Anyone here own a Cigar bar ever?

[smitty81]

Ok, so I have a wild Idea here. It's actually a really great idea but I know nothing of running a business and the legalities of it all.

I know state to state, laws will be different. I am just looking for any information, input or advice from those of you that might have been there and done that.

OK, here's the story of my idea.

I was in Omaha last weekend and my younger brother and I visited a cigar bar. I was not aware that these were legal. Back in 05/06 I think it was, Nebraska banned smoking in public business's all together no matter what the business was.

Well, some of the citizens and business owners protested it and the laws changed. (I wasn't huge into smoking so I didn't follow all this at the time)

While we were at the cigar bar, I asked my brother how people were legally able to smoke in the public. He explained to me that if your primary business is tobacco products, you can legally allow smoking in your business. You can also sell alcohol in addition. The one stipulation is that you can not serve food.

While we were there, we paid double for drinks and cigars. There is another B&M literally right around the corner as well. So I know the pricing wasn't just an area thing. I started thinking about it and realized that they could easily charge double on drinks and cigars.

That was the only place in town you could smoke and drink at the same time indoors all while listening to some great music. People were willing to pay double just because it is a one of a kind place with a unique atmosphere.

So the gears have started turning.

I live in a small town of about 2,500 or so. There is currently 5 bars in our town.

Bar #1 is a great place, it's where I like to go.
Bar #2 has crappy owners and very few people go there because of it.
Bar#3 is the Veterans club, only the older people go there. Their food brings in the older crowd.
Bar#4 is mainly a restaurant, completely dead, surprised they are even open.
Bar#5 is a new place that just opened that is pretty sweet. I won't get into it.

I feel there are 2 main bars that people actually go to on a regular basis. #1 and #5.

In my small town, the bars are the place to be on the weekends. There are bands, football games on tv..........It's about all there is in this town on the weekends. The bars that are nice always have a good crowd, even on the week nights.

You are probably guessing what I am thinking by now.

Why not open up a cigar bar?

Here's my thought process on it. Ever since the smoking ban, people in this town have been really pissed about it. You go to a bar to smoke and drink, it's a bar. If you don't like the atmosphere, don't go. Thats just my on the subject.

I think a cigar bar would pull the majority of the crowd away from the other bars. People would love to be able to smoke while enjoying a drink, conversing with their friends while listening to a band or watching a football game.

It would be the only place in town to do so or within 80-100 miles that I am aware of. I would say about 65-70% of the bar crowd smokes and most of them smoke a lot. There are no cigar smokers in this town that I am aware of but if they were available to them, I'm sure they would try them. I think I could really get people to try cigars and enjoy them.

I would have to find a small place to start and build a walk in humidor. A bar will have to be built and cigars, ciggs and booze will have to be bought. A liquor license and a tobacco license will have to be attained.

If I have to buy a place and have it set up, it's going to cost a LOT of money. It will be my career and my family's lively hood at stake.

One thought was to ask one of the bars if they would want to sell out. They have to be wanting out as I don't see how they can make ends meet.

Bar #4 in particular would be perfect really. It's all set up nicely, there is a bar with lots of seating and a place to build a walk in humidor even. To top it off, it has TV's but a few more will have to be added. In addition to that, that place has a really nice beer garden to sit outside if you wanted.

All this is kind of scary to me as it's a lot of money and nothing I have any experience with.

I really think It would take off and take a lot of business from the other bars.

Any input or advice would greatly be appreciated.

[icehog3]

One thing you need to investigate and price is insurance...it can add a lot to your bottom line.

Most businesses like this fail in the first couple of years. Opening one when you have no business experience increases the odds of that exponentially. One would be wise to seek a partner with some experience in the bar business.

[bobarian]

Originally Posted by icehog3

One would be wise to seek a partner with some experience in the bar business.

And make sure he has very very deep pockets.

[cobra03]

I would have to fully agree with Tom here. While i dont own my own i am friends with people who own cigar shops and bars respectively. In both cases these guys had alot of previous experience running other business and decided to get into this stuff because they had a passion for it. Even with the previous experience and capital it was a huge gamble, and they struggled for a while before they could get a foot hold and break a profit. If it is something you really want to do , i say go for it. This country was built on people going after their dreams. With that said i would sit down with a good lawyer and an accountant and seek out some people with experience possibly a potential partner.

[Fia]

If possible which I dont know how realistic it is living in a small town but it might mean leaving home for a while, is getting a job in just such a place and learn the ropes. You will learn what to do and what not to do before you go and drop lots of money with no experience. Sounds like fun but lots of work.

[Bax]

It's a lot of peoples dreams to jump right into an awesome business venture but besides the the startup costs, rent, electric, liquor license, advertising and so on... that's nothing compared with the hassles of employee paperwork and government regulations.

Fia is on the money when he said to get a job at a bar and learn the ropes, not just bartending but managing the place just to get a grasp on how hard it really is.

[htown]

If you actually drew that many customers who wanted a place where they could drink and smoke, wouldn't your alcohol sales overtake your tobacco sales and then your primary business would no longer be tobacco.

[markem]

I know several people who have succeeded in small business solely on dedication - no deep pockets or experience to rely on. The main thing that you will need to consider is that, like most small businesses, your profits will likely not be high, so expect to do most of the work yourself. A good friend of mine is in to her third year and although her coffee shop is quite busy and doing well, she still works 80-100 hours per week because not only can she really not afford more help, but good help is almost impossible to find.

If you have a community college nearby that has a course in starting your own business, take it. They will help with all the paperwork, business plan, how to find space and a loan, regulations, etc.

In the end, you start a small business because it is what you are passionate about and for almost no other reason.

[Gophernut]

Originally Posted by htown

If you actually drew that many customers who wanted a place where they could drink and smoke, wouldn't your alcohol sales overtake your tobacco sales and then your primary business would no longer be tobacco.

My thoughts exactly. I live in a small town with a number of bars, and just don't see enough people outside smoking to see it as a huge plus. You will, in short order, sell more booze than cigars, etc. At least my

Meet with your attorney and accountant.

[chippewastud79]

Depending on the laws in the state/county, you could spend upwards of $100K for a liquor license alone. That is to say, if there is a limited number of liquor licenses in the area you are looking and they are all owned, the private market for a liquor license can be brutal.


Also remember, maintaining a walk-in humidor for a location that doesn't already have one is a lot more labor intensive than your home desktop. Your initial stock also will cost you a pretty penny, because most (if not all) retailers will not sell on credit. Don't forget to factor in the cost of updating the HVAC to be able to handle multiple cigar smokers at the same time.

Sounds like you will have to have a free-standing building, but why buy an entire restaurant with a kitchen and all the equipment in it?

[bvilchez]

I had a partnership at one time with two other gentlemen in a bar in NY. It was tough to start at first because the liquor license and the locale. The returns were very profitable but they came at a price......MUCH PATIENCE, DEDICATION, AND HARD WORK! Not to mention time away from family starting to get things together.

If it's your first business venture then I would suggest you do PLENTY of homework. It's not as easy as just applying and opening a location. You have to deal with contract with cigar distributors, beer distributors, and liquor wholesales. You need to know how to count liquor as well to see where you could be losing your profits.

These are just a fraction of the things that come with this territory. I ended up leaving and selling my share to the other 2 guys. Left with a profit but I kick myself for doing so since they are currently at 4 locations in NYC.

[smitty81]

Originally Posted by htown

If you actually drew that many customers who wanted a place where they could drink and smoke, wouldn't your alcohol sales overtake your tobacco sales and then your primary business would no longer be tobacco.

I am not 100% sure how this works out, it would have to be something that I look into. I am wondering if there is a loop hole or if they make it work by selling their alcohol at such high prices, people limit themselves to an extent.
With high booze prices, you will have people buy just maybe 1-2 drinks while others won't care about the price.

Originally Posted by Gophernut

My thoughts exactly. I live in a small town with a number of bars, and just don't see enough people outside smoking to see it as a huge plus. You will, in short order, sell more booze than cigars, etc. At least my

Thats because people that go to a bar DON'T want to smoke outside. Unless it's nice outside and there is a beer garden. People don't want to leave their buddies,the atmosphere nor their drink to go outside and have a smoke. It's much more convenient to just sit where you are and light up.

It's all about convenience.

Originally Posted by chippewastud79

Depending on the laws in the state/county, you could spend up wards of $100K for a liquor license alone. That is to say, if there is a limited number of liquor licenses in the area you are looking and they are all owned, the private market for a liquor license can be brutal.


Also remember, maintaining a walk-in humidor for a location that doesn't already have one is a lot more labor intensive than your home desktop. Your initial stock also will cost you a pretty penny, because most (if not all) retailers will not sell on credit. Don't forget to factor in the cost of updating the HVAC to be able to handle multiple cigar smokers at the same time.

