 rounds of tobacco in that time. Therefore, this projection represents 1,000 customer groups in the first year, 2,500 customer groups in the second year and 3,500 customer groups in the third year.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Unit Sales | |||
Tobacco | 19,791 | 50,000 | 70,000 |
Drinks | 23,749 | 60,000 | 80,000 |
Food | 15,831 | 30,000 | 50,000 |
Total Unit Sales | 59,371 | 140,000 | 200,000 |
Unit Prices | Year 1 | Year 2 | Year 3 |
Tobacco | $14.00 | $14.00 | $14.00 |
Drinks | $6.00 | $6.00 | $6.00 |
Food | $5.00 | $5.00 | $5.00 |
Sales | |||
Tobacco | $277,074 | $700,000 | $980,000 |
Drinks | $142,494 | $360,000 | $480,000 |
Food | $79,155 | $150,000 | $250,000 |
Total Sales | $498,723 | $1,210,000 | $1,710,000 |
Direct Unit Costs | Year 1 | Year 2 | Year 3 |
Tobacco | $4.20 | $4.20 | $4.20 |
Drinks | $1.20 | $1.20 | $1.20 |
Food | $1.50 | $1.50 | $1.50 |
Direct Cost of Sales | |||
Tobacco | $83,122 | $210,000 | $294,000 |
Drinks | $28,499 | $72,000 | $96,000 |
Food | $23,747 | $45,000 | $75,000 |
Subtotal Direct Cost of Sales | $135,368 | $327,000 | $465,000 |
The $15,000 in start-up marketing will be spent on the downtown ad campaign (design and production of posters and flyers, as well as purchasing ad space), PR campaign (creation and mailing of press kit), and the grand opening event (live music, door prizes, decorations, free food and drink offers).
After the launch, the business will hold a series of promotions – first the business card drawing and then event incentives – to initiate programming at Arz al-Lubnan Hookah Bar.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
PR Campaign | 1/1/2010 | 2/28/2010 | $1,000 | YB | Marketing |
Downtown Ad Campaign | 2/1/2010 | 2/28/2010 | $5,000 | YB | Marketing |
Bar Grand Opening | 3/1/2010 | 3/1/2010 | $9,000 | SB | Operations |
Business Card Drawing | 5/1/2010 | 5/30/2010 | $5,000 | YB | Marketing |
Event Incentives | 6/1/2010 | 8/1/2010 | $5,000 | WG | Marketing |
Totals | $25,000 |
Arz al-Lubnan Hookah Bar is managed by the husband and wife team of Sayed and Yasmine Batroun, Lebanese-American residents of Trendytown who have developed the concept for the store after working in hookah lounges while overseas.
Sayed Batroun will manage store operations and train wait and kitchen staff. He has culinary experience with ten years as a cook. He will handle procurement and inventory management. He will also work as head cook during initial operations.
Yasmine Batroun will manage marketing, business development, and finance. She has an MBA and corporate experience as a marketing associate for a Fortune 500 business. She will oversee accounting and bookkeeping. She will provide general management in the restaurant as needed, including management of events.
In the second year of operation a general manager will be hired to take over staff supervision, staff training, procurement and inventory management. Sayed Batroun will continue to serve as head cook but will work on a more strategic level in other areas.
Additional staff will include kitchen staff and wait staff.
Staff will include two bartenders, two wait staff, and one kitchen staff initially. This will grow to four bartenders, six wait staff and three kitchen staff. Wages for bartenders and wait staff are lower as they are significantly augmented by tips. These personnel assumptions are based on the bar being open 80 hours per week.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Sayed Batroun | $36,000 | $36,000 | $36,000 |
Yamine Batroun | $36,000 | $36,000 | $36,000 |
Bar Staff | $48,000 | $75,000 | $110,000 |
Wait Staff | $33,600 | $70,000 | $120,000 |
Kitchen Staff | $30,000 | $70,000 | $120,000 |
General Manager | $0 | $50,000 | $60,000 |
Total People | 7 | 11 | 15 |
Total Payroll | $183,600 | $337,000 | $482,000 |
The business is expected to grow significantly in its first three years as it meets the market need for an alternative to local youth-oriented hookah bars. Growth to a second location will occur in the fourth year, financed by the cash reserves of the business.
While the owners will invest substantially in the company, the bulk of the start-up funding will be provided primarily by outside investors, with an additional long-term loan against the assets of the bar. Credit card debt will make up the remainder.
Investors will be provided with 40% of shares for their investment, as the current partners are contributing considerable sweat and financial equity of their own, as well as their specific expertise and credibility as Lebanese-Americans.
Start-up Funding | |
Start-up Expenses to Fund | $80,000 |
Start-up Assets to Fund | $175,000 |
Total Funding Required | $255,000 |
Assets | |
Non-cash Assets from Start-up | $135,000 |
Cash Requirements from Start-up | $40,000 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $40,000 |
Total Assets | $175,000 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $8,000 |
Long-term Liabilities | $50,000 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $58,000 |
Capital | |
Planned Investment | |
Sivrihisar Geobekli | $35,000 |
Willusa Geobekli | $35,000 |
Other Investors | $127,000 |
Additional Investment Requirement | $0 |
Total Planned Investment | $197,000 |
Loss at Start-up (Start-up Expenses) | ($80,000) |
Total Capital | $117,000 |
Total Capital and Liabilities | $175,000 |
Total Funding | $255,000 |
Break-even analysis.
A projected monthly fixed operating cost is shown in the table below. With this level of fixed cost, break even is expected in the sixth month of operation.
Break-even Analysis | |
Monthly Units Break-even | 4,200 |
Monthly Revenue Break-even | $35,279 |
Assumptions: | |
Average Per-Unit Revenue | $8.40 |
Average Per-Unit Variable Cost | $2.28 |
Estimated Monthly Fixed Cost | $25,703 |
Key expenses will include the cost of sales attributed to supplies and raw materials, payroll for the growing staff, marketing to promote the bar in the community, and the bar’s rent and depreciation. The bar will show a profit in the first year which will continue to grow. This is expected due to the high gross margins of selling tobacco through hookahs and the type of food and drinks sold.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $498,723 | $1,210,000 | $1,710,000 |
Direct Cost of Sales | $135,368 | $327,000 | $465,000 |
Other Costs of Sales | $15,914 | $48,400 | $51,300 |
Total Cost of Sales | $151,282 | $375,400 | $516,300 |
Gross Margin | $347,442 | $834,600 | $1,193,700 |
Gross Margin % | 69.67% | 68.98% | 69.81% |
Expenses | |||
Payroll | $183,600 | $337,000 | $482,000 |
Marketing/Promotion | $44,000 | $55,000 | $75,000 |
Depreciation | $16,800 | $20,000 | $24,000 |
Rent | $24,000 | $2,500 | $26,500 |
Utilities | $3,600 | $4,000 | $4,500 |
Insurance | $2,400 | $2,700 | $3,000 |
Payroll Taxes | $27,540 | $50,550 | $72,300 |
Permit Renewals | $500 | $2,000 | $800 |
Supplies | $6,000 | $15,000 | $25,000 |
Total Operating Expenses | $308,440 | $488,750 | $713,100 |
Profit Before Interest and Taxes | $39,002 | $345,850 | $480,600 |
EBITDA | $55,802 | $365,850 | $504,600 |
Interest Expense | $5,341 | $3,200 | $1,400 |
Taxes Incurred | $10,098 | $102,795 | $143,760 |
Net Profit | $23,562 | $239,855 | $335,440 |
Net Profit/Sales | 4.72% | 19.82% | 19.62% |
The cash flow table and chart show the business becoming cash flow positive within six months of operation. Cash will be retained in the business and invested in short-term holdings in preparation for expansion of the franchise after the third year of operation.
Long-term debt will be paid over the first three years of operation with a grace period for the first six months. Short-term borrowings will be paid over the first year of operations.
Some current assets must be replenished each year, and long-term assets must be replaced beginning in the second year as some equipment ages.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $498,723 | $1,210,000 | $1,710,000 |
Subtotal Cash from Operations | $498,723 | $1,210,000 | $1,710,000 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $44,885 | $108,900 | $153,900 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
Subtotal Cash Received | $543,608 | $1,318,900 | $1,863,900 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $183,600 | $337,000 | $482,000 |
Bill Payments | $228,259 | $609,251 | $847,567 |
Subtotal Spent on Operations | $411,859 | $946,251 | $1,329,567 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $44,885 | $108,900 | $153,900 |
Principal Repayment of Current Borrowing | $8,000 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $9,000 | $18,000 | $18,000 |
Purchase Other Current Assets | $2,400 | $3,000 | $3,500 |
Purchase Long-term Assets | $0 | $10,000 | $10,000 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $476,144 | $1,086,151 | $1,514,967 |
Net Cash Flow | $67,464 | $232,749 | $348,933 |
Cash Balance | $107,464 | $340,213 | $689,146 |
The net worth of Arz al-Lubnan Hookah Bar will grow significantly due to relatively low liabilities and high cash reserves as the business prepares for future self-financed expansion.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $107,464 | $340,213 | $689,146 |
Other Current Assets | $42,400 | $45,400 | $48,900 |
Total Current Assets | $149,864 | $385,613 | $738,046 |
Long-term Assets | |||
Long-term Assets | $95,000 | $105,000 | $115,000 |
Accumulated Depreciation | $16,800 | $36,800 | $60,800 |
Total Long-term Assets | $78,200 | $68,200 | $54,200 |
Total Assets | $228,064 | $453,813 | $792,246 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $46,502 | $50,395 | $71,388 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $46,502 | $50,395 | $71,388 |
Long-term Liabilities | $41,000 | $23,000 | $5,000 |
Total Liabilities | $87,502 | $73,395 | $76,388 |
Paid-in Capital | $197,000 | $197,000 | $197,000 |
Retained Earnings | ($80,000) | ($56,438) | $183,417 |
Earnings | $23,562 | $239,855 | $335,440 |
Total Capital | $140,562 | $380,417 | $715,857 |
Total Liabilities and Capital | $228,064 | $453,813 | $792,246 |
Net Worth | $140,562 | $380,417 | $715,857 |
The business is compared here against Snack and Nonalcoholic Beverage Bars, industry SIC code 5812, NAICS code 722213, with over $1 million in annual revenue. Gross margin is expected to be higher than average due to the premium that can be earned from tobacco sales.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | n.a. | 142.62% | 41.32% | -3.07% |
Percent of Total Assets | ||||
Other Current Assets | 18.59% | 10.00% | 6.17% | 42.36% |
Total Current Assets | 65.71% | 84.97% | 93.16% | 50.54% |
Long-term Assets | 34.29% | 15.03% | 6.84% | 49.46% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 20.39% | 11.10% | 9.01% | 24.20% |
Long-term Liabilities | 17.98% | 5.07% | 0.63% | 52.11% |
Total Liabilities | 38.37% | 16.17% | 9.64% | 76.31% |
Net Worth | 61.63% | 83.83% | 90.36% | 23.69% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 69.67% | 68.98% | 69.81% | 59.90% |
Selling, General & Administrative Expenses | 64.94% | 49.15% | 50.19% | 24.02% |
Advertising Expenses | 8.82% | 4.55% | 4.39% | 3.24% |
Profit Before Interest and Taxes | 7.82% | 28.58% | 28.11% | 7.73% |
Main Ratios | ||||
Current | 3.22 | 7.65 | 10.34 | 1.10 |
Quick | 3.22 | 7.65 | 10.34 | 0.98 |
Total Debt to Total Assets | 38.37% | 16.17% | 9.64% | 76.31% |
Pre-tax Return on Net Worth | 23.95% | 90.07% | 66.94% | 76.30% |
Pre-tax Return on Assets | 14.76% | 75.50% | 60.49% | 18.08% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 4.72% | 19.82% | 19.62% | n.a |
Return on Equity | 16.76% | 63.05% | 46.86% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 5.91 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 29 | 26 | n.a |
Total Asset Turnover | 2.19 | 2.67 | 2.16 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.62 | 0.19 | 0.11 | n.a |
Current Liab. to Liab. | 0.53 | 0.69 | 0.93 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $103,362 | $335,217 | $666,657 | n.a |
Interest Coverage | 7.30 | 108.08 | 343.29 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.46 | 0.38 | 0.46 | n.a |
Current Debt/Total Assets | 20% | 11% | 9% | n.a |
Acid Test | 3.22 | 7.65 | 10.34 | n.a |
Sales/Net Worth | 3.55 | 3.18 | 2.39 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
40% of equity will be awarded to investors for their cash contribution, 22% to founders for their cash contribution, and the remaining 38% to owners for their sweat equity. This values the company at $317,500 initially.
