Hookah Lounge Business Plan
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Executive Summary
Business Overview
Hookah Haven Lounge is a startup hookah lounge experience for patrons located in Chicago, Illinois. The company was founded by Constantine Vassilis, a former restaurant and bar owner who has determined that the new business opportunity will bring former customers to a new, exciting experience that appeals to young and old customers alike.
Constantine Vassilis owned the Blue Lagoon restaurant and bar for over twenty years, where the patrons were served traditional seafood and fish meals and the atmosphere was one of the ocean and tropics. While the business brought profitability and a strong following of loyal patrons, Constantine began to look for a new venture in 2020, and founded the new Hookah Haven Lounge as a way of reaching all generations, particularly younger college students, with experiences that are fresh and exciting.
Product Offering
The following are the services that Hookah Haven Lounge will provide:
- Unique, upscale experience in midtown Chicago
- Relaxing and enjoyable environment
- Multiple shisha flavors from which to choose
- Disposable hookah mouth tips
- Rich, comfortable, and private seating arrangements
- Low key social atmosphere
- Alcohol and appetizer menus
Customer Focus
Hookah Haven Lounge will target residential customers within Chicago and the surrounding regions. They will target university and college students. Hookah Haven Lounge will target shisha aficionados. They will also target small groups who are looking for a total experience of shisha, alcohol and appetizers. They will target patrons who enjoy appetizers and alcohol. They will also target potential customers who are seeking an event venue for special experiences.
Management Team
Hookah Haven Lounge will be owned and operated by Constantine Vassilis. He recruited his former restaurant manager, Deane Moore, to be his Restaurant Manager and help oversee the office and operations overall.
Constantine Vassili is a former restaurant and bar owner who has determined that the new business opportunity will bring former customers to a new, exciting experience that appeals to young and old customers alike. As he has invited many former patrons to the new hookah experience, he has built a following who have agreed to visit and are spreading the word of the new hookah lounge experience.
Deane Moore has been in the restaurant business for over twenty years, most recently as the restaurant manager for the Blue Lagoon, Constantine’s former restaurant and bar. She will take on the new role of Restaurant Manager for the Hookah Haven Lounge, where she will oversee all operations of the hookah, bar, and appetizer servings for customers.
Success Factors
Hookah Haven Lounge will be able to achieve success by offering the following competitive advantages:
- Friendly, knowledgeable, and highly-qualified team of Hookah Haven Lounge
- A wide array of shisha flavors, guaranteeing a variety of experiences for those who enjoy hookah.
- Exceptional appetizers available for purchase to serve small groups of 6-10 hookah patrons.
- Wide assortment of alcoholic beverages, including beer, wine and cocktails.
- Plush, comfortable seating and decor, designed to offer privacy for groups of 2 to 10 hookah patrons.
- Hookah Haven Lounge offers the best pricing in Chicago. Their pricing structure is the most cost effective when compared to the competition.
Download the Hookah Lounge business plan template (including a customizable financial model) to your computer here <–
Financial Highlights
Hookah Haven Lounge is seeking $200,000 in debt financing to launch its Hookah Haven Lounge. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and marketing costs. The breakout of the funding is below:
- Office space build-out: $20,000
- Office equipment, supplies, and materials: $10,000
- Three months of overhead expenses (payroll, rent, utilities): $150,000
- Marketing costs: $10,000
- Working capital: $10,000
The following graph outlines the financial projections for Hookah Haven Lounge.
Company Overview
Who is Hookah Haven Lounge?
Hookah Haven Lounge is a newly established, full-service hookah lounge in Chicago, Illinois. Hookah Haven Lounge will be the most reliable, cost-effective, and efficient choice for residents in Chicago and the surrounding communities. Hookah Haven Lounge will provide a comprehensive array of shisha flavors for hookah and a comfortable, plush furnishings for small group social occasions. Their full-service approach includes a comprehensive bar and upscale appetizer selections.
Hookah Haven Lounge will be able to serve 50 to 75 patrons at the same time. The team of professionals are highly qualified and experienced in providing hookah experiences and in serving beverages and appetizers, as well. The Hookah Haven Lounge removes all headaches and of the workday or weekend, as it ensures all issues are removed while patrons enjoy the best customer service and the easiest, most relaxed conversations.
Hookah Haven Lounge History
Since incorporation, Hookah Haven Lounge has achieved the following milestones:
- Registered Hookah Haven Lounge, LLC to transact business in the state of Chicago, Illinois.
- Has a contract in place to set up its office space of 5,000 square feet.
- Reached out to numerous contacts to include Hookah Haven on their “must try” list.
- Began recruiting a staff of ten and office personnel to work at the Hookah Haven Lounge.
