How Much Does it Cost to Open a Hookah Bar
Every day, people all around the country decide to become their own bosses and start a business. With the competition in the restaurant, bar, and retail spaces you may be looking for something a little more unique that will allow you to corner a niche market, like a hookah bar.
Opening a hookah bar can cost anywhere from $30,000 to well over $250,000, but a good estimate is around $140,000. You should keep in mind that there are many different factors that may impact the overall cost of the startup and the long-term costs associated with owning and operating the business.
How Much Does it Cost to Open a Hookah Bar?
First off, a hookah bar is sometimes called other things like a hookah lounge, hookah cafe, or hookah den. All of these names refer to the same thing, which is a space where people go to smoke flavored tobacco (called shisha) through a large shared pipe, known as a hookah.
Starting one of these establishments can have many different costs, including building and renovations, furniture, equipment, hookah pipes, utilities, payroll, licensing, and so on.
The largest expense is typically the building or space and any remodeling and renovations that you will do prior to opening, so this is the area that will drive the overall cost up or down the most.
Costs to Open a Hookah Bar
|Mid-Range Estimate 0||$100,00|
The estimated cost to open a hookah lounge establishment will also vary greatly based on the location and how much taxes, licenses, utilities, etc., run in that area. Another expense that varies greatly is ventilation. Some local ordinances will require extensive ventilation systems for indoor smoking lounges which can push the cost up exponentially.
On the other hand, some people opt to purchase a business outright instead of building it from the ground up. The costs of these established hookah bars can help to provide insight into how much it might cost to open one of these bars.
Hookah Lounge Costs – Established Businesses
|Location||Price||Building Size||Building Rent|
|Brooklyn, NY||$350,000||1,600 SF||$4382/mo.|
|Chicago, IL||$700,000||Unknown .||$4500/mo|
|Charlotte, NC||$585,000||3,600 SF||$4250/mo.|
|West Amherst, NY||$75,000||2,500 SF||$3200/mo.|
|Orlando, FL||$995,000||2,000 SF||$6,300/mo.|
|Duarte, CA||$145,000||1,060 SF||$2500/mo.|
A Breakdown of the Costs to Start a Hookah Bar
Let’s take a look at the different expenses that are associated with opening up a hookah bar and a breakdown of how much each one typically costs. This information is sourced from experts in the field who have opened hookah lounges themselves as well as startup-focused websites like Profitable Venture.
Retail Space + Remodeling ($60k)
The physical space or building is among the biggest expenses that you’ll face when starting your own business. Opening a hookah lounge is no different. The costs will vary greatly based on the geographic location, size, layout, ventilation, leased option versus owned, and so on.
A more desirable location will cost more but there will also be more opportunities for revenue. The cost of renting a centrally located commercial space could cost anywhere from $3,000 to $5,000 per month, according to chamberofcommerce.org.
Most startups opt to lease their retail space at first rather than committing to purchasing a location before knowing if the business will be successful.
However, there’s more to your leased space costs than just the rent. For example, there is also insurance, taxes, and maintenance. Even if you don’t have to pay these costs outright, there’s a good chance that they’ll be factored into your rent and subject to change.
In 2020, the average retail space in the U.S. cost $18.09/square foot. Of course, that price went up and down based on where in the country space was located.
Average Commercial Property Price (Per Sq. Foot/Year) By City
The bottom line is that your retail space will be your biggest investment, and on top of the physical space and rent, you’ll need to plan for renovations to make the space desirable to customers.
For this expense, you should plan to budget at least $25,000. If you plan for one year’s rent at the startup, you should plan for around $35,000 (which is calculated at approximately $1.76/square foot). That makes the total building expenses $60,000 for the first year.
Licenses and Permits ($5,500)
There are many legal fees associated with starting a business in the United States, even more so for opening a lounge that involves indoor smoking and serving food, drinks, or alcohol. Most hookah lounges do serve food and drinks, and more successful locations also serve alcohol.
Let’s take a look at some of the various licenses and permits you’ll need for this endeavor and an estimate for how much each one costs.
Average License and Permitting Costs
|Legal Fees for Licensing and Permits||$1,200|
|Food Service License||$500|
|Food Handler’s Permit||$300|
|Live Entertainment/Music License||$400|
|Alcoholic Beverage License (varies by state)||$1800|
|Indoor Smoking Permit (if required)||$600|
Startup Facility and Equipment Costs ($30k)
Once you’ve secured your business location and obtained the necessary permits and licensing, you’ll need to purchase the startup equipment and other facility-related items that you’ll need to get the hookah bar up and running.
These expenses can include bar and counter equipment, serving equipment for food and drinks, POS equipment (register), security system, signage, furniture, electronics, and other related items.
Let’s take a look at a sample budget for these expenses.
- Storage and shelving hardware (bins, racks, glassware storage, etc.) – $3,700
- Counter area/bar equipment (sink, ice machine, bar counter, etc.) – $6,000
- Dishware and service equipment (glasses, flatware, dishes) – $3,000
- Security system – $800
- Cash register – $1,000
- Signage – $1,000
- Office and electronics, furniture (computers, printers, telephones, sound system, TVs, tables, chairs, etc.) – $10,000
- Website design and maintenance – $800
- Phone, internet, utilities (setup, deposits) – $2,000
- Accounting and payroll software – $1,000
Of course, these expenses may be increased or reduced based on the types and quality of items purchased, the quantities purchased, and whether you can find any of the materials secondhand or at a discount.
