How to Open a Lounge (2024 Guide)
Thinking about opening up a lounge that’s chic, stylish, and wholly inviting? While the entire bar and nightclub industry took a sizeable hit during the pandemic, it’s now rebounding and is expected to grow by over 5% per year for the next five years. This is a market already worth $36 billion, and now’s a great time to get into it.
To ensure you know how to open a lounge and turn it into a successful business, we’ve put together this “Starting a Lounge Checklist” to help you tick all the boxes. It’s designed to walk you through all the steps you’ll need, from initial planning to your grand opening. This will help you turn your dream of opening a great lounge into a reality.
In this article, you will learn how to:
fashion your lounge concept and business structure,
create a business plan and secure financing,
plan your design, menu, staff team, marketing strategy, and more!
Opening a Bar Checklist
How to Open a Lounge: Your Complete Checklist
The checklist that we’ve prepared is designed to help you sit down and thoroughly think through what needs to be done to get your business idea off the ground. Below, you’ll find 12 essential steps to contemplate and a whole lot of resources to point you in the right direction. So let’s get started!
1. Choose your concept
Start with a name and a brand, something that you want to produce and present to the public. It could be a place that’s ultra-chic, beyond luxurious, and focused on the top end of the market. Or you might want something that looks great but stays affordable. Beyond style, price, and atmosphere, you should choose the types of drinks and cuisine that you’d like to focus on.
If you need some help fleshing out the details, we’ve got you covered with this informative article on ideas and concepts you can apply to your vision.
2. Set up your business structure
You could choose to take on sole proprietorship of the business to have all the control but also all the responsibility. Or, taking on a partnership can lighten the load but can also lessen your personal control within the business. With these two options, you’re liable for any and legal issues and debts that the business can incur.
However, registering as an LLC (limited liability company) or a corporation can limit your personal liability. These business structures act as an entity of their own and take on the business' liabilities.
One thing to note — business structures can get complex due to strict requirements around tax treatment, liabilities, and owner/stakeholder restrictions. Make sure to consult an accountant or other advisor before getting started.
3. Write your lounge’s business plan
Your business plan is a strategy document that outlines your goals and plans for achieving them. The process of creating your business plan is the process of planning carefully all aspects of, you guessed it, your business. This helps you think of your strategies for success and will enable you to explain your idea formally to potential partners or funders.
Your business plan should include a financial plan, an operations plan, some market analysis for your industry, an introduction to the management team, and, of course, an executive summary.
You’ll want a business plan in order to pitch your lounge to potential investors, so prioritize it early.
4. Figure out funding
For most people, self-funding isn’t going to be enough to get things off the ground.
Personal or small business loans can be secured from people you know, banks, or other private institutions.
You might also be able to attract investors with your idea. Finally, crowdfunding may be an option to find some of the money you’ll need to help you get started.
Your business plan should help you know how much you’ll need to secure to start, but you should also figure out your fixed and variable costs and what you’ll need to break even.
To learn about the various loan and funding options available to hospitality businesses, check out our guide to restaurant financing and loans.
5. Follow the legal requirements
Your next move would be to register your business and start making it a real entity. To do this, you’ll need to apply for an Employer Identification Number (EIN) from the IRS, which is your business’s tax ID number. If your business will be taxed under a name that isn’t your name or the business’s, you’ll need to register for a DBA (Doing Business As).
You might work with an attorney to help you trademark your name right from the start to avoid any future issues.
Next, you should research all the necessary licenses and permits you’ll need to operate your business. This is the time to start working with professionals like attorneys and accountants so you can leverage their expertise.
6. Choose a location
You could opt to build from scratch or buy a location for your lounge – both of which require a big up-front investment. You can also opt for commercial leasing, which will require signing a lease agreement and paying rent.
Regardless of which option you choose, you need to consider what’s best for your customers. Look for a location with the style you’re looking for in the part of town that will attract your target demographic. Remember to also keep parking and transit in mind – you want to make sure your location is accessible to your customers.
And, of course, ensure that the location is zoned for a lounge business. Every city and town will have its own zoning policies, so dig deep for information before falling in love with a location and finding out you can’t put a lounge there.
7. Design your layout
An excellent atmosphere is essential for a successful lounge.
You’ll need to design more than just the space, but also the lighting, seating, and sound system. It’s also important to plan the layout of the lounge well to allow for efficient use of the space for seating, serving, and back-of-house activities. If you need a floor plan, you can work with a professional or try your hand at this challenge with the help of this article.
8. Build your menu
What will your lounge menu look like? Customers are looking for more than just delicious food and perfectly prepared drinks. They also seek out new and unique gustatory experiences.
So, the big challenge is to fulfill these expectations while still thinking about the bottom line. Compose remarkable cocktails out of common ingredients. From charcuterie boards and fried snacks to fun nibbles, find foods that will complement your establishment while staying cost-effective.
9. Choose your suppliers & vendors
You can plan out a detailed and cost-effective menu, but you’ll need to find and build relationships with the right suppliers and vendors to turn theory into reality. When you’re working with slim margins, ensuring deals on supplies can be the difference between whether you sink or swim. To help things add up and avoid surprises, this article can help you plan all the important suppliers you’ll need for your lounge.
10. Hire staff
Can you run a lounge without staff? There are a few novelty robot-run restaurants out there, but for the most part, people prefer human service.
To get your team started, you’ll need to advertise your needs and recruit people for your lynchpin positions, like head chef, head bartender, and lounge manager. With these crucial people in place and with their help, you can continue to interview candidates and fill out the rest of your staff team.
11. Create your marketing plan
A fabulous lounge is just an empty space until you fill it up with customers. So, how will you get people through the door? The key step of developing your marketing plan is to take into consideration your location, style, menu, and atmosphere and match these to a target market. Then, advertising and other unique marketing ideas can be directed at these targets to get them to start patronizing your business.
Restaurant Marketing Plan
12. Plan your soft opening/grand opening
What’s left to do but open your business?
A soft opening can be a perfect test of the efficiency of your operations and the success of your menu. This gives you a chance to get feedback and make changes before you jump in with both feet. Then, it’s time for the grand opening to celebrate your new lounge. Choose a date that makes sense, like a Friday or Saturday evening, and incentivize new customers to attend with deals. If they come and stay, you’ve arrived at your goal of a real working lounge!
That’s How to Open a Lounge
No one is saying it will be easy. There are a lot of challenges ahead, but also many exciting moments and success on the horizon. Now that you’ve reviewed this starting a lounge checklist, you’ll hopefully have a much clearer idea of every step needed to open a lounge successfully. You also have a lot of resources available to help you achieve your dream, so good luck and enjoy the process.
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DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.