Assuming valuations at either a multiple of earnings (10 is reasonable for this industry), or a multiple of sales (2 is reasonable for this industry), the valuation at the end of year 3 of the entire company is around $3.385 million (an average of the two methods of valuation). This yields a significant, 121% internal rate of return for investors. An exit event will be possible when the company raises money for franchising or sells to an existing franchisor at the point of expansion.
Investment Analysis | ||||
Start | Year 1 | Year 2 | Year 3 | |
Initial Investment | ||||
Investment | $197,000 | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 | $0 |
Ending Valuation | $0 | $0 | $0 | $2,120,400 |
Combination as Income Stream | ($197,000) | $0 | $0 | $2,120,400 |
Percent Equity Acquired | 62% | |||
Net Present Value (NPV) | $1,269,171 | |||
Internal Rate of Return (IRR) | 121% | |||
Assumptions | ||||
Discount Rate | 10.00% | |||
Valuation Earnings Multiple | 10 | 10 | 10 | |
Valuation Sales Multiple | 2 | 2 | 2 | |
Investment (calculated) | $197,000 | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 | |
Calculated Earnings-based Valuation | $240,000 | $2,400,000 | $3,350,000 | |
Calculated Sales-based Valuation | $1,000,000 | $2,420,000 | $3,420,000 | |
Calculated Average Valuation | $620,000 | $2,410,000 | $3,385,000 |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Unit Sales | |||||||||||||
Tobacco | 500 | 600 | 720 | 864 | 1,037 | 1,244 | 1,493 | 1,792 | 2,150 | 2,580 | 3,096 | 3,715 | |
Drinks | 600 | 720 | 864 | 1,037 | 1,244 | 1,493 | 1,792 | 2,150 | 2,580 | 3,096 | 3,715 | 4,458 | |
Food | 400 | 480 | 576 | 691 | 829 | 995 | 1,194 | 1,433 | 1,720 | 2,064 | 2,477 | 2,972 | |
Total Unit Sales | 1,500 | 1,800 | 2,160 | 2,592 | 3,110 | 3,732 | 4,479 | 5,375 | 6,450 | 7,740 | 9,288 | 11,145 | |
Unit Prices | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Tobacco | $14.00 | $14.00 | $14.00 | $14.00 | $14.00 | $14.00 | $14.00 | $14.00 | $14.00 | $14.00 | $14.00 | $14.00 | |
Drinks | $6.00 | $6.00 | $6.00 | $6.00 | $6.00 | $6.00 | $6.00 | $6.00 | $6.00 | $6.00 | $6.00 | $6.00 | |
Food | $5.00 | $5.00 | $5.00 | $5.00 | $5.00 | $5.00 | $5.00 | $5.00 | $5.00 | $5.00 | $5.00 | $5.00 | |
Sales | |||||||||||||
Tobacco | $7,000 | $8,400 | $10,080 | $12,096 | $14,518 | $17,416 | $20,902 | $25,088 | $30,100 | $36,120 | $43,344 | $52,010 | |
Drinks | $3,600 | $4,320 | $5,184 | $6,222 | $7,464 | $8,958 | $10,752 | $12,900 | $15,480 | $18,576 | $22,290 | $26,748 | |
Food | $2,000 | $2,400 | $2,880 | $3,455 | $4,145 | $4,975 | $5,970 | $7,165 | $8,600 | $10,320 | $12,385 | $14,860 | |
Total Sales | $12,600 | $15,120 | $18,144 | $21,773 | $26,127 | $31,349 | $37,624 | $45,153 | $54,180 | $65,016 | $78,019 | $93,618 | |
Direct Unit Costs | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Tobacco | 30.00% | $4.20 | $4.20 | $4.20 | $4.20 | $4.20 | $4.20 | $4.20 | $4.20 | $4.20 | $4.20 | $4.20 | $4.20 |
Drinks | 20.00% | $1.20 | $1.20 | $1.20 | $1.20 | $1.20 | $1.20 | $1.20 | $1.20 | $1.20 | $1.20 | $1.20 | $1.20 |
Food | 30.00% | $1.50 | $1.50 | $1.50 | $1.50 | $1.50 | $1.50 | $1.50 | $1.50 | $1.50 | $1.50 | $1.50 | $1.50 |
Direct Cost of Sales | |||||||||||||
Tobacco | $2,100 | $2,520 | $3,024 | $3,629 | $4,355 | $5,225 | $6,271 | $7,526 | $9,030 | $10,836 | $13,003 | $15,603 | |
Drinks | $720 | $864 | $1,037 | $1,244 | $1,493 | $1,792 | $2,150 | $2,580 | $3,096 | $3,715 | $4,458 | $5,350 | |
Food | $600 | $720 | $864 | $1,037 | $1,244 | $1,493 | $1,791 | $2,150 | $2,580 | $3,096 | $3,716 | $4,458 | |
Subtotal Direct Cost of Sales | $3,420 | $4,104 | $4,925 | $5,910 | $7,092 | $8,509 | $10,212 | $12,256 | $14,706 | $17,647 | $21,177 | $25,411 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sayed Batroun | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | |
Yamine Batroun | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | |
Bar Staff | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | |
Wait Staff | $2,800 | $2,800 | $2,800 | $2,800 | $2,800 | $2,800 | $2,800 | $2,800 | $2,800 | $2,800 | $2,800 | $2,800 | |
Kitchen Staff | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | |
General Manager | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total People | 7 | 7 | 7 | 7 | 7 | 7 | 7 | 7 | 7 | 7 | 7 | 7 | |
Total Payroll | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $12,600 | $15,120 | $18,144 | $21,773 | $26,127 | $31,349 | $37,624 | $45,153 | $54,180 | $65,016 | $78,019 | $93,618 | |
Direct Cost of Sales | $3,420 | $4,104 | $4,925 | $5,910 | $7,092 | $8,509 | $10,212 | $12,256 | $14,706 | $17,647 | $21,177 | $25,411 | |
Other Costs of Sales | $1,000 | $1,050 | $1,102 | $1,157 | $1,215 | $1,276 | $1,340 | $1,407 | $1,477 | $1,551 | $1,629 | $1,710 | |
Total Cost of Sales | $4,420 | $5,154 | $6,027 | $7,067 | $8,307 | $9,785 | $11,552 | $13,663 | $16,183 | $19,198 | $22,806 | $27,121 | |
Gross Margin | $8,180 | $9,966 | $12,117 | $14,706 | $17,820 | $21,564 | $26,072 | $31,490 | $37,997 | $45,818 | $55,213 | $66,497 | |
Gross Margin % | 64.92% | 65.91% | 66.78% | 67.54% | 68.21% | 68.79% | 69.30% | 69.74% | 70.13% | 70.47% | 70.77% | 71.03% | |
Expenses | |||||||||||||
Payroll | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | |
Marketing/Promotion | $5,000 | $5,000 | $5,000 | $5,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | |
Depreciation | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | $1,400 | |
Rent | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | |
Utilities | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | |
Insurance | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | |
Payroll Taxes | 15% | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 |
Permit Renewals | 15% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $500 | $0 | $0 |
Supplies | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | |
Total Operating Expenses | $26,995 | $26,995 | $26,995 | $26,995 | $24,995 | $24,995 | $24,995 | $24,995 | $24,995 | $25,495 | $24,995 | $24,995 | |
Profit Before Interest and Taxes | ($18,815) | ($17,029) | ($14,878) | ($12,289) | ($7,175) | ($3,431) | $1,077 | $6,495 | $13,002 | $20,323 | $30,218 | $41,502 | |
EBITDA | ($17,415) | ($15,629) | ($13,478) | ($10,889) | ($5,775) | ($2,031) | $2,477 | $7,895 | $14,402 | $21,723 | $31,618 | $42,902 | |
Interest Expense | $513 | $509 | $505 | $495 | $485 | $475 | $453 | $428 | $403 | $378 | $354 | $342 | |
Taxes Incurred | ($5,798) | ($5,261) | ($4,615) | ($3,835) | ($2,298) | ($1,172) | $187 | $1,820 | $3,780 | $5,983 | $8,959 | $12,348 | |
Net Profit | ($13,530) | ($12,277) | ($10,768) | ($8,949) | ($5,362) | ($2,734) | $437 | $4,247 | $8,819 | $13,961 | $20,905 | $28,813 | |
Net Profit/Sales | -107.38% | -81.20% | -59.35% | -41.10% | -20.52% | -8.72% | 1.16% | 9.41% | 16.28% | 21.47% | 26.79% | 30.78% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $12,600 | $15,120 | $18,144 | $21,773 | $26,127 | $31,349 | $37,624 | $45,153 | $54,180 | $65,016 | $78,019 | $93,618 | |
Subtotal Cash from Operations | $12,600 | $15,120 | $18,144 | $21,773 | $26,127 | $31,349 | $37,624 | $45,153 | $54,180 | $65,016 | $78,019 | $93,618 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 9.00% | $1,134 | $1,361 | $1,633 | $1,960 | $2,351 | $2,821 | $3,386 | $4,064 | $4,876 | $5,851 | $7,022 | $8,426 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $13,734 | $16,481 | $19,777 | $23,733 | $28,478 | $34,170 | $41,010 | $49,217 | $59,056 | $70,867 | $85,041 | $102,044 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | $15,300 | |
Bill Payments | $314 | $9,472 | $10,747 | $12,273 | $14,047 | $14,876 | $17,487 | $20,611 | $24,354 | $28,850 | $34,557 | $40,670 | |
Subtotal Spent on Operations | $15,614 | $24,772 | $26,047 | $27,573 | $29,347 | $30,176 | $32,787 | $35,911 | $39,654 | $44,150 | $49,857 | $55,970 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $1,134 | $1,361 | $1,633 | $1,960 | $2,351 | $2,821 | $3,386 | $4,064 | $4,876 | $5,851 | $7,022 | $8,426 | |
Principal Repayment of Current Borrowing | $300 | $300 | $300 | $800 | $800 | $800 | $800 | $1,000 | $1,000 | $1,000 | $900 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | |
Purchase Other Current Assets | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | $200 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $17,248 | $26,633 | $28,180 | $30,532 | $32,699 | $33,997 | $38,673 | $42,675 | $47,231 | $52,702 | $59,478 | $66,096 | |
