The state of the economy and alcohol-related trends
drive the Bars, Nightclub and Drinking Establishment industry. Personal income and entertainment needs drive demand. The profitability of individual companies depends on the ability to drive traffic and develop a loyal clientele. Large companies can offer a wide variety of food, drinks, and entertainment, and have scale advantages in purchasing, financing, and marketing. Small companies can compete effectively by serving a local market, offering unique products or entertainment, or providing superior customer service.
Companies in this industry sell alcoholic beverages for on-premises consumption and may also offer limited food service. Companies are typically local or regional, as varying state liquor laws complicate the ability to form large chains.
Laws and regulations surrounding liquor vary from country to country. For example, the legal drinking age for beer and wine in Germany is 16. While drinking laws are less strict in some countries compared to those in the US, laws are stricter in other places. Many Islamic countries, for example, forbid the consumption of alcohol by Muslims. But some such countries allow hotels to sell alcohol in order to accommodate non-Muslim tourists.
With the onset of the recession in 2008, revenue for the
Industry contracted for the first time in more than 10 years. Over the
five years to 2011, revenue has fallen at an average rate of 1.9% per
year. At the height of the recession in 2009, industry revenue declined
10.1% in 2009 to $1.9 billion. Revenue rebounded marginally in 2010 by
0.1% as the economy began its recovery, and grew 2.2% in
2011 to $1.9 billion. Sales of spirits, wine and beer in restaurants, bars and other licensed on-premise locations increased 4.9 percent to reach $93.7 billion in 2011. Adult beverage on-premise volume declined slightly in 2011 (-1.1 percent). The on-premise channel accounts for one-quarter of total adult beverage volume and slightly less than half of total dollars. Improving conditions across the economy will bring the industry back to solid health in the near future.
According to Technomic’s BarTAB (Trends in Adult Beverage) report, the 2013 Top 100 Nightclub & Bar venues generated $1.5 billion in total revenue. More than two-thirds (68.2%) of operators surveyed experienced revenue growth in 2012, and nearly two-thirds of them (31.4%) reported revenue growth in excess of 10%. Once again, the top nightclub and bar venues outperformed the industry overall. The bar and nightclub segment grew 3.9% in 2012. Through 2015, the industry is projected to continue experiencing
competition from non-industry establishments such as restaurants as well
as from people opting to drink at home.
The US bar and nightclub industry's drinking establishments primarily
engaged in the retail sale of alcoholic drinks number around 65,000,
according to Dun & Bradstreet, which generated approximately $20
billion in combined annual sales revenue, with the average establishment
accounting for about $200,000. The industry has high product turnaround
profit margins that make it susceptible to any adverse changes in demand
(including any recessionary declines). States representing the majority
of drinking places were: Wisconsin with 4,489; California with 4,449;
Texas with 4,388; New York with 4,283; Illinois with 3,634; Pennsylvania
with 3,572; Florida with 3,191; and Ohio with 3,201. Other significant
states included Michigan, New Jersey, Louisiana, Indiana, Iowa,
Minnesota, and Washington.
No major companies dominate; varying state liquor laws complicate the
ability to form large chains. The industry is highly fragmented: the 50
largest companies hold just over 5 percent of sales. Taverns were the
largest sector within industry, with 19,660 drinking places. Combined,
they shared more than 32 percent of the market. Bars and lounges
represented 19.8 percent edging out drinking places share of about 19.5
percent of the market. Cocktail lounges held 11.5 percent and night
clubs had 8.6 percent. Per the U.S. Census Bureau's Statistics of U.S.
Businesses, there were about 351,912 people employed within the industry
with nearly $4.1 billion in annual payroll in 2005.
Last years total Restaurant and Bar Industry Sales accounted for $632 billion with 970,000 locations and are projected to be the same or increase 1% in 2013. Sales of spirits, wine and beer in licensed on-premise locations increased 4.9 percent to reach $93.7 billion in 2011 and projections call for continued growth up to 2015, according to Technomic’s BarTAB (Trends in Adult Beverage) report. According to the Restaurant Industry Association and Dun & Bradstreet, Nightclubs generated approximately $19-20 billion in combined annual sales revenue.
