Murder on the dance floor, the last dance, calling it a night… the supposed death of the late-night venue makes for easy headlines.
The same old story was rehashed again last month with figures from Ortus Secured Finance that claimed turnover at the UK’s top 100 nightclubs was down 5% year on year and had fallen from £428m in 2013-14 to £325m in 2016-17.
It was the latest in a string of reports that has predicted the late-night economy is facing more doom than boom. Competition with supermarkets, declining alcohol consumption, socialising increasingly shifting online… the villains of this story remain the same, just the figures change. A profit warning by Revolution Bars Group earlier this year added fuel for the naysayers.
However, the Ortus research came in the same month that the late-night sector was hitting the headlines of the business pages too – with the ongoing tussle between the Deltic Group and Stonegate to get their hands on the aforementioned Revolution. For a sector that is apparently being deserted by revellers, there is still plenty of appetite from some investors.
So, what is the truth about all things going bump and grind in the night?
Deltic started producing its own Night Index last year to counter some of the preconceptions about the sector. The findings have to be taken with a pinch of salt and year-on-year comparisons are not yet available, but contrasting the previous two quarters is instructive.
Deltic’s own data shows average spend down 3.5% in the last quarter, compared to the previous three months. Despite this, spend on drinks in venue rose 4% during the quarter to a total of £17.99. It also showed more people going out at least once a week, compared to the previous period (43.2% compared to 37.2%).
Leading figures in the late-night sector said they did not recognise the picture painted by Ortus and quibbled with the group’s methodology. The research was based on analysis of companies’ records relating to ‘licensed clubs’. However, this excluded the likes of Stonegate, which runs late-night bars and nightclubs across the UK, as well as giants of the London clubbing scene such as Novus, the Columbo Group, Inception and Mothership.
Deltic is included within the definition, but chief executive Peter Marks told MCA that the Ortus research did not reflect his business or the sector as he sees it.
He said admissions rose across Deltic’s 57-strong estate from 6.8m in the year ending February 2016 to 7.2m in the year ended February 2017. So far this year, more than 3.4m revellers have passed through Deltic’s doors – up 236,000 on the period last year.
Marks also pointed out that the company is putting its money where its mouth is. Of the £11.5m of cash from operations generated in the last financial year, £9.6m was reinvested in the estate through capex. This year, £4.4m has been spent on re-launching nine existing sites and the group is exploring new acquisition potential.
Marks said the sector is continuing to evolve, with technology and social media becoming increasingly important in res-pectively meeting the demands of and communicating with customers. The way people are arranging a night out is also changing, with pre-booking more prevalent.
Marks pointed out that part of the problem in assessing the late-night landscape is that lines between nightclubs, bars and pubs have blurred beyond recognition over recent years.
He said: “It used to be very simple – if it had a dance floor, a DJ and people danced there, it was a nightclub. Now people choose to dance everywhere – bars, pubs, pop-ups. I think what people get confused about isn’t really nightclubs but those businesses on the fringes and their categorisation. Those that measure these things have to put things in boxes and dancing, wherever that happens, fits nicely into the nightclub box, which is often misleading.”
Marks added: “We now live in the time where everybody has their eyes wide open and has choices. Gone are the days of people just doing the same thing because other people were doing them. Social media has changed the world. People see things and want to try them. Customers know their value and search out different experiences. Second best just isn’t good enough any more. Challenge and change is now the approach – if things don’t change and improve there is always somebody out there that will find the next great experience. At the moment it’s the ‘big night out’. Customers are spending more money but their expectations are far higher. The end game is the same – a great night out, but it’s the detail of the journey that makes it special.”
Marks stressed that it is also important to separate the circumstances in and outside of the M25.
He said: “London is its own country. It has a diverse culture, decisions are made very quickly, and change is rapid. The rest of the country is some years behind. Clever operators are the ones that take these influences and packages them in a way that appeals to their market. For example, London isn’t going to teach Manchester much about music, but is influencing the Manchester dining market. It’s about timing and relevance. Furthermore, the property market in London has meant that many clubs have closed and redeveloped due to land values. This just does not happen elsewhere.”
On his view of the future for the late-night sector, Marks said: “Experience is king – life memories and chit-chat are social currency so improvement needs to be made throughout every touch point, from being served up relevant information at the right time and to the right person, to the greatest experience at a price point.
“Overhead costs will continue to grow so efficiencies need to be found in operations and technology will no doubt play its part here. Improved experience needs to be delivered to ensure that we retain the value-experience balance.”
He added: “More people than ever dance, they just decide to do it in different ways, at different times and in different places. But, they are still dancing. Categories need to be redefined and we need to stop measuring things at the macro level. If we were to base our understanding of our customers on a macro level we would be out of business. We work on a personalised level and need to continue to improve our techniques to further improve this.”
