3 advantages of a hookah bar under the Mint Lounge franchise

Organizing a hookah holiday is a relatively new type of business for Russia. But this business idea is very promising in terms of profitability. The demand for hookah bars can be explained by the ban on smoking in public places. In addition, this is a new format for leisure activities that has already found its fans. Therefore, opening a hookah bar or club is a tempting business idea. For those who do not want to act by trial and error, the Mint Lounge company offers to use a ready-made hookah bar business model by purchasing its franchise. Let's look at all the details.

Minimal risks

Before opening a hookah bar, Ilya Teplyakov, a franchisee of two hookah bars Myata Lounge in Mitino and Mytishchi, worked in real estate management and launched two franchised Oldboy barbershops. The premises chosen for the second barbershop turned out to be very large, it was decided to attract a partner to open a hookah bar, bar or restaurant with him.

It took a very long time to find a partner, so in 2020 Teplyakov decided to launch a hookah bar himself. Two years ago, there were two main players in the market - Hookah Place and Mint Lounge. The second attracted the entrepreneur with more favorable terms for royalties and lump sum fees and better brand recognition. The design and presentation were also closer.

Mint franchisees do not have to pay royalties and only pay a one-time lump sum fee, so the risks of entering the business were minimal. Initial investments in Mint are usually estimated at 1.5 - 3 million rubles. The outlet in Mitino cost Teplyakov 8 million rubles, the second hookah bar in Mytishchi cost 12 million rubles. The main costs went to ventilation, room renovation and interior design. Hookahs and tobaccos were cheaper.

“When opening a hookah bar, you need to pay attention to the basics of working with excise products, ventilation standards, the nuances of the kitchen in hookah smoking areas,” says Ivan Dronov, founder of Sweet Smoke hookah bars and hookah stores.

Several years ago, the barrier to entry into the business increased greatly, projects became more expensive, and the hookah bar audience became older. For all establishments of this type, including local projects, the level of service and high-quality repairs are important.

The founder of the chain of lounge bars “The Smoke,” Alexey Rakitin, claims that five years ago a hookah bar could be opened in a basement with cheap furniture and immediately make a profit of 200,000 rubles. per month, but now guests have become more demanding. Asya Zakatova, founder of the Omar Khayyam network of hookah clubs, organizer of the Hookah Club Show and president of the Russian Hookah Union “Sodeistvie”, agrees with him.

“Five or six years ago, when the market was just emerging, you could open a hookah bar for 300,000 rubles,” she recalls. – You could rent a small room in the basement, buy furniture from Ikea and cheap hookahs. These hookah bars had no hoods, no repairs, no minimum level of service, no selection of tobaccos. Two years ago, hookah bars appeared with a large budget at the level of expensive restaurants. Cheap hookah bars began to close en masse, but the echoes of their reputation can still be heard.”

In the first location, Teplyakov tried to minimize risks through small investments, because he was starting to work in a new niche that was not yet fully understood to him. The management company helped the partners find a design office in Kazan to develop a design project.

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More information about the promotion

As a result, the cost of the project turned out to be too high, and the areas in the room were used irrationally - it was proposed to make wood cladding in place of brick, and put brick in place of concrete. The entrepreneur and his partners had to change the recommended sizes of work areas and greatly adapt the design project.

“We looked at a lot of Mint hookah bars; everywhere, rather cheap and primitive materials were used for decoration - brick walls, the ceiling was painted, the floor was tiled or laminate,” says Teplyakov. – I don’t know what the franchisees initially offer in the design project, but they probably optimize and redo everything in their own way. The design of all Mints is quite simple.”

Teplyakov found the designer of the second hookah bar himself. The project cost less and the result was more pleasing. The style of both establishments turned out to be similar, but in the second case, the franchisee sought a more premium concept and used more decorative elements in the design.

“Since the hookah business belongs to the HoReCa segment, 90% of its success depends on the location,” says Alexey Rakitin. “The average payback period for The Smoke lounge bars is from 12 to 18 months, but in our experience there were franchisees who paid off in 6 months.”

The Myaty outlet in Mitino paid for itself in about 1.5 years, the planned payback period in Mytishchi is 1 year and 8 months. Real profits diverge from initial forecasts several times. “Our expectations when we opened the second point were close to reality,” admits Teplyakov. “We understood what we were getting into, and now we are developing according to these indicators.”

