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 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
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Nov 7, 2022 - Sales of Premium Spirits Rise
                              • Defying decades-high inflation, sales of premium spirits increased in Q2 2022 compared with the same quarter last year. As measured by the Distilled Spirits Council of the United States’s (DISCUS) Luxury Brand Index, which tracks sales of top-end spirits brands, tequila posted the largest increase with a 43% annual growth rate followed by American whiskey, up 30% year over year. Scotch whiskey, Cognac, and Irish whiskey rose 13%, 9%, and 7%, respectively. Historically, the spirits sector has proved resilient during hard economic times and Q2 2022 was no exception. Between Q2 2017 and Q2 2022, all spirits categories included in the LBI increased their annual growth ranging from 8% (Scotch and Japanese whiskey) to 45% (tequila and American whiskey), with an average rate of 24%, according to DISCUS.
                              • New data points to alcohol's increasing role in US deaths, including a new report that found that the alcohol-induced death rate rose nearly 30% during the first year of the COVID pandemic. A Centers for Disease Control and Prevention (CDC) report released in November focused on more than a dozen kinds of "alcohol-induced" deaths that were wholly blamed on drinking. Examples include alcohol-caused liver or pancreas failure, alcohol poisoning, and certain other diseases, the AP reported. There were more than 52,000 such deaths in 2021, up from 39,000 in 2019. A second report, published in JAMA Open Network in November, examined a wider range of deaths that could be linked to drinking, such as motor vehicle accidents, suicides, and falls. More than 140,000 of that broader category of alcohol-related deaths occur annually, based on data from 2015 to 2019, the reports found.
                              • With recreational cannabis now legal in 19 US states and Washington, DC -- and on November ballots in five more states -- the proliferation of cannabis consumption lounges presents a potential new source of competition for bars, the SevenFiftyDaily reported in August 2022. Like bars that offer patrons the opportunity to sip craft cocktails that they couldn’t make at home, cannabis lounges offer the chance to test out state-of-the-art vaporizers, pipes, gravity hookahs, and other smoking devices, as well as a vast array of cannabis strains from the an attached dispensary, according to SevenFiftyDaily. Though it’s premature to say that cannabis lounges will offer a social alternative to bars, professionals in the alcohol industry are questioning how this new cannabis landscape might impact on-premise alcohol sales in the future.
                              • Drinkers in the US are imbibing earlier in the day compared to pre-COVID times, according to a new analysis from Next Glass. The report, powered by Untappd for Business data, states that drinkers indicate afternoon to early evening as an increasingly popular time to enjoy alcoholic beverages. The data, collected from check-ins using a social app, shows the share of all Untappd check-ins in the US generated in the 7:00 pm. to midnight window declined from nearly 43% in January 2018 to 37.8% in August 2022. By comparison, the percentage of total check-ins between 2:00 pm. and 7:00 pm increased to 47% in August 2022 from just over 42% in January 2018. The app users appear to favor sipping beer during the afternoon hours, from 2 pm. to 7 pm, with each hour displaying a significant increase of check-ins.
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