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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Also called a hookah café, a shisha bar, or a hookah den, a hookah lounge is a place where customers go to smoke shisha. This flavored tobacco is smoked through a pipe, and it can be shared by multiple people. Hookah lounges can charge by time, by pipe, or by tobacco amount.
Learn how to start your own Hookah Lounge and whether it is the right fit for you.
Ready to form your LLC? Check out the Top LLC Formation Services .
We have put together this simple guide to starting your hookah lounge. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas .
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
Luckily we have done a lot of this research for you.
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Hookah Lounge Name Generator
If you operate a sole proprietorship , you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.
When registering a business name , we recommend researching your business name by checking:
It's very important to secure your domain name before someone else does.
Business name generator, what are the costs involved in opening a hookah lounge.
A hookah lounge costs about $40,0000 to start. This price includes having a nice retail space to fund. It also includes licensing and insurance. The other costs include sourcing useable hookahs and shisha. Typically, a lounge will carry between 10 and 30 hookahs. Each can cost as much as $150.
Ongoing expenses include rent, utilities, cleaning, hookah replacement, and shisha replacement. Normally, a hookah lounge will cost about $2,000 to $3,000 per month to run. A 50-gram container of shisha can cost as little as $10 to buy. The same container can be split across multiple hookahs, resulting in a profit of about $100.
The best customers are those who aren’t rowdy. Because hookah smokers need to be at least 18 years old, the hookah-smoking culture can be chaotic. Hookahs are fragile, and a hookah lounge owner will lose money if their hookahs are broken. Every lost hookah reduces the overall number of people who will buy services. Ideal customers are quiet. They’re also return visitors. Hookah lounges make a lot of money from familiars, often creating deals and discounts for them.
A hookah lounge makes most of its money by giving patrons a hookah to smoke. A hookah “session” is paid for either before it begins or after it is over. Normally, one hookah is shared between two and four people. Hookah lounges can either charge by the hour, or they can charge by the bowl’s size. Normally, a hookah lounge will determine a bowl’s price by how much shisha it can hold. A large bowl, for example, may burn longer. For this reason, it costs more to smoke.
Hookah lounges can also make money by selling shisha separately. Or, they can sell hookahs and hookah accessories. These accessories include coals, hoses, and vases. Other hookah lounges may sell food or even alcoholic beverages.
Customers can be charged about $10 for a single-person smoking experience, $15 for a three-person smoking experience, and $20 for a four-person smoking experience. Each smoking “experience” includes one hookah to be smoked. You can also offer to replace the bowl’s shisha, if you’d like. This isn’t necessary, but it can definitely retain customers if it’s balanced against the expense.
A hookah lounge can make quite a lot of money, if it’s successful. Average profits are about $150,000.
To become more profitable, you should create incentives. Because shisha is a niche form of entertainment, a lot of customers will return to hookah bars with unique atmospheres. Consider adopting a discount plan, rewarding returning customers, or offering food and drinks.
Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!
The most common business structure types are the sole proprietorship , partnership , limited liability company (LLC) , and corporation .
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your hookah lounge is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Have a Professional Service Form your LLC for You
Two such reliable services:
You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services . You can choose to hire a registered agent or act as your own.
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN through the IRS website . If you would like to learn more about EINs, read our article, What is an EIN?
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil .
Besides being a requirement when applying for business loans, opening a business bank account:
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Getting a business credit card helps you:
Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
Certain state permits and licenses may be needed to operate a hookah lounge. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits .
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses .
A hookah lounge is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business .
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance . This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance . If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
FInd out what types of insurance your Hookah Lounge needs and how much it will cost you by reading our guide Business Insurance for Hookah Lounge.
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners , we'll give you helpful tips and advice for creating the best unique logo for your business.
Recommended : Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker .
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator . Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
Fortunately, hookah lounge promotion takes care of itself. Word of mouth, normally, will suffice. That said, you can boost your hookah lounge’s visibility by marketing through liquor stores, outside grocery stores, near college campuses, and party areas. Once a hookah lounge is “found,” it usually catches on quickly.
Customers will come for the hookah, but they’ll stay for the experience. Because smoking shisha is a social event, customers will flock to whichever lounge offers the best amenities and prices. Normally, this includes: a low shisha price, loose smoking restrictions, informative staff, an interesting environment, and good deals.
After defining your brand and creating your logo the next step is to create a website for your business .
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
Recommended : Get started today using our recommended website builder or check out our review of the Best Website Builders .
Other popular website builders are: WordPress , WIX , Weebly , Squarespace , and Shopify .
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.
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Anyone who’s interested in shisha, hookah, or the hookah culture should open a lounge. A hookah lounge is a good business for entrepreneur types, diner lovers, and tobacco connoisseurs.
