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IBISWorld Industry Report 72241Bars & Nightclubs in the
USSeptember 2014 Andy Brennan
Drink up: Revenue will stay strong as consumer spending
increases
2 About this Industry2 Industry Definition
2 Main Activities
2 Similar Industries
3 Additional Resources
4 Industry at a Glance
5 Industry Performance5 Executive Summary
5 Key External Drivers
7 Current Performance
9 Industry Outlook
11 Industry Life Cycle
13 Products & Markets13 Supply Chain
13 Products & Services
14 Demand Determinants
14 Major Markets
15 International Trade
16 Business Locations
18 Competitive Landscape18 Market Share Concentration
18 Key Success Factors
18 Cost Structure Benchmarks
20 Basis of Competition
21 Barriers to Entry
21 Industry Globalization
22 Major Companies
23 Operating Conditions23 Capital Intensity
24 Technology & Systems
25 Revenue Volatility
26 Regulation & Policy
27 Industry Assistance
28 Key Statistics28 Industry Data
28 Annual Change
28 Key Ratios
29 Jargon & Glossary
www.ibisworld.com | 1-800-330-3772 | [email protected]
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This industry includes bars, taverns, pubs, lounges, nightclubs
and other drinking places that primarily prepare and serve
alcoholic beverages for immediate consumption. These
establishments may also provide limited food services.
The primary activities of this industry are
Operating licensed bars
Operating nightclubs
Operating wine bars
Operating licensed establishments with limited food service
44531 Beer, Wine & Liquor Stores in the USThese
establishments primarily retail packaged alcoholic beverages not
for immediate consumption on the premises.
72211a Chain Restaurants in the USThese establishments primarily
prepare and serve food and alcoholic beverages to patrons who order
and are served while seated and pay after eating.
72211b Single Location Full-Service Restaurants in the USThese
establishments engage in preparing and serving alcoholic beverages
and providing food services to patrons who order and are served
while seated and pay after eating.
81341 Civic, Social & Youth Organizations in the USThese
establishments promote the civic and social interests of their
members and may operate bars or restaurants for members.
72221b Coffee & Snack Shops in the USThese establishments
primarily serve alcoholic beverages and provide food services to
patrons who generally pay before eating.
72221a Fast Food Restaurants in the USThese establishments
primarily prepare and serve alcoholic beverages and provide food
services to patrons who generally pay before eating.
Industry Definition
Main Activities
Similar Industries
About this Industry
The major products and services in this industry are
Admissions to special events and nightclubs, including cover
charges
Sale of beer and ale
Sale of distilled spirit drinks
Sale of meals and nonalcoholic beverages
Sale of wine drinks
Other (accommodation, cigarettes, rentals and packaged
liquor)
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About this Industry
For additional information on this industry
www.ttb.gov Alcohol and Tobacco Tax and Trade Bureau
www.ablusa.org American Beverage Licensees
www.discus.org Distilled Spirits Council of the United
States
www.nciaa.com National Club Industry Association of America
www.nightclub.com Nightclub & Bar Magazine
www.census.gov US Census Bureau
Additional Resources
IBISWorld writes over 700 US industry reports, which are updated
up to four times a year. To see all reports, go to
www.ibisworld.com
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% cha
nge
3
2
1
0
1
2
2008 10 12 14 16 18Year
Consumer spending
SOURCE: WWW.IBISWORLD.COM
% cha
nge
4
4
2
0
2
2006 08 10 12 14 16 18Year
Revenue Employment
Revenue vs. employment growth
Products and services segmentation (2014)
36.4%Sale of beer and ale
2.4%Admissions to special events and nightclubs, including cover
charges
32.5%Sale of distilled spirit drinks
11.4%Other (accommodation, cigarettes,
rentals and packaged liquor)
10.4%Sale of meals and
nonalcoholic beverages
6.9%Sale of wine
drinks
SOURCE: WWW.IBISWORLD.COM
Key Statistics Snapshot
Industry at a GlanceBars & Nightclubs in 2014
Industry Structure Life Cycle Stage MatureRevenue Volatility
Low
Capital Intensity Medium
Industry Assistance Low
Concentration Level Low
Regulation Level Heavy
Technology Change Low
Barriers to Entry Low
Industry Globalization Low
Competition Level High
Revenue
$23.5bnProfit
$1.4bnWages
$5.6bnBusinesses
69,391
Annual Growth 14-19
2.1%Annual Growth 09-14
1.4%
Key External DriversConsumer spendingConsumer Confidence
IndexPer capita expenditure on alcoholHealthy eating index
Market ShareThere are no Major Players in this industry
p. 22
p. 5
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON
PAGE 28
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Key External Drivers Consumer spendingConsumer spending measures
the total amount Americans spend on services, new goods and net
purchases of used goods, both domestically and abroad. Changes in
overall consumer spending are significant because they reflect
specific trends, including alcohol spending. Consumer spending is
expected to increase during 2014, representing a potential
opportunity for the industry.
Consumer Confidence IndexChanges in consumer sentiment
significantly impact household discretionary expenditure,
including
expenditure on entertainment and liquor, particularly outside of
the home. As consumer sentiment increases, households are more
likely to increase discretionary spending in bars and nightclubs.