Net Cash Flow | ($3,514) | ($10,152) | ($8,403) | ($6,800) | ($4,220) | $173 | $2,337 | $6,542 | $11,826 | $18,166 | $25,562 | $35,948 | |
Cash Balance | $36,486 | $26,334 | $17,931 | $11,131 | $6,911 | $7,084 | $9,421 | $15,963 | $27,789 | $45,954 | $71,517 | $107,464 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $40,000 | $36,486 | $26,334 | $17,931 | $11,131 | $6,911 | $7,084 | $9,421 | $15,963 | $27,789 | $45,954 | $71,517 | $107,464 |
Other Current Assets | $40,000 | $40,200 | $40,400 | $40,600 | $40,800 | $41,000 | $41,200 | $41,400 | $41,600 | $41,800 | $42,000 | $42,200 | $42,400 |
Total Current Assets | $80,000 | $76,686 | $66,734 | $58,531 | $51,931 | $47,911 | $48,284 | $50,821 | $57,563 | $69,589 | $87,954 | $113,717 | $149,864 |
Long-term Assets | |||||||||||||
Long-term Assets | $95,000 | $95,000 | $95,000 | $95,000 | $95,000 | $95,000 | $95,000 | $95,000 | $95,000 | $95,000 | $95,000 | $95,000 | $95,000 |
Accumulated Depreciation | $0 | $1,400 | $2,800 | $4,200 | $5,600 | $7,000 | $8,400 | $9,800 | $11,200 | $12,600 | $14,000 | $15,400 | $16,800 |
Total Long-term Assets | $95,000 | $93,600 | $92,200 | $90,800 | $89,400 | $88,000 | $86,600 | $85,200 | $83,800 | $82,400 | $81,000 | $79,600 | $78,200 |
Total Assets | $175,000 | $170,286 | $158,934 | $149,331 | $141,331 | $135,911 | $134,884 | $136,021 | $141,363 | $151,989 | $168,954 | $193,317 | $228,064 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $0 | $9,115 | $10,340 | $11,805 | $13,554 | $14,296 | $16,804 | $19,804 | $23,399 | $27,705 | $33,209 | $39,067 | $46,502 |
Current Borrowing | $8,000 | $7,700 | $7,400 | $7,100 | $6,300 | $5,500 | $4,700 | $3,900 | $2,900 | $1,900 | $900 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $8,000 | $16,815 | $17,740 | $18,905 | $19,854 | $19,796 | $21,504 | $23,704 | $26,299 | $29,605 | $34,109 | $39,067 | $46,502 |
Long-term Liabilities | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | $50,000 | $48,500 | $47,000 | $45,500 | $44,000 | $42,500 | $41,000 |
Total Liabilities | $58,000 | $66,815 | $67,740 | $68,905 | $69,854 | $69,796 | $71,504 | $72,204 | $73,299 | $75,105 | $78,109 | $81,567 | $87,502 |
Paid-in Capital | $197,000 | $197,000 | $197,000 | $197,000 | $197,000 | $197,000 | $197,000 | $197,000 | $197,000 | $197,000 | $197,000 | $197,000 | $197,000 |
Retained Earnings | ($80,000) | ($80,000) | ($80,000) | ($80,000) | ($80,000) | ($80,000) | ($80,000) | ($80,000) | ($80,000) | ($80,000) | ($80,000) | ($80,000) | ($80,000) |
Earnings | $0 | ($13,530) | ($25,806) | ($36,575) | ($45,523) | ($50,885) | ($53,620) | ($53,183) | ($48,936) | ($40,117) | ($26,155) | ($5,250) | $23,562 |
Total Capital | $117,000 | $103,470 | $91,194 | $80,425 | $71,477 | $66,115 | $63,380 | $63,817 | $68,064 | $76,883 | $90,845 | $111,750 | $140,562 |
Total Liabilities and Capital | $175,000 | $170,286 | $158,934 | $149,331 | $141,331 | $135,911 | $134,884 | $136,021 | $141,363 | $151,989 | $168,954 | $193,317 | $228,064 |
Net Worth | $117,000 | $103,470 | $91,194 | $80,425 | $71,477 | $66,115 | $63,380 | $63,817 | $68,064 | $76,883 | $90,845 | $111,750 | $140,562 |
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Hookah Lounge
Back to All Business Ideas
Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on May 31, 2022
Investment range
$23,550 - $48,100
Revenue potential
$200,000 - $502,000 p.a.
Time to build
1 – 3 months
Profit potential
$60,000 - $150,000 p.a.
Industry trend
When opening your hookah lounge, keep these essential aspects in mind:
Interactive Checklist at your fingertips—begin your hookah lounge today!
You May Also Wonder:
Is a hookah lounge profitable?
Yes, a hookah lounge can be profitable. You’ll need to design an interesting hookah menu and create a great atmosphere, and you can be successful.
How do I differentiate my hookah lounge business from competitors?
To differentiate your hookah lounge business from competitors, you can focus on providing a unique atmosphere or ambiance that sets your lounge apart. This can include offering a diverse selection of high-quality shisha flavors, creating a comfortable and inviting space with unique decor or lighting, or providing exceptional customer service.
Can I start a hookah lounge on the side?
It would be very difficult to start a hookah lounge on the side unless you have limited hours, which could seriously affect your ability to make a profit.
What kind of music and entertainment can I offer in my hookah lounge business?
The music and entertainment you offer in your hookah lounge business will depend on your target audience and the atmosphere you want to create. Some popular options include playing ambient or chill-out music, hosting live performances or DJs, or offering karaoke or open mic nights.
Pros and cons.
Starting a hookah lounge has pros and cons to consider before deciding if it’s right for you.
Industry size and growth.
Trends in the hookah lounge industry include:
Challenges in the hookah lounge industry include:
Startup costs for a hookah lounge range from $23,000 to $48,000. Costs include the space rental, space preparation, and hookah equipment and supplies. They also include a liquor license and liquor inventory.
You’ll need a handful of items to successfully launch your hookah lounge business, including:
Start-up Costs | Ballpark Range | Average |
---|---|---|
Setting up a business name and corporation | $150 - $200 | $175 |
Business licenses and permits | $100 - $300 | $200 |
Insurance | $100-$300 | $200 |
Business cards and brochures | $200 - $300 | $250 |
Website setup | $1,000 - $3,000 | $2,000 |
Space rental | $2,000 - $4,000 | $3,000 |
Space preparation | $10,000 - $20,000 | $15,000 |
Hookah equipment and supplies | $5,000 - $10,000 | $7,500 |
Liquor license and liquor inventory | $5,000 - $10,000 | $7,500 |
Total | $23,550 - $48,100 | $35,825 |
Hookahs are usually priced at about $20 an hour. Your profit margin after all costs should be about 30%.
In your first year or two, you might serve 20 hookahs a day and serve $15 in alcoholic beverages to 10 people, bringing in $200,000 in annual revenue. This would mean $60,000 in profit, assuming that 30% margin. As your hookah lounge gains popularity, you might serve 50 hookahs a day and beverages to 25 people. With annual revenue of $502,000, you’d make a healthy profit of $150,000.
There are a few barriers to entry for a hookah lounge. Your biggest challenges will be:
Step 2: hone your idea.
Now that you know what’s involved in starting a hookah lounge, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research hookah lounges in your area to examine their products, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a hookah café that serves liquor or a shisha bar that offers food.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as herbal shisha or flavored tobacco.
This could jumpstart your word-of-mouth marketing and attract clients right away.
You’ll want to create a hookah menu with different flavor mixes. You could also serve liquor with the proper licensing. If you put in a kitchen, you could offer food as well.
Hookah prices range from $15 to $25 per hour. Check prices in your area to make sure you’re competitive. Your profit margin after supplies, rent, and overhead should be about 30%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will be Hookah smokers, which are likely to be a younger crowd, so you should focus your marketing on TikTok and Instagram.
Choosing the right location for your hookah lounge is crucial for attracting customers and ensuring its success. Look for a spot in a high-traffic area with good visibility, such as a busy nightlife district or a college town.
Consider accessibility and convenience, ensuring that the location is easily reachable by public transportation and has ample parking. Additionally, assess the competition in the area and aim to differentiate your hookah lounge by offering unique flavors or a relaxing and comfortable atmosphere.
By strategically choosing the right location, you can establish a profitable and popular hookah lounge that offers a unique and enjoyable experience for customers and stands out in the competitive hospitality industry. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Find a Domain
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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to hookah lounges.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your hookah lounge will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.
