Table of Content

    Hookah lounge business plan for your own bar business

    Do you want to start a hookah bar business? A hookah bar business is undoubtedly one of the most profitable startups, yielding the greatest rate of return as compared to other businesses. A hookah bar is a place where people can come freely and enjoy different flavors of hookahs, drinks, e-liquids, appetizers, cigars and sometimes alcoholic drinks too. Opening a hookah bar will prove a rewarding and profitable business for you, as smoking is banned in public places in many countries.

    Before starting it, you need to have a well-structured shisha bar business plan covering even the tiniest bit of details. To help you avoid all the trouble of thinking and making a plan yourself, we are providing a detailed sample hookah lounge business plan for the startup ‘Aladdin Hookah Bar’.

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    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.

    The business will be owned and operated by Stephen Gerrard who is well-known in Miami for his reputable catering services operating for the last 15 years.

    2.2 Management of Hookah Lounge

    Gerrard aims at achieving perfection in hookah bar business by providing an exotic environment and fresh hookah drinks. The business will be managed by Gerrard himself initially and he’ll hire a small team for different tasks.

    2.3 Customers of Hookah Bar

    Aladdin Hookah Bar will provide fresh fruit hookahs and different types of coffees in a well-designed seductive environment to both permanent and temporary residents of Miami aged 22 and above.

    2.4 Target of the Company

    If you have decided to open a hookah bar, you must include your targets in your hookah bar business plan to improvise your business at a large scale. Mr. Gerrard’s target is to make his hookah bar’s environment homey and unique by providing a large number of drinks, hookahs, coffees, and teas.

    Hookah Bar Business Plan - 3 Years Profit Forecast

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    Company Summary

    3.1 Company Owner

    Gerrard is famous in Miami for his reputable and distinguished catering service operating for the last 15 years. Due to the individuality of his ideas, he is considered the esteemed choice for managing caterings in events. This year, he wants to start a side business of a hookah bar and is willing to invest both time and money in it.

    3.2 Why the Hookah Lounge Business is being started

    Due to the policy of WHO to protect non-smokers from passive smoking, smoking is forbidden in public places, and people search for a hookah lounge to smoke. Gerrard is going to launch a hookah bar as he best knows how to open a hookah bar  and how to run a hookah lounge  successfully. In addition to that, he also aims to generate profit from his comfortable and legal smoking place in Miami.

    3.3 How the Hookah Bar Business will be started

    After analyzing various aspects of this business, Gerard has decided to manage the bar himself, yet he will hire a team for his assistance and for preparing the menu. The startup costs are as follows:

    Hookah Bar Business Plan - Startup Cost

    The detailed start-up requirements, expenses, total assets, total funding required as forecasted by the company’s analysts are given below:

    Start-up Expenses  
    Legal $55,300
    Consultants $0
    Insurance $32,750
    Rent $32,500
    Research and Development $32,750
    Expensed Equipment $32,750
    Signs $1,250
    Start-up Assets $0
    Cash Required $332,500
    Start-up Inventory $32,625
    Other Current Assets $232,500
    Long-term Assets $235,000
    TOTAL ASSETS $121,875
    Total Requirements $245,000
    START-UP FUNDING $273,125
    Start-up Expenses to Fund $11,875
    Start-up Assets to Fund $15,000
    Assets $23,125
    Non-cash Assets from Start-up $18,750
    Cash Requirements from Start-up $0
    Additional Cash Raised $18,750
    Cash Balance on Starting Date $21,875
    Liabilities and Capital $0
    Liabilities $0
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $0
    Other Current Liabilities (interest-free) $0
    Capital $0
    Planned Investment $0
    Investor 1 $332,500
    Investor 2 $0
    Other $0
    Additional Investment Requirement $0
    Loss at Start-up (Start-up Expenses) $313,125
    TOTAL CAPITAL $251,875
    Total Funding $255,000
    Any questions? Get in Touch!

    Services for customers

    Before starting a hookah bar, you must be clear about the services you are going to provide to your customers as it will help you to estimate opening a hookah bar cost.

    Gerrard has exclusive hookah bar ideas, he aims to make a perfect place for spending a quiet afternoon alone or with friends by adorning the big lounge by dim lights and brick walls combined with comfortable sofas and pillows.

