9% fall in turnover for Top 100 nightclubs
Turnover of the UK’s Top 100 nightclub companies has fallen by 9% in a year as a lack of access to funding and increased competition leaves them struggling to compete with bars and pubs, says Ortus Secured Finance, the London-based commercial lender.
Nightclub turnover has been falling continuously over the last three years. Ortus says that last year the turnover for the top 100 nightclubs was £340m – compared to £373m the year before and £428m the year before that.
The introduction of the 2003 Licensing Act – which came into full effect in 2005 and saw the substantial relaxation of licensing laws – is in part behind the trend.
The Act has seen nightclubs face increasing competition from late-opening bars and pubs. While bars and pubs would previously only have been allowed to stay open until 11pm, under the new laws they are now able to remain open and serve alcohol, in some cases, as late as nightclubs.
As banks continue to struggle to lend to the sector, additional funding is key to nightclubs fighting their corner and winning back their customer base. Funding would help nightclubs to upgrade and refresh their venues – as well as diversify to include restaurant and bar services.
Jon Salisbury, managing director of Ortus Secured Finance, says: “The economic downturn together with the introduction of new licensing laws hit the nightclub industry hard.
“When it was introduced, the Licensing Act meant new and exciting opportunities to bars and pubs – and these venues were able to attract considerable investment as a result.
“Nightclubs, on the other hand, have struggled to secure the funding they need in order to compete with this new wave of venues.
“Whilst there has been a transitional period over the last few years many nightclubs continue to need funding in order to renovate, buy new equipment or even diversify to include restaurants and bars, for example.
“But nightclubs which want to respond to their customers’ wants often find themselves unable to, due to a lack of access to funding. This puts them at an immediate disadvantage.
“Alternative lenders have an important role to play in helping nightclubs access finance. This is something nightclubs are increasingly recognising.”