The 2013 Top 100 list was developed by Nightclub & Bar in partnership with Technomic Inc. using secondary research and yielded primary data from 1,444 nightclub, bar and lounge locations. Two Las Vegas nightclubs broke records in 2012, as XS Nightclub and Marquee Las Vegas each generated annual revenues in excess of $80 million and delivered results so similar that they share the #1 spot on the Top 100 list. In 2012 the No. 1-ranked Marquee Nightclub & Dayclub in Las Vegas reported 2011 revenue in excess of $70 million, a record-breaking figure for the club in its first full year of operation.
Altogether, the Top 100 venues generated $1.5 billion. More than two-thirds (68.2%) of operators surveyed experienced revenue growth in 2012, and nearly two-thirds of them (31.4%) reported revenue growth in excess of 10%. Once again, the top nightclub and bar venues outperformed the industry overall. The bar and nightclub segment grew 3.9% in 2012 and 9.2% in 2011. Overall, the top clubs continue to generate growth well in excess of the overall bar and nightclub segment, which grew 1% in 2011.
Vegas is a major hub of nightclubs based on revenue for "Large Box Clubs." Of the Top 100, the top 3 nightclubs are in Las Vegas, NV and make $60-70mm each; the 4th made $45-60mm in 2011 and is in Miami. The next four nightclubs made revenues of $35-45mm each and three are in Las Vegas. The following six nightclubs made revenues of $15-10mm each and three are in Las Vegas. The next 35 venues #23 thru #57 had revenues of $10-5mm each; and the remaining venues reported revenues less than $5mm each which includes "small box clubs."
One quarter of the list — 25 venues — are located in California, with 15 in the Los Angeles area, seven in San Diego, two in San Francisco and one in Sacramento. Las Vegas contributes 22 venues, with eight of the top 10 venues located in Las Vegas. Ten of the 2012 Top 100 operations are in the five boroughs of New York City. Chicago contributes five venues, Texas delivers four and Atlantic City and Washington, D.C., each offer up three. It’s expected that the major markets dominate the Top 100 list, but operators in a number of other markets — including Atlanta; Denver; Ocean City, Md.; Destin, Fla.; Lake Cuomo, N.J.; Kansas City, Mo.; Scottsdale, Ariz.; Myrtle Beach, S.C.; and Knoxville, Tenn. — also succeeded in bringing in the crowds and revenue.
Of the Top 100 survey participants, 42.8% identified their venues as nightclubs; 70.6% of them described their hotspots as dance clubs. Of those identifying their venue as bars, 31.7% are sports bars and 29.3% are traditional bar/taverns. DJs and live entertainment are featured by 88.3% and 73.6% of total respondents, respectively. Nearly 80% offer a dance floor, 70.1% provide VIP areas and 65% offer bottle service.
The majority reported solid growth in 2011. In fact, 70% of respondents to the Top 100 survey indicated their venues’ revenues increased, and of them, nearly half (48%) reported revenue increases exceeding 10%. Consistent revenue was cited by 20% of survey respondents, while 3.4% cited revenue declines. Drinks generate the lion’s share of venue revenues – 56% of sales from alcohol is the mean among Top 100 survey participants. While in the venues, partyers favored spirits, which generate 44% of alcohol sales. Beer contributes 25% and wine 9%. A full food menu is offered by 68% of survey respondents’ venues. Gaming, such as pool tables, video game systems and jukeboxes, are available at 42% of respondents’ venues. Nearly three quarters (73%) have outdoor patio, terrace or rooftop space, which is an increase from 63% a year ago.
Venues dont report cover charge revenue information specifically, but average fees range at $5 to a local bar event, $10 Guest list cover, $20 average entry fees and higher for concert or performance style events. This would exclude Las Vegas where entry fees can range from $20 - $200. Current ticket prices for nightclub events are sourced from http://vip.wantickets.com
Mike Ginley, Partner at Next Level Marketing, provided the latest on-premise consumer research study fielded exclusively for the 2014 VIBE Conference. The study was conducted using Next Level’s custom on-line survey tool. The study includes 1,000 on-premise national chain beverage alcohol consumers. The 2014 study includes 21+ consumers from all of the top casual dining, fine dining and hotel chains. Here are a few statistics relating to the consumer that will help owners and operators to better understand their patrons:
-55% of respondents are going out as often as last year
-70% visit the same types of restaurants and bars
-15% are going to less expensive places
-15% are going to more expensive places – Millennials are the group skewing to better places
-65% order drinks most to all the time with males ordering more frequently than females. Surprisingly, Millennials order less frequently than older consumers.