Choose Your State
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The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist , and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a hookah lounge business. You might also try crowdfunding if you have an innovative concept.
Starting a hookah lounge business requires obtaining a number of licenses and permits from local, state, and federal governments. For starters, you’ll need a tobacco license as well as a liquor license if you serve alcohol.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your hookah lounge business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Restaurant365 , lightspeed , or toast to manage your menus, inventory, schedule, and invoices.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your hookah lounge meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your hookah lounge business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a hookah lounge business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in hookah lounges for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in hookah lounges. You’ll probably generate new customers or find companies with which you could establish a partnership.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a hookah lounge business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Hookah lounges have been common in the Middle East for centuries, and recently made their way to the United States. The hookah market is taking off, expected to double in the next decade. If you’re a hookah lover and want to share your passion with others, now is the right time to launch your own hookah lounge. You could help people enjoy their evenings out and make a good living at the same time.
Your business knowledge is fired up now, so it’s time to start buying water pipes and getting your successful hookah lounge off the ground.
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Shisha bars, also known as hookah lounges, have exploded in popularity in recent years as a laid-back alternative to the typical bar scene. Despite the chilled-out environment of a hookah bar, starting one of your own is no lazy affair.
If you have the drive to create a cool, relaxed atmosphere for your local shisha smokers, launching a hookah lounge might be the perfect entrepreneurial adventure for you. Here's how to do it.
Startup costs for a shisha bar vary greatly depending on business size, rental rates and permit regulations in your area, but a few expenses are about the same for any hookah lounge. Here is an example of expenses you can expect:
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Of course, these expenses will be lower if you aren't planning to serve alcohol at your bar or if you have cheaper means of obtaining furniture and serving equipment.
You'll have to add to that list some expenses that vary depending on employment laws, rental rates and permit regulations:
If you're opening a hookah lounge in an expensive area such as Los Angeles, you'd probably have to budget $250,000 in startup costs for the first several months of your business. In lower-rent areas, it could be less.
Secure this funding through savings and loans, and keep your eye out for startup business grants as well.
Smoking laws vary by state, county and city, so do your homework on any smoking-ban legislation that might apply to your business, as it may prohibit smoking in certain types of public places.
Chance are, anywhere your business is located, you'll have to obtain a license to sell tobacco. Check in with the laws in your city, county and state to see how you're expected to obtain your tobacco license. Once you have it, you need to display it in your venue and renew it annually. While traditional shisha contains tobacco, herbal shisha doesn't, which some lounges use to skirt local laws that restrict the sale of tobacco.
If you plan to sell alcohol in your shisha bar, you'll have to obtain the necessary permits to do that, as well. These permit requirements and availability vary in counties and cities. Many hookah lounges opt to serve tea instead of alcohol, as it's a less-expensive beverage option with less red tape and fewer age restrictions for customers.
Shisha is a bit of an art. Some people develop palates for it as is common for fine dining and craft beer. When you're able to hire a couple of employees, make sure that they are skilled in preparing shisha and that they're familiar with the culture behind it.
Your lounge will also draw customers who are completely new to shisha, so your staff should be able to inform and help them in a kind and patient way. Make sure they're speedy and that their customer service skills are top-notch to make your patrons feel comfortable and keep them coming back.
Chances are, you're not the first person in your area to open a hookah lounge, and that's OK – competition and a variety of options are important for any industry. However, you'll have to set prices that compete well with those at nearby shisha bars, especially since your bar is a newcomer.
Hookah lounges usually charge for a session either before it begins or after it's over, and each bowl's price is set based on how much shisha it can hold. A large bowl burns longer, for example, which earns it a higher price.
If your lounge has the good fortune to become a local favorite, you might be able to drive up your prices a little since shisha smokers often pay a lot to smoke hookah at their favorite places – and they bring their friends.
Every new business needs a little kick in the pants to get its name out there, but fortunately, shisha communities keep in the know on new hookah businesses, and you'll have the power of word-of-mouth on your side.
Still, consider taking out an ad in the local paper or sponsoring some ads on Facebook to help build your business brand. After all, branding is key for hookah bars – shisha smokers come for the personality and atmosphere of a place as much as for the shisha itself.
By: Author Tony Martins Ajaero
Home » Business ideas » Food Industry » Hookah Bar & Lounge
Are you about starting a hookah bar & lounge? If YES, here is a complete sample hookah bar business plan template & feasibility report you can use for FREE .
The truth is that, if you choose to start a business just for the sake of making money, you are likely going to struggle to grow the business.
When the going gets tough as expected, you are likely going to pull out. One business that falls under this category is a hookah bar; you cannot successfully run a hookah bar business if you aren’t a smoker yourself.
The fact that The World Health Organization (WHO), in conjunction with Governments of various Countries are clamping down on smoking in public places just in a bid to protect non- smokers from the harmful effect of smoking makes hookah bar welcome loads of clients who usually love to share their experience with friends ( smoking tobacco with friends ) in a cozy environment.
Right there in the Airports, Cinemas, Shopping Malls and Public places in general, you might have noticed the “ Smoking Not Allowed ” signs hung at various spots informing the general public that the area is a no smoking zone. However, if you took your time to make enquiry, you would find that there are hookah bars and cigar lounges just around the corner.
Banning smoking in public places is actually a blessing in disguise for people with the intention of starting a hookah bar or a cigar lounge.
Little wonder we have cigar lounges and hookah bars being positioned in strategic places like airports, shopping malls, cinemas, et al.
Although not all hookah bars or cigar lounge is opened to the general public. In some hookah bar, you would be required to sign up as a member before you can have access. Below is a sample Hookah Bar business plan template that can help you to successfully write your own with little or no difficulty.
1. industry overview.
The hookah bar / lounge which is also known as a shisha bar or den, especially in united kingdom and some parts of Canada is an establishment where patrons share shisha from a communal hookah or nargile which is placed at each table.
This is a location where tobacco smokers can purchase and smoke tobacco and cigars freely without the fear of breaking the law of a country or city. Businesses in this industry usually provide limited food and alcohol services as a means of increasing their revenue generation.
According to the American Cancer Society – ACS, hookah basically a flavored tobacco and it is smoked out of a ‘hookah’ water pipe. The tobacco is often called shisha which is a higher grade hookah with only molasses and flavoring added. It is a centuries old practice and most likely originated from india.
Hookah bars are mostly found in college towns and urban areas and are regarded by some as a trendy way to socialize and embrace multiculturalism. Some people of Middle Eastern or South Asian extraction consider them a continuation of their own cultural traditions.
Some hookah bars have well-equipped kitchens and are more similar to wine bars. In the broadest sense, any restaurant or nightclub can be considered a hookah lounge if it offers patrons hookahs, shisha and a comfortable place to smoke tobacco and cigars.
Because of several state anti-tobacco laws, most Hookah bars have made the transition from smoking traditional shisha to smoking herbal shisha because it contains no tobacco or nicotine and is legal indoors in areas specific to the prohibition of tobacco and cigar smoking. Besides, herbs do produce tar when they burn.
In recent time, the Hookah bars cum Cigar Lounges industry has made a strong comeback in the united states over the last five years as a large increase in tobacco consumption has boosted the demand for tobacco related products. In the face of regulatory hurdles in obtaining exemption from state indoor smoking bans, both industry participation and revenue have grown at rapid rates since 2010.
No doubt, as the economy continues to grow and improve over the next five years, more consumers will likely indulge in premium cigars and tobaccos at high-end hookah bars or cigar lounges, helping the industry sustain its growth and widen profit margins. So also, with the United States recent steps toward normalization of relations with Cuba will definitely expand access to the country’s high-end cigars and tobaccos, providing an opportunity for the industry to maximize profits.
The Hookah Bars cum Cigar Lounges industry is indeed a thriving industry in the United States, Canada and in most countries in Europe, Statistics has it that the Cigar Lounges and Hookah Bars industry in the United States of America, is worth $2 billion, with an estimated growth rate of 11.0 percent.
There are about 7,684 legally registered and licensed cigar lounges / Hookah bars businesses scattered across the United States of America and they are responsible for employing about 17,980 people. The industry is an open industry hence a low level of market share concentration.
In order to invest wisely, you need to carry out a research on the industry or line of business you intend investing in. if you are opening a hookah bar for the first time, it is important you conduct a thorough research so that you can be well informed and guided when making the choices of what you want from the array of options that are available to you.
Researching will open you up to the various opportunities you can leverage on and how you can access them. It’s not compulsory that you must be the one to carry out the research; you can pay professionals to help you garner the needed information.
Any entrepreneur who wants to start a hookah bar business in the US would definitely be confronted with tough competition out there. The truth is that, you will not only compete with hookah bars /smoke shops / cigar lounges in your location or city, but you would be competing with every other entertainment options such as wine bars, night clubs, restaurants, casinos et al where cigars and tobacco et al are retailed and can be freely smoked.
For instance, people go to bars to drink, smoke and socialize and they tend to get more when they go to night clubs or other entertainment hub. In night clubs, people do not only drink, smoke and socialize, but they also dance if they choose to and get entertained.
Purple & Blue Hookah Bar®, LLC is a neighborhood hookah bar cum cigar lounge that will be located on the ground floor of one of the busiest campus communities with a robust international in the United States of America – The University of California – Los Angeles. We have been able to secure a one-year lease of a vacant shop within the campus facility. We are fortunate to secure a facility with an option of renewal for 5 years at an agreed rate that is favorable to us.
We are going to be involved in the sale of traditional shisha, sale of herbal shisha sale of cigars, sale of tobacco-related accessories, sale of other tobacco products, sale of food and drink, mass marketing cigars and cigarillos, sale of premium cigars, providing a cigar-friendly smoking environment, sale of assorted red and white wines, sale of beer and liquor, sale of distilled spirits, martinis and tobacco et al to campus students and visitors in a conducive environment that is specifically designed for socializing and networking and free from all forms of violence.
Purple & Blue Hookah Bar®, LLC is designed and constructed to meet both the health and safety standard as recommended by the local authority. Our customers are going to be treated with good music at all times. We have made provision for live band, karaoke, country side music and jazz et al. This will be played at the background to create the ambience that our customers will cherish.
We are in business to make profits at the same to give our customers value for their money; we want to give people the opportunity to choose from the wide range of shisha, assorted cigars, tobaccos and drinks that are manufactured both in the United States of America and overseas.
Purple & Blue Hookah Bar®, LLC will go all the way to make available in our hookah bar most of the shisha, tobacco and cigar brands produced in the United States of America and in other parts of the world especially in countries like Cuba, India and Italy.
