Brad Turner, creator of Pool Hall Business Plan, walks us through the steps of opening a billiards business. He talks about getting funding for your pool hall, choosing a location, bringing in the most lucrative players, bringing in pool tournaments, follow-up marketing, hiring a manager and employees, and more. [24 min.]
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Give us an overview of the pool hall business. It sounds pretty interesting.
In most metro areas now in the northeast, when you to go a pool hall, it’s not your plain cement floor just off the bowling alley type thing. The trend now is to have full bars, wait staff, comfortable lighting, comfortable chairs, that sort of thing. They are becoming really sort of Meccas for sports entertainment and in the case of The Hub, we actually have a second floor where we have a full live music venue. So we do live music on the weekends as well.
I see that in general. The pool halls that I’ve seen not adapt to that sort of more upscale play have actually started to fall by the wayside. We are seeing less and less of those dingy, grungy pool halls of yesteryear and more of a trend to the upscale space. We are not seeing more pool halls coming to being, but we are seeing a resurgence in the refurbish and the improvement of the pool halls that are local.
It is still very strong there. Again, speaking to Long Island, there is a big, strong, social element. At The Hub we focus very much on what I’ll call the “social player,” couple of guys coming in to shoot pool. But there is also, in the New York metro, a very strong amateur and professional league scene as well. Pool is alive and well and my understanding is that it’s thriving in other parts of the country as well.
Brad, back up a little bit and tell us how you got into this business. What’s your background?
I had gotten into this business actually through a friend. I was looking to start a business – when I was younger I had done a lot of work in retail and I had been very much customer facing in a lot of my past jobs.
I’m originally from Canada and I had a good friend up there open up a pool hall with a chain called Dooly’s in Canada. I’m going to say there are probably about 30 to 40 locations strong and he had opened one. I saw it as a great business where what appealed to me was the customers entertain themselves. They are not there for my food, not beholden to a chef. I wanted to get into some customer facing business. I was comfortable in that space and what struck me about billiards was that it is unique, it is niche and the customers for the most part entertain themselves, right? So that’s what got me into it and then leveraging my colleague and learning everything I could from what he had done building up his pool hall, when I moved to the United States and the time was right, I elected to go into that business and it’s been about five years now.
What kind profit potential is there in the pool hall business? You see some maybe in your local area and you wonder are people really making a lot of money in this?
If you look at gross margins – I’m just speaking for New York – anything that you make off the pool table is tax free in terms of sales tax and then our other revenue stream is beverage sales. We don’t have a full kitchen. We do simple foods but all in all the gross margins are in that 50 to 60%. In my case, the building is close to 12,000 square feet. Rent is your biggest expense followed by employees and then utilities. So net-net you can expect to get – if you are running it right, you could expect to see 10 to 15% net margins.
Talk us through the process of creating a pool hall business plan. Where do you really start?
The first part was really coming up with what was the concept. Are you going to be a family entertainment center? Think bowling alley. That type of thing. Or are you looking to be more geared towards the player? Or are you looking to be more geared towards the social element, right? I think that drives the type of venue you want, how you are going to lay out and what kind of expenses you are going to have and, of course, it’s going to drive one of the major things, which is rent, and where you want to be. That’s the first thing: what’s your concept?
For me, it was simply just starting to write it all down. I think a lot of times when folks are thinking about starting a business, they’ve got all these ideas but they don’t take the time to methodically write it down. For me, the easy part was starting to write down my ideas and my thinking of everything. So this is all great. This is how it’s going to look. This is the pool tables I want. This is the décor. This is the food. And I could envision a day in the life but then the hard part maybe not the most glamorous part was okay, let’s start to then figure out what this thing is going to cost.
Once I had an understanding of what I wanted in terms of a concept, I started to look for locations and sites. Long Island is just one big, sprawling suburb broken into small towns. I started looking at those towns where people gathered. My concept was all around sort of the social or entertainment player. We still have families. We still have leagues and that sort of thing, but the real focus was on what I will call the social player.