Consumer sentiment is expected to increase during 2014.
Per capita expenditure on alcoholAttitudes toward general
alcohol consumption, the type of alcohol being consumed and where
alcohol is being consumed (e.g. at home or at a bar) are changing.
Binge drinking, particularly among the younger generation, is now
an area of particular concern for the
Executive Summary
Having emerged from the recession relatively unharmed, the Bars
and Nightclubs industry turned around in 2010 and has continued to
make strides over the past five years. Revenue growth has been
slow, however, hampered by shaky consumer confidence and stubbornly
high unemployment, meaning people have been more content to drink
at home rather than at bars or nightclubs. The industry is expected
to grow 1.4% per year on average to $23.5 billion over the
five years to 2014. Industry revenue is expected to grow by 2.8%
in 2014 alone as consumer confidence and disposable income pick up,
allowing people to spend more of their pay at bars and
nightclubs.
Bars and nightclub operators have attempted to respond to
lackluster growth by diversifying into a range of new concepts such
as wine bars, cocktail lounges and brewpubs to attract new
demographics. New operators are consistently entering the industry
to
satisfy new consumer trends. As a result, the industry has
become more fragmented as drinking establishments cater to a larger
range of niche markets. Many of the remaining establishments have
adapted their menus and entertainment offerings to accommodate
consumer tastes. While per capita expenditure on alcohol is
expected to rise at an annualized rate of 1.4% over five years to
2014, a rising number of consumers prefer drinking packaged
beverages at home rather than alcoholic beverages at clubs or
bars.
Over the five years to 2019, the industry is projected to
continue facing competition from in-home alcohol consumption and
nonindustry establishments that also serve alcohol, such as
restaurants. In spite of these factors, the industrys financial
performance is forecast to strengthen as the economy improves and
consumer spending increases. Bars will continue to introduce
healthier and upscale products like craft beer and organic food to
their menus. In the five years to 2019, industry revenue is
forecast to increase at an annualized rate of 2.1% to $26.1
billion.
Industry PerformanceExecutive Summary | Key External Drivers |
Current Performance Industry Outlook | Life Cycle Stage
New operators are consistently entering the industry to satisfy
new consumer trends
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Industry Performance
Key External Driverscontinued
government, and regulatory constraints relating to excessive
alcohol consumption are increasing for industry operators.
Decreasing alcohol consumption negatively affects demand for bars
and nightclubs. Per capita expenditure on alcohol is expected to
increase slowly over 2014, but still represents a potential
long-term threat to the industry.
Healthy eating indexThe current Dietary Guidelines for Americans
set forth by the US
Department of Agriculture (USDA) recommend that women do not
consume more than one alcoholic drink per day and that men do not
consume more than two alcoholic drinks per day. Alcohol is listed
by the USDA as one of the highest-calorie beverages consumed by
adults. Consequently, demand for industry products is inversely
correlated with the healthy eating index. The healthy eating index
is expected to increase in 2014.
% cha
nge
4
4
2
0
2
1907 09 11 13 15 17Year
Per capita expenditure on alcohol
SOURCE: WWW.IBISWORLD.COM
% cha
nge
4
2
1
0
1
2
3
2008 10 12 14 16 18Year
Consumer spending
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Industry Performance
Go out or stay home? Personal income and entertainment needs
drive demand for the Bars and Nightclubs industry. Per capita
disposable income is expected to increase 1.0% per year on average
over the five years to 2014, after declining 1.3% in 2009, the
first such decline in more than a decade. As a result, consumer
spending has increased 2.3% per year on average over the past five
years as consumers have begun splashing out on discretionary
purchases thanks to rising incomes. Still, growth in both spending
and household incomes has been much slower than prior to the
recession, in part because consumers have been wary of the economic
outlook. Some consumers have become more selective about how they
spend their
disposable incomes and are now more likely to drink alcoholic
beverages at home instead of visiting bars and other drinking
establishments. This has been, in part, a reflection of the price
paid for alcohol at different locations. Between 2004 and 2014, the
price of alcohol purchased at retail stores increased 17.7%
compared to a 41.6% rise of the price of alcohol purchased at bars,
according to the Department of Labor Statistics.
Consumption trends After peaking in 1981, per capita alcohol
consumption slowly declined until the mid-1990s, before undergoing
a brief resurgence. Over the past five years, per capita alcohol
consumption has remained flat, reflecting increased awareness of
the harmful effects of overdrinking and zero tolerance laws in some
states regarding underage drinking. Stricter laws for drunk driving
and public intoxication have also influenced consumption patterns,
and industry revenue has been
hurt by an alcohol consumption trend toward consuming wine,
spirits and ready-to-drink products at home or in other licensed
venues instead of drinking at the bar.
