Purchasing An Existing Hookah Lounge

[McGuappo]

H guys,

My business partner and I have been developing a business plan to open our own hookah lounge. Recently we noticed the hookah lounge we frequent went up for sale and we're very interested in purchasing it. We plan on taking the owners out to dinner to have a meeting, as well as having a sit down with a lawyer to make sure we do everything legally.

We both think it has a lot of potential after some improvements and investments. I know we're both hard workers and are willing to put in endless hours to get it to where it needs to be. We're both mid to late 20s (25 and 27) with strong business, customer service and management backgrounds.

Quick info about it:

- Location is near a popular University and a few surrounding colleges
- Established for a few years
- 1,960sqft
- Beer/wine license
- Selling for under $20k

We've been brainstorming questions to ask but I figured I would start this thread and see if you guys had any additional advice. What questions/info should we ask and seek?

[Stuie]

Start here
http://www.hookahforum.com/topic/11575-so-you-want-to-start-a-hookah-lounge-updated/

[joytron]

If you are not well acquainted with setting up and operating a hookah itself, I would start there.

[â€On]

I would make sure the building is not currently on fire.

[mushrat]

You want to see their books. If they are sellign then they must show your their accounting. It will show their profits, expenses, etc. If they try to tell you they made more than they declared, walk away. Base your price on their net profit, not gross, not how much they SAY they were pulling in, black and white tax forms and corp annual report. Also talk with the landlord they are renting from. Make sure it's all on the up and up.

[McGuappo]

[quote name='Stuie' timestamp='1353529960' post='562433']
Start here
[url="http://www.hookahforum.com/topic/11575-so-you-want-to-start-a-hookah-lounge-updated/"]http://www.hookahfor...lounge-updated/[/url]
[/quote]

Check. Read it multiple times over the last few months, as well as a bunch of other threads. I'm sure I'll run through it again

[quote name='joytron' timestamp='1353530021' post='562434']
If you are not well acquainted with setting up and operating a hookah itself, I would start there.
[/quote]

Covered there. Business partner actually used to work at the lounge and I smoke almost every day. We want to make sure every bowl is 100% consistent in quality.

[quote name='mushrat' timestamp='1353538458' post='562446']
You want to see their books. If they are sellign then they must show your their accounting. It will show their profits, expenses, etc. If they try to tell you they made more than they declared, walk away. Base your price on their net profit, not gross, not how much they SAY they were pulling in, black and white tax forms and corp annual report. Also talk with the landlord they are renting from. Make sure it's all on the up and up.
[/quote]

This is definitely something we wanted to take a close look at (obviously). When we mentioned we'd be interested in purchasing and would like to have a sit down one of the owners said "We'll show you everything". It was comforting that he came out ready to say that.

Thanks for the replies so far guys!

[thehelios]

*cough* Hookah Hut *cough*

[thehelios]

If a mod can combine this w/ my previous post, that'd be cool.

If it's the place I'm thinking about, PLEASE PLEASE PLEASE figure out a way to market it to the college students. The university paper is useless and a lot of people don't have much reason to visit a pure hookah bar (take Funky Buddha for example where they brew their own beer/sell brewing supplies).

Not sure how you feel about a pint night w/ hot coals and drunk kids being mixed together but it's sure of a hell of a way to draw kids in.

[Pavo21]

yah well if u do the whole alcohol thing idk how hard core they are with rules, but if u serve boose it might be hard to keep kids under 21 from drinking. but yah you really need to understand where you're money is going. and expect to not make any money for a while.

[McGuappo]

Yeah it's the hut We definitely want to keep the beer/wine license. One of the reasons I stopped going there (and many others I know) was because they didn't have it, so for someone 21+ I know it's an additional draw. I've done my share of bar tending and drunk people are manageable for me. I'm used to managing/controlling the level of drunkness too.

We want to implement a hard marketing campaign aimed directly at the college kids. It's just a matter of coming up with it after we acquire it. Any suggestions since you know the place

[thehelios]

[quote name='McGuappo' timestamp='1353603522' post='562518']
Yeah it's the hut We definitely want to keep the beer/wine license. One of the reasons I stopped going there (and many others I know) was because they didn't have it, so for someone 21+ I know it's an additional draw. I've done my share of bar tending and drunk people are manageable for me. I'm used to managing/controlling the level of drunkness too.

