Opening a cigar lounge comes with lots of perks. You’ll meet likeminded tobacco aficionados, share your passion for fine cigars, and be the first to know about cigar industry trends.
But the best perk of all is the opportunity to turn a profit.
So, how much money does a cigar lounge make? Keep reading to learn what cigar lounge owners make on average and explore the four key factors that can affect your business’ profitability.
The Industry Average: How Much Do Cigar Lounges Make?
How much does a cigar lounge make?
Unfortunately, the most accurate answer is that it depends. Annual revenue for cigar lounges can vary wildly — ranging from $50,000 to $150,000.
Since there’s such a wide range in total annual revenue, focusing on average profit margins might be more helpful.
Smoke shop profit margins are usually between 20% and 30%, but cigar lounges offer a higher quality experience than retail-only shops. Since you’ll provide a luxe seating area, expert cigar recommendations, and entertainment, you can increase your profit margins by up to 45%.
Keep in mind that higher prices come with higher expectations, so make sure you’re ready to invest time and money into creating an excellent experience for your guests.
Calculating Your Cigar Lounge’s Earning Potential: 4 Factors To Consider
Now that we’ve shared some general numbers, we can dive into the specific factors affecting your cigar lounge’s unique earning potential.
1. Location and Competition
How much you can make by opening a cigar lounge depends partially on where you are.
Let’s say you plan to open your lounge in an affluent neighborhood with a few busy smoke shops, but no existing cigar lounges.
In this case, you have a golden chance to appeal to your area’s tobacco enthusiasts by launching a unique cigar lounge. Plus, the lack of competition means you can charge higher prices for your cigars.
On the other hand, if you open a cigar lounge in an already saturated market or in a neighborhood where few people smoke tobacco, you’ll have a harder time differentiating your business from the competition and attracting customers — which might mean lower revenue and overall profits.
2. Ambiance and Customer Experience
Your cigar lounge’s “vibe” can also have a surprising impact on your profits.
Crafting a luxurious space, curating an excellent selection of cigars, and providing top-notch service will give you the opportunity to charge a premium for the experience and products your customers enjoy when they visit your lounge.
Here are a few ways to create an upscale environment that justifies higher prices.
- Invest in your seating options: Comfortable seating will invite guests to stay longer and purchase additional cigars.
- Install the right lighting: Ensure your space isn’t blindingly bright or too dim. Opt for warm white lights to make customers feel at ease.
- Offer entertainment options: Make sure to tune into major sporting events, curate an easy-listening playlist, and keep volume levels at the right balance.
- Train your staff: Ensure your employees know how to greet customers, recommend cigars, and provide exceptional service throughout the entire visit.
- Simplify the checkout process: Rely on a fast, modern point of sale (POS) system to ensure customers have a convenient experience at the checkout counter.
Implementing these tips does take money and effort — but it will be well worth the gains in customer satisfaction and profit.
3. Cigar Selection and Customer Preferences
Another major factor determining how much your cigar lounge can make is what’s on your shelves.
While it might be tempting to stock only luxury cigars, we recommend offering a well-rounded selection at various price points. This will help you attract a wider range of customers with different budgets. Plus, if you have high end and low end brands, customers will likely purchase multiple cigars during their visit rather than just one.
The right inventory management approach is also essential for cigar lounge success.
We recommend investing in a cigar lounge POS system with built-in inventory management features. This powerful tool gives you a real-time overview of everything you have in stock, reveals your bestsellers and underperforming products, and makes it easy to keep customers’ favorite smokes on the shelves.
4. Marketing and Promotions
Implementing an effective marketing strategy can also boost your cigar lounge’s earning potential.
Your cigar lounge marketing strategy should have two main goals: attracting new customers and retaining existing ones.
Here are our top tips for expanding your customer base:
- Establish an online presence by claiming your Google Business Profile or creating a simple website for your lounge.
- Invest in attractive signage outside of your lounge to attract passersby.
- Leverage social media to highlight your space and product offerings.
Once you’ve brought a customer through your door, your focus should be building a relationship with them. Here’s how:
- Launch a loyalty program that rewards customers for stopping by your lounge.
- Offer enticing promotions that let customers save and encourage them to spend.
- Invest in the customer experience by providing well-stocked shelves, great customer service, and a welcoming environment every time they visit.
These strategies will help you earn more when new and returning customers stop by your lounge.
Crush Your Cigar Lounge Goals With Cigars POS
So, how much can a cigar lounge make? The answer is that it’s up to you!
Choosing a location carefully, curating an upscale environment, providing above and beyond customer service, and prioritizing marketing can help you achieve higher revenue and overall profits.
The right POS system can also help your cigar lounge reach its full potential. Cigars POS is designed to help you sell cigars, manage tobacco inventory, maintain customer relationships, and grow.
See how Cigars POS can set your cigar lounge up for success by scheduling your live demo today.