    Aladdin Hookah Bar will provide all sort of hookah drinks and coffees to its esteemed customers above age 22. Each one of our offerings will be prepared by maintaining strict health and quality measures.

    Besides providing simple drinks, wines, and cigars, our major products will include:

    • Hookah Drinks: We’ll provide fresh hookah drinks of the following flavors, Grape, Lemon, Peach, Cola, Mint, Black Mint, Strawberry, Cherry, Apple Doppio, Mango, Orange, Banana, Pistachio, Vanilla, and Rose. Besides these usual flavors, we’ll introduce a new flavor, Code Blue, which will be a mixture of creamy blueberry with red grape soda and black mint.
    • Teas & Coffees: We’ll provide a wide range of coffees and teas including flat white, espresso, long black, macchiato, Vienna and Irish coffee.
    • Soft Drinks: We will also provide various kinds of soft drinks.
    • Salads: We’ll also provide fresh vegetable cheese salads, bean salads, and fruit salads.

    Aladdin Hookah Bar will be open twenty-four hours a day.


    Before starting a hookah bar, you must be clear about the services you are going to provide to your customers as it will help you to estimate opening a hookah bar cost.

    Market Analysis Summary

    Operational/Strategic Planning Services

    The first thing to do before starting a hookah bar  is to research about how to start a hookah bar business  in your state since there are a lot of concerning health regulations in practice. After that, carry out an accurate marketing analysis which will help you to decide the company’s strategies over the next years. It must be incorporated in the initial business plan and all subsequent things must be planned according to it.

    Considering its importance, Mr. Gerrard obtained the services of marketing experts to help him develop a hookah bar business plan taking into account the current marketing demands.

    5.1 Marketing Trends

    If you want to know how much is hookah bar business profitable, you will be glad to know that there are more than 7000 legally registered hookah bars in the US and the number of hookah bars is increasing significantly. According to an IBISWorld report, hookah bars have generated a revenue of more than 900 million dollars in the past few years.

    But remember, the success and failure of any business depend upon how keenly you focus on your target customers. A successful marketing strategy can only be developed after knowing the target audience and potential customers.

    This sample business plan will help you in defining your target audience, you can take help from this sample business plan even if you don’t know how to start a hookah lounge, In this business plan we have explained how to open up a hookah bar  and run it successfully.

    5.2 Marketing Segmentation

    The following type of target audience will become the future customers of Aladdin Hookah Bar.

    Hookah Bar Business Plan - Market Segmentation

    5.2.1 General Traffic: The top category of our target customers will be the general traffic i.e. the people who happen to be near our hookah bar and decides to relax and smoke for some time in the hookah bar. We will be benefited a lot as Aladdin Hookah Bar is situated near the main market of Miami, which is visited by thousands of people daily. The exclusive entrance and dim-light theme of Aladdin Hookah Bar will attract the people who search for a place to sit calmly to smoke or to drink hookah.

    5.2.2 Companies and Businesses: This category includes all employees working in the various office, companies, and businesses situated near us. As smoking is not allowed in offices, so the workers who want to drink hookah or cigars in their break time will rush towards. The employees of these companies and businesses will buy hookah drinks, coffees and salads from us on a daily basis.

    5.2.3 Local Residents: We also aim to target the local residents residing in nearby areas. We are sure that they will be surely addicted to the solace environment we’ll provide, and whenever they want to have a hookah drink, they’ll approach us.

    The detailed market analysis of our potential customers is given in the following table:

    Market Analysis
    Potential Customers Growth YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 CAGR
    Local Residents 48% 22,334 32,344 43,665 52,544 66,432 10.00%
    General Traffic 18% 11,433 13,344 16,553 18,745 20,545 13.43%
    Companies & Businesses 34% 18,322 19,455 20,655 22,867 24,433 15.32%
    Total 100% 52,089 65,143 80,873 94,156 111,410 9.54%
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    5.3 Business Target

    Our target is to become the best hookah bar in Miami within the first year of launch. We also aim to recover our initial capital within 3 years of our launch and grow our sales by 30% each year. We’ll achieve our target by providing the best quality drinks and environment and by valuing our customers.