-79% try a new drink every 90 days with new drink trial highest among Millennials.
-73% have ordered a beer at a restaurant or bar in the past 30 days and 62% order the highest quality beer at the best price
-70% of consumers have ordered seasonal beers and there is growing interest
-65% have ordered wine at a restaurant or bar in the past 30 days with 64% ordering the highest quality wine at the best price
-59% have ordered a spirit cocktail at a restaurant or bar in the past 30 days
The average consumer order 2.3 drinks per occasion with males ordering more than females and Millennials ordering more than the older consumers. Asking for the order is the number one way to sell an extra drink per occasion followed by after dinner drinks, better quality drinks, faster service, smaller sizes and lighter drinks.
When consumers order that second drink, they have been hooked, they need to be reeled in and turned into a repeat customer. The most popular loyalty programs are TGI Fridays, Applebee’s, Chili’s, Olive Garden and Red Lobster.
In order to keep up with the top loyalty programs, restaurants need to stay on top of these consumer trends, such as electronic menus. Today, 25% of consumers have ordered from an electronic menu and this will grow rapidly as they are placed in more locations. Over half of the consumers studied are somewhat interested in ordering from an electronic menu – this is something that is not going away.
Information related to menu content concluded that 80% of consumers expect to see all drink prices listed on the menus that they order from. The majority of consumers feel more comfortable ordering drinks when the prices are published and over half are less likely to order a drink when the prices are not visible.
A study conducted by Optimize Atlanta with participating Atlanta nightclubs and lounges, reveals interesting information about nightclubs, VIP, bottle service, and group dynamics. We learned that the average overall bottle price is $239; the overall average drink price is $10.50; 67 percent consume two or more drinks, shots or cocktails; and spend $55 on average. We also learned that most nightclubs and lounges also offer juices, mixers, bottled water, and energy drinks with VIP table reservations and bottle service. Some even offer complimentary champagne. This is in addition to the private tables and exclusivity.
Two reports from research firm GuestMetrics indicate a gentle if slow upswing in on-premise trends.
Traffic was just slightly positive during the 4-week period ending 10/5, enough to raise year to date figures to almost flat for the year. While traffic still was struggling to meet last year’s level, overall on-premise food and beverage sales were up 3% in the latest four weeks, an improvement on year to date trends .
Casual dining traffic was up 0.5% over the latest four weeks counted versus down just under a point for the year; bars and clubs remained weak with traffic down just less than 2% for the latest 4 weeks and just over 2% for the year (down 2.2%). The fine dining segment slowed, with traffic down about 1.5% the latest four weeks.
In terms of beverages, beer volume was down about 3.5% in the latest four weeks measured, equivalent to the year to date trend. Beer sales were up 0.7% in the latest 4 weeks, but flat for the year after a strong July and August were followed by a weak September. Premium light share continued down (1.8%) in the latest 4 weeks vs -1.9% for the year; craft gains slowed to 1.6%, below its 2% year to date gain. Fastest growing segments were IPA which had a share gain of 1.4% and cider which had a share gain of 0.6%.
Guestmetrics also reported a gain in spirits on-premise. After declining nearly 1% during the first six months of 2014, volumes were up 0.5% during the third quarter. However, trends softened throughout the quarter, going from up 1.7% during the four weeks ending 8/10 to up 0.6% during the most recent four weeks ending 10/5.
Year to date spirits sales are up 1.7% in the on-premise, up 2.6% for the third quarter, with dollars up a stronger 3% for the four weeks ending 10/5. Dollar sales were driven by a combination of higher price and trade up to higher priced spirits, the firm said. Brown spirits generally out-performed white spirits in the latest four weeks - bourbons and blends volumes up 12% and brandy/Cognac up 5%. Vodka volume was down 3%, rum down 6%. Craft spirits continue to gain share, up about 2% in the third quarter.
Today’s consumers seek variety on drink menus. More than half of consumers surveyed say variety of spirits/cocktails (58%) and wine (54%) is important on restaurant menus, while nearly half say the same for beer selection (46%). Additional insights found in the Technomic 2014 BarTAB Report indicate that drink selection can drive traffic and enhance the overall experience of dining out, both of which are important to improving sales and profits.
