Tim Luke,
The clubs may be beautiful, yet with every club has memberships.
Profit is in the membership backlog and sales and drinks are the
icing on the cake.
Please read below:
REVENUES
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Three things about this company:
they sell memberships to pay for most or all the club before the club is opened;
they collect monthly revenues on credit cards in advance;
they are building a vertically-integrated operation.
The initiation fees ensure that the company will not have to service a large debt with each new club opening and the monthly dues guarantee profits to the location.
Grand Havana Rooms extend no credit and have no house accounts. Food and wine purchases must be settled at the point of sale by credit card, cash or check.
This means no bad debt.
Monthly dues collected can run 60% over costs of operation for each club.
Beverly Hills takes in approximately $100,000 per month, with an overhead of just $40,000 per month. From a single club, that's a yearly profit of $720,000 before the sale of any cigars, food, or beverages!
Vertical integration means that Grand Havana is building an organization where the company exploits all aspects of businesses relating to the company, including manufacture of product, distribution, wholesale and retail sales, memberships, monthly dues, international licensing, etc.
For example, in response to a premium cigar shortage, Grand Havana has aligned itself with one of the premier cigar manufacturers of the world to create a private-label cigar that will be distributed internationally through Grand Havana retail locations and Grand Havana Rooms. The Grand Havana Reserve label cigars are expected to sell between three and four million units this year, with a net profit of $1 per cigar.
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