Hookah Haven Lounge Services
The following will be the services Hookah Haven Lounge will provide:
- Unique, upscale experience in midtown Chicago
- Relaxing and enjoyable environment
- Multiple shisha flavors from which to choose
- Disposable hookah mouth tips
- Rich, comfortable, and private seating arrangements
- Low key social atmosphere
- Alcohol and appetizer menus
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
The growth will be driven by the number of patrons seeking a relaxing experience
The growth will be driven by an increased supply of shisha in new varieties of flavors
The growth will be driven by a larger demographic looking for bar, food and alcohol environments
Costs will likely be reduced as prices for shisha are lowered and the supply is increased
Costs will likely be reduced as more hookah lounges are opened
Download the Hookah Lounge business plan template (including a customizable financial model) to your computer here <–
Customer Analysis
Demographic Profile of Target Market
Hookah Haven Lounge will target residential customers within Chicago and the surrounding regions. They will target university and college students. Hookah Haven Lounge will target shisha aficionados. They will also target small groups who are looking for a total experience of shisha, alcohol and appetizers. They will target patrons who enjoy appetizers and alcohol. They will also target potential customers who are seeking an event venue for special experiences.
The precise demographics for Hookah Haven Lounge are:
| Total | Percent | |
|---|---|---|
| Total population | 1,680,988 | 100% |
| Male | 838,675 | 49.9% |
| Female | 842,313 | 50.1% |
| 20 to 24 years | 114,872 | 6.8% |
| 25 to 34 years | 273,588 | 16.3% |
| 35 to 44 years | 235,946 | 14.0% |
| 45 to 54 years | 210,256 | 12.5% |
| 55 to 59 years | 105,057 | 6.2% |
| 60 to 64 years | 87,484 | 5.2% |
| 65 to 74 years | 116,878 | 7.0% |
| 75 to 84 years | 52,524 | 3.1% |
Customer Segmentation
Hookah Haven Lounge will primarily target the following customer profiles:
- Residents of the city of Chicago and surrounding communities
- University and college students
- Shisha aficionados and those who enjoy smoking
- Patrons seeking a total experience: atmosphere, of alcohol, appetizers, and hookah
Competitive Analysis
Direct and Indirect Competitors
Hookah Haven Lounge will face competition from other companies with similar business profiles. A description of each competitor company is below.
Mediterranean Hookah Bar
The Mediterranean Hookah Bar, located in Rosemont, Illinois, is owned by brothers Amid and Apollos Ajax. Amid and Apollos founded the Mediterranean Hookah Bar after they spent their university years enjoying a similar bar and found the target market in the Rosemont area was without competition. They used private loans and credit cards to start the business in 2020 and it became profitable as of late 2022. They employ six team members, three of whom serve at the bar and three who set up and serve hookah.
The Mediterranean Hookah Bar offers a wide range of alcoholic beverages, including mixed cocktails, fine whiskey, and several types of beer. The emphasis of the bar is one of relaxation and, in a portion of the bar, sports to follow via an interactive screen. Seating is arranged in groups of 4-6 patrons and snacks are available on the weekends only.
Azure Gold Line Hookah
Formed in 2018, the Azure Gold Line Hookah lounge features brand name shisha, including their most popular brand, Azure Gold Line Hookah. The lounge is located in Lake Forest, Illinois about twenty miles from Chicago, and offers a full flavored series of hookah for patrons who seek quiet, comfortable surroundings. The Azure Gold Line Hookah lounge is small and intimate, with private seating for two patrons and it includes live music on the weekends with a distinctive Mediterranean sound. Patrons are encouraged to try all flavors of shisha by engaging in the “Shisha Tastings” that are offered on Wednesday evenings. Twelve varied flavors of shisha are offered to patrons to determine are the favorites of the evening. The winning shisha is then offered to each patron in the “Shisha Tasting Club” when they return. This creates a social club of about twenty-five patrons and encourages conviviality among the single patrons. The Azure Gold Line Hookah offers single-use mouth tips to encourage hygienic habits, while also offering a buffet on Saturday evenings that include Mediterranean favorites.
The Chicago Rose Smoking Lounge
The Chicago Rose Smoking Lounge is situated adjacent to the Magnificent Mile in Chicago. Opened in 1939, the wood-patterned walls and roomy leather furnishings speak of several generations ago, when men sat and smoked their tobacco as women finished their meals in fancy restaurants nearby.
With the popularity of smoking tobacco on the decline in Illinois, the Chicago Rose Smoking Lounge began a hookah service that included four hookah bowls and leather sofas, along with distinctive flavors of shisha, that could be offered to those who are shisha aficionados. This brought in younger generations of patrons and increased the business, while retaining the flavor and atmosphere of the old-world Chicago Rose Smoking Lounge. The hookah portion of the environment remains somewhat small in comparison to the areas for cigarette and cigar smokers.