Operators are responding to varied degrees: the number of adult beverage offerings on all on-premise menus tracked in the MenuMonitor tool rose 5.0% in the third quarter of 2014 as compared with the same period in 2013. During that time, however, national and regional chain restaurants actually reduced the number of beverage offerings (-0.3%). In recent conversations with chain operators, we’re hearing more about the need to trim adult beverage offerings to make drink programs more manageable.
Bars and nightclubs compete with other venues that offer alcoholic
drinks or entertainment, including restaurants, hotels, casinos, and
Personal income and entertainment needs drive demand. The profitability
of individual companies depends on the ability to drive traffic and
develop a loyal clientele. Large companies can offer a wide variety of
food, drinks, and entertainment, and have scale advantages in
purchasing, financing, and marketing. Small companies can compete
effectively by serving a local market, offering unique products or
entertainment, or providing superior customer service. The industry is
extremely labor-intensive: average annual revenue per worker is $60,000.
The barriers to entry are low and steady, given that an operator can
lease premises, equipment, furniture and fittings, which lowers the
initial capital costs, outlays and borrowings. The main barrier to entry is in obtaining a suitable license. Entry
costs can be lowered by either leasing or managing an establishment on
behalf of the owner. Due to the small business nature of the industry
and the low average revenue and profit margins per establishment, entry
costs can also be low across some geographic locations.
ORGANIZATION & STRUCTURE
A profile of the bar and tavern industry in terms of what percentage of
the market is represented by larger concerns, such as major hotel
lounges versus independently owned taverns, doesn't exist. However, the
leading trade association of licensed servers of alcoholic
beverages--the American Beverage Licensees--boasted 20,000 members
throughout the 1990s and that number remained steady through the mid
This industry, in general, consists of small businesses, with few major
operators and many being family owned and operated. Census information
indicates that just over 77.6% of establishments are small businesses
employing up to nine people, and a total of 98.2% employing under 50
people. Due to the fragmented and small business nature of this
industry, especially in the way it operates, the level of concentration
is not expected to change over the next five years. The small
neighborhood bar, the sports bar with menu, the brew pub, and the hotel
lounge are generally spread throughout urban and suburban centers in the
United States. While they may differentiate themselves in image,
ambiance, and type of product served (some, for instance, serve only
beer), they often coexist in close proximity to one another. Many have
live entertainment, such as music, or associations with celebrities,
such as sports bars bearing the name of their athlete-owner.
The drinking establishment industry--also known as the bar and tavern
industry--dates back to colonial America, which adopted the concept of a
roadhouse tavern as a gathering place. The industry, however, is
changing rapidly and may not exist in its traditional form by the
beginning of the next century. By the late 1980s, some consultants and
bar owners were predicting that the corner bar, which sells nothing but
alcohol, was heading toward its demise. By way of adaptation, bars and
lounges, which serve food and even emphasize the sales of food items
over alcoholic beverages have been gaining in popularity relative to
establishments that sell beer, wine, and cocktails exclusively.
BACKGROUND & DEVELOPMENT
The use of fermented beverages in celebratory rituals and social
gatherings has been documented in many parts of the world throughout its
history. The public roadhouse was developed by the Romans in the first
century A.D. as they built their infrastructure of paved roads. The word
pub, in fact, is shortened from "public house," a stopping place for
the traveler to rest both himself and his horse. In the fifth century,
Europeans fostered winemaking. In addition, in the tenth century an Arab
physician is believed to have discovered the distillation process (for
The tavern, or pub, was an important aspect of English culture and was
adopted by colonial America. Rum was prevalent at social occasions in
early America, as were corn whiskey and hard cider. Tavern patrons were
often entertained by performers, including ventriloquists, dancers, and
musicians. The pub was also a place where the day's news was spread, as
locals listened to travelers passing through from other places. This
dissemination of news made the tavern a natural place for the
establishment of local post offices.
The tavern owner was considered responsible for contributing to the
town's orderliness. Licenses for serving alcoholic beverages dated back
to 1672, and they were subject to suspension or revocation for sales to
minors, slaves, servants, or intoxicated adults. Throughout the 1600s
and 1700s, wine and malt liquors, as well as hard liquor or spirits,
were sold. Rum was imported from the West Indies and had begun to
eclipse the popularity of hard cider by the early 1700s. The colonies
traded fish, tobacco, cotton, and lumber for rum and for molasses, which
was then distilled in New England as rum.