Rising consumer interest in higher quality food and beverages
(known broadly as premiumization) has helped boost the industry as
hundreds of gastropubs, brewpubs, wine bars and other
establishments with a focus on quality have opened at the expense
of
The Bars and Nightclubs industry has performed modestly over the
past five years as the negative consequences of slow economic
recovery have weighed on the minds of consumers. Consumer drinking
patterns have also changed, forcing seasoned bar operators to adapt
their menus to suit changing consumer tastes. Although industry
revenue has increased in every year since 2009, as the economy has
recovered and consumer spending rates have steadily increased,
growth has
been slow as delicate consumer confidence has meant spending per
customer has only just managed to reach its prerecession high. Much
of the industrys growth has been due to rising alcohol prices,
rather than higher volume. IBISWorld expects industry revenue to
grow at an annualized rate of 1.4% over the five years to 2014 to
$23.5 billion. In 2014, the industry is expected to grow 2.8% as
broader economic conditions continue to improve, driving consumer
spending.
Current Performance
Some consumers are more likely to drink at home, rather than
visiting bars
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Industry Performance
Consumption trendscontinued
traditional dive bars and sports bars. The rising popularity of
craft beer, cider, specialty cocktails and wine has helped sustain
the industry. No longer a beer alternative limited only to local
brewpubs and small-time hobbyists, the craft beer has emerged as
one of the fastest-growing alcoholic beverage industries in the
United States. Consumers have increasingly purchased
craft beer for its perceived higher quality, greater attention
to detail, finer ingredients and wider variety of flavors than
traditional light beers. Likewise, the market for hard cider, once
considered a niche alcoholic beverage industries relegated to local
cider houses across New England, has grown into a major competitive
force in the market for alcoholic beverages.
Downsizing The number of industry establishments has declined
over the past five years as unprofitable businesses exited the
industry in response to a sustained period of decline or low
revenue growth. Most bar operators can usually ride out tough
economic times by reducing labor costs or operating hours. However,
many businesses could not fully recover from the recession and were
forced to close up shop altogether. As a result, the number of
industry establishments is expected to decline 0.6% per year on
average to 70,042 over the five years to 2014. Profit margins
increased over the past five years,
but remained low as a percentage of revenue as the industry has
remained highly competitive. At the same time, industry employment
has declined at an average annual rate of 0.2% to 371,989, as
operators have been forced to seek ways to reduce operating costs
such as labor.
Many businesses could not fully recover from the recession and
were forced to close
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Industry Performance
Beer, wine and premiumization
The craft beer trend represents an opportunity for the industry.
Microbrewers have experienced double-digit growth over the past
five years as younger demographics are increasingly taking to beers
with fuller flavors. Cider is also growing rapidly in popularity
with millennials (those born in the 1980s and early 2000s), and
many operators may decide to diversify their offerings to include
more craft beers and ciders on menus. However, small- to medium-
sized restaurants that offer a greater range of food services will
compete with bars for market share. Competition will remain fierce
and serve to keep operators innovating to serve constantly evolving
consumer preferences.
Interest in local and imported wines is forecast to grow over
the five-year period.
Growing interest in wine among millennials, who represent a
larger portion of demand than baby boomers (those born between 1946
and 1964), will also drive growth in this segment. Future wine
drinkers embracing high-priced wines will also benefit wine bars
and wine sales at drinking establishments.
Furthermore, demand for liquor and spirits is expected to grow
over the next five years, largely due to continued premiumization
and a resilient cocktail culture. To perform well, establishments
will need to anticipate and respond quickly to cocktail trends.
Bars and nightclubs that continue to identify niches and adapt
their drink menus to meet consumer demand and changing customer
tastes will ensure steady business, regardless of market
conditions.
Industry Outlook
Bar and nightclub owners will reap the rewards of increasing
household incomes and consumer spending over the next five years.
Consumer spending is projected to grow 2.8% per year on average
over the five years to 2019. The industry will benefit from an
improving economy, lower unemployment rates and increased
discretionary spending. Alcohol consumption is expected to increase
only minimally as moderate alcohol consumption remains an accepted
part of the American adult lifestyle. Despite this, the movement
toward premium beverage consumption will continue as the economic
recovery supports the average persons disposable income. As a
result of these trends, industry revenue is
expected to grow at an annualized rate of 2.1% to $26.1 billion
by 2019.
% cha
nge
4
2
1
0
1
2
3
2006 08 10 12 14 16 18Year
Industry revenue
SOURCE: WWW.IBISWORLD.COM
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Industry Performance
Future risks Lingering concerns over a possible rise in binge
drinking rates, particularly among young adults, could place the
industry under increased government scrutiny. Data from the US
Department of Health indicates that the highest prevalence of binge
and heavy drinking occurs in young adults between the ages of 18 to
25, peaking at 21 years old. More than one third of young adults
are classified as binge drinkers. As a result, further restrictions
on alcohol sales and promotions could be placed on the industry to
combat binge drinking. These restrictions may include controls over
the
sale of kegs, happy hour promotions, beer sales of pitchers and
large containers and alcohol advertising, limiting potential
revenue growth. However, it is unlikely that alcohol laws will
change significantly during this period, especially with lobby
groups influencing both sides.
Establishments to expand
Industry employment is forecast to increase marginally, at an
average annual rate of 0.3% to 376,874 people over the five years
to 2019, as labor remains an important component of the industrys
cost structure. IBISWorld projects only a marginal improvement in
industry profitability through 2019. Profit margins will continue
to be tight due to ongoing competition within the industry and from
other licensed premises that sell alcoholic beverages, such as
restaurants. Over the period, consumers will increasingly seek a
leisurely drinking experience and demand the wide menu options
restaurants provide with their drinks.
