Could nightclub downturn be prevented by increasing funding?

The nightclub has been going through something of a rough patch over the last few years.

Weekend revelers can be found opting for bars and pubs for their late-night entertainment, instead of more traditional clubs – which in turn is proving a bit of a problem for this key part of Britain’s night-time economy.

Worryingly, our research found the turnover of UK nightclubs has fallen another 5% in the past year, as they struggle to compete with the growing popularity of late-night bars and pubs.

According to our own research, this is now the fourth successive year of falling income for nightclubs, as the top 100 nightclub businesses in the UK registered £325m in turnover, down from £340m in 2015/16, and £428m in 2013/14.

Previously bars and pubs had to stop serving alcohol at 11pm, but these restrictions have been relaxed since the Licensing Act 2003 came into force in 2005. Now, in theory, they are licensed to stay open for 24 hours. Thanks to these licences, late-night bars are a direct competitor to nightclubs – they have become prolific, and are taking an ever-bigger bite out of nightclubs’ market share.

So, to keep themselves relevant, it’s vital that clubs are able to access finance to make sure they have state-of-the-art interiors, facilities, lighting and sound systems. Of course, nowadays a flashy roof terrace is also crucial to compete with the latest entrants and the very biggest names in the market.

But this is not as easy as it sounds – nightclub companies are currently stuck in something of a vicious cycle. Already struggling to compete with this new breed of bars, many nightclubs are finding it more and more difficult to get enough funding to overhaul their premises, and are therefore struggling to attract new clientele and make profits.

Having said this, nightclubs can still work to be very profitable enterprises, so long as they’re able to keep up with what the market expects from them. Like with most things, a dated nightclub is in almost all cases, a failing nightclub.

Specialist lenders are sure to have a huge part to play in making commercial decisions to lend in the future. These specialist alternative lenders can be a key conduit of funds for nightclubs, as they will be much more knowledgeable about their business and their market.

Traditional lenders are still somewhat shy of funding the sector following the recession, after which many have deemed nightclubs to be too risky. Not to put too fine a point on it, this has given alternative lenders – like us – a critical role in funding nightclubs in the UK.

The cracks are really beginning to show for these nightclub companies, but there is plenty to do to save themselves from catastrophe – with the right funding.

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