We aware that hookah bars easily attract intellectuals and business people and we know that the campus community is one of the places where we can easily tie down these people especially when they have to socialize.
We will ensure that all our employees are selected from a pool of qualified and customer centric people in and around Los Angeles – California and also from any part of the United States. We will make sure that we take all the members of our workforce through the required trainings that will position them to meet the expectation of the company and to compete with other players in the United States and throughout the globe.
Purple & Blue Hookah Bar®, LLC is owned by Clarence Williams and his immediate family members. Clarence Williams has managed several cigar lounges, smoke shops , bars and night clubs in Los Angeles and Las Vegas prior to opening his own hookah bar. He has the magic wand to attract people who go to cigar lounges and hookah bars on a regular basis.
Purple & Blue Hookah Bar®, LLC is going to operate a standard and health compliance hookah bar in University of California – Los Angeles that will make available shisha, most of the cigar products and accessories that can be found in a standard cigar lounge or hookah bar in the United States.
We will also ensure that we go all the way to make available assorted wines and alcoholic drinks in our smoke hookah bar. These are some of our product and service offerings;
Our Business Structure
Purple & Blue Hookah Bar®, LLC is a business that is established to be a pacesetter when it comes to how standard hookah bar should be run in Los Angeles and even in the United States of America. We have the goal of assembling a team of dedicated workforce who will give our customers excellent customer service at all times, a team that will ensure that we will continue to have repeated customers and a team that will indeed make us the melting pot for smokers and socialites in Los Angeles.
In view of the above, we have been able to follow suits on what is obtainable in standard hookah bars and cigar lounges in the United States and perhaps improve on the structure with time when the need arises. We will work hard to ensure that we only attract people with the right mindset to help us achieve our business goals and objectives in record time.
Below is the business structure that we will build Purple & Blue Hookah Bar®, LLC;
Greeters / Customer Service Agent / Table Attendant
Security Officers
Chief Executive Officer – CEO:
Hookah bar Manager:
Bartender / Baristas:
Accountant / Cashier:
Disc Jockey (DJ)
Purple & Blue Hookah Bar®, LLC is established with the aim of becoming the melting point for smokers and socialites in Los Angles which is why we have taken our time to critically analyze and conduct SWOT analysis to be able to identify areas we need to work on if indeed we want to achieve our business goal.
No investor would want to invest his or hard earned money without assessing the risks involved in the venture and also his or her capability to deliver and make profits from the business. The ability to make profits from any business and to favorably compete with competitors in the industry starts with the result you get from your SWOT analysis.
In view of that, Purple & Blue Hookah Bar®, LLC hired a business and HR specialist to help her conduct SWOT analysis for the business and below is a summary of the result that was generated;
Our strength as a company are, excellent and detailed customer service a wide range of assorted shisha, cigars, tobaccos, and alcoholic drinks both from the United States and other parts of the world. Excellent facility, excellent ambience and perfect location for a hookah lounge in metropolitan city like Los Angles.
Our perceived weakness could be that we are new business, and we may not have the financial muscle to sustain the kind of publicity we want to give our business.
There are unlimited business opportunities available to hookah bar businesses in busy communities like University of California – Los Angeles; Los Angeles is one of the cities in the world where social life is at its peak. Besides the campus facility where our hookah lounge is located is one of the busiest in the United States and it is open to loads of opportunities due to the influx of international students especially from India and other Asia countries.
Another opportunity that we stand to leverage on is the fact that we can easily order any brand of shisha, cigar, tobacco, wine and drinks directly from the manufacturer with little or no stress.
Just like any other business, one of the major threats that we are likely going to face is economic downturn. It is a fact that economic downturn affects purchasing / spending power. Another threat that may likely confront us is the arrival of a new hookah bar, cigar lounge or wine bar in same facility or within same location where our target market exist and who may want to adopt same Business model like us.
Despite the fact that the hookah bars cum cigar lounges industry has long existed in the United States, it is starting to fall back into fashion. Innovative flavors and different varieties of shisha and cigars have increased demand over the last five years.
Recent data from the Centers for Disease Control and Prevention (CDC) clearly indicated that 40.0 percent of people who try smoking try flavored cigarettes or cigarillos. Consequently, this industry has jumped back into a growth phase.
A close observation of the trends in the industry shows that hookah use has increased dramatically among American and European youth in recent years because of the social atmosphere it creates, and because many young adults believe hookah is a safer alternative to cigarette smoking, for that reason they do not fully understand the health effects that come along with it. In order to remain open, many hookah lounges cannot sell food or beverages. Roughly 90 percent of the cities that have put a ban on smoking in public places have exemptions for hookah bars.
Most hookah bars in the United States have chic or ultramodern elements such as glass tables, plasma televisions, and oxygen bars et al. Most bars in the U.S. require patrons to be at least 18 years of age to smoke shisha and 18 years of age to purchase ( exceptions are Utah, Arizona, Alabama, and New Jersey: 19 years of age to smoke ).
However the laws in some other states require the patron to only be 18 years of age to purchase or possess tobacco, which in a hookah bar, the patron is doing none of these, for that reason one is likely going to find under age teenagers in many hookah bars in the United States
No doubt, the Hookah Bars cum Cigar Lounges industry will continue to improvise on ways to increase sales. They seek to remove the association of shisha, tobacco and cigar with high – end clientele and overwhelming cigar lists and replace it with a more casual and relaxing atmosphere.
Many of these hookah lounges are furnished with nooks and cozy booths encased in rich colors and plush surroundings in hopes their guests will linger. Hookah lounges look to embrace the intellectual stimulation linked to shisha, cigar and tobacco and offer an alternative to the hookah bar scene. The phlegmatic environment lends itself to a good socializing setting with a less crowded feel and more intimate appeal.
In recent time, hookah lounges have begun to incorporate a larger variety of alcoholic drinks and food choices as part of their product offerings. It is obvious that adding these product offerings help in creating alternate source of generating sales and increasing their overall income even if they struggle to sell their shishas, cigars and tobaccos.
Before starting our hookah lounge business in Los Angeles – California, we conducted a market survey and feasibility studies and we are certain that there is a wide range of people who would patronize our hookah lounge on a regular basis.
In view of that, we have created strategies that will enable us reach out to various groups of people who are likely going to become our loyal customer. Below are our target markets;
Our competitive advantage
We are mindful of the fact that there are stiffer competitions in the hookah bars cum cigar lounges industry in the United States of America; hence we have been able to hire some of the best business developer to handle our sales and marketing.
Part of what is going to be our selling point is the fact that we operate a standard and health compliance hookah bar, in a perfect location (one of the busiest campus facilities in University of California – Los Angeles, the United States) for the kind of business that we run and also the fact that our hookah lounge facility is highly secured.
Another factor that will give Purple & Blue Hookah Bar®, LLC competitive edge is that we have enough parking space to accommodate the numbers of customers our hookah lounge can contain per time. We are not ruling out the fact that we have a dedicated and customer centric workforce that are willing to go the extra mile to give our customers full value for their money and time whenever the patronize our hookah lounge.
We are not ignoring the fact that we are among the few neighborhood hookah lounge in Los Angeles that sells almost all the brands of shisha, cigar, tobacco, and alcoholic drinks available in the United States of America, crafted beers, distilled spirits, liquors et al and obviously, that will surely count towards our advantage in the market place and also the robust experience of our CEO and the hookah bar manager is also a positive for Purple & Blue Hookah Bar®, LLC.
Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category (startups hookah lounges, wine bars and night club businesses in the United States) in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives.
Purple & Blue Hookah Bar®, LLC is established with the aim of maximizing profits in the hookah bars cum cigar lounges industry and we are going to go all the way to ensure that we do all it takes to attract our target market. The sources of income for Purple & Blue Hookah Bar®, LLC are stated below;
One thing is certain when it comes to hookah lounge business, if your hookah lounge is cozy, relaxing, well stocked and centrally positioned, you will always attract customers cum sales and that will sure translate to increase in revenue generation for the business.
We are well positioned to take on the available market in Los Angeles California and we are quite optimistic that we will meet our set target of generating enough income / profits from the first six month of operations and grow the business and our clientele base.
We have been able to critically examine the hookah lounge market and we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projections are based on information gathered on the field and some assumptions that are peculiar to similar startups in Los Angeles – CA.
Below are the sales projections for Purple & Blue Hookah Bar®, LLC, it is based on the location of our business and other factors as it relates to hookah bars start – ups in the United States;
N.B : This projection is done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor offering same products and customer care services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.
Top of the list on our marketing and sale strategy document is generating a buzz for our hookah lounge via word-of-mouth and leveraging on road show around UCL campus community.
Despite the fact that our first outlet is located inside University of California Los Angeles, the model of hookah lounge we intend running is a neighborhood bar hence we are not going to rely only on the conventional ways of marketing.
We don’t have the plans to run paid adverts on Local TV stations, local radio stations or even local newspaper but we will sure maximize every other available means to promote our business. Our unique selling proposition is that we have a collections of almost all the brand shishas, cigars and tobaccos produced in The United States in our hookah lounge, we also have assorted alcoholic drinks et al.
In view of that, we are going to adopt the following marketing strategies to ensure that we do not only attract customers but generate repeated sales from them. Parts of the marketing and sales strategies that we will adopt are;
Purple & Blue Hookah Bar®, LLC is a campus hookah bar and we will ensure that we create the buzz that will make people in our area know about us and what we do. We are quite aware that one of the effective ways of promoting our hookah lounge is to create special internal promotions which in turn will help us achieve our aim of leveraging on word of mouth publicity.
Here are the platforms we intend leveraging on to promote and advertise Purple & Blue Hookah Bar®, LLC;
The prices of our shishas, cigars, tobaccos, wines, beers, and other alcoholic drinks et al will be what is obtainable in the market. In fact we will try as much as we can to sell below the industry’s average so as to attract loads of customers. We also have plans in place to discount our products once in a while and also to reward our loyal customers.
The payment policy adopted by Purple & Blue Hookah Bar®, LLC is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.
Here are the payment options that Purple & Blue Hookah Bar®, LLC will make available to her clients;
In view of the above, we have chosen banking platforms that will enable our client make payment for farm produces purchase without any stress on their part. Our bank account numbers will be made available on our website and promotional materials to clients who may want to deposit cash or make online transfer for our products.