“All franchises have the same position - to convince franchisees that a hookah bar can be opened for 1.5 million rubles. and earn 1 million rubles. per month,” says the entrepreneur. “The potential partner believes in this, but in reality this is almost impossible.”

According to Ivan Dronov, the relevance of the hookah market increased sharply in 2014 against the background of the law banning smoking. “More Russian producers of hookahs and tobacco are appearing on the market, and the government is providing more comfortable conditions for the sale of excise products.”

Mint Lounge franchise cost

To launch a project, investments are needed. At the starting stage, you will need from 1,600,000 rubles. The maximum investment is 3,000,000. Expenses go towards the following needs:

• rent, current repairs and interior design of the premises;
• installation of air conditioners and ventilation systems;
• purchase of hookahs and raw materials;
• purchasing drinks and snack ingredients;
• wage fund - in practice, staff remuneration is piecework. An alternative is a percentage of the establishment’s total revenue.

Note! There are no royalties or other ongoing fees. Lump sum payment - 300,000 rubles. Paid at the stage of signing the contract.

The market is oversaturated

According to Ilya Teplyakov, the main advantage of a franchise is not the proven schemes of the franchising company, but the synergy of existing franchisees who exchange experiences and recommend suppliers to each other, but this is only effective at the beginning of the development of the project. Otherwise, the entrepreneur does not see the franchisor’s support.

“At the start, sharing experience helped, but now it only gets in the way, because the owners of new outlets also come to us for advice,” says Teplyakov.

Now the entrepreneur has almost no responsibilities to the management company. “All franchisees working under the brand have the same signs, but no one monitors the quality of the product and compliance with the concept, so each Mint depends on the vision of a particular entrepreneur,” he explains.

Recently, the management of Myata nevertheless obliged its franchisees to participate in marketing campaigns, for example, to pay for premium placement on Yandex.Maps - a specific location is highlighted in bright color for key queries. This solution is beneficial for entrepreneurs who open in premises that are difficult for the client to find at first glance, for example, semi-basement premises with an entrance from the yard. For Teplyakov, such premium placement is irrelevant.

The hookah business in Russia is developing rapidly, but according to franchisees, the growth will soon slow down or begin to reverse. The competition is already quite high. “Mint” in Mitino opened in 2020. In two years, six other hookah bars and another Mint franchise outlet appeared nearby. Another hookah bar should open nearby soon.

“The number of hookah lovers is not growing in the same proportion as the number of hookah bars. It seems that the market is devouring itself,” says Teplyakov.

“The company’s goal is to sell as much as possible,” the entrepreneur adds. – If previously there was a two-kilometer restriction on placing hookah bars of the same brand next to each other, now new Mint franchises are opening 300 meters from each other. The market is oversaturated with “Mints”, but they turn a blind eye to these restrictions.”

When choosing a franchise, Alexey Rakitin advises asking how many people work in the management team.

Also, in his opinion, it is important to clarify a number of other questions: ask what will accompany the opening, who will participate in the opening of the hookah bar and what the franchisor will do after the opening. If a franchise does not have royalties, the franchisor’s only income is the sale of new franchises, explains Rakitin. “Therefore, it will stimulate the opening of new locations near yours.”

Asya Zakatova remembers how 6 years ago she launched a hookah bar with full-fledged food and a bar. “A year later, 20 other hookah bars opened within a kilometer radius, and a year later, 100 hookah bars opened,” she says. – I had to work on the quality of service. Now I’m opening a third hookah bar.”

Support for opening a Lounge Bar under the “Professor SMOKE” franchise

For the successful start and development of your business, we will provide you with:

• A brand with high visitor loyalty;
• Corporate identity and brand book;
• Assistance in selecting a location for opening your lounge bar;
• Lawyer consulting;
• Selection and quality training of personnel;
• Marketing support;
• Own loyalty system;
• Rules and standards of work;
• Working technologies, recipes and cooking rules;
• Supplier base;
• Financial supervision of your lounge bar.

Difficulties of business promotion

Brand recognition helps Ilya Teplyakov develop a hookah bar under the Myata franchise. This is important for the hookah bar market, which is very difficult to promote online due to the peculiarities of the legislation. Instagram and Facebook block ads related to hookahs, even if the advertising post does not mention hookahs, but they are in a specific account. It is more effective to promote the franchise on VKontakte and through events.

