Lounge Business Plan
If you want to start a lounge business or expand your current lounge business, you need a business plan.
The following lounge business plan template gives you the key elements to include in a successful lounge business plan.
Lounge Business Plan Example
I. Executive Summary
Business Overview
[Company Name] is a cozy community lounge located in [Location]. Our mission is to create a fun and relaxed environment where residents can buy drinks and food, and socialize with their friends, family, and neighbors. We also have fun activities such as pool tables and darts and have special events like karaoke nights. With our relaxing environment, fun activities, good food, and friendly staff, we aim to make [Company Name] a home away from home.
Products Served
[Company Name] provides a relaxing and inviting atmosphere to unwind in after a long day or week. Our friendly staff and welcoming environment encourage relaxation and conversation. Customers can indulge in an extensive menu of drinks, appetizers, and dinner options. They can also enjoy the multiple sources of entertainment [Company Name] provides, including darts, pool, and karaoke.
Customer Focus
[Company Name] will primarily serve the residents who live within a 20-mile radius of our lounge and workers within a quarter-mile radius. The demographics of these customers are as follows:
- 85,521 residents
- 6,500 workers
- Average income of $67,200
- 28% married
- 52% in Management/Professional occupations
- Median age: 31 years
Management Team
[Company Name] is led by [Founder’s Name] who has worked in the industry for [X] years. Throughout his career, [Founder’s Name] has managed lounges, nightclubs, and similar establishments throughout [Region], one of which is [Lounge], the most visited lounge in [Location]. He has also worked for the [Bar/Club Name] where he managed a crew of 25 people. He also graduated with an MBA from [University] in [Year].
Success Factors
[Company Name] is uniquely qualified to succeed due to the following reasons:
- There are very few lounges in the community we are entering. In addition, we have surveyed the local population and received extremely positive feedback saying that they explicitly want to frequent our business when launched.
- Our location is in a high-volume traffic area and will thus be highly convenient to a significant number of passersby each day.
- The management team has a track record of success in the lounge business.
- The lounge business has proven to be a successful business in the United States.
Financial Highlights
[Company Name] is seeking a total funding of $560,000 to launch its lounge. The capital will be used for funding capital expenditures, building and design, bar equipment and kitchen appliances and utensils, labor costs, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
- Design/build: $300,000
- Equipment for bar and kitchen: $150,000
- Working capital: $110,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break even
Top line projections over the next five years are as follows:
| Financial Summary | FY 1 | FY 2 | FY 3 | FY 4 | FY 5 |
|---|---|---|---|---|---|
| Revenue | $560,401 | $782,152 | $1,069,331 | $1,379,434 | $1,699,644 |
| Total Expenses | $328,233 | $391,429 | $552,149 | $696,577 | $776,687 |
| EBITDA | $232,168 | $390,722 | $517,182 | $682,858 | $922,956 |
| Depreciation | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 |
| EBIT | $225,168 | $383,722 | $510,182 | $675,858 | $915,956 |
| Interest | $6,016 | $5,264 | $4,512 | $3,760 | $3,008 |
| Pre Tax Income | $219,152 | $378,458 | $505,670 | $672,098 | $912,948 |
| Income Tax Expense | $76,703 | $132,460 | $176,985 | $235,234 | $319,532 |
| Net Income | $142,449 | $245,998 | $328,686 | $436,864 | $593,416 |
| Net Profit Margin | 25% | 31% | 31% | 32% | 35% |
II. Company Overview
Who is [Company Name]?
[Company Name] is a cozy community lounge located in [Location]. Our mission is to create a fun and relaxed environment where residents can buy drinks and food, and socialize with their friends, family, and neighbors. We also have fun activities such as pool tables and darts and have special events like karaoke nights. With our relaxing environment, fun activities, good food, and friendly staff, we aim to make [Company Name] a home away from home.
[Company Name]’s History
Upon surveying the local customer base and finding potential retail locations, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].
