Bars and Nightclubs

Brief Excerpt from Industry Overview Chapter:

The US bar and nightclub industry includes about 45,000 establishments (single-location companies and branches of multi-location companies) with combined annual revenue of about $20 billion. No major companies dominate; varying state liquor laws complicate the ability to form large chains. The industry is highly fragmented: the 50 largest companies account for about 5 percent of revenue.

COMPETITIVE LANDSCAPE

Personal income and entertainment needs drive demand. The profitability of individual companies depends on the ability to drive traffic and develop a loyal clientèle. 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 labor-intensive: average annual revenue per worker is about $60,000.

Bars and nightclubs compete with other venues that offer alcoholic drinks or entertainment, including restaurants, hotels, and casinos. Drinking establishments also compete with the home consumption of alcohol.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major sources of revenue include beer (about 35 percent of sales), distilled spirits or hard liquor (30 percent), food and non-alcoholic beverages (20 percent), and wine (7 percent). Companies may specialize in certain beverages, like craft beers or martinis.

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. Entertainment includes live music, DJs, dancing, and adult entertainment. Types...