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A hookah lounge owner is in charge of setting up hookahs for people to smoke. A lounge owner needs to make sure all the hookah pipe pieces are clean. Similarly, they need to make sure the lounge’s shisha supply is clean and unspoiled. A lounge owner charges customers, keeps track of payments, and cleans the establishment. Hookah lounges are typically small, and they can be operated by a single person. Some hookah lounge owners stock hookahs for sale. They can also sell shisha, hookah hoses, hookah bowls, and other accessories.
A hookah lounge owner needs to have a firm grasp on hookahs. They need to understand how they’re smoked, how shisha is measured, how to take care of a hookah, and how to make a pleasant smoking session. High-quality hookah lounge owners also understand the culture of smoking hookah. Because hookah is a middle-eastern novelty, some visitors go to lounges to try something exotic. While hookah has become pretty popular, a high-quality lounge will still cover the “bells and whistles” to make a nice experience.
A hookah lounge owner also needs to understand liquor and tobacco laws. Guests need to be safe at all times. Guests can smoke too much hookah, causing them to get sick. A good hookah lounge owner will make sure guests are knowledgeable about hookah.
A lot of hookah lounges are local. Because of this, there isn’t much growth potential on a state, or even national, level. A hookah lounge can, however, become a local favorite. If your hookah lounge offers the best shisha, the lowest prices, the best discounts or other great amenities, expect it to be a main location for visitors.
Hookah lounges gain a lot from tobacco’s inelastic demand . People who smoke hookah will often pay a lot for it, and they’ll keep returning to purchase it. For this reason, a hookah lounge which provides the best products, services or cost opportunities will have a very big advantage.
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When jump-starting a hookah lounge, make sure your prices are affordable. Additionally, make sure you’re offering shisha the customers like. Again, hookah bars benefit from the average customer’s love of tobacco. That said, a hookah lounge which doesn’t prepare shisha properly can lose business quickly.
Raw materials will also need to be sourced. Make sure you’re using popular shisha, and make sure your employees are skilled in the art of shisha preparation. While shisha preparation isn’t too difficult, there is a firm culture behind it.
At the start, you can run a hookah lounge yourself. You should quickly gain between one and three workers, however. A lot of hookah lounges are small, and they thrive on having a café-like atmosphere. That said, a hookah lounge with slow service is often passed up.
Industry opportunities.
Hookah lounges, also known as shisha bars or hookah bars, have become popular social destinations where people gather to enjoy flavored tobacco through a water pipe called a hookah or shisha. If you’re passionate about creating a relaxing and culturally rich atmosphere for patrons to unwind and socialize, starting a hookah lounge business could be an exciting venture.
Hookah lounges often feature comfortable seating, ambient lighting, and Middle Eastern-inspired decor to enhance the overall experience for customers. The primary focus of a hookah lounge business is to provide a welcoming environment for patrons to unwind, socialize, and enjoy the unique hookah smoking experience.
1. market research, 2. create a hookah lounge business plan.
Create a business plan and include aspects like start-up capital, ownership pattern, location, mission statement, and objectives. A detailed business plan will make you confident in achieving short-term goals and in building a smooth day-to-day operation module.
A proper business name is a critical part of the process of creating a brand. Brainstorm different names and select the one which aptly manifests your hookah business. you can check our guide on how to name a business .
First of all, check what licenses and permits you must acquire to run a hookah bar in your locality. Check local regulations and zoning laws to ensure compliance with licensing requirements for operating a hookah lounge business. Obtain necessary permits and licenses, such as a business license, food service permit, tobacco license (if applicable), and any other permits required by local authorities.
Ingredients used in hookah should be permissible and not against the anti-weed law. Further smoking zone should be separate from the restaurant area if the restaurant is also being run on the same premises.
Design the interior space to create a cozy and inviting atmosphere. Incorporate comfortable seating, ambient lighting, Middle Eastern-inspired decor, and designated areas for hookah smoking.
It is advisable to offer a selection of beverages, such as teas, coffees, soft drinks, and mocktails, to complement the hookah experience. You may also consider serving light snacks or appetizers.
A great location and space are very important for a hookah bar lounge business. You will need to delicately balance between a low-key restaurant and a social bar atmosphere. Smoking hookah is a very relaxing kind of social activity and you need to concentrate on décor.
Stock up on essential supplies like shisha flavors, disposable mouthpieces, cleaning tools, and replacement parts for hookah maintenance.
Related: How To Effectively Manage Manpower
11. safety and compliance.
Implement strict safety measures, including proper ventilation, fire safety protocols, and adherence to health and sanitation standards. Educate staff and customers about responsible hookah smoking practices and the potential health risks associated with tobacco use.
