The following is a Hookah Lounge we recently considered purchasing in October 2007, to add to our growing number of Hookah Lounges nationwide.  The owners of the business were two young entrepreneurial college students that were going on to higher education - but leaving behind a very successful and profitable business.  If you are interested in our Hookah Lounge Franchise please fill out our request form for more information.

View more pictures of the Hookah Lounge here

 The owners have been operating the lounge for around 6 months and making a consistent profit of around $8000 a month.  The following are the notes we recorded while questioning the owners about purchasing their Hookah Lounge.  You may want to consider finding out similar answers, or planning for the following when opening your own Hookah Lounge:

• Lease up in January 2008

• Sales tax is documented

• Patrons must be 18 to order, but minors can be accompanied by someone 18 or over to order a Hookah

• Cops in the area are not a problem

• 2 flat screens, 1 projector in the back

• Everything stats for the new owner

• $2500 rent each month, $600-$1,200 in beverage sales, $6,000 in Hookah sales, $1,000 in retail sales

• Advertised their grand opening through Facebook and other online websites

• Was going to consider shutting down if a buyer can't be found

• PPA license - party entertainment license, allows owners to charge at the door

• Birthdays in the back generate $700 per birthday party

• Many customers are 15-16 in age

• Rugs cost $40 each (4 large ones) and 6 smaller rugs

• $60-$65 in annual sales so far for 2007

• Surround sound system installed - customers enjoy listening to rap, hip-hop, reggae, Latin, and they regularly bring CD's to be played

• Recently began allowing bands to play live in the back room

• Almost 100 friends on facebook.com

• Buyer pays closing and legal costs

• Can put new sign on front door to attract more patrons

• Remove frame surrounding front windows to increase exposure

• Wants to sell ASAP

• Tobacco ban only affects restaurants in the area - customers may come from restaurants afterwards to smoke

The following is our analysis of this Hookah Lounge's set up, business operations, accounting procedures, use of Hookah products, and how the business can be expanded upon:

Hookah Lounge set up

The Hookah lounge completely lacked exterior advertising.  There was no sign indicating that there was even a business there.  The stenciled image on the exterior door could have easily been confused for an accountants office.  A bright sign would have done wonders for attracting more business from the thousands of people that walk or drive by every day.  Many people enjoy Hookah's and would have gladly gone if they knew it was indeed a Hookah lounge.  the interior was extremely dirty and poorly kept.  It was a typical college Hookah lounge, but unable to command a premium price for their services.  The lighting could have accented the features in the lounge to add dramatic affect.  The furniture was all ordered from Ikea and rugs from local Moroccan stores.  The hanging chandeliers were a nice touch and had a Moroccan theme to them.  The sound system was poorly displayed and wiring was exposed.  The staircase leading to the back room looked like it could have caved in and made the rear room look "shady".  A professional presentation at all times is a must for Hookah lounges.  The back room was very large and had a projection screen.  The projection screen was of very low quality and the image was fuzzy.  There was adequate floor space for dancing and live music.  Charging for table reservations on weekends could have generated substantial profits.

Business Operations

The business was poorly run and customer service/hookah server was unprofessional and inattentive to guests.  A more responsive staff of employees would drastically increase customer retention and profits.  The preparation of Hookah's was carried out in a room that could have been half the size that it needed to be.  Adding more floor space for patrons and increased profits.  Finally, the table that greeted customers at the front door was not being utilized and thus a waste of space.  If you plan on charging customers for entrance, then a front desk is useful.

Accounting Procedures

There were none other then a cash register that looked like had never been used.  Proper accounting is absolutely necessary if you are to achieve a profitable Hookah Lounge.  Keeping track of the highest selling Tobacco is useful in keeping up with inventory levels.  In the Hookah lounge industry many waitresses will pocket cash and steal from operators.  It is absolutely necessary that proper accounting procedures are put into place to generate historical operating numbers.  If you are away on business or vacation, you will be able to determine whether or not your employees are stealing from you.

Hookah Products

The owners of this lounge took no great concern in delivering a high quality smoke for their patrons.  The tobacco was of terrific quality, however the presentation and maintenance of the Hookah's was poor.  When serving Hookah's we always recommend that they be served ice cold with plenty of ice in the base.  It makes for a much nicer smoke and happier customers.

How to expand this Hookah Lounge's business

• Expanding the Hookah Lounge business

• This Hookah lounge can very easily be expanded upon generating thousands of dollars more in revenue each month.  In order to increase this Hookah Lounge's operating revenue we suggest they:

• Sell Hookah products at retail prices in a designated area of the store and through a website.

• Immediately purchase a high quality sign for the exterior of the business

• Hire a contractor to fix the staircase leading into the back room

• Make the sound system less obtrusive by hiding wires and placing it in a backroom

• Hire 2 waitresses to wait on tables and customers

• Introduce appetizers such as Hummus, Falafel, Pita, tea, and deserts

• Clean the store thoroughly after every weekend

• Charge an admittance fee to all customers on the weekend

• Schedule more live entertainment and partner with promoters to increase business on weekends and weekdays

• Participate in local community events to garner more goodwill and more customers

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