In setting up any business, the amount or cost will depend on the approach and scale you want to undertake. If you intend to go big by renting a place, then you would need a good amount of capital as you would need to ensure that your employees are well taken care of, and that your facility is conducive enough for workers to be creative and productive.
This means that the start-up can either be low or high depending on your goals, vision and aspirations for your business.
The tools and equipment that will be used are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked. As for the detailed cost analysis for starting a hookah lounge business; it might differ in other countries due to the value of their money.
This is what it would cost us to start Purple & Blue Hookah Bar®, LLC in the United of America;
We would need an estimate of $250,000 to successfully launch our hookah lounge in downtown Los Angeles, CA. This amount includes the salary of all employees and the CEO (Owner) for 3 months.
Generating Funds/ Startup Capital for Purple & Blue Hookah Bar®, LLC
Purple & Blue Hookah Bar®, LLC is a private business that is owned by Clarence Williams and his immediate family members and they intend to finance the business alone. Although they have plans to make the hookah bar manager part owner of the business after 5 or 7 years of services, but that does not stop him from reserving well over 80 percent stake of the business for himself and his family.
Since they are the sole financier of the business, they have decided to adopt the following means to generate start – up capital for the business;
N.B: Mr. Sleek Davenport and his family have been able to generate $100,000 the breakdown shows that they generated $75,000 from their personal savings and sale of their stocks and they generated $25,000 soft loans from their family members and friends. The balance of $150,000 will be generated as loan facility from the bank.
The future of a business lies in the numbers of loyal customers that they have the capacity and competence of the employees, their investment strategy and the business structure. If all of these factors are missing from a business (company), then it won’t be too long before the business close shop.
One of our major goals of starting Purple & Blue Hookah Bar®, LLC is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to properly position our hookah lounge, ensure adequate security, availability of various brand of shishas, cigars, tobaccos, alcoholic drinks and excellent customer service et al.
Purple & Blue Hookah Bar®, LLC will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and re – training of our workforce is at the top burner.
As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
Check List / Milestone
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Bob blackman said failing to include shisha lounges and chewing tobacco, such as paan, in the tobacco and vapes bill would leave ‘escape clauses’., article bookmarked.
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Shisha lounges should be clamped down on, as part of legislation to reduce smoking and the use of vapes, a Tory MP has said.
Bob Blackman said failing to include shisha lounges and chewing tobacco, such as paan, in the Tobacco and Vapes Bill would leave “escape clauses”.
In July’s King’s Speech, the Labour Government revived plans to introduce the Bill, originally put forward by the Conservatives.
The Bill proposes progressively increasing the age at which people can buy tobacco, preventing anyone born after January 1 2009 being legally able to do so.
It also aims to curb the attraction of vaping for children and young people, such as restricting the flavours, packaging and display of e-cigarettes.
At business questions on Thursday, Mr Blackman (Harrow East) said: “(Lucy Powell) hasn’t announced the Tobacco and Vapes Bill coming back.
“During the committee stage, I and many members on the other side proposed amendments to the then-government’s Bill, which we would want to progress, I realise that will be considered by the Health Secretary.
“Will she also take back the view that shisha lounges and the sale of paan need to be part of the regulation that we take forward?”
Mr Blackman added that “otherwise we’re going to leave escape clauses” which could lead to “mouth, throat and lung cancer”.
Shisha lounges and the sale of paan need to be part of the regulation that we take forward
Commons Leader Lucy Powell replied: “He will know on the Tobacco and Vapes Bill that we announced that we would take forward that Bill in our King’s Speech, it will be coming forward to this House in due course.
“And I know that one of the issues the Secretary of State is looking at is how we can look at the amendments from the previous session in order to strengthen that Bill before we introduce it.”
In August this year, Sir Keir Starmer did not rule out a smoking ban in outdoor spaces such as pub gardens, and hospital and university campuses, after The Sun reported that leaked “secret Whitehall papers” featured this plan.
On smoking, the Prime Minister said: “It’s a huge burden on the NHS and, of course, it’s a burden on the taxpayer.”
He added that “more details” on his plans would be revealed.
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Are you curious about the top nine operating costs that can significantly impact a shisha lounge business? From rent to staff salaries , understanding these essential expenses is crucial for maintaining profitability. Dive into our comprehensive guide that reveals how to efficiently manage these costs and even explore a detailed business plan tailored for shisha lounges!
Operating a shisha lounge, such as the proposed Oasis Shisha Lounge , involves several key expenses that can significantly impact overall profitability. Understanding these costs is crucial for effective shisha lounge financial management and ensuring the business remains viable. On average, the total operating costs of a shisha lounge can range from $10,000 to $30,000 per month , depending on location, size, and market strategy.
The primary components contributing to the cost to operate a shisha lounge include:
With these costs in mind, potential owners can better prepare for the financial realities of running a shisha lounge. A comprehensive cost analysis for shisha lounges can further highlight areas for potential savings.
In summary, understanding the various shisha lounge expenses and preparing accordingly can provide a strong foundation for a successful business venture. For further insights into startup costs and operational expenses, resources such as this guide can be invaluable.
Operating a shisha lounge like Oasis Shisha Lounge involves several significant costs that need to be meticulously managed to ensure profitability. Understanding these costs is vital for effective shisha lounge financial management and can lead to more informed decision-making. Here are the largest operating costs associated with running a shisha lounge:
By keeping a close eye on these operating costs, shisha lounge owners can achieve a more sustainable business model, ensuring that they meet the demands of their clientele while also maintaining profitability. For a deeper dive into shisha lounge expenses and related financial metrics, you can refer to this resource .
Reducing operational costs for a shisha lounge, such as Oasis Shisha Lounge , can significantly enhance profitability. Understanding the shisha lounge operating costs is crucial for effective financial management. Here are strategic ways to cut costs while maintaining quality and customer satisfaction:
Streamlining operations not only cuts costs but also improves service efficiency. Utilizing software for shisha lounge financial management can assist in tracking sales trends and identifying busy periods.
Additionally, consider sourcing locally to lower shipping costs and support community businesses, which can bolster your lounge’s reputation.
Regular maintenance of equipment can also prevent costly repairs and ensure optimal performance.
Utilizing inventory management software can help track sales trends and adjust orders accordingly, preventing over-purchasing.
Utilizing platforms like Instagram and Facebook can help promote events and specials with minimal expenses.
By implementing these strategies, Oasis Shisha Lounge can effectively manage its shisha business costs while creating an inviting atmosphere for customers.
| Shisha Lounge Business Plan ADD TO CART |
When considering the operating costs of a shisha lounge , it’s essential to grasp the diverse range of expenses involved in maintaining a successful establishment like Oasis Shisha Lounge . These costs impact financial management strategies and overall profitability. Here's a breakdown of the top operating costs:
Location is critical for a shisha lounge, often leading to high rent costs . Depending on the area, lease payments can range from $3,000 to $10,000 per month , significantly impacting shisha lounge expenses .
Labor is another significant cost, with salaries for staff typically accounting for 20-30% of total expenses. For a medium-sized lounge, this could mean $50,000 to $150,000 annually for baristas, servers, and management.
Utility bills can vary widely but generally total around $500 to $1,500 per month for a lounge, depending on usage and local rates. This includes costs for lighting, heating, and appliances.
The cost to operate a shisha lounge also includes shisha supplies . Monthly expenses for tobacco and related accessories can range from $1,000 to $3,000 , based on customer volume and quality of products.
Offering food and beverages can enhance the customer experience but also adds to costs. Monthly inventory might cost between $2,000 and $5,000 , depending on the menu.
Starting a shisha lounge requires various licenses and permits, which can cost upwards of $2,000 to $10,000 in the initial stages and may need renewal fees.
Effective marketing strategies are vital. Allocate around $500 to $2,000 monthly for advertising to reach potential customers and build brand awareness.
Insurance is an essential aspect of shisha lounge budgeting . Expect to pay around $1,000 to $3,000 annually for various coverage types, including liability and property insurance.
Regular maintenance and repairs are crucial for safety and ambiance. Monthly costs can average $200 to $600 , depending on the state of the facilities.
Each aspect of shisha lounge operational costs necessitates careful planning and monitoring. By understanding these examples, aspiring entrepreneurs can effectively budget and manage their shisha business costs efficiently.
When operating a shisha lounge, understanding the fixed expenses is crucial for effective financial management. Fixed costs are those that remain constant regardless of the lounge's sales volume, providing a clearer picture of the minimum financial obligations a business needs to meet each month. These are essential for budget planning and are particularly vital for a startup like Oasis Shisha Lounge.
Key fixed costs for a shisha lounge typically include:
Understanding these fixed costs is not only important for shisha lounge financial management , but it also helps in analyzing the cost to operate a shisha lounge effectively. Knowing the baseline expenses can aid in strategic planning and operational efficiency.
By accurately identifying and managing fixed expenses, Oasis Shisha Lounge can better forecast cash flow needs and allocate resources effectively, allowing for a more resilient business model amid fluctuating variable costs. Keeping an eye on these fixed expenses is essential for long-term sustainability and growth.
When managing a shisha lounge , understanding the difference between fixed and variable costs is crucial for effective financial management . Variable costs fluctuate based on the level of business activity and directly influence the operational costs of a shisha bar. These costs can significantly impact your overall shisha business expenses , especially during peak and off-peak hours.
The primary variable costs for a shisha lounge include:
Each of these variable costs contributes to the top costs of running a shisha lounge , and monitoring them is essential for maintaining a healthy profit margin. According to industry benchmarks, variable costs can account for up to 30% to 50% of total operating expenses in hospitality businesses, including shisha lounges.
Effectively managing these variable costs will not only help in controlling your overall shisha lounge operating costs but will also enhance your ability to adapt to changing market conditions. For more detailed insights into operating expenses, consider reviewing resources on shisha lounge startup costs .
Operating a shisha lounge involves several key expenses that contribute to the overall financial health of the business. Understanding these shisha lounge expenses is crucial for effective financial management and can aid in developing a successful business strategy. Below are the primary operating costs that owners of a shisha lounge, such as Oasis Shisha Lounge, must consider:
Location is vital for attracting customers, and as such, shisha lounge rent costs can be one of the largest fixed expenses. Monthly lease payments can range from $2,000 to $15,000 , depending on the area and square footage.
Labor costs, which include salaries and wages for servers, bartenders, and kitchen staff, typically account for approximately 25% to 40% of total operational costs. It is essential to pay competitive wages to maintain a skilled workforce.
Utility bills for shisha lounges can vary widely, often averaging between $500 and $2,000 monthly. These costs can rise during peak hours or seasons.
