Bars & Nightclubs
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 39,300 bars and nightclubs in the US make most of their profits from alcohol sales. Nonalcoholic beverages, food and snacks, and entertainment services are additional revenue streams.
Changing Regulations
Because of the effect of alcohol on health, establishments that serve alcohol are highly regulated.
Competition for Leisure Time
People visit bars to socialize and for entertainment, but new technologies are allowing many people to do those same activities from the comfort of their home, at a fraction of the cost of a typical night out.
Industry size & Structure
An average bar or nightclub has about 7 employees, $681,000 in annual revenue, and pays $190,000 in salaries.
- The US has about 39,300 firms with 270,000 employees and total sales of $26 billion.
- 72% of firms have fewer than 10 employees, but they account for just 31% of industry revenue and 28% of employment.
- Local/regional regulations make national chains difficult to operate in this segment; the 50 largest firms account for less than 9% of industry sales.
- National chains include Coyote Ugly, Voodoo Lounge, House of Blues, and TAO.
- It is estimated that over half of startups will fail within the first 3 years, and around a quarter fail in the first year.
Industry Forecast
Bars & Nightclubs Industry Growth
Coronavirus Update
Nov 24, 2021 - High Vaccination Requirement Compliance Reported
- Los Angeles County, CA, health inspectors report high levels of compliance by bars and nightclubs with COVID-19 vaccination verification requirements. Bars, nightclubs, lounges, breweries, and distilleries have been required as of November 4 to verify that all workers and customers are fully vaccinated against COVID-19. The rule previously required verification of only one dose of vaccine. Inspectors found 93% of bars, 94% of nightclubs, and 100% of lounges in compliance between October 30 and November 5. Businesses that violate the rules can face escalating penalties under the ordinance, starting with a warning for a first violation, then a $1,000 fine for a second violation, eventually reaching a $5,000 penalty for a fourth or subsequent violation. The fines would begin to be enforced starting November 29, according to the ordinance. An amendment that would make it a crime to harass or interfere with any employee trying to enforce the rules was not approved. The requirement will expire when the city lifts its emergency declaration for the COVID-19 pandemic.
- A federal judge in Kansas City has cleared a restaurant group's COVID-related business interruption claim for jury trial. The judge found that an 8th Circuit Court decision which determined that no coverage was owed in a prior case does not apply to the restaurant group’s lawsuit, which alleges that SARS-CoV-2 was physically present in the group's facilities. “Whether the virus was present on plaintiff’s premises, whether it actually caused a physical loss or physical damage to plaintiff’s premises, and the extent of plaintiff’s damages due to that ‘loss’ is a question of fact best left for a jury to decide,” US District Judge Stephen R. Bough wrote in his order. The finding notes that the earlier case brought before the 8th Circuit did not address whether the physical presence of the virus on properties could cause a direct physical loss that is covered by an insurance policy. The group owns nine restaurants, bars, catering services, and event spaces in the Kansas City metropolitan area, which spans both Missouri and Kansas.
- Legislatures in Alabama, Arizona, Florida, Georgia, Illinois, Louisiana, Maryland, Michigan, Mississippi, Ohio, Texas, Virginia, Washington, and West Virginia have passed bills either extending or making permanent laws that allow alcohol delivery from restaurants, bars and, in some cases, liquor stores. While some of these bills are still awaiting governor signatures at the state level, some cities are also taking unilateral action or asking state houses for legislative action, including New York City. California, Massachusetts, Pennsylvania, South Carolina and Wisconsin are also among states with legislatures that have been debating similar moves in recent months.
- Bars and nightclubs that closed during the pandemic will need to proceed carefully when hiring, as hospitality employers in some jurisdictions must offer certain former employees their jobs back. A new Washington, DC, law, for example, provides eligible non-exempt workers in the hospitality industry who were displaced by COVID-19 the right to be reinstated to their former positions. The law may also apply when there has been a change of ownership. Covered employees can sue their employers for violations of the law on an individual and class basis. Prevailing employees can be awarded back pay, the cost of lost benefits, punitive damages, and attorney’s fees. A sunset provision was included in the law that expires on June 30, 2023.
- Americans shifted their drinking patterns to off-premise consumption during the coronavirus pandemic. “That frequent on-premise drinker is 60% more likely to have purchased more alcohol in the past month through delivery or pick up from a store, 80% more likely to have purchased online from a bar or restaurant, and 55% more likely to have increased their online purchases from a brewery, winery or wine club, or distillery,” said Danelle Kosmal, Nielsen’s vice president of beverage alcohol.
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