As a result of increased demand, new bars and restaurants are
expected to open. While some areas of the industry have reached or
are approaching their saturation point, there is still plenty of
room for growth, especially in medium-size cities with above
average economic growth. Traditional bars that have not updated
their concept in years face the biggest threat as small, intimate
settings that provide a casual ambience have become increasingly
popular with consumers. For these reasons, establishment numbers
are expected to increase 1.2% over the five years to 2019 to
74,475. Furthermore, the industry will continue to remain
fragmented and no major consolidation is expected.
Concerns about binge drinking rates could place the industry
under government scrutiny
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Industry PerformanceAlcohol consumption patterns are shifting
toward drinking packaged forms at home and away from on-premise
consumptionThe gradual aging of the population will result in a
fall in overall alcohol consumptionThe industrys contribution to
the economy is slowing
Life Cycle Stage
SOURCE: WWW.IBISWORLD.COM
20
15
10
5
0
-5
-10
% G
row
th in
sha
re o
f eco
nom
y
% Growth in number of establishments
-10 -5 0 5 10 15 20
DeclineShrinking economicimportance
Quality GrowthHigh growth in economic importance; weaker
companies close down; developed technology and markets
MaturityCompany consolidation;level of economic importance
stable
Quantity GrowthMany new companies; minor growth in economic
importance; substantial technology change
Key Features of a Mature Industry
Revenue grows at same pace as economyCompany numbers stabilize;
M&A stageEstablished technology & processesTotal market
acceptance of product & brandRationalization of low margin
products & brands
Beer, Wine & Liquor StoresEgg & Poultry Wholesaling
Chain RestaurantsFish & Seafood Wholesaling
Bars & Nightclubs
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Industry Performance
Industry Life Cycle The Bars and Nightclubs industry is in a
mature phase of its life cycle. This is due to stagnant growth in
per capita alcohol consumption and changing consumer preferences
toward at-home consumption. The industry is highly competitive and
is facing increased competition from other industries, such as
casinos, full-service restaurants, as well as establishments that
sell packaged alcohol, such as supermarkets and convenience stores.
Alcohol consumption patterns are shifting toward drinking out of
bottles and cans at home, especially wine and imported beer. The
number of industry establishments is expected to grow at an average
rate of just 0.3% per year over the 10 years to 2019.
Over the 10 years to 2019, industry value added (IVA), which
measures an industrys contribution to GDP, is
expected to grow at an average annual rate of 1.8%, lower than
average annual GDP growth of 2.5% over the same period. The
industrys lower contribution to the US economy and increasing
competition indicates that the industry is mature.
In response to flat revenue growth, some segments of the
industry are transforming to focus on higher quality drink and food
offerings with higher margins, as well as trying to appeal to
families and younger patrons. Gluten free and organic food is now
commonly found on bar menus and craft beer is increasingly served
on tap. In many cities, traditional establishments, such as Irish
bars, are making way for upscale cocktail bars and wine bars. The
industry is expected to become increasingly fragmented to serve a
greater number of niche segments.
This industry is Mature
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Products & Services
Sales of liquor, wine and beerThe overwhelming majority of
industry revenue stems from alcoholic beverage sales, accounting
for about 75.0% of the total. IBISWorld estimates that distilled
spirit sales account for about 32.5% of total revenue, while beer
and ale account for 36.4% of sales. Wine accounts for 6.9% of
sales. Sales of packaged alcohol account for less than 2.0% of
revenue. Over the past ten years, there has been a general decline
in the proportion of alcohol-related revenue derived from
beer and ale, though this trend has been offset by increasing
consumption of wine, distilled and mixed spirit drinks.
This segment is highly sensitive to economic factors which
affect the on-premise consumption of alcohol. During the past five
years, consumers became more selective about how they spent their
disposable income. Consumer spending declined and discretionary
leisure activities like visiting bars, nightclubs and drinking
establishments were reduced or cut out. Some consumers
Products & MarketsSupply Chain | Products & Services |
Demand Determinants Major Markets | International Trade | Business
Locations
KEY BUYING INDUSTRIES
9901 Consumers in the US The overwhelming majority of revenue is
derived from households.
KEY SELLING INDUSTRIES
42444 Egg & Poultry Wholesaling in the US This industry
supplies poultry for menus.
42446 Fish & Seafood Wholesaling in the US This industry
supplies fish and seafood for menus.
42447 Beef & Pork Wholesaling in the US This industry
supplies meats for menus.
42481 Beer Wholesaling in the US This industry supplies beer and
ale.
42482 Wine & Spirits Wholesaling in the US This industry
supplies wines and distilled spirits.