England's Molasses Act of 1733 levied a duty on products imported into
the colonies. This legislation provided an impetus for independence from
England. Numerous historical figures in pre- and post-Revolutionary
America that were tavern owners or sons of owners included Samuel Adams,
Ethan Allen, William Penn, and Abraham Lincoln.
Prohibition caused the tavern to be replaced by "speakeasies"--illegal
establishments where liquor was plentiful to those who provided the
correct password. Organized crime gained its foothold in America during
this period, as bootlegging flourished and dealers in whiskey and other
liquors protected their market with weapons. Following the repeal of the
Prohibition Act thirteen years after its passage, the neighborhood
Americans were increasingly doubting the healthiness of alcohol
consumption in the early and mid-1990s. Medical research linked high
alcohol consumption to liver cancer and other degenerative diseases.
Smokers who also drink alcohol were found to have 13 times the risk of
developing lung cancer as those who neither smoke nor drink. Although
some research had found that widespread consumption of wine with dinner
in France was responsible for their lower levels of heart disease
compared with that of Americans, a 1993 study contradicted that finding.
The more recent study concluded that the relative health of the French
was due not to their wine consumption, but to their love of vegetables.
The bar and tavern industry has been heavily impacted by the steadily
declining consumption of distilled liquor in recent decades. One bar
owner in San Francisco described the environment in the late 1980s as
"neo-prohibitionist." In an article in New York Times in 1989, Gerry E.
Murphy, then executive director of the then-National Licensed Beverage
Association (NLBA), said, "The day of the old bar which just served
alcoholic beverages is past." Indeed, the U.S. Industrial Outlook
predicted that "Domestic consumption of, and spending for, alcoholic
beverages will probably continue to decline, leveling off toward the end
of the 1990s."
In the early to mid-1990s, the eating and drinking places industry as a
whole was growing at a steady rate, averaging about five percent
increase in overall sales per year. By contrast, sales from bars and
taverns (including both alcohol and food receipts) were flat and in some
years actually fell. According to the National Restaurant Association
(NRA), for example, sales at such establishments fell from $9.4 billion
in 1991 to $9.3 billion in 1993, rebounded to $10.9 billion by 1995 but
then fell again to $9.4 billion in 1996 (the latter a drop of nearly 14
percent). The NRA expected 2000 sales of about $12 billion, an increase
due in large part to the rising popularity of sports bars.
Americans' growing emphasis on healthy eating and healthy living is the
primary reason for the slow growth in this category. Self-help programs
designed to help people identify and end addiction to alcohol flourished
throughout the 1970s and 1980s. Moreover, those who drink alcohol in
moderation have become more conscious of caloric measure and the
nutritive value of food and drink consumed. In addition, Americans
became more disapproving of driving while intoxicated, and groups such
as Mothers Against Drunk Drivers (MADD) have gained political and social
clout. Rising litigation over the responsibility of drinking
establishments for the alcohol consumption of patrons also acted as a
force toward lower purchases of alcoholic drinks. The overall effect of
this shift in thinking is that the line is blurring between full-service
restaurants which serve alcohol and bars and taverns that offer full
lunch and dinner menus.
This grim outlook for the alcohol industry as a whole did not portend
well for the bar and tavern industry. Many hotel lounges were
transformed into combination eating/drinking establishments, or
eliminated altogether to be replaced by meeting rooms. Although alcohol
items have higher profit margins than food items, food was increasingly
being emphasized more than drinks. Renewed interest in wine, martini
bars, and sports bars helped stave off a continued decline at the end of
the century, stopping the sales slippage with 2000 totals of $11.9
While the overall cause in this threat to the industry is the nationwide
trend toward healthier living, the signposts of this shift are many.
There has been, for the past several decades, a growing acceptance for
the nondrinker in social settings. This has occurred in large part
because of the widespread recognition of the physical and emotional
health problems created by alcohol addiction. The Alcoholics Anonymous
(AA) program, begun in the early 1900s by Bill Wilson and others, was
created to combat the problem of alcoholism through meetings of
individuals who identify themselves as having an addiction to alcohol.