Download the Hookah Lounge business plan template (including a customizable financial model) to your computer here <–
Competitive Advantage
Hookah Haven Lounge will be able to offer the following advantages over their competition:
- Friendly, knowledgeable, and highly-qualified team of Hookah Haven Lounge
- A wide array of shisha flavors, guaranteeing a variety of experiences for those who enjoy hookah.
- Exceptional appetizers available for purchase to serve small groups of 6-10 hookah patrons.
- Wide assortment of alcoholic beverages, including beer, wine and cocktails.
- Plush, comfortable seating and decor, designed to offer privacy for groups of 2 to 10 hookah patrons.
- Hookah Haven Lounge offers the best pricing in Chicago. Their pricing structure is the most cost effective when compared to the competition
Marketing Plan
Brand & Value Proposition
Hookah Haven Lounge will offer the unique value proposition to its clientele:
- Friendly, knowledgeable, and highly-qualified team of Hookah Haven Lounge
- A wide array of shisha flavors, guaranteeing a variety of experiences for those who enjoy hookah.
- Exceptional appetizers available for purchase to serve small groups of 6-10 hookah patrons.
- Hookah Haven Lounge offers the best pricing in Chicago. Their pricing structure is the most cost effective when compared to the competition.
Promotions Strategy
The promotions strategy for Hookah Haven Lounge is as follows:
Word of Mouth/Referrals
Constantine Vasilis has built up an extensive list of contacts over the years by providing exceptional service and expertise to the patrons of his former restaurant and bar. Those patrons will follow him to his new company and help spread the word of Hookah Haven Lounge.
Social Media Promotions
Using popular social media platforms, a part-time marketing employee will announce the launch of the Hookah Haven Lounge and discounts will be offered during the first month of business. Reminders, updates and announcements will be sent regularly through all social media channels, with special promotions directed to university and college students.
Website/SEO Marketing
Hookah Haven Lounge will utilize their website extensively. The website will be well organized, informative, and list all the services that Hookah Haven Lounge provides. The website will also list their contact information and list their shisha flavors, including special flavors of the day. The website presence will employ SEO marketing tactics so that anytime someone types in the Google or Bing search engine “Hookah lounge” or “Hookah near me”, Hookah Haven Lounge will be listed at the top of the search results.
Pricing
The pricing of Hookah Haven Lounge will be moderate and on par with competitors so customers feel they receive excellent value when purchasing their services.
Operations Plan
The following will be the operations plan for Hookah Haven Lounge.
Operation Functions:
- Constantine Vasilis will be the Owner and President of the company. He will oversee all staff and manage client relations. Constantine has spent the past year recruiting the following staff:
- Deane Moore will take on the new role of Restaurant Manager for the Hookah Haven Lounge, where she will oversee all operations of the hookah, bar, and appetizer servings for customers.
Download the Hookah Lounge business plan template (including a customizable financial model) to your computer here <–
Milestones:
Hookah Haven Lounge will have the following milestones completed in the next six months.
- 5/1/202X – Finalize contract to lease office space
- 5/15/202X – Finalize personnel contracts for the Hookah Haven Lounge
- 6/1/202X – Finalize potential patron list for Hookah Haven Lounge
- 6/15/202X – Begin networking at association events
- 6/22/202X – Begin moving into Hookah Haven Lounge
- 7/1/202X – Hookah Haven Lounge opens its doors for business
Management Team
Hookah Haven Lounge will be owned and operated by Constantine Vassilis. He recruited his former restaurant manager, Deane Moore, to be his Restaurant Manager and help oversee the office and operations overall.
Constantine Vassili is a former restaurant and bar owner who has determined that the new business opportunity will bring former customers to a new, exciting experience that appeals to young and old customers alike. As he has invited many former patrons to the new hookah experience, he has built a following who have agreed to visit and are spreading the word of the new hookah lounge experience.
Deane Moore has been in the restaurant business for over twenty years, most recently as the restaurant manager for the Blue Lagoon, Constantine’s former restaurant and bar. She will take on the new role of Restaurant Manager for the Hookah Haven Lounge, where she will oversee all operations of the hookah, bar, and appetizer servings for customers.
Financial Plan
Key Revenue & Costs
The revenue drivers for Hookah Haven Lounge are the fees they will charge to customers for the products and services offered.
The cost drivers will be the overhead costs required in order to staff Hookah Haven Lounge. The expenses will be the payroll cost, rent, utilities, office supplies, and marketing materials.