    5.4 Product Pricing

    Product pricing is the most important factor affecting the sales of a new business. We have priced our items and drinks in the same range as our competitors in the market. But the products which are only provided by us such as Code Blue Hookah will be a little costlier as more effort will be required for its preparation.


    After you have understood how to open up a hookah bar you must plan your business strategy, you can take help from this sample business plan on how to open up a hookah lounge.

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    6.1 Competitive Analysis

    Aladdin Hookah Bar will have a tough competition because there are thousands of already established hookah lounges in Miami. Moreover, people are always hesitant to try a restaurant business plan that’s why Gerrard has decided that Aladdin Hookah Bar will be decorated in a unique manner, to attract the customers for the first time.

    Our biggest competitive edge is our location and the wide parking space for our customers. Lastly, we will provide our customers with the best standard and quality products in a healthy environment where we’ll do proper aeration system to purify the air from the smoke.

    6.2 Sales Strategy

    For attracting the majority of people in the startup of a business, Gerrard has planned some types of advertisements.

    • We’ll give free hookah drinks and salads till the third day of launch.
    • We’ll ensure that we have a wide range of hookah drinks, cigars, tobaccos, wines, non-alcoholic drinks and salads at all times.
    • We’ll provide an online table reservation facility for those who want to come in the form of a group with friends.
    • We’ll advertise our lounge and menu through our website and social media.

    6.3 Sales Monthly

    Hookah Bar Business Plan - Sales Monthly

    6.4 Sales Yearly

    Hookah Bar Business Plan - Sales Yearly

    6.5 Sales Forecast

    Hookah Bar Business Plan - Unit Sales

    Sales Forecast      
    Unit Sales Year 1 Year 2 Year 3
    Hookah Drinks 187,330 260,320 258,240
    Tea 802,370 815,430 823,540
    Soft Drinks 539,320 770230 1,002,310
    Salads 265,450 322,390 393,320
    Coffee 1,435,320 1,250,430 1,762,450
    TOTAL UNIT SALES 3,229,790 3,418,800 4,239,860
    Unit Prices Year 1 Year 2 Year 3
    Hookah Drinks $140.00 $150.00 $160.00
    Tea $600.00 $800.00 $1,000.00
    Soft Drinks $700.00 $800.00 $900.00
    Salads $650.00 $750.00 $850.00
    Coffee $140.00 $120.00 $100.00
    Hookah Drinks $214,800 $274,000 $333,200
    Tea $120,050 $194,500 $268,500
    Soft Drinks $50,110 $71,600 $93,000
    Salads $139,350 $194,600 $249,850
    Coffee $62,350 $72,300 $82,250
    Direct Unit Costs Year 1 Year 2 Year 3
    Hookah Drinks $0.70 $0.80 $0.90
    Tea $0.40 $0.45 $0.50
    Soft Drinks $0.30 $0.35 $0.40
    Salads $3.00 $3.50 $4.00
    Coffee $0.70 $0.75 $0.80
    Direct Cost of Sales
    Hookah Drinks $98,300 $183,000 $267,700
    Tea $66,600 $119,900 $173,200
    Soft Drinks $17,900 $35,000 $52,100
    Salads $19,400 $67,600 $115,800
    Coffee $27,700 $69,200 $110,700
    Subtotal Direct Cost of Sales $294,100 $699,400 $1,104,700

    Personnel plan

    After a great research on how to start a hookah bar business, Gerrard has devised his personnel plan, which is given here for your help.

    7.1 Company Staff

    Stephen Gerrard will himself act as the Aladdin Hookah Bar Manager and will be responsible for the daily activities. The company will initially hire the following people:

    • 12 Bartenders for arranging glasses and bottles for attractive display and for mixing and serving drinks
    • 2 Cashiers to receive cash from the people
    • 1 Marketing Executive responsible for the marketing and advertising of the restaurant
    • 2 Chefs for making salads
    • 8 Cleaners to clean the dishes and other facilities at the restaurant
    • 2 Security Officers

    To ensure the best quality service, all employees will be selected through vigorous testing and will be kept in check for their dealing with clients.

    7.2 Average Salary of Employees

    The following table shows the forecasted data about employees and their salaries for the next three years.

