Strengths
Cigar bars are able to operate with a strong degree of economic stability given that they sell tobacco products (and demand does not tend to decline during economic recessions). These businesses are able to generate substantial gross margins from the sale of cigars, specialty cigarettes, and related products (including e-cigarettes sold at some locations). Additionally, most cigar bars and lounges are able to produce significant income from the sale of alcoholic beverages. Most of these businesses, depending on the scale of the location, are able to operate with moderate operating costs (especially as it relates to personnel expenditures).
As will be discussed below, cigar bars generally have strong access to capital (either debt or equity) given their economic stability. Many of these businesses are able to receive traditional bank financing in order to acquire furniture, fixtures, equipment, and inventories. Many investors are also keen to place capital with cigar bars and lounges given the strong return-on-investment that occurs once these businesses achieve profitability.
Weaknesses
For weaknesses, these businesses are required to comply with a number of regulations regarding the sale of tobacco and alcohol. The Company will need to employ a number of protocols to keep these risks to a minimum. On all sales, proper identification will need to be provided. An additional weakness that man cigar bars and cigar lounges face is that there is generally a moderate amount of competition in any metropolitan area. The business will need to employ strategies that will set the Cigar Bar apart from other bars/lounges in the market.
Opportunities
The opportunities for a cigar bar are substantial. Foremost, an owner can create additional locations outside of the initial target market radius based on demand. Given the low startup costs associated with these locations, the business can generally use its retained earnings in order to fuel the growth of the business. It should be noted that cigar bars are excellent candidates for additional financing given their economic stability, high gross margins, and ongoing demand.
Threats
The primary threat faced by cigar bars and lounges is that these businesses do face changing regulations. Recently, many states have increased the tobacco purchasing age to 21 (which will not impact the operations of the business as alcohol is sold onsite). The other issue facing these establishments is in regards to the current pandemic. However, many health experts anticipate that the pandemic will subside over the next six to twelve months.