Index: Should the rental cost of the venue affect the cost of hookah? Poll
Greetings to all owners and managers of shisha lounges!
Have you ever heard about a thing called „index“? For example „Body Mass index“ – a value derived from the mass (weight) and height of a person, this BMA index help to understand weather your mass is okay for you compare to your height.
I have an idea to create some specific Index for shisha lounges.
Lets call it Hookah Rent Index (HRI).
I came up to this idea travelling by different countries and talking with various lounge owners, where Ive been surprised how different the cost of 1 smoking session from lounge of one country to another.
I have asked a question:
„Whats the price of smoking session of MustHave/Darkside/BlackBurn/e.t.c. tobacco?“
In Serbian lounge the price for shisha smoking been 15 euro, while in China its 42 euro! Wow, whats the reason of such a big difference?
Than I’ve asked another question:
„What is the avarage monthly rent of your venue for 1 square meter including utilities like water/electricity e.t.c.?“
In Serbian lounge 1 square meter costs 12 euro, while in Chinese lounge its 60 euro
Than I realized that we can compare 2 numerical indicators:
Price for 1 shisha smoking VS Rent for 1 sq. meter
For Serbian lounge it will be calculated like this:
15 euro (price for smoking) / 12 euro (rental cost) = 1,25 HRI
For Chinese lounge it will be calculated like this: 42 euro (price for smoking) / 60 euro (rental cost) = 0,7 HRI
I have travelled to other countries and lounges and my current list looks like that:
1,5 HRI – Estonia, Tallinn (Mere resto)
1,25 HRI – Serbia, Belgrade (Hookah House)
1,03 HRI – Italy, Milan (Smoke One lounge)
0,7 HRI – China, Shanghai (No Worries Lounge)
0,56 HRI – Czechia, Prague (Loft#8 Lounge)
0,55 HRI – Poland, Warsaw (Myata Lounge)
What means high HRI and what means low? How can we use it? I have my own thoughts, but I would like to know first your opinion in comments.
Here is what I would like ask you to do in the comments section (business discussion):
1. Calculate HRI of your lounge and type your HRI rate + Country, City (Lounge name)
2. Add reply to the next question: What practical use can this index provide in your opinion?
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31st January 2025 14:00 UTC time the author of the highest rated comment will receive:
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8 Comments
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So HRI at my lounge, Sheesha Avenue in Angeles City, Philippines is 1.46. Avg Cost of Shisha session at my lounge is PHP 750 ie €12.09 depending on the flavor brand. Rent is approx PHP 512.8 per sqmt ie €8.26 per sqmt. I actually got a good deal on my rentals. Avg rentals here are approx PHP 700 (€11.29) to PHP 900 (€14.51) per sqmt.
Now based on the HRI, IMO higher the HRI its better as it gives enough gross margin converting to better gross profits. Ofcourse if we include all the other expenses then the HRI goes down. Now if the rentals are higher automatically that will reflect on the Shisha session prices and definitely if my rentals were higher the price would have been higher. Another important thing to note is also in better locations, bigger cities obviously rentals are higher. In that scenario even if shisha prices are at the current level that I am selling at, the overall number of shishas will be higher due to the higher customer footfall.
In general I would say HRI is good starting base number to get an idea of pricing model but the whole financial model should not depend on it since there are many other permutations and combinations involved mainly expenses, footfall into a lounge, additional items sold in the lounge like food, drinks, alcohol, salaries which usually is a major expense, advertising etc.
54 euro (price for smoking) / 157 euro (rental cost)
0,34 HRI – China, Hong Kong (Backdoor)
It appears that the higher index you have, the more profitable you have on selling shisha. In terms of practical use, it could act like a guideline and navigation for lounge owners to set pricing. For example the range of a smoking session of proper lounges and bars in Hong Kong is 52 euro to 63 euro. However the rent in Hong Kong is skyrocketing, thus the main income stream for the places is alcohol and food whilst shisha accounts for up to 20-30%.
In conclusion, the idea of the index is relatively interesting, nonetheless the reference value would be much greater if we also take other data (cost of tobaccos, staff cost, potential risks associated such as fines and penalties due to laws and regulations in different countries) into account.
В целом интересная задумка – но действительно, большой вопрос в том к чему подвязывать этот индекс? Успешность бизнеса он не покажет.
Маржинальность? Тогда нужно сюда добавлять еще Фонд оплаты труда, закупочные цены и используемое сырье.
Так же надо не забывать что в зависимости от позиционирования заведения, даже несколько точек на одной локации могут оч сильно отличаться или могут быть очень схожи, но сравнивать их будет не совсем корректно.
Но это мое сугубо личное мнение.
Но если, всетаки посчитать индекс нашего заведения в СПБ то получается 1,5 HRI
1. 1 HRI – Россия, Санкт-Петербург, Carnival
2. Ума не приложу куда можно прикрутить этот индекс.
Возможно, человек с экономическим образованием, смог бы добавить этот показатель в свою фин модель. Но мои 3 класса церковно-приходской не позволяют этого сделать.
Как по мне, этот показатель уместен для сравнения, забавы ради. На что он влияет ума не приложу. Так как, он не учитывает слишком много других показателей, перечисление которых займёт довольно увесистый абзац.
1,53 HRI – Россия, Санкт-Петербург (Black Work Lounge)
Как интерпретировать HRI индекс:
У меня получается, что стоимость кальяна почти в два раза выше, чем стоимость аренды, в то время как у вышеупомянутых некоторых коллег есть индекс 0,5 – значит у них цена аренды в два раза выше, чем стоимость кальяна. Получается чем выше индекс – тем выгоднее вы продаете кальяны.
Но, я бы конкретно не фокусировался только на индексе ибо в заведение могут быть дополнительные услуги, как бар и кухня. Поэтому в целом заведения с большим количеством доп услуг может себе позволить делать кальян дешевле, а заведения без доп услуг не могут. Плюсом еще очень влияет уровень сервиса в заведение. Если у вас работает большое количество мастеров, которые работают с 1-2 столов, то стоимость вашего кальяна не может быть на уровне лаунжа у которого 1 мастер на 10 столов.
1,1 HRI – Russia, St. Petersburg (DisketteLounge)
How did I calculate:
Cost for smoking Darkside by our menu: 1390 RUB per session
Cost for rent for 1 month: 212 000 RUB rent + 49 000 RUB utilities = 261 000 RUB / 207 square meters = 1260 RUB for 1 square meter for month including utilities
1390 RUB / 1260 RUB = 1,1 HRI
How can we use HRI?
Well, for example this can indicate appropriate price for you shisha menu compare to your location. Same lounge can be located in the city center (with a high rent price) and suburb (with low rent price), should the price for hookah smoking be different? I think yes and HRI can help navigate this.