13. promote your hookah lounge business.
A happy hour discount promotion may also encourage your clients to come chill with their friends – a great trick to reach new customers. Create a website with some inside clippings. Ask satisfied customers to give feedback there. Use social media carefully to get clients.
What are the legal requirements for starting a hookah lounge business, what is the cost of starting a hookah lounge.
Then there is a recurring cost of a shisha that you need to buy in containers. The amount will depend on the number of hookahs you provide to customers.
What equipment is needed for a hookah lounge.
Essential equipment for a hookah lounge includes hookah pipes, shisha tobacco, charcoal, bowls, hoses, tongs, ashtrays, seating furniture, lighting fixtures, sound systems, and decor items. It’s crucial to invest in high-quality hookah equipment and ensure proper maintenance.
What are the health and safety considerations for a hookah lounge, how can i differentiate my hookah lounge from competitors.
Differentiating factors can include offering a diverse selection of high-quality shisha flavors, providing exceptional customer service, creating a unique ambiance or theme, hosting live entertainment or events, and regularly updating the menu with new offerings or promotions.
Are there any age restrictions for customers at a hookah lounge, what are the potential challenges of running a hookah lounge business.
Challenges may include navigating regulatory requirements and smoking laws, managing inventory and supply chain logistics, attracting and retaining customers in a competitive market, maintaining consistent quality and service standards, and addressing health and safety concerns related to smoking.
This Section's Contents
Capital requirements and use of funds, key assumptions.
[Company Name]’s revenues will come from the sales of hookah, drinks, and food.
The major costs for the company will be food, hookah, and alcohol costs and staff salaries. In the initial years, the company’s marketing spend must also be taken into consideration as it establishes itself in the market.
[Company Name] is seeking a total funding of $560,000 to launch its hookah lounge. The capital will be used for funding capital expenditures, building and design, bar equipment and kitchen appliances and utensils, labor costs, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
Number of customers per day | Per location |
---|---|
FY 1 | 100 |
FY 2 | 120 |
FY 3 | 140 |
FY 4 | 165 |
FY 5 | 190 |
Annual Lease ( per location) | $60,000 |
Yearly Lease Increase % | 2.50% |
5 Year Annual Income Statement
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
---|---|---|---|---|---|---|
Revenues | ||||||
Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
Expenses & Costs | ||||||
Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
PRETAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
---|---|---|---|---|---|---|
ASSETS | ||||||
Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
LIABILITIES & EQUITY | ||||||
Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
Share Capital | $0 | $0 | $0 | $0 | $0 | |
Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
---|---|---|---|---|---|
CASH FLOW FROM OPERATIONS | |||||
Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
CASH FLOW FROM INVESTMENTS | |||||
Investment | ($246,450) | $0 | $0 | $0 | $0 |
Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
CASH FLOW FROM FINANCING | |||||
Cash from equity | $0 | $0 | $0 | $0 | $0 |
Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
SUMMARY | |||||
Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
You can download our Business Plan Template (including a full, customizable financial model) to your computer here.
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Hookah Lounge Business Plan Home I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan
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This July, ABC 33/40 is proud to partner with AmFirst for their 5th annual Feeding Families Across Alabama Food Drive.
by Jeff Wyatt and Associated Press
KANSAS CITY (WBMA) - A former Alabama football player has been released by his NFL team amid legal troubles in Tuscaloosa.
According to court documents obtained by ABC 33/40 News, Isaiah Buggs has been released from the Kansas City Chiefs football organization.
Buggs' name appears on the NFL's list of terminations for the month of June. The Chiefs also confirmed Buggs' release in a tweet Monday afternoon.
Buggs surrendered the business license to Kings Hookah Lounge last week, according to the City of Tuscaloosa. Earlier in the week, it was announced on the lounge's Facebook page that they would be closing. The lounge, located on Greensboro Avenue in Tuscaloosa, was owned by Buggs.
The 27-year-old Buggs, who signed a $1,292,500 contract with Kansas City for the upcoming season, turned himself in May 30 after he was charged with two misdemeanor counts of second-degree animal cruelty. Two dogs that were under Buggs’ care were allegedly found neglected and malnourished, and one of the dogs had to be euthanized.
The run-stuffing tackle out of Alabama played three seasons for the Pittsburgh Steelers before spending the past two with the Detroit Lions. He has started 23 games and appeared in 56 in his career, with 89 tackles and two sacks.
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Develop A Hookah Lounge Business Plan - The first step in starting a business is to create a detailed hookah lounge business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
Executive Summary 2.1 The Hookah Lounge Business. Aladdin Hookah Bar will be a registered hookah bar in Miami at a 10 minutes' walk from the Bayside Marketplace. Miami is a highly advanced and ordered city; a hookah bar strategically located in the main commercial zone of this populated city will business a lot, as most people and tourists search for a serene place for smoking and relaxing.