Funding Requirements and Use of Funds
Hookah Haven Lounge is seeking $200,000 in debt financing to launch its hookah lounge. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and association memberships. The breakout of the funding is below:
- Office space build-out: $20,000
- Office equipment, supplies, and materials: $10,000
- Three months of overhead expenses (payroll, rent, utilities): $150,000
- Marketing costs: $10,000
- Working capital: $10,000
Download the Hookah Lounge business plan template (including a customizable financial model) to your computer here <–
Key Assumptions
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.
- Number of Customers Per Month: 1,120
- Average Revenue per Month: $22,400
- Office Lease per Year: $100,000
Financial Projections
Income Statement
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Total Revenues | $360,000 | $793,728 | $875,006 | $964,606 | $1,063,382 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $64,800 | $142,871 | $157,501 | $173,629 | $191,409 | |
| Lease | $50,000 | $51,250 | $52,531 | $53,845 | $55,191 | |
| Marketing | $10,000 | $8,000 | $8,000 | $8,000 | $8,000 | |
| Salaries | $157,015 | $214,030 | $235,968 | $247,766 | $260,155 | |
| Initial expenditure | $10,000 | $0 | $0 | $0 | $0 | |
| Total Expenses & Costs | $291,815 | $416,151 | $454,000 | $483,240 | $514,754 | |
| EBITDA | $68,185 | $377,577 | $421,005 | $481,366 | $548,628 | |
| Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
| EBIT | $41,025 | $350,417 | $393,845 | $454,206 | $521,468 | |
| Interest | $23,462 | $20,529 | $17,596 | $14,664 | $11,731 | |
| PRETAX INCOME | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
| Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
| Use of Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
| Taxable Income | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
| Income Tax Expense | $6,147 | $115,461 | $131,687 | $153,840 | $178,408 | |
| NET INCOME | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 |
Balance Sheet
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $30,000 | $33,072 | $36,459 | $40,192 | $44,308 | |
| Total Current Assets | $184,257 | $381,832 | $609,654 | $878,742 | $1,193,594 | |
| Fixed assets | $180,950 | $180,950 | $180,950 | $180,950 | $180,950 | |
| Depreciation | $27,160 | $54,320 | $81,480 | $108,640 | $135,800 | |
| Net fixed assets | $153,790 | $126,630 | $99,470 | $72,310 | $45,150 | |
| TOTAL ASSETS | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $315,831 | $270,713 | $225,594 | $180,475 | $135,356 | |
| Accounts payable | $10,800 | $11,906 | $13,125 | $14,469 | $15,951 | |
| Total Liability | $326,631 | $282,618 | $238,719 | $194,944 | $151,307 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
| Total Equity | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
| TOTAL LIABILITIES & EQUITY | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 |
Cash Flow Statement
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | ||||||
| Net Income (Loss) | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 | |
| Change in working capital | ($19,200) | ($1,966) | ($2,167) | ($2,389) | ($2,634) | |
| Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
| Net Cash Flow from Operations | $19,376 | $239,621 | $269,554 | $310,473 | $355,855 | |
| CASH FLOW FROM INVESTMENTS | ||||||
| Investment | ($180,950) | $0 | $0 | $0 | $0 | |
| Net Cash Flow from Investments | ($180,950) | $0 | $0 | $0 | $0 | |
| CASH FLOW FROM FINANCING | ||||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 | |
| Cash from debt | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
| Net Cash Flow from Financing | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
| Net Cash Flow | $154,257 | $194,502 | $224,436 | $265,355 | $310,736 | |
| Cash at Beginning of Period | $0 | $154,257 | $348,760 | $573,195 | $838,550 | |
| Cash at End of Period | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 |
Hookah Lounge Business Plan FAQs
What Is a Hookah Lounge Business Plan?
A hookah lounge business plan is a plan to start and/or grow your hookah lounge business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your Hookah Lounge business plan using our Hookah Lounge Business Plan Template here.
What are the Main Types of Hookah Lounge Businesses?
There are a number of different kinds of hookah lounge businesses, some examples include: Hookah Lounge, Hookah Bar, and Hookah Cafe.
How Do You Get Funding for Your Hookah Lounge Business Plan?
Hookah Lounge businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.
What are the Steps To Start a Hookah Lounge Business?
Starting a hookah lounge business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. 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.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your hookah lounge business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your hookah lounge business is in compliance with local laws.
3. Register Your Hookah Lounge Business - Once you have chosen a legal structure, the next step is to register your hookah lounge business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your hookah lounge business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Hookah Lounge Equipment & Supplies - In order to start your hookah lounge business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your hookah lounge business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Learn more about how to start a successful hookah lounge business: