Sixty years ago, nobody needed a cigar bar. People smoked wherever they wanted, so there was no need to devote a special place to enjoying fine cigars. In the 21st century, smoking bans and regulations are found across the country, even in some tobacco-producing states. It's because of those restrictions that a cigar bar can flourish as a business.
TL;DR (Too Long; Didn't Read)
Decide what sort of cigar bar you want to be: elegant and dignified, loud and lively, members only or open to the public. Look up your state requirements for cigar bar certification or licensing and meet them. Equip your cigar lounge with a humidor and a good ventilation system. Along with the other steps required to open any business, you should be ready to go.
The History of Cigars
Native tribes in North and South America smoked cigars as a stimulant during religious ceremonies. Explorers brought the use of tobacco back to Europe in the 1500s, where cigars became popular alongside pipes and snuff. By the 19th century, cigars had become massively popular.
In the 20th century, however, cigarettes were seen as a more fashionable way to smoke tobacco and the cigar industry began to shrink. The medical realization that smoking caused cancer and other illnesses hurt all tobacco-related products. By the early 1990s, the cigar industry was in poor shape.
That changed when Cigar Aficionado magazine began publishing, presenting cigars as part of an elegant, sophisticated lifestyle. For the first time in years, cigars were cool again. Providing patrons with not only cigars but a place to smoke them in comfort is now a viable business model.
Types of Cigar Bar
Cigar bars and cigar lounges come in several varieties.
- Members only. These bars charge smokers a membership fee for the privilege of using them, though members are typically welcome to bring guests with them.
- Public lounges. Like a regular bar, this is a place anyone who wants to sit down and enjoy a good cigar can drop in unannounced, or make reservations for a large party.
- Cigar shop annex. If you already own or are planning to open a cigar store, providing customers with a place to smoke can bring in extra revenue and help build your connection with your clientele.
The tone of your business may be dignified and formal, offering customers a quiet place to unwind and smoke. A sports cigar lounge is louder and livelier, usually with sports events playing on TV screens. A more formal bar may have a dress code; a sports lounge is typically relaxed about such things.
The Cigar Lounge License
Even North Carolina, a tobacco-producing state, restricts smoking in bars and restaurants. Laws vary from state to state, but there's a good chance you'll need a cigar lounge license, cigar bar certification or simply an exemption from anti-smoking laws to operate. In North Carolina, for instance, you must meet all the state's requirements for an exemption:
- You generate 60% of quarterly gross revenue from the sale of alcohol and 25% or more from selling cigars. This shows you're an actual cigar lounge, not just a regular bar that lets patrons ignore the no-smoking laws.
- You have to submit quarterly revenue reports to the state showing you meet the percentages.
- You must have a humidor, a box or room with constant humidity for storing cigars.
- No one under 21 is allowed to enter.
- All cigar bars opening after 2009 must be located in a freestanding building. Your bar must be the building's only occupant.
In Washington D.C., you can apply for an exemption if you're licensed as a restaurant, tavern, pub or nightclub and you generate at least 10% of your revenue from tobacco sales. In Oregon, cigar bar certification includes requirements that the bar seats a maximum of 40 people, you have a liquor license and cigars are the only product smoked on-site.
Applying For Cigar Bar Certification
Like the restrictions and requirements for a cigar lounge license, the application process will vary from state to state. In Washington D.C., for example, you need the following for cigar bar certification:
- An application for a District of Columbia Basic Business License.
- If you're a corporation, you need proof of corporate registration.
- Your business tax registration.
- A "clean hands" certification that says you don't owe the District of Columbia more than $100 in unpaid taxes or bills.
- An eight-page notarized application for a smoke-free exemption.
- Summarize your tobacco sales revenue in an Excel or QuickBooks format. An independent entity, such as your accountant, must sign off.
- Two years of tax returns.
In Oregon, you submit a state application for cigar bar certification along with other documentation, including:
- Your business's license for on-premises liquor sales.
- A copy of the floor plan, including a detailed seating chart.
- Documentation from the local building authority showing your building is approved as a smoking lounge.
- If you're opening a chain or a cigar lounge franchise, you need to submit duplicate paperwork for each individual cigar bar.
The Members Only Option
One way to encourage repeat business is to make your cigar lounge members only. If your customers have to pay a membership fee to join, they have an incentive to get their money's worth. That means coming back repeatedly, which puts more money in your pocket.
Several cigar store owners have made private clubs an amenity for their customers. The club is open outside store hours, and the fee entitles members to discounts or credits at the store. There's no standard membership fee: each store tailors it to what they think the customer base is willing to pay.
A cigar lounge membership contract spells out what your members get in return for their fees: how many guests they can bring in, access to a locker in the humidor, discounts on cigar purchases, first crack at limited cigar brands and so on. The cigar-lounge membership contract also explains rules for members, for example, that they only smoke cigars on the premises if they buy them from you.
Cigar Bar Essentials
A cigar lounge has to have a humidor for keeping the cigars in the right environment for maximum smoking pleasure. The size of the humidor you need depends on how many patrons you can handle in an evening. If you already own a cigar store, you should already have a suitable humidor.
You should also offer customers the basic accessories for smoking, such as lighters or matches, ashtrays and cigar cutters. The style should fit the style of your cigar lounge: a more elegant, sophisticated cigar bar should have classier accessories.
Good air quality is vitally important. Even patrons who love cigars won't want to sit in a cloud of other people's smoke, so the air has to stay reasonably clear. An exhaust system or a powerful HVAC can keep your cigar bar's atmosphere livable.
Provide Awesome Service
Many cigar lounges are neighborhood businesses, drawing customers from a relatively small radius around them. You want customers to feel this is "their" place, a home away from home, and good service can help with that. If there are a lot of cigar bars competing in your town, good service can help you stand out.
- Learn what brands your customers like and keep them in stock.
- Spend time on social media and in online cigar discussions. If there's a lot of buzz about a new brand of cigar, secure a supply for your store before customers start asking for them.
- Talk to your customers about what they want from you. Use that intel to help shape your business decisions.
- Don't be just about cigars. If you can offer your customers locally brewed craft beers or a distinctive menu, that gives them an added reason to sit down and smoke in your lounge.
- Cigar Inspector: Long History of Cigars
- American Lung Association: Smokefree Air Laws
- Gentleman's Gazette: Cigar Etiquette 101
- Tobacco Business: Six Steps to a Hip Cigar Lounge
- Tobacco Prevention and Control Branch: SmokefreeNC: FAQs
- Washington DC: DC Tobacco Business Licenses & Smoke-Free Workplaces Law Frequently Asked Questions
- Oregon: Smoke Shop and Cigar Bar Certification
- Tobacco Business: Members Only: How to Launch a Successful Private Cigar Lounge and Club
- ZT Cigars: Cigar Lounge Membership Application
- Pure n Natural: Must Haves for the Ultimate Cigar Room
Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com