Families will come in, absolutely, and they’ll get some chicken wings or get some sodas and they are great for a Saturday afternoon or Sunday afternoon for sure. The league players, what I find is the serious league players around pool are very serious on the game. They are not big drinkers, but the keep your room as busy on a Monday, Tuesday or Wednesday night. The money is in the folks that will come in, maybe they will be two couples, they will come in, they will take a table for a couple of hours but the women are drinking wine, the guys are drinking craft beers and that’s really where the money is in, birthday parties, to be honest with you.
The way we’ve designed our room and we get a lot of 30, 40, 50, 60th sort of celebration birthday points. We’ve done it such that the wives, the girlfriends feel just as comfortable in the places the guys do. To me that’s the sweet spot. If I could do birthday parties every day of the week, I’d be a happy man.
How do you get funding for your pool hall business? I mean, when you walk into a bank or you apply for a loan, is this something people want to lend you money to do?
I spent a lot of time with the New York State Development Corp. refining the business plan. I went to leverage the different resources like score to continue to flesh out the plan and then through the SBA programs there, I was able to get funding from a bank. To answer your question succinctly, Matt, yes, I think they will fund you. Obviously, how much are you looking for? How much are you putting in yourself? What does your business plan look like? Those are all key factors.
Ultimately, what you might want to look at is purchasing an existing pool hall. Can you get the guy that’s had the place for 10/15 years, maybe let it run down a little bit and he is ready to get out. So the question is: is it the right location for the concept you want to do? What’s it going to take to turn around? What sort of modifications, refurbs, cleanup is it going to take? There is a high likelihood that you can get the seller to finance part of the purchase. “Listen, we are going to pay this thing off over three years, four years and I will give you 50% down and you pay the other 50% off monthly at an agreed upon interest rate.”
That’s another route that I know other owners have taken and the trade-off is it might not be the exact location you want to go to and that can be do or die. Then again, you may not have to deal with any banks.
Buying an existing location, that’s an interesting thought and I’m sure that some people listening are going to be faced with that sort of thing. How do you differentiate between a business that might be just poorly run with a lot of upside potential and one that’s on the way out that you really should steer clear of?
The first thing I would do is consult with the building department. Here on Long Island, you have to be zoned for public assembly. You have to be zoned for billiards and amusement. Then, of course, if you have a bar, you have to have a liquor license and have the zoning to sell liquor and food. All of these things you can find at your local building department. What I would suggest is you make a list of all the pool halls in the surrounding area that you are interested in, craft a letter introducing yourself frankly stating, “Hey, I’m looking at opening up a pool hall in your area. I’d be interested in speaking to you about possibly purchasing your venue.” Send that out to all of those guys and then you’ll get information back.
Now you’ve done your business plan, right? I’m not saying this is a way to short circuit your business plan, but you’ve done your business plan. You understand what certain things cost. You’ve talked to the electrical company to get an understanding of what the rates are for gas/electric. You know what the phone bill is going to be. You’ve gone to the liquor and beer distributors and if not the distributors, just go to the retail outlets and you’ve priced liquor, you’ve priced beer. You have an understanding of what your costs are going to be going into it. And it’s not going to be perfect but it’s going to be pretty close and what I offer in my consulting is the ability to validate some of those assumptions that some of my customers have made, right? Hey, you are too high. You are too low. That sort of thing.
Point is you’ve done your business plan, you’ve done your homework. Now when you’ve reach out – and I guarantee you, you are going to get some calls – you go in there and you’ll be able to spend some time with them. What’s the rent? As part of the business plan, you’ve talked with real estate brokers, commercial brokers, you’ll know what the going rent is in certain towns in certain areas, right? Have the guy signed a terrible lease? If he has signed a terrible lease, is there an opportunity that when you buy this to renegotiate the lease? Of course, you are not going to buy anything until you’ve talked to the landlord and had that discussion.
To answer your earlier question, yeah, maybe he is just into a terrible lease and there is an opportunity to renegotiate the lease. Maybe he’s let the place go and you’ve spent some time, you’ve staked it out, you’ve been there on Saturday and next Friday nights. Maybe you know people who know the pool hall. Is it just run down? The old pig needs some lipstick? What’s the neighborhood that it’s in? Is it in a good neighborhood and just been let run down? Or is the neighborhood changing? From what you know about the neighborhood, is it changing for the better or for the worse?