The number of people who have ended their consumption altogether through
this mutual support program is unknown, but is believed to be in the
millions. Although people who wished to abstain from alcohol consumption
felt social pressure to drink at parties and public gatherings, the
stigma associated with "teetotaling" faded until it was almost
nonexistent in the 1990s. MADD gained political influence and helped
create a stigma surrounding driving an automobile while intoxicated. In
addition, several key civil actions brought by victims of auto
collisions and their families resulted in increased liability of alcohol
servers for intoxicated patrons that leave establishments and cause
The response of the bar and tavern industry to the liability issue was
the education of its workforce about this challenge. A program sponsored
by the American Beverage Licensees (ABL)--formed by the merger of the
NLBA and National Association of Beverage Retailers (NABR) in
2002--called Techniques of Alcohol Management (TAM) certifies bartenders
and other alcohol servers in methods of curtailing the problem. The
program teaches employees of taverns to identify signs of intoxication
in patrons, the effect of food consumption on the rate of intoxication,
how to discreetly regulate a customer's consumption, and the application
of state and local laws to the sale of alcoholic beverages. A similar
program is called Training for Intervention ProcedureS (TIPS).
Several different pieces of federal legislation either hampered the
industry or threatened it in the 1990s. President Clinton signed a bill
that reduced the business meals and entertainment tax deduction from 80
percent to 50 percent in 1993. The industry immediately began lobbying
for repeal of that legislation through separate bills introduced in both
the Senate and House of representatives.
A bill under consideration in 1999 included a provision to lower the
national blood-alcohol content (BAC) level defining intoxication from
.10 to .08. The then-NLBA opposed this measure on the basis that, of
those intoxicated drivers who were killed in auto accidents, 81 percent
had a BAC higher than the legal limit of .10. However, several states,
including California, had already lowered the BAC to .08 while national
legislation was still being considered. By the mid-2000s all states had
adopted the lower limit.
While opposing legislation that was perceived to be harmful to the
industry, bar and tavern owners fought back by courting consumers. The
rise of sports bars in the 1980s provided an example of industry
adaptation to consumer health concerns. In contrast to the dark,
smoke-filled bar of past decades, sports bars are lighter, with an
updated, high-energy ambiance. The vast majority of such bars, in
addition to having televisions for their customers to view, serve full
menus of lunch and dinner items. These types of establishment stress a
casual atmosphere and efficient but unobtrusive service so that patrons
may meet to watch an athletic event and enjoy gathering with friends.
Sports bars also target women and families, often tailoring their menu
to include light, healthy food in addition to burgers and other American
fare. The celebrity element is another prominent characteristic of
sports bars. Many are owned by, or named after, athletes, and rely on
visits by athletes to publicize and promote the establishment.
Another successful concept of the 1990s has been the brew pub. Although
this is a borderline category since many brew pubs derive more than half
of their sales from the food they serve, the brew pub--and microbrewer
beer generally--has helped to revive both a beer industry on the decline
and the drinking places industry itself. According to Michelle Dorfman,
writing in ID: The Voice of Foodservice Distribution, "brew pubs, by
definition, have an on-site brewery and more than 50 percent of the brew
product is consumed on-premise." After gaining initial popularity early
in the 1990s, the category has since exploded with more than 500 brew
pubs nationwide by late 1996.
Posher alternatives that catered to popular fads such as swing dancing,
martini bars became more prevalent and helped rejuvenate the industry.
Industry entrepreneurs also embraced the cigar fad of the 1990s, and
began to allow their patrons to smoke cigars on-site or created
specialty cigar bars that sold a variety of cigars in addition to
selling alcoholic beverages. Such innovations were signs that the
industry would keep reinventing itself despite all the negative trends.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major sources of revenue include beer (35% of sales), distilled
spirits or hard liquor (30%), food and non-alcoholic beverages (20%),
and wine (7%). Companies may specialize in certain beverages, like craft
beers or martinis. Among the key findings:
- Beer is the largest adult beverage category on-premise, generating more than four-fifths of volume and nearly half of dollars. Major domestic brands, while challenged, maintain the lion’s share of volume and sales, but imported and craft beer are growing.