     Personnel Plan      
    Year 1 Year 2 Year 3
    Bartenders $485,000 $495,000 $505,000
    Cashiers $85,000 $92,000 $109,000
    Marketing Executive $166,000 $173,000 $180,000
    Chefs $95,000 $105,000 $115,000
    Cleaners $263,300 $270,000 $276,700
    Security Officers $85,000 $92,000 $109,000
    Total Salaries $694,300 $732,000 $789,700
    Any questions? Get in Touch!

    Financial Plan

    You can never estimate how much is a hookah bar business profitable unless you devise its financial plan. As the last step of your business plan, you must prepare a financial plan, to manage your investments and profits.

    Aladdin Hookah Bar will be solely financed by Mr. Gerrard and no equity funding or outside loan will be required unless the business expands faster than forecasted.

    8.1 Important Assumptions

     General Assumptions      
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 10.00% 11.00% 12.00%
    Long-term Interest Rate 10.00% 10.00% 10.00%
    Tax Rate 26.42% 27.76% 28.12%
    Other 0 0 0


    8.2 Brake-even Analysis

    Hookah Bar Business Plan - Brake-even Analysis

     Brake-Even Analysis  
    Monthly Units Break-even 5530
    Monthly Revenue Break-even $159,740
    Average Per-Unit Revenue $260.87
    Average Per-Unit Variable Cost $0.89
    Estimated Monthly Fixed Cost $196,410


    8.3 Projected Profit and Loss

     Pro Forma Profit And Loss      
    Year 1 Year 2 Year 3
    Sales $309,069 $385,934 $462,799
    Direct Cost of Sales $15,100 $19,153 $23,206
    Other $0 $0 $0
    TOTAL COST OF SALES $15,100 $19,153 $23,206
    Gross Margin $293,969 $366,781 $439,593
    Gross Margin % 94.98% 94.72% 94.46%
    Payroll $138,036 $162,898 $187,760
    Sales and Marketing and Other Expenses $1,850 $2,000 $2,150
    Depreciation $2,070 $2,070 $2,070
    Leased Equipment $0 $0 $0
    Utilities $4,000 $4,250 $4,500
    Insurance $1,800 $1,800 $1,800
    Rent $6,500 $7,000 $7,500
    Payroll Taxes $34,510 $40,726 $46,942
    Other $0 $0 $0
    Total Operating Expenses $188,766 $220,744 $252,722
    Profit Before Interest and Taxes $105,205 $146,040 $186,875
    EBITDA $107,275 $148,110 $188,945
    Interest Expense $0 $0 $0
    Taxes Incurred $26,838 $37,315 $47,792
    Net Profit $78,367 $108,725 $139,083
    Net Profit/Sales 30.00% 39.32% 48.64%

    8.3.1 Profit Monthly

    Hookah Bar Business Plan - Profit Monthly

    8.3.2 Profit Yearly

    Hookah Bar Business Plan - Profit Yearly

    8.3.3 Gross Margin Monthly

    Hookah Bar Business Plan - Gross Margin Monthly

    8.3.4 Gross Margin Yearly

    Hookah Bar Business Plan - Gross Margin Yearly

    8.4 Projected Cash Flow

    Hookah Bar Business Plan - Projected Cash Flow

     Pro Forma Cash Flow      
    Cash Received Year 1 Year 2 Year 3
    Cash from Operations
    Cash Sales $40,124 $45,046 $50,068
    Cash from Receivables $7,023 $8,610 $9,297
    SUBTOTAL CASH FROM OPERATIONS $47,143 $53,651 $59,359
    Additional Cash Received
    Sales Tax, VAT, HST/GST Received $0 $0 $0
    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 $47,143 $53,651 $55,359
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations
    Cash Spending $21,647 $24,204 $26,951
    Bill Payments $13,539 $15,385 $170,631
    SUBTOTAL SPENT ON OPERATIONS $35,296 $39,549 $43,582
    Additional Cash Spent
    Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
    Principal Repayment of Current Borrowing $0 $0 $0
    Other Liabilities Principal Repayment $0 $0 $0
    Long-term Liabilities Principal Repayment $0 $0 $0
    Purchase Other Current Assets $0 $0 $0
    Purchase Long-term Assets $0 $0 $0
    Dividends $0 $0 $0
    SUBTOTAL CASH SPENT $35,296 $35,489 $43,882
    Net Cash Flow $11,551 $13,167 $15,683
    Cash Balance $21,823 $22,381 $28,239

