By on Jul 10, 2010 with Comments 0
Are nightclubs staying alive? For the most part they don’t. Many close down after a couple of years because of failures to plan.Plan what you say? Plan for many things, but we’ll go over a couple of major ones here.
Initial investment and fixed costs can be a real problem. As I stated in another article, some people have more money then brains. It’s not that they are dumb people, but ego gets in the way many times, and they fail to admit reality that all these costs have to paid back, along with getting a return on your investment.
Too many operators believe that what they are building, no matter what the cost, will draw crowds forever. Not necessarily true. In addition, they will obtain a leased site, sometimes with not enough or no parking, go figure, that is too expensive lease wise, or too expensive to build out. If the numbers don’t work, don’t build it. Period.
So once the newness wears off, and the crowd dwindles a little, you have to be able to pay your fixed costs. Plus, you are in business to make money right? So it needs to make a profit also.These are not long term properties in many cases. Even if you do well, you will always be investing in different looks every couple of years, add new technology, and investments in staying ahead of your competitors. Lease and build right, and you will make money before you start.
Their nightclubs staying alive seems to be all that’s on their minds. Too many operators in addition seem to build places too large for what the demographic, and their environment is. They have this huge club of which they have to fill. They may have three hundred people in there, but the club looks dead. That’s a no no.
Which brings us to days of operation. Let’s face it, the majority of the money made in this industry in done on Friday and Saturday nights. Period. That’s the reality. And that’s when you fill your nightclub. But, on those nights, they are only open for what, five hours? And out of those five hours, you only make real money two of those five hours.
So what to do, what to do. Sure, they open additional nights. Why not? And they should if they can draw it. But, you will find that many locations can get a Wednesday or Thursday to be successful, but generally not both. If you can get a good four days, your are doing well. However, you will find in order to get that extra day, the operators are doing specials! So they give away their profit to get heads in the door, but when it’s all over, there is no profit dollars, or very little.
Then there are those that live by the premise that “if you don’t open, you can’t make money”. Ok, that’s stupid. You should never, I mean never, open a club up unless you can fill it seventy five percent full. Because there is nothing worse then people going around town and telling everyone your club is “dead”.
In addition, you will find profitability, I mean profitability, will be in smaller towns. Their lease and real estate prices are lower, build out costs will be lower, you probably have little competition, if any, with a captive audience. Larger cities many times are just ego driven, and not profit driven. Common sense has to prevail when investing this kind of money.
Let’s move on to the demographic, the venue in which they choose to make money. If you’re in this business to make money, why would you want to build a nightclub for a 21-15 crowd? In order for nightclubs staying alive, like I said, have to make a profit. Why would you want to draw a crowd that has ten or twenty dollars in their pocket, are known for fights, community disruption, and are the most fickled group you can draw?
They flow with the wind. Who ever opens up next, they are going. Please don’t think for one second there is loyalty in this industry. You will draw a few years of this age group, and that’s it. Anyone older has grown out of this music, and these clubs are stuck in the 80’s with blinding light shows and pounding music that you can barely hear yourself.
Why wouldn’t you open for a little older crowd? They are out of school, have jobs, and are more mature. Look at the demographics. And look around yourself. What’s going on in this world. Look at people getting married later in life. Look at the divorce rate out there. There are many many people out there that want a place to go and have fun. Like I have said in other articles, it’s about boy meets girl, and fun.
These people have money in their pocket. They want to have fun and meet people. They are young enough to want to find a love and have fun. They are not as fickled as the younger crowd. And look at the age group you can draw from. How about 25 or 30 to 40 or 45. That’s a lot of years of people to draw from. And what a mix. It’s just perfect. Not too young and not too old, but want to meet people and have money!
Plus, they bring to your place gatherings of people from the office, family in from out of town, bachelor parties, etc. Did I say they have money?
They want to dance to requests. They don’t want to hear rap, or very little of it. They want to be entertained. Not hear what sounds like one long song for the entire night. This makes sense. It is a fact that operators in this industry say that a 25-40 age group drives this industry and is profitable.
Is this always to be true? Of course not. There are always exceptions. You may find in a town you are in, the demographic for youth is high, say 21-30 and they pack your place, four days a week, and spend money. I’m happy for you.
Are nightclubs staying alive? Many are not and don’t last three years. The ones that do it right are companies like the Cordish Companies. They invest and operate top notch venues with large investments that cater to people and provide real customer service, and fun.
So take a look at what you are doing, before you do it. Look around at what’s going on. People want to have fun. And most people don’t know how, but sure want to be a part of it. Spend your time creating fun, not doing drink specials. If you are the place to go and you create fun, you will always get full price, and they will be willing to pay it.
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