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How much does it cost to open a cigar lounge?

Writer's picture: Plymouth WrightPlymouth Wright

Opening a cigar lounge can be a rewarding venture, but it requires significant financial planning and investment.


From securing a location to creating an appealing ambiance and meeting legal requirements, the cost of opening a cigar shop or lounge can quickly add up. Below, we outline the key expenses to consider when opening a cigar lounge.


1. Real Estate and Leasing Costs


The first major expense is securing a suitable location. A cigar lounge typically requires a space in a commercial area with sufficient ventilation and room for seating. Leasing costs vary depending on the location, but expect to pay anywhere from $2,000 to $10,000 per month for rent. Upfront costs may include a security deposit and the first and last months' rent, adding another $4,000 to $20,000 to your initial budget. For those purchasing property, costs can range from $200,000 to $1 million, depending on the size and location.


2. Build-Out and Renovation


Transforming your space into a comfortable and stylish cigar lounge can be one of the largest investments. Renovations may include installing custom furniture, walk-in humidors, a bar area, and ventilation systems to handle smoke. A high-quality ventilation system alone can cost between $20,000 and $100,000. Depending on the level of customization, renovations can range from $50,000 to $250,000.


3. Licensing and Permits


Operating a cigar lounge requires various licenses and permits. These include a tobacco retailer’s license, local business permits, and possibly a liquor license if you plan to serve alcohol. Licensing fees vary widely by state and municipality but can total between $1,000 and $25,000. Additionally, legal fees for navigating the regulatory process may cost $5,000 to $15,000.


The decor and ambience you are seeking plays a major role in the cost of opening your lounge. Furniture alone can cost upwards of tens of thousands of dollars.


4. Inventory Costs


A robust inventory of cigars is essential for attracting customers. Initial inventory costs depend on the variety and quality of cigars you stock but expect to spend $10,000 to $50,000 to start. This budget should also account for accessories like cutters, lighters, and ashtrays.


5. Staffing


You will need experienced staff, including a manager, servers, and possibly a cigar sommelier. Monthly payroll expenses can range from $5,000 to $20,000, depending on the size of your team and local wage standards. Training costs and employee benefits should also be factored in.


6. Marketing and Branding


To build awareness and attract customers, invest in branding and marketing. This includes creating a logo, designing a website, and running advertising campaigns. Initial marketing costs can range from $5,000 to $20,000. Ongoing promotional efforts will require additional funding.


7. Utilities and Operating Costs


Utilities like electricity, water, and internet are recurring expenses that typically range from $1,000 to $3,000 per month. Special considerations, such as maintaining a consistent humidity level in your humidor, may increase these costs.


8. Contingency and Miscellaneous Costs


Unexpected expenses are inevitable. Set aside 10-20% of your total budget as a contingency fund to cover unforeseen costs.


Conclusion


Opening a cigar lounge can cost anywhere from $150,000 to over $500,000, depending on the scale of your business and location. Careful planning and a detailed budget are essential to ensure your lounge becomes a thriving and profitable venture.


Looking to open a cigar lounge or already have one? We provide financial services tailored to the cigar industry.


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