“Now business is illegal,” says Asya Zakatova. – All hookah bars are public catering and do not exist for the state. The legal framework has not been developed for the hookah industry. All hookah bars in Russia live by the principle “what if they just close us all down.”

Previously, the Federation Council and the Ministry of Health criticized hookahs and proposed banning their smoking in public places, similar to cigarettes. In 2020, deputies in St. Petersburg took the initiative to ban hookah bars from being located in residential buildings.

Otherwise, the success of a hookah bar depends on how loyal the audience who lives nearby is to it. It is difficult to attract a new audience to a hookah bar, so it is important to initially choose a location with a small number of competitors and a suitable target audience, and in the first three to four months to create recognition of a specific point among visitors in the primary (15 minutes walking distance) and secondary (up to 10 minutes by public transport ) coverage areas.

It is better to open a hookah bar in places with massive development and high density of residents in the primary coverage area. In this case, it is better to choose sites in shopping and business centers. Many hookah bars operate in residential buildings, but this has its own risks - residents can often complain about such establishments.

Review of hookah and vape bar franchises

Smoke House is a hookah bar franchise. Atmosphere, focus on creating and promoting culture. The staff is recruited from participants in hookah competitions. On the market since 2012.

Parobar is a vape bar franchise. The partner receives extensive experience of the franchisor, discounts from suppliers up to 35%, modern software that will allow you to manage your business, step-by-step instructions, and more. The company has been on the market since 2020.

Bomb Tobacco is a franchise of hookah tobacco. Premium quality at an affordable price, in-house production of new flavors. The franchise began selling in 2020. The company has been on the market since 2020.

Smoking Shop is a tobacco store franchise. Several formats are available for the partner - online store, retail and wholesale options. On the market since 2020.

The office Nargilia Lounge is a high-tech style hookah bar franchise. Unique design and atmosphere, unusual for hookah bars, large selection of flavors. On the market since 2009.

Consumer loyalty

Most of Myata's clients already understand tobacco and hookahs and, as a rule, prefer premium brands of medium strength and higher. It is very important to diversify the range of tobaccos as much as possible in order to be more likely to please the client. The hookah bar must have popular tobaccos that everyone knows about. With a huge number of brands available, customers evaluate first of all the quality of the establishment.

Brand awareness influences hookah bar traffic. “In offline business, it is very difficult for clients to make the first contact with something unfamiliar,” says Ilya Teplyakov. “If the client has minimal loyalty, he knows that he will see the same thing that he has already seen in his usual place, it will be much easier for him to make a decision.”

According to the entrepreneur’s observations, clients often “migrate” from one “Mint” to another. In the summer, many Muscovites come to Mytishchi in cottage villages and come to a hookah bar of the usual format, and at this point the decline in seasonality is not noticeable.

Hookah bars are characterized by a high LTV indicator (Lifetime Value - the profit that a client brings during the entire time of working with him. - Ed.). A client who is satisfied with the quality and service of the establishment will most likely come to it again. “Many visitors smoke hookah every day,” says Teplyakov. “The most loyal clients drink coffee and hookah in the morning, come to us for negotiations at lunch, and spend time with friends in the evening.”

“Hookah for young visitors is one of the tools for live communication,” says Asya Zakatova. “The prospects for hookahs in Europe, the US and South America are great because young visitors are looking for ways to spend time and socialize in real life without alcohol.”

To maintain LTV, you cannot skimp on ventilation and tobacco. A room with a lot of smoke, which is difficult to breathe in, and poor raw materials instantly affect return rates. It is also important that the hookah man is experienced and has at least a minimal understanding of mixology, brands and flavors of tobacco.

“Chain hookah bars are associated with expected quality,” says Asya Zakatova. – Arriving in a new city, the client knows approximately what he will get there. Such points often operate on an hourly basis, and one hookah per hour is served to a certain number of people. Customers can stay in signature hookah bars for up to three hours. The emphasis there is on an unusual interior, a large selection of tobaccos and the personality of the owner. Among such projects are Royal Smoke, Expert Bar and House of Monsieur Le Hookah.

“In the hookah industry, a franchise business can be launched faster and cheaper,” says Ivan Dronov. – Among the advantages of working under a franchise is that the entrepreneur immediately understands how to register a legal entity, he can understand the product range, and gets access to CRM, warehouse and financial programs. For example, Sweet Smoke franchisees receive orders on the first day of work due to the fact that our online representative office has been operating throughout Russia for a long time.”