    8.5 Projected Balance Sheet

     Pro Forma Balance Sheet      
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $184,666 $218,525 $252,384
    Accounts Receivable $12,613 $14,493 $16,373
    Inventory $2,980 $3,450 $3,920
    Other Current Assets $1,000 $1,000 $1,000
    TOTAL CURRENT ASSETS $201,259 $237,468 $273,677
    Long-term Assets
    Long-term Assets $10,000 $10,000 $10,000
    Accumulated Depreciation $12,420 $14,490 $16,560
    TOTAL LONG-TERM ASSETS $980 $610 $240
    TOTAL ASSETS $198,839 $232,978 $267,117
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities
    Accounts Payable $9,482 $10,792 $12,102
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $9,482 $10,792 $12,102
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $9,482 $10,792 $12,102
    Paid-in Capital $30,000 $30,000 $30,000
    Retained Earnings $48,651 $72,636 $96,621
    Earnings $100,709 $119,555 $138,401
    TOTAL CAPITAL $189,360 $222,190 $255,020
    TOTAL LIABILITIES AND CAPITAL $198,839 $232,978 $267,117
    Net Worth $182,060 $226,240 $270,420


    8.6 Business Ratios

     Ratio Analysis        
    Year 1 Year 2 Year 3 Industry Profile
    Sales Growth 4.35% 30.82% 63.29% 4.00%
    Percent of Total Assets
    Accounts Receivable 5.61% 4.71% 3.81% 9.70%
    Inventory 1.85% 1.82% 1.79% 9.80%
    Other Current Assets 1.75% 2.02% 2.29% 27.40%
    Total Current Assets 138.53% 150.99% 163.45% 54.60%
    Long-term Assets -9.47% -21.01% -32.55% 58.40%
    TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
    Current Liabilities 4.68% 3.04% 2.76% 27.30%
    Long-term Liabilities 0.00% 0.00% 0.00% 25.80%
    Total Liabilities 4.68% 3.04% 2.76% 54.10%
    NET WORTH 99.32% 101.04% 102.76% 44.90%
    Percent of Sales
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 94.18% 93.85% 93.52% 0.00%
    Selling, General & Administrative Expenses 74.29% 71.83% 69.37% 65.20%
    Advertising Expenses 2.06% 1.11% 0.28% 1.40%
    Profit Before Interest and Taxes 26.47% 29.30% 32.13% 2.86%
    Main Ratios
    Current 25.86 29.39 32.92 1.63
    Quick 25.4 28.88 32.36 0.84
    Total Debt to Total Assets 2.68% 1.04% 0.76% 67.10%
    Pre-tax Return on Net Worth 66.83% 71.26% 75.69% 4.40%
    Pre-tax Return on Assets 64.88% 69.75% 74.62% 9.00%
    Additional Ratios Year 1 Year 2 Year 3
    Net Profit Margin 19.20% 21.16% 23.12% N.A.
    Return on Equity 47.79% 50.53% 53.27% N.A.
    Activity Ratios
    Accounts Receivable Turnover 4.56 4.56 4.56 N.A.
    Collection Days 92 99 106 N.A.
    Inventory Turnover 19.7 22.55 25.4 N.A.
    Accounts Payable Turnover 14.17 14.67 15.17 N.A.
    Payment Days 27 27 27 N.A.
    Total Asset Turnover 1.84 1.55 1.26 N.A.
    Debt Ratios
    Debt to Net Worth 0 -0.02 -0.04 N.A.
    Current Liab. to Liab. 1 1 1 N.A.
    Liquidity Ratios
    Net Working Capital $120,943 $140,664 $160,385 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 0.45 0.48 0.51 N.A.
    Current Debt/Total Assets 4% 3% 2% N.A.
    Acid Test 23.66 27.01 30.36 N.A.
    Sales/Net Worth 1.68 1.29 0.9 N.A.
    Dividend Payout 0 0 0 N.A.

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