[Company Name]’s operations are currently being run out of [Founder’s Name] home office, but once the lease on [Company Name] retail location is finalized, all operations will be run from there.
Since incorporation, the company has achieved the following milestones:
- Developed the company’s name, logo, and website
- Found a location for the lounge and signed a Letter of Intent to lease it
- Initial floor and design plans
- Created the food and drinks menu
- Determined equipment and inventory requirements
[Company Name]’s Products/Services
[Company Name] provides a relaxing and inviting atmosphere to unwind in after a long day or week. Our friendly staff and welcoming environment encourage relaxation and conversation. Customers can indulge in an extensive menu of drinks, appetizers, and dinner options. They can also enjoy the multiple sources of entertainment [Company Name] provides, including darts, pool, and karaoke.
III. Industry Analysis
The lounge industry has experienced overall growth over the past five years. This growth was largely driven but sustained growth in consumer spending and per capita expenditure on alcohol. The industry will continue to benefit from economic growth, a decrease in the unemployment rate, and increased discretionary spending. Additionally, per capita expenditure on alcohol is expected to increase at a faster rate than in the previous five-year period, particularly on premium beverages.
The rising popularity of lounges and similar establishments has helped sustain the industry, especially post-COVID. According to IBIS World, the Lounge & Nightclub industry has grown by 2.2% in the past five years and this growth is expected to continue. The industry is expected to grow at a compound annual growth rate of 5.9%, showing that the popularity of lounges will continue to rise.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name] will serve the community residents of [Location] and its surrounding areas.
A demographic profile of the area is as follows:
| Wilmette | Winnetka | |
|---|---|---|
| Total Population | 26,097 | 10,725 |
| Square Miles | 6.89 | 3.96 |
| Population Density | 3,789.20 | 2,710.80 |
| Population Male | 48.04% | 48.84% |
| Population Female | 51.96% | 51.16% |
| Target Population by Age Group | ||
| Age 18-24 | 3.68% | 3.52% |
| Age 25-34 | 5.22% | 4.50% |
| Age 35-44 | 13.80% | 13.91% |
| Age 45-54 | 18.09% | 18.22% |
| Target Population by Income | ||
| Income $50,000 to $74,999 | 11.16% | 6.00% |
| Income $75,000 to $99,999 | 10.91% | 4.41% |
| Income $100,000 to $124,999 | 9.07% | 6.40% |
| Income $125,000 to $149,999 | 9.95% | 8.02% |
| Income $150,000 to $199,999 | 12.20% | 11.11% |
| Income $200,000 and Over | 32.48% | 54.99% |
Customer Segmentation
We will primarily target these three customer segments:
- Local college students: We are strategically located near [University], so we expect a good portion of our clientele will consist of students from the school.
- Young adults: Since most customers who frequent lounges or similar establishments are in their 20s, we expect that much of our clientele will be Gen Z or young millennials.
- Local residents: Approximately 75,000 residents live near the surrounding area and a majority will frequent the establishment.
V. Competitive Analysis
Direct & Indirect Competitors
The following companies do business within a 20-mile radius of [Company Name], thus providing either direct or indirect competition for customers:
Carl’s Lounge
Carl’s Lounge is an intimate lounge with ample tables, drinks, and other menu offerings. The decor exudes a calm and intimate setting, which is great for those looking to unwind after a hard day or week. They have an extensive menu of domestic and exotic drinks, friendly staff, and an overall inviting atmosphere that keeps customers coming back.
The Rose Lounge
The Rose Lounge is a family-owned establishment that offers local drinks and meals made with local ingredients. They sell craft beer and wine made in the region and all ingredients used in the food are grown nearby. In addition to supporting the local food and beverage industry, The Rose Lounge also creates a welcoming environment that helps all tourists and residents who visit feel like they are part of a community.