Costs for shisha supplies , including tobacco, coals, and hoses, form a significant portion of a lounge’s budget. Business owners should anticipate spending around $1,000 to $3,000 monthly on these supplies.
If the lounge offers food and drink services, maintaining an inventory is crucial. Monthly costs can range from $3,000 to $10,000 depending on the menu and volume of sales.
Starting a shisha lounge requires various licenses and permits. Initial licensing fees can be between $1,000 and $5,000 , with annual renewals also contributing to the overall operating expenses.
To attract and retain customers, marketing is essential. Shisha lounge owners should budget around $500 to $2,000 monthly for promotional activities and advertising campaigns.
Insurance is a must for protecting the business from liabilities. Costs can range from $1,000 to $3,000 annually, depending on coverage types and the specific risks associated with operating a lounge.
Regular maintenance and unexpected repairs can add up. Owners should consider setting aside 5% to 10% of their monthly budget for these expenses to ensure the facility is always in good condition.
Operating costs are a fundamental aspect of running a shisha lounge, encompassing all the necessary expenditures that keep your business running smoothly. Understanding these costs is crucial for effective budgeting and ensuring the long-term viability of the establishment.
Operating Cost | Average Amount (USD) |
---|---|
$30,000 - $70,000 | |
Utility Expenses (Electricity, Water, Gas) | $1,000 - $3,000 |
$2,000 - $10,000 | |
Food and Beverage Inventory | $5,000 - $15,000 |
$1,000 - $5,000 | |
Marketing and Advertising Costs | $500 - $5,000 |
$1,000 - $3,000 | |
$1,000 - $4,000 | |
When considering the cost to operate a shisha lounge , one of the primary expenses that owners must account for is rent or lease payments. The location of the shisha lounge significantly influences its overall operating costs. A prime location may come with higher rent but also attracts more customers.
On average, rent for a shisha lounge can range from $2,000 to $10,000 per month , depending on factors like size, location, and market demand. Here are some benchmarks to consider:
Location Type | Average Monthly Rent | Square Footage |
---|---|---|
Downtown | $5,000 - $10,000 | 1,000 - 2,500 sq ft |
Suburban | $2,000 - $5,000 | 1,500 - 3,000 sq ft |
Rural | $1,000 - $3,000 | 1,000 - 2,000 sq ft |
Landlords may also require a security deposit, generally amounting to one to three months' rent . This should be factored into the shisha lounge startup costs . Here are some common lease structures:
Understanding the structure of your lease can help in shisha lounge financial management and budgeting effectively. It’s advisable to negotiate terms that offer flexibility, especially in the early stages of your business.
Paying rent is a necessary expense that directly impacts the operational costs of a shisha bar . A well-thought-out lease agreement can help control these costs and contribute to the long-term success of your business.
One of the largest operating costs of a shisha lounge, like Oasis Shisha Lounge, is the staff salaries and wages . This expense is crucial in maintaining high-quality service and a welcoming atmosphere. The costs associated with hiring, training, and retaining skilled staff can significantly impact the overall shisha lounge operating costs . Employing the right team ensures that customers enjoy their experience and motivates them to return.
In the hospitality industry, including shisha lounges, the average percentage of payroll expenses can account for around 30% to 40% of total operating costs. This figure can vary based on location, staff roles, and the overall size of the operation.
When budgeting for staff salaries, consider the following roles that typically require compensation:
The table below highlights the estimated monthly salary ranges for different positions within a shisha lounge:
Position | Monthly Salary (USD) | Percentage of Total Wages |
---|---|---|
Shisha Server | $2,000 - $3,000 | 25% |
Bartender | $2,500 - $4,000 | 30% |
Cook | $2,000 - $3,500 | 25% |
Manager | $3,500 - $5,500 | 20% |
In addition to base salaries, don't forget to account for other employee-related expenses, such as:
When evaluating shisha lounge expenses , it is essential to prioritize staff wages effectively. A well-compensated team not only enhances customer satisfaction but also fosters a positive work environment, leading to lower turnover rates. By understanding and managing these operational costs, such as staff salaries, you can align with the financial goals set for your shisha lounge business.
For those interested in a comprehensive guide to launch and manage their shisha lounge, consider exploring the detailed business plan available at Oasis Shisha Lounge Business Plan .
Operating a successful shisha lounge like the Oasis Shisha Lounge involves various operational costs , with utility expenses standing out as one of the top costs of running a shisha lounge. These expenses can significantly influence the overall shisha lounge expenses and impact your profitability. Understanding the costs related to electricity, water, and gas helps in financial management and aids in strategic planning.
Utility bills for shisha lounges can be substantial, depending on the size of the establishment, customer volume, and the range of services offered. Here’s a breakdown of typical utility expenses:
Utility Type | Estimated Monthly Cost | % of Total Operating Costs |
---|---|---|
Electricity | $1,200 | 15% |
Water | $300 | 4% |
Gas | $500 | 6% |
As illustrated, the average monthly costs can amount to approximately $2,000 , accounting for about 25% of total operating costs. Electricity typically takes the largest share due to lighting, heating, ventilation, and air conditioning (HVAC) systems. Water is essential not only for washing and hygiene but also for maintaining the quality of the shisha experience. Gas is primarily used for cooking, if food is served, which is often the case in lounges.
It's crucial to monitor these expenses closely and keep track of changes in usage patterns. Seasonal fluctuations can also affect these costs, particularly in winter months when heating demands rise. For example, electricity usage can spike during colder months, which may require additional budgeting considerations.
In order to facilitate shisha lounge budgeting , owners should implement regular reviews of utility bills and consider investing in smart meters to gain real-time insights into consumption. This approach supports better decision-making regarding shisha lounge startup costs and ongoing operational strategies.
Utilizing sustainable practices not only contributes to cost savings but also appeals to environmentally conscious customers, which could enhance the reputation of your lounge. Overall, understanding and managing utility expenses effectively is vital for the long-term success of the Oasis Shisha Lounge and can significantly impact the overall cost to operate a shisha lounge .
One of the largest operating costs of a shisha lounge is undoubtedly the expense associated with shisha supplies, which includes tobacco, coals, and various accessories. The initial setup and ongoing replenishment of these items significantly impact the overall shisha lounge operating costs . For instance, premium tobacco blends can range from $12 to $25 per kilogram , depending on the brand and quality. Additionally, quality coals necessary for an optimal smoking experience can average $15 per box , containing enough coals for multiple sessions.
Item | Average Cost | Estimated Monthly Usage (for mid-sized lounge) | Monthly Cost |
---|---|---|---|
Tobacco (1 kg) | $20 | 100 kg | $2,000 |
Coals (1 box) | $15 | 20 boxes | $300 |
Accessories (pipes, hoses, etc.) | $50 | 2 sets | $100 |
When calculating the cost to operate a shisha lounge , it’s essential to consider these supply costs as they can fluctuate based on market demand and seasonal availability. It's estimated that shisha lounge supplies can constitute about 15-20% of the total monthly operational expenses.
Moreover, accessories like pipes and hoses require periodic replacement, contributing to the shisha lounge expenses . These costs can vary widely based on the style and material of the items. On average, investing in durable accessories may incur a one-time cost of around $500 , with additional maintenance and replacement expenses averaging $100 per month .
To maximize profitability, efficient shisha lounge financial management is crucial. Tracking the costs associated with shisha supplies regularly can help identify trends, enabling better forecasting and budgeting. Ultimately, understanding these costs is integral to ensuring that the operation remains sustainable and profitable.
In the shisha lounge business, food and beverage inventory stands out as a substantial component of the overall operating costs. This expense is crucial as it directly impacts customer satisfaction and repeat business. A well-managed inventory can enhance the guest experience while ensuring profitability for the lounge.
The cost of food and beverage inventory in a shisha lounge can vary based on several factors, including location, target market, and menu offerings. Typically, these costs can range from 25% to 40% of total revenues. For a lounge like Oasis Shisha Lounge , focusing on quality and variety can elevate the overall appeal and drive customer traffic.
Key elements to consider when managing food and beverage inventory include:
The table below outlines some example costs associated with common items in food and beverage inventory:
Item | Average Cost (per unit) | Estimated Monthly Consumption | Total Monthly Cost |
---|---|---|---|
Shisha Tobacco | $20 | 100 units | $2,000 |
Coals | $5 | 300 packs | $1,500 |
Beverages (Soft Drinks) | $1 | 500 units | $500 |
Light Snacks | $2 | 400 units | $800 |
Alcohol (if applicable) | $5 | 200 units | $1,000 |
In total, these common inventory costs could reach approximately $6,800 monthly, highlighting the importance of diligent financial management in a shisha lounge operation.
Effective financial management in a shisha lounge requires a careful balance of maintaining quality while controlling operational costs . Understanding the nuances of food and beverage inventory can significantly impact the overall financial health of the business.
For those starting out or seeking to refine their strategy, utilizing resources such as a detailed shisha lounge business plan can provide invaluable guidance and structured approaches to managing these costs effectively.
Operating a successful shisha lounge like Oasis Shisha Lounge requires a keen understanding of the various licensing and permits necessary to legally run the business. These requirements can vary significantly based on local laws and regulations, making it essential for entrepreneurs to conduct thorough research. Non-compliance can lead to hefty fines or even closure, which can dramatically impact the operational costs of a shisha bar .
The following are some of the key licenses and permits typically required for a shisha lounge:
Type of Permit | Average Cost | Importance |
---|---|---|
Business License | $50 - $500 | Legal operation |
Health and Safety Permits | $100 - $1,000 | Customer safety |
Alcohol License | $300 - $10,000 | Serving alcohol legally |
Shisha Retail Permit | $100 - $1,000 | Legal tobacco sale |
Outdoor Seating Permit | $200 - $1,500 | Patio operation |
Additionally, it is crucial to stay updated with any changes in local laws that may affect your shisha lounge expenses . Engaging with local business associations can provide valuable insights and updates on regulatory changes.
Overall, while the costs associated with licenses and permits can seem daunting, they are a crucial part of the cost to operate a shisha lounge . Properly managing these expenses can save significant amounts in the long run, allowing you to focus more on building a vibrant community space at Oasis Shisha Lounge.
When operating a shisha lounge, such as the Oasis Shisha Lounge , marketing and advertising costs represent a crucial segment of the overall operational expenses. This cost plays an essential role in attracting new customers and retaining existing ones. To effectively position a shisha lounge in a competitive market, a well-thought-out marketing strategy is necessary. The costs associated with these efforts can vary significantly depending on the chosen methods and platforms.
