Opening A Bar Or Nightclub In A Changing Economic Landscape: An Ultimate Guide For 2020

Opening a bar or nightclub can be a very rewarding and profitable experience if done the right way. Every year, Britain’s night-time industry generates a whopping £66 billion for the economy.

And yet there have been some negative headlines about the health of Britain’s clubs and pubs, particularly in the wake of the coronavirus pandemic.

For entrepreneurs to open a bar or nightclub in the future and do it well, they will need to understand how the industry is changing and what the modern consumer wants

An important part of this is understanding the difference between ‘industry decline’ and ‘change’. Yes, there are challenges and venues must find new ways to diversify and evolve to meet these demands. But our economy and culture needs nightlife and the industry is fighting to ensure its survival.

So forget the doom and gloom in the newspapers. Don’t view the night-time industry as littered with obstacles and pitfalls. Instead, consider the infinite number of exciting opportunities available.

Ask yourself, why should I open a bar or nightclub?

For nightclubs in particular, the evidence suggests that supply is not meeting demand. Illegal raves have nearly doubled in popularity in recent years. This suggests that a lot of people want to ‘rave’, but feel they have no choice other than to do so outside of a legal nightclub.

Things are looking bright for the pub trade, too, though of course the COVID-19 pandemic has put many businesses under strain.

That said, success rate of opening a bar or nightclub is generally quite good. Many more bars and nightclubs succeed rather than fail. Even after three years of opening more than half (53 per cent) of bars and nightclubs are still going strong.

As we all emerge from lockdown and start enjoying nightlife once more, it’s likely our night-time businesses will start to see an uplift in trade. The future might not look too bright now, but this is only a temporary period of darkness.

Make the necessary considerations before opening a bar or nightclub first, and do it the right way

Bars and nightclubs can cost a lot of money to establish. Initial start-up costs can be in the area of tens of thousands of pounds.

There may also be a lot of factors that can affect the start-up cost. This includes the size of the bar or nightclub, its location, and the ambition behind it.

For example, when thinking about size as a factor, a small nightclub could have a similar start-up fee to a large pub. Though a great location might make things more expensive even for a small bar. This is because premium bar or nightclub areas usually demand higher rental costs. It is important to spend some time considering the location and, if it is a premium area, whether it is worth the extra cost.

Here are a few points to think about beforehand:

  • How much space do you need to bring your vision to life?
  • Your financial strategy: When do you expect to be in the black; when do you expect to break even? And how much revenue do you need to achieve these results?
  • How much do you need to save on a weekly basis, and what will you do with these savings?
  • What follow-up plan do you have in the event of failure? It is always sensible to prepare for the worst, in every business scenario.
  • How many staff do you need, in what areas, and how will you recruit them?
  • Will your venue serve food? Do you have the necessary equipment, experience and budget to do this successfully?

Try to think about the not-so-obvious issues that could be waiting down the line. This is especially important during the financial planning stages. For example, it could be that more licences are required than you think. The license finder is a great starting point. For example, your venue may require an Information Commissioner’s Office notification license if you plan to install CCTV.

Legal requirements may be a little different depending on your location in the UK. So be sure to check out the distinctions for Scotland, England, Wales, or Northern Ireland.

Our night-time industry report covers further information about obtaining and keeping your licence.

Spot the difference: Bar promotion and nightclub ideas

For a bar or nightclub to be successful, it needs to stand out and be different.

Discover what makes your bar or nightclub special. Find something that keeps it memorable and lets it stand out from the competition, like a song has a catchy chorus. In an age of so much choice it is important to have a special quality that will appeal to and bring in so many customers.

Consumers are more demanding than ever before. Drinks at home are cheaper, and there’s a whole world of entertainment available at the touch of a button. So why should someone leave their comfy house and spend money at your venue instead?

It’s all about experience, and it’s your job to find a way to create an unforgettable experience your customers won’t forget (and will tell their friends about too).

There’s an increasing reliance on theme to give late night leisure businesses the edge over their competitors. This includes saloon-themed restaurants, periodic, SciFi or alternative music nights… plus so much more. There’s also a trend for hybrid venues – coffee shops that transform into cocktail bars in the evening.

Keep evolving

If the coronavirus pandemic has taught us anything, it’s that venues need to learn to adapt and diversify when the going gets tough. If you’re stuck in your ways, you won’t get far. When thinking about setting up your venue, think about your Plan B, C and D. A Business Continuity Plan will help you consider what’ll happen if unexpected incidents do occur and there’s disruption at your venue.

Trends are also evolving at a rapid pace at the moment. Consumers want their favourite beers available to takeout, or want to take part in virtual events. Find out what your competition is doing, what your local demographic is like and what they’re engaging with. Find a gap in the market and fill it with a niche idea, such as launching a karaoke night that people can take part in both physically or online. If you’re planning to open your doors during these tough times, you need to expect to get creative and keep coming up with new ways to engage with your customers.