You to go two or three pool halls and you talk to the owners, you are going to start to get a sense of what is a good deal and what isn’t. You are going to start to know because you’ve done your research about turning it around.
The other thing you could think about is find out who runs the pool tournaments. In the New York area, there is a hand full of guys that are sort of the go-to guys for the metro and regional tournaments. Predator is a brand of cue. They hold the Predator Tour. Joss is another cue manufacturer, so there is the Joss Tour, those types of things.
The guys running those tournaments and the guys who go to those tournaments know all the pool halls and know all the issues that are going on. So if you find out where the next Predator tour is or the next tournament, you’ll go there. They’ll be 20, 30, 40, 50 guys depending on the size of the tournament. Just go in, hang out, introduce yourself to some of the players and say, “Hey, what about Bob’s pool hall over on route 10. What do you guys know about that? What’s the word on the street of those guys?” And you’ll be amazed at the answers. It’s a relatively small community and you’ll start to get a feel for that particular location and trust me, you’ll start to get enough information to find out if it’s a good spot, if it’s a diamond in the rough, or if it’s a dog.
Recently I had one of the pool halls not far from me, really a rundown place that went belly up. I had some guys I know from my pool hall go out there – they thought they could get it on the cheap, right? Hey, you know this guy is going out of business we get it on the cheap. Well, you know what? They found out there was no sprinkler system. It was an older building so it was sort of grandfathered that they didn’t need a sprinkler system. Well, you know what? To have a new owner, means the grandfathering is over. So they’d have to go to the building department, get sprinkler systems. Lo and behold, they do a bit more research, find out he hasn’t got a billiards permit.
Again, some of these towns they turn a blind eye as long as there is no trouble but do you want to build your business on the fact that this guy isn’t “legal to use.”
What about choosing a location if you are opening a new pool hall? Are there certain types of businesses you want to be located near or are there certain types of properties that offer a good value – might be attractive but not too expensive?
I target what I call the social player in my business plan. I am in an area sort of between two towns where there is not a convergence of restaurants or bars, so I would have liked to have been closer to what we call the “happening towns” on Long Island where they are known for their nightlife. I’m also on the south shore, which means that to get to my location, you’ve got to come off the beaten path a little bit. What I would suggest is you try to get as close to major arteries as you can. That will increase your draw. I get people especially for my music or for some of the dart tournaments or pool tournaments I try to run. A little off the beaten path that’s going to cut back by 15-20% the amount of people we can draw, right? So look for a major artery.
Look for companion businesses and in my case, it would be bars, restaurants, sort of a happening area. The tradeoff, of course, is your rent is going to be higher, right? Then the availability of space. Again, I’ve got a two-story building. Each floor is about 5500 square feet. To find 5, 6, 7, 8, 9, 10,000 square feet depending on how big you want to go in a sort of happening area, can be expensive. I’m not saying it’s not worth it, but that’s the tradeoff you’ll have to make.
Now that you’ve brought in customers, what are some of your marketing techniques that you’ve learned about effective ways to market a pool hall business?
Couple of ways that we’ve been bringing in customers. First of all, we scan everybody’s ID at door. What that does is it captures their address, date of birth, first and last name. It’s called Bar & Club Stats. It’s an app for an iPod and then you buy this specialty scanner that the iPod slips into. We’ve been doing that to capture current customers and we then do that for mailings, right? So we’ll send out postcards to those people. We also actively work on our Facebook page to capture likes and leverage social media. As you know, it costs nothing, so it’s a good value for the buck. If you go to our website and you want to look at our calendar events, it leads right to our Facebook page and we work pretty hard to keep that up-to-date, so leveraging social media.
The other piece of it, with us, we are targeting dart tournament organizers, pool tournament organizers to drive our day traffic predominantly on the weekend, so we will work with guys that are connected with the dart community. As part of your concept, you definitely want to have a dart alley. Unlike the pool players, the dart guys, they come to play and they come to drink, so they are a great demographic to target, for sure. We leverage the dart guys and work with them to bring tournaments. We do pool leagues which then gets us out in the pool community, so we have a Wednesday night leagues. Then for the venue upstairs, we leverage a lot of promoters where we give them a cut of the door and they are tasked with putting together a show for the evening, whether that’s one band or multiple bands.