- Drinking establishments, which include bars, taverns/pubs, lounges, nightclubs, comedy clubs and music/cabaret venues, account for the largest portion of on-premise adult beverage sales, followed by casual-dining restaurants.
- Sparked by cost-conscious consumers and winemaker innovation, on-premise domestic wine growth outpaced that of imports to account for three-quarters of total wine volume in restaurants and bars.
- Spirits generate one-third of total on-premise dollars, and the vibrant cocktail scene continues to evolve, evidenced by the notable growth of both the largest category, vodka, and the smallest category, Irish whiskey.
- Consumers value drink programs at restaurants; one-third report that the adult beverage offering influences their decision to visit a particular concept.
- More than three-quarters of consumers order food with their adult beverage.
Entertainment includes live music, DJs, dancing, and adult entertainment. While most customers go to bars and nightclubs to socialize, bar
activities tend to focus more on drinking, while nightclubs focus on
entertainment and dancing. Types of bars include microbreweries,
taverns, pubs, wine bars, and martini bars. Bars and nightclubs may have
themes, like sports or country-western. The failure rate for nightclubs
can be high due to the trend-driven nature of the industry; an
estimated eight of 10 nightclubs will fail during the first year of
operation, according to Nightclub and Bar magazine.
To open a bar or nightclub, a location must have proper zoning from
local government. Community resistance to new bars and nightclubs is
common due to anticipated problems with drunken patrons and noise.
Companies may need both a standard liquor license to sell alcohol, and a
pouring license to serve alcohol for consumption on-premise. Multiple
types of liquor licenses dictate what types of alcohol a bar can sell,
and the availability and cost of licenses can vary greatly. Licenses to
serve beer and wine tend to be less expensive than to serve hard liquor.
Some communities issue a limited number of liquor licenses, and
companies may have to buy one from an existing licensee. Local
municipalities may also require an entertainment license to provide TV
programming, live music, or dancing.
Local laws typically dictate days and hours of operation. A venue may
announce a "last call" or last chance, to buy an alcoholic beverage,
prior to the required closing time. The majority of business is during
the weekend. Most nightclubs are not open during the day, and many open
only two to three nights per week.
Almost all companies consist of a single operation, although the
industry includes some regional chains and franchises. Tourist
destinations can be good locations, since vacationers tend to visit bars
and nightclubs. Size varies greatly, from small corner taverns to
warehouse-sized dance clubs. The majority of nightclubs range from 3,500
to 7,000 square feet, according to nightclubbiz.com. Experienced owners
tend to run the largest nightclubs, which range from 10,000 to 30,000
square feet. A 3,000 square foot club can gross between $24,000 and
$64,000 per month. A 15,000 square foot club can gross between $100,000
and $260,000 per month.
Bars that serve food may have an area for table seating. Nightclubs may
have one or more bars, table seating, a stage, or a dance floor. Outdoor
seating is popular in warm weather and many tourist locations. Most
companies use lighting and decor to create a distinctive ambiance or
image to attract specific clientèle. For example, a sports
bar may have numerous large screen TVs and sports memorabilia to draw
sports fans, while a nightclub may have expensive lighting and sound
systems to draw the dance crowd. In addition, a friendly bartender or a
popular DJ can help develop a loyal customer base. Some nightclubs
promote an image of exclusivity, and may be selective as to which
patrons can enter.
Bartenders are responsible for mixing and serving drinks. How fast a
bartender operates and how much a bartender pours can significantly
affect sales and profitability. Companies may use special pour spouts to
standardize liquor dispensation. In addition, secret audits monitor
liquor consumption and can be used to identify "heavy-handed"
bartenders. Some companies audit liquor inventory daily.
Companies typically buy alcoholic beverages from state-licensed liquor
distributors. Federal and state laws prohibit direct sales from
manufacturers. Large bars and nightclubs can hold sizeable, expensive
inventories of alcohol, especially if the company stocks high-end
liquor. Inventory management and cost control can be difficult due to
employee error, overpouring, and theft. Proper storage is important to
minimize bottle breakage and prevent theft. Bars and nightclubs that
serve food typically buy ingredients from food distributors
Companies may use computerized point-of-sale (POS) systems to record
orders, look up drink recipes, and manage bar tabs. Beverage monitoring
systems use miniature sensors attached to liquor bottles to record
individual drink servings and transmit data wirelessly to inventory
management systems. Handheld scanners help track inventory. For
nightclubs, technology plays an important role in providing
entertainment and ambiance. Computer systems that integrate sound,
light, special effects, and music videos help create a distinctive
environment. In addition, some companies use digital surveillance
systems to catch illegal activity by both customers and employees.