Assume your customers are going to want food

Studies have shown that, when Brits leave the house for at least three hours, nearly 40% end up spending money eating and drinking in a bar. An extra 12 per cent must still be hungry, because they buy yet more food afterwards.

Eating is both a luxury and a necessity. If a bar or nightclub does not provide food, then that could be a missed business opportunity. Even nightclubs these days are providing a snack bar, where clubbers can sober up with a portion of fries throughout the night.

Follow the advice of the Food Standards Agency to ensure you’re legally and safely preparing and selling food. If you’re not ready to start serving food just yet, why not team up with another local restaurant instead? Give customers a % discount off their meal, and ask the restaurant to send people your way by giving their customers an offer too! People can’t resist a treat, after all.

Provide extras

We live in an age of unprecedented access to information and services. The downside of this is people’s expectations are higher than ever.

There are plenty of bars and nightclubs that do very well without offering anything over and above. However, newer bars and nightclubs may need to find new ways to keep customers interested.

Bars and nightclubs are discovering new ways to reach the crowds. This includes arcade machines, pool tables and much more to encourage people to choose their venue over another.

Gimmicks should not be seen as cheapening or distasteful. They can add an irresistible charm – whether this is reinforcing a theme or providing a short-term stay factor. A photogenic beer garden or smoking area, draped in something as familiar and cost-effective as fairy lights, can work wonders for public perception.

Get the word out!

So you have managed the budget, found a suitable location, and hired the right staff. With all these factors in place, now you can start to think about what the nightclub or bar will look like when it is open.

Here are a few tips to hit the ground running:

  • Give it a great name. It doesn’t have to be anything super creative, but make it memorable.
  • Design a smart website that shows you mean business.
  • Put in place a social media campaign and establish a digital ‘fan base’.
  • Promote your deals, events, and themes in advance (but not too far in advance, otherwise people are likely to forget).
  • Make a schedule, so you can plan ahead effectively.
  • Remember to keep the momentum up; don’t let clubbers and customers forget you exist. Remind them why the best night out is always at your venue.

Now, the really important stuff. Ask yourself: What bar or nightclub insurance do I need?

There is a traditional but outdated assumption that nightclubs and pubs (and any other late night leisure attraction, for that matter) are areas of so-called ‘high risk’ – something that is typically reflected in insurance premiums. This should not deter a nightclub or bar owner from getting the right insurance. There are certain elements of insurance that are lawfully required, and an establishment could be fined thousands of pounds if they are unable to produce the relevant documentation.

Employers’ Liability insurance

From the second you officially employ someone, Employers’ Liability insurance becomes a legal requirement. Employers in any business without Employers’ Liability insurance risk a fine of £2,500 every day until they get cover and a £1,000 fine on the spot if they cannot produce the correct certificate. It’s deemed a necessary safety net and an absolute minimum. So, if an employee ever gets injured or ill in the workplace, they can receive the necessary compensation costs. It is important to remember there is also such a thing as Public Liability insurance, and to not confuse the two. Although the two sound similar, they are very different.

What is Public Liability and why does your bar or nightclub need it?

Public Liability insurance is not a legal requirement, but it is very important to have. Especially when there is a potential risk to public safety — as there will be in all establishments.

If you are lucky, thousands of people will want to spend their leisure time at your nightclub or bar, but as the people multiply so does the chance of an accident. Some of the most common accidents include customers slipping or tripping. All it takes is for a spilled drink in the early hours on a busy weekend and you could have a claim on your hands. Public Liability really is a must. We would not offer cover without it, and nor should any other credible bar or nightclub insurance package.

In some cases Public Liability insurance is a requirement, if the bar or nightclub has an overseeing regulatory or membership body that stipulates it.

Building and Contents cover, Business Interruption Insurance and more

There is also the matter of the building itself, its equipment and other assets. There are the usual covers, such as Buildings and Contents cover. These insurances protect not only the infrastructure but the speakers and laser systems. But there is another type of cover that you might not know about: Business Interruption.

It is not nice to think about, but sometimes disaster does strike – as we’ve seen from the recent pandemic (particularly the controversy surrounding Business Interruption policy wordings). Depending on the circumstances, some venues may even have to close trading for a period of time. This is where Business Interruption becomes so invaluable. Business Interruption is different from typical building insurance. It covers the profit loss a venue may suffer as a result of stopping trading.

Trust the specialists

Remember that, for any bar or nightclub to thrive, an adequate level of insurance cover is a must. If you need more information then the experts at NDML are ready to help. NDML provide insurance for the night-time industry in one complete package. This gives you convenience and complete peace of mind.

We’ve teamed up with the NTIA, BARBIE and other leading partners and associations to fight for the night-time industry and protect it. Join us in helping the industry to flourish.