We want to implement a hard marketing campaign aimed directly at the college kids. It's just a matter of coming up with it after we acquire it. Any suggestions since you know the place
[/quote]

The college scene in this area is really light and the ONLY thing that draws these kids out is alcohol. Period. The only time these people want to go out is when clubs/bars have $.25 beer night tuesdays, kill the keg wednesdays, etc. Hopefully, they don't try destroying you with monthly rental costs.

The best thing I can think of is 21+ nights and you get access to dirt cheap, crap beer (PBR or Natty) with the rental cost of a hookah for like $15-$20. This would possibly desuade people from trying to get in and share a hookah. And House/Rap music. These people couldn't give a crap about Middle Eastern "authenticity".

[mushrat]

Word of mouth is your beest advertising in a college town. I wasted money on the Studen Paper and a few other things until I realized no one was looking. Now you wan't free advertising that people WILL read, get the Student Paper to do an article on you. Heck,get the loacl paper to do an article on you.

Best thing though, make the people who do come happy and set up a good web presence. FB, Web site, the whole 9 yards. Make your web site SIMPLE and make sure it lists your beers by name and your tobaccos by name. That is essential for web search engines.

[Fang]

Coming for a college student with a hookah bar in town, I would really like for them to have a college night where hookah is discounted for students with the college's ID.

[Tyler]

I personally avoid any and all hookah cafes that serve alcohol

[Rambo]

[quote name='Tyler' timestamp='1356739043' post='566619']
I personally avoid any and all hookah cafes that serve alcohol
[/quote]
really? I love nothing more than a cold beer with my hookah.

[Springfield03]

[quote name='Tyler' timestamp='1356739043' post='566619']
I personally avoid any and all hookah cafes that serve alcohol
[/quote]

I'm on this page, I find that drunk people ruin the atmosphere for smoking. On the other hand, from a business perspective, it's silly not to have an alcohol license. Though, not a single lounge of the five hookah lounges that are local to me have a liquor/beer license.

[Pavo21]

[quote name='Springfield03' timestamp='1356904875' post='566756']
[quote name='Tyler' timestamp='1356739043' post='566619']
I personally avoid any and all hookah cafes that serve alcohol
[/quote]

I'm on this page, I find that drunk people ruin the atmosphere for smoking. On the other hand, from a business perspective, it's silly not to have an alcohol license. Though, not a single lounge of the five hookah lounges that are local to me have a liquor/beer license.
[/quote]

Agreed, because drunk people just always over do it. and just uggg...

[skeetsak]

[quote name='Tyler' timestamp='1356739043' post='566619']
I personally avoid any and all hookah cafes that serve alcohol
[/quote]

do all of those lounges pump POP or RAP music too?

i noticed that in St. Louis the only lounges that serve alcohol and packed with fist pumping D-bags

I dont know what are the causes and what the correlations though... i think it goes like this... the market is the d-bags and they go to the alcohol. the alcohol cosumption goes up in "club like settigns". the music sets up the club fealing and the cheap and easy profit fallows along. Edited January 2, 2013 by skeetsak

[Venger]

a fist pumping D-bags money is just as green as yours. I would love all lounges to be a chill place to hang and talk and drink tea but truth be told most folks that "hang out" don't buy anything and want freebies because they are regulars and "get it". The bro's come in,have a bunch of beer,food and smoke then move on like the locust that they are. Leaving room for more to swarm in and spend that sweet sweet cash. A lounge is a business and you need to pander to those who hold the money.

[Rambo]

[quote name='skeetsak' timestamp='1357156734' post='566976']
[quote name='Tyler' timestamp='1356739043' post='566619']
I personally avoid any and all hookah cafes that serve alcohol
[/quote]

do all of those lounges pump POP or RAP music too?

i noticed that in St. Louis the only lounges that serve alcohol and packed with fist pumping D-bags

I dont know what are the causes and what the correlations though... i think it goes like this... the market is the d-bags and they go to the alcohol. the alcohol cosumption goes up in "club like settigns". the music sets up the club fealing and the cheap and easy profit fallows along.
[/quote]

typically if you go Tuesday through Thursday its pretty chill.