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 
Research and Development$32,750
Expensed Equipment$32,750
Start-up Assets$0
Cash Required$332,500
Start-up Inventory$32,625
Other Current Assets$232,500
Long-term Assets$235,000
Total Requirements$245,000
Start-up Expenses to Fund$11,875
Start-up Assets to Fund$15,000
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
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
Planned Investment$0
Investor 1$332,500
Investor 2$0
Additional Investment Requirement$0
Loss at Start-up (Start-up Expenses)$313,125
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 and Strategic Planning

    he 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 CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR
    Local Residents48%22,33432,34443,66552,54466,43210.00%
    General Traffic18%11,43313,34416,55318,74520,54513.43%
    Companies & Businesses34%18,32219,45520,65522,86724,43315.32%
    Any questions? Get in Touch

    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.

    ENGIN Z.

    High Quality Business Plan and Professional Support

    It was amazing to work with OGS Capital for our business plan. They promptly responded our enquires and delivered document on time.The document was well organized high quality and content.We succeded with Alex and his team support. We thank you guys again for professional approach and easy communication.

    ∙ ENGIN Z.

    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 SalesYear 1Year 2Year 3
    Hookah Drinks187,330260,320258,240
    Soft Drinks539,3207702301,002,310
    TOTAL UNIT SALES3,229,7903,418,8004,239,860
    Unit PricesYear 1Year 2Year 3
    Hookah Drinks$140.00$150.00$160.00
    Soft Drinks$700.00$800.00$900.00
    Hookah Drinks$214,800$274,000$333,200
    Soft Drinks$50,110$71,600$93,000
    Direct Unit CostsYear 1Year 2Year 3
    Hookah Drinks$0.70$0.80$0.90
    Soft Drinks$0.30$0.35$0.40
    Direct Cost of Sales   
    Hookah Drinks$98,300$183,000$267,700
    Soft Drinks$17,900$35,000$52,100
    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 1Year 2Year 3
    Marketing Executive$166,000$173,000$180,000
    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 1Year 2Year 3
      Plan Month123
      Current Interest Rate10.00%11.00%12.00%
      Long-term Interest Rate10.00%10.00%10.00%
      Tax Rate26.42%27.76%28.12%

      8.2 Brake-even Analysis

      Hookah Bar Business Plan - Brake-even Analysis
       Brake-Even Analysis 
      Monthly Units Break-even5530
      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 1Year 2Year 3
      Direct Cost of Sales$15,100$19,153$23,206
      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%
      Sales and Marketing and Other Expenses$1,850$2,000$2,150
      Leased Equipment$0$0$0
      Payroll Taxes$34,510$40,726$46,942
      Total Operating Expenses$188,766$220,744$252,722
      Profit Before Interest and Taxes$105,205$146,040$186,875
      Interest Expense$0$0$0
      Taxes Incurred$26,838$37,315$47,792
      Net Profit$78,367$108,725$139,083
      Net Profit/Sales30.00%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 ReceivedYear 1Year 2Year 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
      ExpendituresYear 1Year 2Year 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
      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   
      AssetsYear 1Year 2Year 3
      Current Assets   
      Accounts Receivable$12,613$14,493$16,373
      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 CapitalYear 1Year 2Year 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
      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 1Year 2Year 3Industry Profile
      Sales Growth4.35%30.82%63.29%4.00%
      Percent of Total Assets    
      Accounts Receivable5.61%4.71%3.81%9.70%
      Other Current Assets1.75%2.02%2.29%27.40%
      Total Current Assets138.53%150.99%163.45%54.60%
      Long-term Assets-9.47%-21.01%-32.55%58.40%
      TOTAL ASSETS100.00%100.00%100.00%100.00%
      Current Liabilities4.68%3.04%2.76%27.30%
      Long-term Liabilities0.00%0.00%0.00%25.80%
      Total Liabilities4.68%3.04%2.76%54.10%
      NET WORTH99.32%101.04%102.76%44.90%
      Percent of Sales    
      Gross Margin94.18%93.85%93.52%0.00%
      Selling, General & Administrative Expenses74.29%71.83%69.37%65.20%
      Advertising Expenses2.06%1.11%0.28%1.40%
      Profit Before Interest and Taxes26.47%29.30%32.13%2.86%
      Main Ratios    
      Total Debt to Total Assets2.68%1.04%0.76%67.10%
      Pre-tax Return on Net Worth66.83%71.26%75.69%4.40%
      Pre-tax Return on Assets64.88%69.75%74.62%9.00%
      Additional RatiosYear 1Year 2Year 3 
      Net Profit Margin19.20%21.16%23.12%N.A.
      Return on Equity47.79%50.53%53.27%N.A.
      Activity Ratios    
      Accounts Receivable Turnover4.564.564.56N.A.
      Collection Days9299106N.A.
      Inventory Turnover19.722.5525.4N.A.
      Accounts Payable Turnover14.1714.6715.17N.A.
      Payment Days272727N.A.
      Total Asset Turnover1.841.551.26N.A.
      Debt Ratios    
      Debt to Net Worth0-0.02-0.04N.A.
      Current Liab. to Liab.111N.A.
      Liquidity Ratios    
      Net Working Capital$120,943$140,664$160,385N.A.
      Interest Coverage000N.A.
      Additional Ratios    
      Assets to Sales0.450.480.51N.A.
      Current Debt/Total Assets4%3%2%N.A.
      Acid Test23.6627.0130.36N.A.
      Sales/Net Worth1.681.290.9N.A.
      Dividend Payout000N.A.

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