Supply Chain
Products and services segmentation (2014)
Total $23.5bn
36.4%Sale of beer and ale
2.4%Admissions to special events and nightclubs, including cover
charges
32.5%Sale of distilled spirit drinks
11.4%Other (accommodation, cigarettes,
rentals and packaged liquor)
10.4%Sale of meals and
nonalcoholic beverages
6.9%Sale of wine
drinks
SOURCE: WWW.IBISWORLD.COM
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Products & Markets
Major Markets Over 90.0% percent of the total revenue earned by
bars, nightclubs and drinking establishments is derived from
households. The biggest spenders on
alcohol per capita, according to the US Census Bureau, are those
aged 34 years and younger. However, due to the size of the
population aged between 45 and 54,
DemandDeterminants
Income and expenditureThis industry is sensitive to factors that
affect the growth in household disposable income, because drinking
at bars and nightclubs is usually discretionary (as opposed to
necessary). Household disposable income growth is affected by
changes in labor market growth (i.e. employment rates), tax and
interest rates, gas prices. The decline in industry revenue during
the recent recession illustrates the extent to which the industrys
performance relies on growing income, high consumer confidence and
a robust economy. Low consumer confidence, anemic growth in
disposable income and rising unemployment lead to tighter household
budgets and encourage people to save more and spend less by
drinking at home rather than going out.
Health consciousnessRising health consciousness about the
negative impacts of excessive alcohol consumption can have a
negative impact
on industry demand. As government campaigns and the media raise
awareness of the negative consequences caused by heavy drinking,
such as disease, injury, crime and lost productivity, the number of
people attending bars and clubs may decrease. Also, rising health
consciousness can impact the food options provided by bars and
clubs. Consumers have become increasingly concerned about fat
content, fried foods and salt content, especially when dining out.
Consequently, rising concerns over the nutritional value of meals
at bars and restaurants are likely to influence demand for certain
foods on menus, thus encouraging industry establishments to alter
their product mix.
RegulationSignificant price rises, caused by excise duty
increases, can also hamper demand, as can alcohol consumption
regulations. For instance, since the late-1980s, it has been
illegal to sell alcohol to persons aged less than 21 years in all
states.
Products & Servicescontinued
opted to drink in their homes instead of visiting bars.
Consumers who continued patronizing drinking establishments tended
to visit them less, spent less when they did go out and often chose
more affordable establishments.
OtherFood and meals, largely for consumption on the premises,
and sales of nonalcoholic beverages, account for about 10.4% of
sales. This segment can
include prepackaged food, appetizers and even full meals. The
number of bars serving food has increased over the past five years
because consumers are increasingly time poor and want to go to
establishments that are a one-stop shop for their eating and
drinking activities.
Revenue from cover charges and admissions to bars and nightclubs
represents about 2.4% of total industry revenue. Other revenue is
derived from sales of cigars and cigarettes and from slot
machines.
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Products & Markets
International Trade As a retail industry, the Bars and
Nightclubs industry is not technically engaged in importing or
exporting products, so international trade is not relevant to the
industry. The industry consists largely of small business owners
that serve the domestic market. Although many products sold by the
industry are imported from overseas, these are calculated at the
manufacturing level and therefore do
not count toward trade in the Bars and Nightclubs industry.
The industry also derives a portion of its revenue from
international visitors to the United States. The amount of revenue
earned from foreign consumers depends on international tourism
patterns. Overall, the number of international visitors entering
the United States has trended upwards over the past five years as
the global economy has improved.
Major Marketscontinued
this segment is the industrys biggest market. Older consumers
also tend to spend more on additional items such as food. Alcohol
consumption tends to decline substantially once a person reaches 65
years of age.
According to a survey by Centers for Disease Control, about
56.0% of those aged 18 to 45 are current regular drinkers, compared
with 50.0% of the total population. Given these findings, customer
demographics will vary according to whether the establishment is
located in a college town or elsewhere, and depending on the
concept, which
could be a neighborhood bar, an on-premises beer-brewing tavern,
a sports bar, a wine bar or a nightclub.
Some revenue is derived from the private sector, such as
businesses which may seek to rent conference rooms or other
facilities for a special function or occasion. These occasions may
include a product launch or a seasonal staff function. The major
markets for this industry have remained relatively stable over the
five years to 2014. Older consumers account for a growing
percentage of industry sales due to the ageing demographics.
Major market segmentation (2014)
Total $23.5bn
20.0%Consumers aged 45 to 54 years
6.5%Consumers aged under 25 years
19.5%Consumers aged 25 to 34 years
6.5%Private sector
19.5%Consumers aged 35 to 44 years
16.5%Consumers aged 55 to 64 years
11.5%Consumers aged 65 years and older
SOURCE: WWW.IBISWORLD.COM
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Products & Markets
Business Locations 2014
MO1.8
West
West
West
Rocky Mountains Plains
Southwest
Southeast
New England
VT0.2
MA2.2
RI0.6
NJ2.6
DE0.1
NH0.1
CT0.7
MD1.4
DC0.2
1
5
3
7
2
6
4
8 9
Additional States (as marked on map)
AZ1.4
CA7.2
NV1.5
OR1.9
WA1.9
MT1.4
NE1.4
MN2.4
IA2.3
OH5.4 VA
0.3
FL4.3
KS1.1
CO1.9
UT0.4
ID0.8
TX6.0
OK0.9
NC1.4
AK0.4
WY0.4
TN0.8
KY0.8
GA1.0
IL6.5
ME0.3
ND1.0
WI7.2 MI
3.9 PA6.9
WV1.1
SD0.8
NM0.3
AR0.3
MS0.2
AL0.6
SC0.8
LA2.0
HI0.5
IN2.6
NY7.8 5
67
8
321
4
9
SOURCE: WWW.IBISWORLD.COM
Mid- Atlantic
Establishments (%)
Less than 3% 3% to less than 10% 10% to less than 20% 20% or
more
Great Lakes
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Products & Markets
Business Locations As a service-based retail industry, bar and
nightclub operators are dispersed largely in line with population
and income distribution. The industry is concentrated in the West,
Great Lakes and Mid-Atlantic regions, mainly due to population
distribution and size. Most of these regions have a large number of
relatively small establishments, in terms of employment and
revenue. However, the industry tends to also be under-represented
in the Southeast region. Licensing restrictions in some states also
have an impact on this industrys operations and location.