For the category of beer, wine, and liquor stores, the U.S.
Department of Labor's Bureau of Labor Statistics reported a total
employment of 137,390 in May 2009. The largest portion (79 percent) of
the workforce is dedicated to sales and related occupations. Roughly 13
percent of workers are employed in positions related to office and
administrative support. About 3 percent are involved in moving and
According to Technomic’s BarTAB (Trends in Adult Beverage) report, the 2013 Top 100 Nightclub & Bar venues generated $1.5 billion in total revenue. More than two-thirds (68.2%) of operators surveyed experienced revenue growth in 2012, and nearly two-thirds of them (31.4%) reported revenue growth in excess of 10%. Once again, the top nightclub and bar venues outperformed the industry overall. The bar and nightclub segment grew 3.9% in 2012. Through 2015, the industry is projected to continue experiencing competition from non-industry establishments such as restaurants as well as from people opting to drink at home.
While the distilled spirits industry has been lucrative, Federal and
state excise taxes play a significant role in the industry. In 2005, The
National Center for Policy Analysis (NCPA) reported that thirteen
states sought increases in taxes and related fees on alcoholic
beverages. Further, taxes on distilled spirits were about $0.21 per
ounce of alcohol. According to the Distilled Spirits Council (DSC) of
the United States, "distilled spirits are one of the most heavily taxed
consumer products in the United States. More than half of the price that
consumers spend on a typical bottle of distilled spirits goes toward a
tax of some kind." The resulting effect on the entire hospitality
industry is wide-reaching, as the DSC goes on to say "When beverage
alcohol taxes are increased, it creates a devastating ripple effect on
jobs throughout the entire hospitality industry."
Despite the excise tax, the U.S. Department of Commerce reported that
adjusted alcohol sales were up 5.2 percent to nearly $9.2 billion in
June of 2008 over the same period a year earlier. Also, according to the
NCPA, the total amount of Federal excise tax collected from the
distilled spirits category for 2006 was $4.4 billion, from the beer
category for $3.6 billion, from the wine category for $800 million.
Additionally, state taxes during that same time reached nearly $5
* IbisWorld.com.au Bars, Nightclubs & Drinking Establishments in the US - Industry Code: 72241
2012 US Bars & Nightclubs Industry Risk Rating Report
2012 Bars & Nightclubs Market Research Report
2011 Nightclubs Market Research Report
* Research & Markets Reports: SIC Codes: 5813 NAICS Codes: 722410
2011 U.S. Drinking Places & Bars Industry Report #1369593
2010 Worldwide Drinking Places & Bars Industry Report #1195668
* Barnes Reports
2012 Trendology: U.S. Drinking Places & Bars
* First Research
2012 BarTAB (Trends in Adult Beverage) Report
* Anything Research
* Encyclopedia of American Industries. "Drinking Places (Alcoholic Beverages)." Gale, 2009.
* Reproduced in Business and Company Resource Center. Farmington
Hills, Mich.:Gale Group. 2009.
Document Number: I2501400750
* Distilled Spirits Council of the United States. "Distilled Spirits
Industry Primer: Taxes." September 2008.
* National Center for Policy Analysis. "Taxing the Poor." June 2007.
* United States Department of Commerce. "Monthly Wholesale Trade:
Sales and Inventories." June 2008.
* U.S. Census Bureau. U.S. Department of Commerce. Statistics of U.S.
Businesses: 2005. 24 July 2008.
* International City/County Management Association. PM Magazine. "Got
Nightlife? Manage Sociability as an Economic Engine" Cover Story,
November 2010, Volume 92, Number 10.
* Optimize Atlanta with participating Atlanta nightclubs and lounges
* Microsoft Academic Search
* Mike Ginley, Partner at Next Level Marketing
on-premise consumer research study fielded exclusively for the 2014 VIBE Conference. The study includes 1,000 on-premise national chain beverage alcohol consumers. The 2014 study includes 21+ consumers from all of the top casual dining, fine dining and hotel chains.