Operational Costs ($53k)
Operational costs include all of the regular, recurring expenses that are necessary to keep your business up and running. They include costs like:
- Marketing and advertising ($2000)
- Consulting ($2000)
- Insurance premiums ($3000)
- Supplies ($1000)
- Monthly bills including payroll ($30,000)
- Inventory ($15,000)
Though these expenses will depend on the size of your business and the number of employees you hire, they are standard expenses that will apply to every business. For these operational costs, you should budget at least $53,000 for your startup cost.
Hookah Pipes and Shisha ($2k)
Interestingly, hookahs and tobacco are some of the least expensive costs for opening up a hookah bar. Once you have the space ready, you will need to invest in the centerpieces of your customers’ visit. It’s important to purchase quality equipment, but also hookahs that are aesthetically pleasing and that will add to the overall customer experience.
What to look for when selecting hookahs for your lounge or bar:
Stability – Hookahs are large and when they’re sitting in the center of a group, they’re bound to get knocked and bumped. A broken hookah is not making money for the business, so you want to avoid this at all costs. A stable hookah will minimize the risk of accidents, so look for a design with a wide base and make sure it’s not too top-heavy.
Durability – Your hookahs will be used again and again in a commercial setting, so make sure that you purchase high-quality, durable equipment. One of the most important components is the shaft and hose adapter. Look for a hookah with a well-built shaft and where the shaft is built into the hookah rather than screwed or welded on.
Hoses – Look for washable hoses, ideally heavy-duty silicone, with a wide gauge. Check all hoses for leaks and manufacturer defects before putting them into your rotation. The hose should also have a wide diameter from one end to the other, rather than narrowing at one end. This will improve airflow and the customer’s experience.
Traditional versus Modern – Hookahs tend to either have a very traditional Moroccan look or a sleek, modern European design. Either style is acceptable, but you should take this into consideration to make sure the look of the hookah matches the look and feel of your lounge.
Single versus Multi-Hosed – Some hookah lounges have pipes with multiple hoses coming out of a single hookah. However, the vast majority of hookah bars offer single-hose hookahs, and for good reason. Multiple hose hookahs tend to be complex and are not used as frequently as one might think. Most customers like to select their own flavors of tobacco, and thus prefer single-hose hookahs. Multiple hose hookahs will not likely generate extra revenue and will only create more hassle.
Design – The ideal hookah will have a simplistic design and be easy to use. Fewer removable parts is better for cleaning and sanitation and customer use. It’s also better to get a widely-available brand and design so that you can easily order replacement parts as needed.
Average Hookah Cost Range
For commercial use, it’s better to go with a high-end piece because of the amount of wear and tear it will be subjected to on a daily basis. Most ready-to-use hookahs that are of good quality for lounge use will fall in the $100-$150 range (or more, depending on design).
In addition to the hookah, you will also need an abundance of hoses, which cost anywhere from $1-$4 each. The mouthpiece (or head) is usually made of ceramic and they cost anywhere from $5-$10 each. You will need a good amount of heads, at least one per customer at max capacity, and extras to account for pieces that are broken or dirty.
The last component of the hookah itself is the coal. The hookah is heated with small coals, and you should plan on budgeting at least $40-$50 worth of coals per day depending on how busy your lounge is. It’s always good to have extra coals on hand because you never want to run out of the thing that literally fuels your business.
Starting out, you should plan to have at least 12 hookah stations ready to go. If your space is larger and you can accommodate more tables, add more hookahs. If you’re only purchasing single-hose hookahs, you will need to take that into consideration and increase the number of hookahs available to whatever you are anticipating your capacity to be.
Shisha is the tobacco that your customers will smoke through a hookah. The most cost-efficient way to purchase this is in bulk through a wholesaler. The prices for this vary depending on the brand, type, and quality, but it is not very expensive. Additionally, many wholesalers offer quantity deals and discounts for wholesale orders.
|Product||Price||Price Per Gram|
|Bon Bon 100g||$6.99||$.07|
|Eternal Smoke 250g||$19.99||$.08|
|Social Smoke 250g||$21.99||$.09|
For some of the most widely available brands, the price per gram ranges from $0.05-$0.11.
The Bottom Line
While the average cost to open a hookah bar can range between $30,000 and over $250,000, the price variations depend greatly on the location and the price of renting a retail space. For a mid-range hookah bar with an upgraded ventilation system, licenses, insurance, payroll, and operating costs, most business owners would need around $140,000 to start up successfully.
However, there are a lot of other things to consider besides just the cost. It’s important to weigh the benefits of purchasing a business that’s already established versus building one from the ground up. You should also consider the potential revenue and ensure that you will be able to turn a significant profit. There are many things to consider, and it’s important to look at all of the potential situations to determine which option is best for your personal circumstances and long-term goals. You may want to look into ATM costs.