Research by the US Department of Agriculture indicates that the
states with the highest per capita consumption of distilled spirits
are New York, Florida, Texas and California. The Adams Handbook
indicates that the states with the highest consumption of domestic
and imported beer are: Texas (Southwest region), Florida (Southeast
region), Illinois and Ohio (Great Lakes region), and New York and
Pennsylvania (Mid-Atlantic region). The information also points to
beer consumption as a key indicator of this industrys geographic
spread, along with population size. Because beer consumption is
only decreasing slowly on a per capita basis, no significant change
is expected in industry distribution over the short term.
Therefore, IBISWorld does not expect
the level of geographic concentration to change in the near
future.
Operators will attempt to situate themselves in high-profile
areas with a high rate of foot or automobile traffic. This
indicates that rent costs may be high as bars and nightclubs are
paying for the privilege of exposure.
The current distribution is not expected to change significantly
over the next five years, as IBISWorld does not expect any
substantial demographic changes or population shifts during the
period, and the same fundamentals remain at play.
%
30
0
10
20
Southw
est
West
Great Lakes
Mid-Atla
ntic
New
Eng
land
Plains
Rocky Mou
ntains
Southe
ast
EstablishmentsPopulation
Distribution of establishments vs. population
SOURCE: WWW.IBISWORLD.COM
-
WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
18
Cost Structure Benchmarks
ProfitIndustry profit is based on earnings before interest and
taxes. Profit varies among players depending on the size of the
firm, with larger operators generally benefiting from economies of
scale. Operators in the Bars and Nightclubs generally rely on high
product turnaround to break even. However, this means bar and
nightclub owners operator off slim profit margins, making them
highly susceptible to any adverse changes in demand. IBISWorld
estimates that in 2014, the average industry operator will obtain
profit equivalent to 5.8% of revenue. The average industry
profit
margin has increased slightly over the past five years as demand
has improved and costs have remained steady, however, the
competitive nature of the industry limits the ability of operators
to access profit margins much higher than their current level.
PurchasesThe major cost operators are exposed to is purchases,
such as alcohol, food, and other incidentals including paper
towels, cleaning equipment and glassware. Alcohol is the biggest
cost within this category, usually representing between 20.0% and
30.0% of total revenue. Food
Key Success Factors Having a loyal customer baseIt is important
to ensure a high level of regular customers who spread good
word-of-mouth recommendations to others.
Ability to quickly adopt new technologyEstablishment operators
should have appropriate levels of technology in areas such as stock
control, which is a major cost area.
Ability to control stock on handOperators must have control over
stocks, particularly stock losses, and have sufficient stock in
line with expected demand.
Effective cost controlsHaving effective cost controls and
systems in place is essential because this is a relatively low
profit margin industry.
Must have licenseOperators are required to have the appropriate
licenses to operate and always meet the conditions of the
licenses.
Access to niche marketsIt is important to have a very good
understanding of the markets serviced by your location and
customers changing needs.
Market Share Concentration
The industry is highly fragmented and consists of a large number
of small businesses that are often family owned and operated. The
top four players in the industry account for well under 5.0% of
total revenue. Census information indicates that just more than
77.6% of establishments are small businesses employing up to nine
people, and a total of 98.3% employ less than 50 people. There are
limited
economies of scale to be found than earning more than one venue
due to the labor intensive and location-specific nature of the
industry. Also, the varying state liquor laws makes it difficult
for owners to form large chains. Due to the fragmented and
small-business nature of this industry, especially in the way it
operates, the level of concentration is not expected to change over
the next five years.
Competitive LandscapeMarket Share Concentration | Key Success
Factors | Cost Structure Benchmarks Basis of Competition | Barriers
to Entry | Industry Globalization
Level Concentration in this industry is Low
IBISWorld identifies 250 Key Success Factors for a business. The
most important for this industry are:
-
WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
19
Competitive Landscape
Cost Structure Benchmarkscontinued
and beverages are usually purchased from wholesalers,
particularly from operators that can guarantee both prompt delivery
and quality foodstuffs. Fluctuations in the cost of food and liquor
significantly impact industry revenue and profit. In the short
term, many of these cost increases cannot be passed on to the
client. Therefore menus, portion sizes and other inputs into food
service have to be continually monitored. The other major source of
inefficiency is waste, due to fluctuations in demand, oversupply of
meals or excess ingredients that cannot be used and subsequently
spoil. IBISWorld forecasts that in 2014, purchases will account for
44.0% of an average firms revenue.