Bud’s Sports Lounge
Bud’s Sports Lounge is a local lounge that offers sports, beer, and good food. It’s the ultimate spot to hang out and watch the game with your buddies or fellow fans. The lounge has an extensive menu of bar food and snacks as well as a diverse menu of imported and local beer.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Location: [Company Name]’s location is near universities and business offices, giving us access to students and workers nearby.
- Decor and Environment: The lounge will have upscale decor and lighting to attract customers.
- Management: Our management team has years of business and management experience that allows us to market and serve customers in a much more sophisticated manner than our competitors.
- Relationships: Having worked in the industry for [X] years, [Founder’s Name] has the contacts with suppliers, promoters, and influencers to successfully launch a lounge.
VI. Marketing Plan
The [Company Name] Brand
The [Company Name] brand will focus on the Company’s unique value proposition:
- Offering an inviting and relaxing environment
- Providing high-quality drinks and food
- Providing a premiere lounge experience
- Providing excellent customer service
Promotions Strategy
[Company Name] expects its target market to be individuals living, working, and going to school within a 20-mile radius. The company’s promotions strategy to reach these individuals includes:
Direct Mail
[Company Name] will blanket neighborhoods surrounding its locations with direct mail pieces. These pieces will provide general information on [Company Name], offer discounts, and/or provide other enticements for people to frequent the lounge.
Public Relations
We will contact all local and area newspapers and television stations and send them a press release describing the opening and unique value proposition of [Company Name].
Advertising
[Company Name] will initially advertise in local newspapers and local TV shows, and sponsor community events in order to gain awareness.
Social Media
Since the company’s main target market is students and young adults, raising [Company Name]’s online visibility will help in bringing people to the lounge.
Pre-Opening Events
Before opening the lounge, [Company Name] will organize pre-opening events designed for prospective customers, local merchants, and press contacts. These events will create buzz and awareness for [Company Name] in the area.
Website/SEO
[Company Name] will invest in developing a professional website that displays all the services offered by the company. It will also invest in SEO so that the company’s website will appear at the top of search engine results.
Pricing Strategy
[Company Name] pricing will be moderate, so customers feel they receive great value when patronizing the lounge.
VII. Operations Plan
Functional Roles
In order to execute [Company Name]’s business model, the company needs to perform many functions including the following:
Administrative Functions
- Social media management
- Website management
- Bookkeeping
- Marketing
- Hiring and training staff
- Maintenance functions
- Other general administrative functions
Bar & Kitchen Functions
- Cook food
- Make drinks
- Provide excellent customer service
- Maintenance functions
Milestones
The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is led by [Founder’s Name] who has worked in the industry for [X] years. Throughout his career, [Founder’s Name] has managed lounges, nightclubs, and similar establishments throughout the [Region], one of which is [Lounge], the most visited lounge in [Location]. He has also worked for the [Bar/Club Name] where he managed a crew of 25 people. He also graduated with an MBA from [University] in [Year].
Hiring Plan
[Founder’s Name] will serve as the lounge manager. In order to launch the lounge, we need to hire the following personnel :
- Wait Staff (3 full-time)
- Bartender (2 to start)
- Cooks (2 to start)
- Assistant Manager (1 to start)
- Additional Support Staff (2 to start)
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come from the sales of drinks and food.
The major costs for the company will be food and alcohol costs and staff salaries. In the initial years, the company’s marketing spend must also be taken into consideration as it establishes itself in the market.
Capital Requirements and Use of Funds
[Company Name] is seeking a total funding of $560,000 to launch its lounge. The capital will be used for funding capital expenditures, building and design, bar equipment and kitchen appliances and utensils, labor costs, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
- Design/build: $300,000
- Equipment for bar and kitchen: $150,000
- Working capital: $110,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break even
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Number of customers per day | Per location |
|---|---|
| FY 1 | 100 |
| FY 2 | 120 |
| FY 3 | 140 |
| FY 4 | 165 |
| FY 5 | 190 |
| Annual Lease (per location) | $60,000 |
| Yearly Lease Increase % | 2.50% |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRE-TAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