Sounds like you will have to have a free-standing building, but why buy an entire restaurant with a kitchen and all the equipment in it?

First off, it's a really nice place in a really nice location. It's right uptown by everything else.

2nd, it already has a bar.

3rd, it's a good size place with lots of seating and enough room to have a band.

4th, it has a perfect place to build a walk in humidor.

It wouldn't take much to strip the kitchen and sell the stuff for a profit really.

Just the reasons I have targeted this place.


I have thought about having a partner or two. I am friends with a guy that has ran/owned a bar. I think he may be interested if I talk to him.

Money wise, it's really a bit scary how much money would be wrapped up in this. I realize it would practically be where I live. The money and the unknown is what holds me back.

I think I can get the funds or at least a good chunk of them. It would involve a 3rd partner but thats ok.

[LasciviousXXX]

Don't forget the most important part of this little venture... the cigars. It is not an easy task to forge relationships with tobacco companies and getting the proper authorization to sell their cigars. Case in point, Arturo Fuente. Unless you are a large company/corporation or already move A LOT of product, you are not going to get a Fuente account. Same with other cigar companies. Those contacts don't come easy and most aren't going to be jumping at the chance to put their product in a small place with little to no economy in the area.

You might want to start making those contacts now if you're serious and also going to the IPCPR show for a couple of years prior to jumping into business.

[markem]

yes, there are lots of things to consider, but if this is your passion, then go for it. The two places I think would be best to start are your local business banker and your insurance agent. They have probably seen many good ideas come and go and both will want you to be successful long term since it will mean good business for them. Also, they will have their pulse on the local community and can tell you if the idea is whacky or not.

Even if you ultimately are unable to open this business, what you will learn by trying will always be valuable.

[Bill86]

I don't know how it is in your state but here we have a liquor distributor that distributes cigars as well. So while you won't be able to get Opus X, Anejos, GoF...etc etc. You can get the hemingways, short stories...maduros as well, and most of their regular line. This can probably save you quite a bit if you're only opening a bar in a town of 2,500. You can get Padrons as well, maybe not all of them but a good bit.

What I have seen after working for a few of them, aside from my grievances to the quality of people they are, shops can pretty much succeed SOLELY by location and inventory. It's all about where you put your store. This is why I would think a town of 2,500 would be a bad location. You need a high traffic area in a good size town that is middle class to upper middle class. Somewhere around there at least. A nice enough town could support several B&M's. Also I will say people that smoke cigars don't like cigarette smokers and visa versa so if it is a bar more than a cigar bar you'll find people leaving due to what gets smoked.

But Tyr is right, it is about who you know and have contacts with. You won't be getting any of the premium stuff otherwise. No ligas, no Illusione, no high end fuente, no boutique cigars......That said a town of 2,500 you would really just want generic cigars anyways. Just the stuff people have heard of. You would probably settle on a smaller walk in humidor that holds 150-200 boxes. Something like a 10x10, or 12x12 or so.

I've seen people open a shop with $60-70K but I'd hardly call it complete. In fact it's just a store with MINIMAL stock. I'd expect more like $100K-$150K just with construction, inventory, and equipment.

It gets pricey real quick, I would not personally risk it by putting a store in a town of 2,500

[smitty81]

Thanks for all the info and advice, you all have been most helpful.

While I think it is a really good idea and there is enormous potential to make money, I don't think I have nearly enough knowledge to make a serious go at it.

[icehog3]

Good call.

[chippewastud79]

Originally Posted by smitty81

First off, it's a really nice place in a really nice location. It's right uptown by everything else.

2nd, it already has a bar.

3rd, it's a good size place with lots of seating and enough room to have a band.

4th, it has a perfect place to build a walk in humidor.

It wouldn't take much to strip the kitchen and sell the stuff for a profit really.

Just the reasons I have targeted this place.

If it is a really nice place in a really nice location and is always dead, I would consider that a huge red flag.

Making a profit on the equipment isn't realistic, because they guy isn't going to give you the equipment for free, but you could sell it to recoup some of the initial investment.

Any idea how much money the guy would want for the building and FF&E? I know some commercial restuarant buildings in the greater Cincinnati Area without working equipment and no current business can run upwards of $1-2 million.

[oooo35980]

A cigar shop that sells booze is alot different than a bar in which you can smoke. It sounds like you were trying to make the latter while convincing the state you were the former. I don't think it would work because the clientele would clash.