WagesWages are high due to the labor-intensive nature of
preparation and serving drinks and food. There is a high labor
component associated with serving customers and providing meals.
The use of hourly staff typically assists with adapting to
variations in customer demand. Over the past five years, labor
costs, including wages and benefits, such as health, workers
compensation and unemployment insurance, have increased. Wage costs
are expected to account for 24.0% of an average firms revenue in
2014.
OtherOther costs include insurance, accounting and legal costs,
stationery and office costs. These costs account for 15.2% of
industry revenue. Rent and utilities also account for 6.5% of
industry revenue and are high due to the need for locations in
high-visibility areas.
Other costs include those incurred in the normal course of
business, such as insurance, accounting and legal costs,
Sector vs. Industry Costs
Profi t Wages Purchases Depreciation Marketing Rent &
Utilities Other
Average Costs of all Industries in sector (2014)
Industry Costs (2014)
0
20
40
60
Perc
enta
ge o
f rev
enue
80
100 7.3
16.4
7.52.84.1
39.4
22.5
5.8
15.3
6.51.23.2
44.0
24.0
SOURCE: WWW.IBISWORLD.COM
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WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
20
Competitive Landscape
Basis of Competition The Bars and Nightclubs industry is highly
competitive, with competition coming from both within the industry
(internal competition) and from operators in similar industries
(external competition). This owes to the relatively low barriers to
entry associated with opening a bar or nightclub. There are a large
number of small business establishments and the industry is highly
fragmented.
Internal competitionPrice is an important competitive factor.
Operators that can serve food and beverages at the most value will
normally attract and retain patrons, even during times of anemic
economic growth. Location is another important competitive factor
for a bar or nightclub. Establishments are usually located in areas
where people congregate for entertainment purposes and businesses
are prominent. Bars and nightclubs also take advantage of
agglomeration, meaning they will usually benefit from being located
within proximity to competitors.
Service is one of the most important competitive factors for
bars and
nightclubs, especially those with a high-end focus. Upscale bars
and nightclubs need to provide world-class service to guests that
expect a seamless and enjoyable visit. Front-of-house staff like
bartenders and wait staff are trained to be professional, courteous
and accommodating and to portray concern for the well-being of
patrons. It has become increasingly common for operators to chase
higher earning patrons by renovating venues and providing higher
quality beverages and menus. Within the changing alcohol
consumption market, bars have moved toward providing cocktails and
providing high-quality food in unique environments.
External competitionThe industry also faces competition from the
wider on-and-off premises alcohol consumption market. The industry
exhibits a high level of external competition from licensed
restaurants and cafes, to supermarkets, casinos and retail liquor
stores. Many of these compete with bars off-premises alcohol sales
on a price basis, particularly for high turnover products.
Cost Structure Benchmarkscontinued
licensing fees, stationery and office costs. These costs account
for an estimated 15.3% of the average bar or nightclub operators
revenue. Marketing is another cost that varies depending on the
establishment. Some bars have a large
budget for promotional activities, while others do not spend a
cent on marketing. Rent and utilities also account for 6.5% of the
average operators revenue, although this varies considerably
depending on the city and the location of the bar.
Level & Trend Competition in this industry is High and the
trend is Increasing
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WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
21
Competitive Landscape
Industry Globalization
The majority of operators in this industry are small businesses
that are US-owned and earn most of their sales from domestic
activity. No significant or major international operators exist in
this industry and international trade
is nonexistent. The industry is therefore subject to a low level
of globalization. IBISWorld does not expect the industrys level of
globalization to change significantly in the coming years.
Barriers to Entry Capital investmentLike many industries, the
main barrier to entry new operators face is access to capital.
Opening a new bar or nightclub can be an expensive venture:
equipment must be purchased, buildings must be leased and fitted
out and suppliers and staff paid with reserve capital until the
business can maintain a positive cash flow. Capital requirements
can be alleviated to some degree by renting or leasing equipment.
As a large amount of revenue in this industry is generated by
owner-operators, it may also be possible to enter through the
purchase of an existing business or recently closed bar or
nightclub operation. However, refurbishing costs may be required
with this method.
Liquor licenseAcquiring a liquor license can be a significant
barrier to entry, especially in jurisdictions that already have a
large number of licensed establishments per capita. Some
jurisdictions mandate the maximum number of liquor licenses that
can be issued at any one time. A liquor license must be acquired at
the provincial level through a liquor board or commission that
oversees the control, distribution and sale of alcohol in its
jurisdiction. Liquor licenses also need to be renewed each year and
can be taken away if license terms and conditions are not met.
SaturationIndustry concentration is low, with the top four
players accounting for less than 5.0% of total industry revenue.
While this level of competition does not restrict the ability of
new bars or nightclubs to open, the saturation of establishments in
many locations does pose a hurdle to those establishments that
cannot offer a unique value proposition.