On average, businesses in the hospitality industry allocate between 5% to 10% of their gross revenue to marketing and advertising. For a shisha lounge, this could translate into a budget of $2,500 to $5,000 monthly, depending on the overall income. The primary components of marketing expenses can include:
Effectively managing these costs requires a careful balance of creativity and analytics. For instance, digital marketing, which encompasses social media and pay-per-click advertising, allows for targeted campaigns that can yield high returns on investment. A well-optimized online presence can lead to increased visibility and foot traffic, translating to higher revenue for the lounge.
Another consideration in your shisha lounge financial management is tracking the performance of your marketing investments. Regularly analyzing metrics such as customer acquisition cost (CAC) and return on marketing investment (ROMI) can provide insights into which strategies yield the best results. For example, if your CAC is $50 and the average customer spends $100 , your marketing efforts may be deemed effective. In contrast, if the CAC exceeds the revenue generated, it might be necessary to rethink your advertising approach.
Marketing Strategy | Estimated Monthly Cost | Expected ROI |
---|---|---|
Social Media Advertising | $1,000 | $5,000 |
Influencer Partnerships | $750 | $3,500 |
Promotional Events | $1,500 | $7,000 |
Effectively measuring the performance of each marketing channel can help you refine your approach, ensuring that your shisha lounge not only attracts new customers but also fosters loyalty among regular patrons. By deploying a strategic mix of marketing tactics, the operational costs of a shisha bar can be optimized, ultimately enhancing profitability and establishing the lounge as a cherished destination in the community.
When running a shisha lounge, insurance expenses represent a crucial component of the overall shisha lounge operating costs . Proper coverage protects your business from various risks, including property damage, liability claims, and unforeseen events that could impact your operations.
Insurance can significantly affect your shisha business costs , so it's essential to understand the types of insurance you may need:
Overall, the estimated total insurance costs for a shisha lounge can range from $4,700 to $17,500 annually, depending on the size, services offered, and number of employees.
In addition to basic insurance needs, shisha lounge owners should also account for the operational environment and local laws, which can affect the required coverage levels. For example, establishing a lounge in a high-traffic area may necessitate higher liability limits.
Type of Insurance | Average Annual Cost | Coverage Scope |
---|---|---|
General Liability Insurance | $500 - $2,500 | Bodily injury and property damage |
Property Insurance | $1,200 - $4,000 | Physical asset protection |
Workers' Compensation Insurance | $2,000 - $6,000 | Employee injury coverage |
Liquor Liability Insurance | $1,000 - $5,000 | Alcohol-related claims |
By correctly assessing and managing your shisha lounge expenses related to insurance, you can ensure that you're not only protected from potential risks but also optimizing your operational budget. This part of shisha lounge financial management is vital for sustaining a long-term and successful business.
When considering the operating costs of a shisha lounge , maintenance and repairs are essential factors that can significantly impact your shisha lounge expenses . A well-maintained lounge not only enhances the customer experience but also helps in avoiding unexpected costs that can arise from neglect. Regular maintenance ensures that everything from furniture to equipment is functioning optimally, which can prevent larger repair bills down the line.
Here are some common areas where maintenance costs might arise:
According to industry benchmarks, businesses typically allocate about 5-10% of their shisha lounge startup costs to maintenance and repairs annually. For a lounge generating approximately $300,000 in annual revenue, this could translate to $15,000 to $30,000 dedicated to keeping the venue in pristine condition.
Maintenance Costs | Percentage of Annual Revenue | Typical Annual Amount |
---|---|---|
Furniture | 15% | $2,250 |
Equipment | 25% | $3,750 |
HVAC Systems | 30% | $4,500 |
Plumbing & Electrical | 30% | $4,500 |
Moreover, shisha lounge financial management should account for seasonal fluctuations. For instance, certain periods may see less usage of outdoor areas, which could decrease maintenance needs accordingly. By monitoring and adjusting your operational costs of a shisha bar , you can reduce unnecessary expenditure while ensuring a high-quality experience for your customers.
In terms of emergencies, it's advisable to set aside a specific budget for unforeseen repairs. Having around 2-5% of your overall budget reserved for unexpected issues can prevent financial strain when urgent maintenance is required.
Ultimately, investing in thorough maintenance and proactive repairs not only safeguards your assets but also enriches the customer experience at your Oasis Shisha Lounge . For more insights on building a successful shisha lounge, consider reviewing a comprehensive business plan tailored to this industry: Shisha Lounge Business Plan .
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This comprehensive nine-step checklist will guide you through the process of writing a business plan that encompasses everything from conducting market research to creating a financial plan. Conduct market research: Gather data and insights on the shisha lounge industry, target demographics, and consumer preferences.
Industry Analysis. The hookah lounge and bar industry is expected to grow over the next five years to over $15 million. The growth will be driven by an increased number of younger patrons who seek social interaction via hookah lounge experiences. The growth will be driven by event planners seeking new event venues.
For comprehensive guidelines on how to craft your shisha lounge business plan checklist, visit this link. Establish A Financial Forecast And Budget. Creating a solid financial forecast and budget is essential when drafting your business plan for a shisha lounge. A well-structured financial plan will provide a roadmap for your business, guiding ...
Hookah Lounge Business Plan. Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their hookah bars and lounges. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a hookah lounge ...
A comprehensive shisha lounge business plan is essential, detailing how you will sustain your operations while minimizing costs. According to industry analyses, the average initial investment for opening a shisha lounge can range from $50,000 to $100,000, but with creative financing and community support, you can drastically reduce this figure. ...
Shisha Hookah Lounge | Business Plan [YEAR] 8/41. Shisha - 3 Year Revenue Highlights 2021-22 360,723 114,289 13,038 2022-23 538,041 216,784 44,360 2023-24 665,012 269,869 65,638 Financial Year Sales Gross Margin Net Profit Hookah Lounge | Business Plan [YEAR] 9/41. 2.
The shisha bar market. Originated in the Middle East, South East Asia and Northern Africa, shisha is tobacco that is smoked communally in a water pipe known as a hookah or narghile.In recent years, shisha bars have become increasingly popular in the UK - with a 2019 survey by ash finding that 11% of Brits have tried it at one point or another.. Often taking place in a cafe or restaurant ...
Creating a comprehensive business plan is the first and most crucial step in starting your shisha lounge. Your business plan should outline the structure of your lounge, including: Identify your target demographic and understand their preferences. Detail the types of shisha, food, and beverages you will provide. Develop a competitive pricing ...
If you are planning to start a new Hookah Lounge, the first thing you will need is a business plan. Use our hookah lounge business plan example created using upmetrics business plan software to start writing your business plan in no time.. Before you start writing your business plan for your new Hookah Lounge, spend as much time as you can reading through some samples of services business plans.
Let's go through the content of each section in more detail! 1. The executive summary. The first section of your shisha bar's business plan is the executive summary which provides, as its name suggests, an enticing summary of your plan which should hook the reader and make them want to know more about your business.
Arz al-Lubnan Hookah Bar (Cedars of Lebanon) is a new hookah bar concept which will focus on a combination of Middle Eastern customers and customers over 22 years in age to offer a more adult alternative to hookah bars frequented by college-age customers. The first bar will be established in Trendytown, and managed by the business founders ...
Step 3: Brainstorm a Hookah Lounge Name. Here are some ideas for brainstorming your business name: Short, unique, and catchy names tend to stand out. Names that are easy to say and spell tend to do better. Name should be relevant to your product or service offerings.
Inventory including cigars, alcoholic and nonalcoholic drinks, hookahs and various types of shisha and tobacco: $16,000. Counter and serving equipment: $12,500. Store equipment including a cash ...
Below are the sales projections for Purple & Blue Hookah Bar®, LLC, it is based on the location of our business and other factors as it relates to hookah bars start - ups in the United States; First Fiscal Year-: $120,000. Second Fiscal Year-: $350,000. Third Fiscal Year-: $750,000.
How Can Operational Efficiency Be Optimized For A Shisha Lounge Business? Operational efficiency is crucial for increasing profits in a shisha lounge, such as Oasis Shisha Lounge.By streamlining processes, managing resources effectively, and enhancing the customer experience, the profitability of shisha lounges can significantly improve.
At its core, a hookah lounge is a retail business, requiring all the elements a retail business needs—a physical location, inventory, a process for collecting sales tax, and the like. To begin, you'll need to determine what you'll sell. Some hookah lounges also serve alcohol, food, or both. Some sell hookah and smoking accessories like shisha ...
GROW YOU BUSINESS WITH US Grow your business. Don't let this list overwhelm you. ... one or two of these ideas that are suitable to your business and your circumstances and get busy developing your growth plan. READ MORE. ARE YOU A SHISHA LOUNGE OWNER? Join the world's best Shisha Lounge and reach millions of people.
S Oral: Amazing hookah and tea. Francesco Rulli: You should absolutely try this place, it was opened recently, the owner is a real shisha expert and gave me many tips about tobaccos, it was the best smoking place i tried in moscow! Anna Reznikova: Best shisha ever! 2. BeauMonde Lounge (Бомонд Лаунж) 9.4.
According to industry studies, businesses that review their KPIs regularly tend to see a 10-15% increase in profitability within a year. This is particularly crucial for the shisha lounge industry, where customer satisfaction and operational efficiency play a significant role in success.Implementing a structured KPI tracking system not only aids in assessing current performance but also helps ...
Shishas Lounge Bar, Moscow, Russia. 10,111 likes · 10,212 were here. Сеть Shishas Bar: - Shishas Sferum Bar (Новый Арбат) - Shishas Happy Bar (1905...
Posted by u/bugz299 - 3 votes and 2 comments
Furthermore, exploring financing options for shisha lounges, such as small business loans or crowd-funding, can provide the necessary capital to launch without overwhelming initial expenditure.If you can start with a smaller inventory of tobacco and flavors, this can free up budget for other operational needs.. In reality, many successful shisha lounges have started with budgets as low as ...
Tory MP calls for crackdown on shisha lounges Bob Blackman said failing to include shisha lounges and chewing tobacco, such as paan, in the Tobacco and Vapes Bill would leave 'escape clauses'.
By understanding and managing these operational costs, such as staff salaries, you can align with the financial goals set for your shisha lounge business. For those interested in a comprehensive guide to launch and manage their shisha lounge, consider exploring the detailed business plan available at Oasis Shisha Lounge Business Plan.