How to Start a Hookah Lounge Business
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:
- Office supplies: $500
- 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 register, ventilation and signage: $13,750
- Furniture and electronics: $4,000
- Website creation: $600
- Marketing promotion: $3,580
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:
- Legal expenses for licenses and permits
- Business registration fee
- Accounting software or contract with third-party payroll business
- Operational costs including bills and employee salaries
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.
Get Your Permits in Order
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.
Build Your Staff
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.
Set Your Prices
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.
Market Your Business
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.