I haven’t been able to find anything besides email, direct mail, social media. We don’t do anything with local newspapers or anything like that just because it’s been cost prohibitive. Those would be the main areas. The old adage, your best new customer is your last customer. If we’ve got a show going on where I’m going to have 50, 75, 100, 150 people upstairs, that’s 100 new names. For a 42 cents stamp I could send them out a postcard and remind them to think about their next party at the Hub.
What kind of pricing do you have at the Hub Billiard Club? What does it cost to come and play a game of pool?
We do it on a per person, per hour basis. So if you are coming in on a Saturday night and you’ve got two, three, four people, you are looking at about, on average, $6 to $7 per person per hour. Four people shooting pool on a Saturday for an hour the bill would be about $24. We open at noon each day and we have a stable of retirees or shift worker type city employees that come in pretty much every day and we give them a $12 play-all-day flat rate. These guys are in every day working on their game, so we do that for them. Our liquor prices, in the Long Island area, we charge about $5 for a beer and then hard liquor can run $6 to $9 – $10, depending on the drink.
Certainly, liquor sales is an important part of the pool hall business?
For every dollar we take in in pool revenue, we are taking in about a dollar and a half of liquor. So the more you can drive the people to the pool tables – people are there, they are grabbing pictures of beer, they are grabbing a martini, they are grabbing a glass of wine, they are having a shot of scotch, whatever it may be. I can’t see a pool hall surviving without some food but definitely liquor sales.
What about finding and hiring a good manager and employees? What do you have for advice about that?
I lucked in. I had friends of the family, their son was just finishing up hospitality management in college and I brought him in – he was probably about 22 or 23 at the time – and remember this was my first pool hall, my first business, so it was a sort of, “Let’s learn this thing together.” What was great about having that individual was he’d bartended a lot. He knew how to run a bar. He was great with people and he had this desire to learn.
Have some faith that it’s not rocket science, right? Anybody can learn to pour a drink. Anybody can be taught. Find somebody that’s passionate about the idea as you. Pay them as much as you can afford if they are good. They don’t have to be pool experts but if they enjoy the game of billiards, most importantly, if they enjoy the public and have people skills and then you are looking for somebody that can get the job done.
In my research I ran across one book, and there was this great anecdote about keeping employees. It went something like this, he called it the shopping mall rule where if you were in a big shopping mall and you saw somebody that you knew, we all do one of three: we walk over and say, “Hey, Bob. How are you doing?” Or “Hey, there is Bob. If I bump into him, I’ll say hi.” Then there is the third type which is “Hey, there is Bob. I think I’ll turn the other way around.” The advice from this book, and it served me well, was you only keep the first one. So if you’ve got an employee that you wouldn’t run to in the mall and say, “Hey, how are you doing?” Then get rid of them.
It’s a simple little rule of thumb that’s worked really well because it keeps morale up with everybody because everybody that’s there wants to be there and is doing their share. My first manager actually just moved on. He’s now starting his own business and I think a lot of what he learned starting the pool hall with me has now translated into his confidence to do something on his own. So find somebody that’s passionate. The ideas will come, the energy to do it. Assume that they are going to fail a little bit and make mistakes but make sure they want to deal with the public, that they have some people skills and you are comfortable with their management style and how they are going to treat the employees.
What would you say are the most common mistakes you see people make when they open a pool hall?
The first thing I see in the planning stage is they’ve got this great rosy picture but when you actually peel down and say, okay, so what’s the rent going to be there? Have you talked to the building department? What’s the situation with liquor sales there and reps in your state? How does that all work? Because every state is different, right?
The biggest mistake I see is they are ready to take that step of signing a lease or making an offer to an existing owner without having done their homework. That leads to either overpaying for rent or overpaying for the business and not being fully prepared for what they are going to get in to.
The other piece of it, if you haven’t done it before, maybe first get into a bar of similar size and style and see if you can work there. Whether it’s kitchen help, stock boy, bar back, bartender, waiter, if you haven’t got it, get some of that relevant experience just so you understand what’s it about. Nothing worse than betting part of your nest egg on a business just to find out it’s not really your cup of tea. Do what you can to get some relevant experience beforehand if you haven’t got it already.