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 ...
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.
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.
4. Secure Startup Funding for Your Hookah Lounge (If Needed) In developing your hookah lounge business plan, you might have determined that you need to raise funding to launch your business.. If so, the main sources of funding for a hookah bar to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors.
Hookah Lounge 10200 Bolsa Ave, Westminster, CA, 92683 https://upmetrics.co (650) 359-3153 [email protected] Business Plan John Doe A Moments of Chill Air
Here is very simplified version of the financial planningof a fictional lounge that hopefully helps you get started. $14,000 Revenue. Then Subtract: $7500 (Fixed Costs - Rent, Labor, utilities, etc) $2500 (Variable costs - Your shisha, replacement hookahs, mouth tips, sales tax, etc) $4000 - Boom! Now you know how much money you need to bring ...
In conclusion, writing a business plan for a hookah lounge requires careful consideration and thorough research. By following the nine steps outlined in this checklist, you can ensure that your business is set up for success. Remember to conduct market research, define your target market, determine your location, estimate startup costs, develop ...
Before diving into the world of hookah lounges, it's essential to create a solid business plan. This plan will serve as a roadmap for success and guide you through the entire process of starting your own hookah lounge. Two key aspects to focus on during the planning phase are business concept development and market research and analysis.
A business plan for a hookah lounge business is important to ensure the business is organized and successful. It is a roadmap that outlines the financial and operational goals, objectives, and strategies necessary to launch and sustain the business. A business plan will help you to evaluate the potential for success and identify any potential ...
Example Business Plan For Hookah Lounges. Below are links to each of the key sections of a sample business plan for a successful hookah lounge business. I. Executive Summary - The Executive Summary provides an overview of your business opportunity and summarizes the business plan. II.
2. Draft a hookah lounge business plan. 3. Develop a hookah lounge brand. 4. Formalize your business registration. 5. Acquire necessary licenses and permits for hookah lounge. 6. Open a business bank account and secure funding as needed. 7. Set pricing for hookah lounge services. 8. Acquire hookah lounge equipment and supplies. 9.
The business will launch its first hookah lounge in Trendytown within six months and endeavor to create a scalable model which can be franchised in additional urban locations. The business will earn revenues through the sale of tobacco (multiple flavors), drinks (coffee, tea, and juices) and food (Middle Eastern and American snacks and ...
Start a hookah lounge by following these 10 steps: Plan your Hookah Lounge. Form your Hookah Lounge into a Legal Entity. Register your Hookah Lounge for Taxes. Open a Business Bank Account & Credit Card. Set up Accounting for your Hookah Lounge. Get the Necessary Permits & Licenses for your Hookah Lounge.
The first step is to conduct thorough market research to understand the demand for hookah lounges in your area. Also, identify your target market, competition, and potential location options. 2. Create a Hookah Lounge Business Plan. Create a business plan and include aspects like start-up capital, ownership pattern, location, mission statement ...
In the realm of leisure and relaxation, hookah lounges have carved out a niche as trendy and culturally immersive spaces. As the demand for unique social experiences continues to rise ...
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 ...
[Company Name] is seeking a total funding of $560,000 to launch its hookah lounge. The capital will be used for funding capital expenditures, building and design, bar equipment and kitchen appliances and utensils, labor costs, marketing expenses, and working capital.
Biz Bits: A place to be: Hookah lounge opens in Moscow. By Murf Raquet. Feb 21, 2009. 1 of 5. Nicole Tyllas and her husband, Thando Dzowa, left the Midwest for the Palouse and its educational ...
The post, published shortly after Buggs' release from jail, stated, "Kings Hookah Lounge will be surrendering Business license kings hookah lounge will be closed for good.". Buggs embroiled in ...
Elite Hookah Lounge is fun! The ambience is inviting and stylish, creating a perfect atmosphere to relax and unwind with friends. But Elite takes things a step further with amazing food. Their menu goes beyond the typical lounge fare. I came for brunch and really enjoyed the shrimp and grits as well as the French toast!
Buggs surrendered the business license to Kings Hookah Lounge last week, according to the City of Tuscaloosa. Earlier in the week, it was announced on the lounge's Facebook page that they would be ...
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Hookah Lounge LikeShisha. 34 reviews. #21 of 562 Nightlife in Moscow. Bars & ClubsCigar Bars. Open now. 2:00 PM - 2:00 AM. Write a review. About. The cozy interior in the vintage style, a great professional hood, an extensive tea menu (36 varieties), enveloping sound, a wide range of tobaccos, hookahs and hookah professional, refreshing bar ...
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.