1. How to Start a Hookah Lounge
2. Who Is This Business Right For?
3. What Happens During a Typical Day at a Hookah Lounge?
4. Who is the Target Market?
5. How Does a Hookah Lounge Make Money?
6. Licensing and Permitting

Updated October 29, 2020:

How to Start a Hookah Lounge

Before you learn how to start a hookah lounge, you should first understand what hookah is all about. Hookah lounges have gained in popularity across the United States because they offer a relaxed environment for people to gather, smoke, and drink. They're also known as a shisha bar, hookah den, or hookah cafe. All of these names refer to a place where customers can go to smoke shisha with their friends. 

Shisha is tobacco that's flavored with fruit, mint, cola, molasses, or sugar and inhaled via a pipe and hose that's connected to a hookah. Smoking shisha is different from smoking a cigarette because of the hookah. The shisha is put into a bowl at the top of the hookah along with hot coals, causing the shisha to smoke. 

A hookah user draws down on their pipe, and the smoke is drawn through a down stem that terminates in the vase at the bottom of the hookah. The smoke goes through the water, then back upwards through a hose port opening and into the hose gasket of the hose the user draws upon. Multiple people can use the hookah at once. Lounges can take advantage of the group use by charging for the time used, how many pipes were used, or by how much tobacco was consumed. 

Smoking a hookah is considered a leisure activity which makes it ideal for starting a lounge. Many lounges base their decor off the Middle Eastern origins of the hookah through the use of pillows and cushions for reclining, playing Middle Eastern music, and setting things up in a communal way to encourage groups to sit down and relax for a while. 

Who Is This Business Right For?

People who are interested in the hookah, shisha, or hookah culture are best suited for opening a lounge. It's a good business for those who are interested in the finer points of tobacco, self-starters, and those who want to explore combining multiple concepts into one business.

What Happens During a Typical Day at a Hookah Lounge?

A typical day for a lounge owner includes the setup of hookahs, making sure there's enough shisha to meet the daily demand, making sure the supply is clean and free from contamination, and setting up hookahs for people to smoke. He or she also keeps track of payment by customers, makes sure the lounge is cleaned, and that there is enough stock for sale. A hookah lounge can sell hookahs, shishas, and paraphernalia related to the smoking of shisha.

Who is the Target Market?

The target market is adults who are at least of the minimum age allowed by the state for someone to legally smoke tobacco or shisha. 

How Does a Hookah Lounge Make Money?

Hookahs are typically smoked in a “session.” The session is paid for either at the beginning or end of the session. One hookah is usually shared between two to four people. A lounge can charge by the hour, or they can charge by the size of the bowl. A hookah lounge will determine the price of a bowl by how much shisha it holds. A large bowl may burn longer and cost more to smoke.

Lounges can make money through other avenues beyond the smoking of a hookah. They can make money by selling shisha, hookahs, accessories, and food and beverages depending on state law.

Licensing and Permitting

Because hookah smoking involves the use of tobacco, a hookah lounge may require state, county, and local permits or licenses to operate. Make sure to contact the local, county, and state authorities that are responsible for the licensing of tobacco operations. Find out what information they need for a tobacco-based business to operate legally.  Some of the licenses and permits that a hookah lounge may need include:

  • Retail tobacco dealer
  • Occupancy permit (make sure the location doesn't have restrictions such as being within so many feet of a school)
  • Retail tax remittance number
  • Liquor license if alcohol is to be served

Hookah lounges and related operations have to register with the Federal Bureau of Alcohol, Tobacco, Firearms, and Explosives. Forms are available on the website of the ATF.

Make sure all relevant permits and licenses are prominently displayed at all times to ensure smooth operation of the business.

If you need help with starting a hookah lounge, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.