Bars & Nightclubs

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 38,250 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.

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.

Changing Regulations

Because of the effect of alcohol on health, establishments that serve alcohol are highly regulated.

Industry size & Structure

An average bar or nightclub has about 10 employees, $705,000 in annual revenue, and pays $190,000 in salaries.

    • The US has about 38,250 firms with 418,600 employees and total sales of $27 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 three years and around a quarter fail in the first year.
                              Industry Forecast
                              Bars & Nightclubs Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Oct 20, 2023 - Employment Exceeds Pre-Pandemic Levels
                              • Employment by bars and nightclubs increased in July compared to a year ago and is well above pre-pandemic levels. Indeed, industry employment is up a whopping 475% from its depths during the pandemic. Wages at bars and nightclubs also rose in July year over year with average industry wages for nonsupervisory employees approaching $22 per hour. Sales for the US bars and nightclubs industry are forecast to grow at a 3.61% compounded annual rate from 2022 to 2027, slower than the growth of the overall economy.
                              • The rising disposable income of young people, who are the primary consumers of nightlife, is threatened by the resumption of student loan payments. The three-year federal pause on student loan payments and interest that began during the pandemic ended on October 1, impacting some 44 million borrowers, according to Nation’s Restaurant News (NRN). As a result, many consumers will find themselves with less money to spend on perks like drinks or night-out splurges in restaurants, bars, and nightclubs. The average federal loan debt is about $37,000 per borrower, some $1.59 trillion in total. According to US News, that translates to an average student loan payment of about $300 per month. With the average American spending $2,000 per year on nightlife, according to the American Nightlife Association, $300 per month translates to a 15% hit to annual spending.
                              • Alcohol purchasing trends are changing, with at-home drinking on the rise while on-premise consumption continues to fall, according to "Shopping for Beverage Alcohol,” a new report by Kantar. The shift toward more at-home drinking comes despite the reopening of bars and restaurants in the aftermath of the pandemic. The report finds that 23% of consumers drank more at home over the past 12 months, compared to 16% who drank more on-premise. Also, consumers are more generally cutting back, with 21% reporting that they have had less to drink over the same period while at home, compared to 25% of those who drink at bars and restaurants reporting the same. Not only are consumers, especially younger people, drinking out less, but they’re also gravitating more toward nonalcoholic options, with 21% percent of Gen Z and 18% of millennials purchasing nonalcoholic beer in the past 12 months.
                              • Amid surging fentanyl overdose numbers, fentanyl test strips and the overdose-reversing drug Narcan are finding their way onto nightclub dance floors, The Wall Street Journal reports. Clubgoers, business owners, elected officials, and grassroots organizations are eyeing nightlife hot spots like clubs and bars as a new front line to inform people about fentanyl test strips, and to make them available to patrons who use illicit drugs or know someone who does, according to WSJ. The Centers for Disease Control and Prevention has endorsed the use of fentanyl test strips and some cities, counties, and states have decriminalized them. In March, the US Food and Drug Administration approved the sale of overdose-reversing Narcan for over-the-counter, nonprescription, use. Travis County, Texas has announced plans to start providing Narcan, a brand of the overdose reversal drug naloxone, to 13 Austin bars.
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