Barriers to successOverall, the industrys barriers to entry are
low. Meanwhile, barriers to success (i.e. the ability to stay
profitable and in operation for more than a few initial years) are
significantly higher. According to various sources, over half of
new bars or nightclubs close or change hands within three years of
opening. Even among those family owned-and-operated bars and
restaurants that are successful, owner burnout is high since the
hours are often demanding.
Barriers to Entry checklist LevelCompetition HighConcentration
LowLife Cycle Stage MatureCapital Intensity MediumTechnology Change
LowRegulation & Policy HeavyIndustry Assistance Low
SOURCE: WWW.IBISWORLD.COM
Level & Trend Barriers to Entry in this industry are Low and
Steady
Level & Trend Globalization in this industry is Low and the
trend is Steady
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WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
22
Other Companies Due to the small and localized scale of bars and
nightclubs, there are few major operators, and financial data and
other details on their operations are sparse. In 2014, IBISWorld
estimates the average revenue per establishment will increase to
$335,950, up from $304,670 in 2009. The average number of employees
per establishment is estimated to be about 5, with an average
annual employee wage of $15,182.
According to Nightclub & Bar Magazines 2014 top 100 list, XS
Nightclub in Las Vegas was the top grossing drinking establishment
in the United States in 2013, earning between $90.0 million and
$95.0 million. Marquee Nightclub was second on the list, earning
between $85.0 and $90.0 million. The top 10 bars and nightclubs
each earned between $25.0 million and $95.0 million in 2013. Among
the top ten, seven are located in Las Vegas, while the remaining
three are in Miami Beach, FL and New York City..
Like many other small businesses, a large proportion of bars and
nightclubs fail financially within their first five years of
operation. However, successful new bars can have a positive cash
flow within the first year, and proceed to recover their initial
investment over three or four years. This industry varies widely in
terms of style and concept. Some operators can be classified as
neighborhood bars, which usually serve drinks and meals and
provide entertainment to a number of regular customers. The
neighborhood bar is likely the most common concept adopted by the
industrys establishments. Sports bars display sporting memorabilia
and provide live telecasts of important international, national and
local sports events. These operators also provide a wider variety
of drinks and meals. The brewpub uses on-premise microbrewing
equipment to brew its own special and craft beers. There are also
wine bars, nightclubs and cocktail lounges. All of these types of
establishments are niche operators, which tend to appeal to a core
demographic and, therefore, must provide the facilities and
ambience preferred by key customers.
The costs of establishing a bar or tavern also vary
considerably, from $100,000 to $200,000 for a neighborhood bar to
over $1.0 million for a brewpub or nightclub, depending on location
and size. According to the Risk Management Associations Annual
Statement Studies, players in the Bars and Nightclubs industry have
recently earned gross profit margins averaging about 60.0% of
revenue, though profit before interest and taxes have averaged only
about 5.0%. The industry is, therefore, highly sensitive to factors
that affect demand and cost.
Major CompaniesThere are no Major Players in this industry |
Other Companies
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WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
23
Capital Intensity The Bars and Nightclubs industry exhibits a
low level of capital intensity. In 2014, for every $1.00 the
average operator spends on wages, it will spend an estimated $0.13
on the use and replacement of capital. The industry is highly
dependent on human capital due to its service-oriented nature.
Although most staff are relatively low-skilled, low-cost workers,
no bar can function without quality staff with basic product
knowledge. For upmarket bars, staff require a broad knowledge of
wine varieties and regions, cocktails and beer types. The average
operator spends about 25.1% of its revenue on wages and associated
labor costs. The use of staff on hourly rates assists with catering
to the variation in the daily
and weekly demands and needs of clients.
Meanwhile, capital costs are moderate for the average bar. The
cost of the initial fit out will depend on the size and style of
the establishment. However, most bars are small-to-medium in size
and do not require extensive, expensive renovations. Once set-up,
minimal capital costs a re required.
Operators can significantly reduce their capital investment by
renting or leasing establishments, rather than purchasing. In this
case, an operators rental expense will be far greater as a
percentage of revenue than depreciation expense. The investment
required to purchase a bar or nightclub varies significantly
depending on size, location
Operating ConditionsCapital Intensity | Technology & Systems
| Revenue VolatilityRegulation & Policy | Industry
Assistance
Tools of the Trade: Growth Strategies for Success
SOURCE: WWW.IBISWORLD.COM
Labo
r Int
ensi
veCapital Intensive
Change in Share of the Economy
New Age Economy
Recreation, Personal Services, Health and Education. Firms
benefi t from personal wealth so stable macroeconomic conditions
are imperative. Brand awareness and niche labor skills are key to
product differentiation.
Traditional Service Economy
Wholesale and Retail. Reliant on labor rather than capital to
sell goods. Functions cannot be outsourced therefore fi rms must
use new technology or improve staff training to increase revenue
growth.
Old Economy
Agriculture and Manufacturing. Traded goods can be produced
using cheap labor abroad. To expand fi rms must merge or acquire
others to exploit economies of scale, or specialize in niche,
high-value products.
Investment Economy
Information, Communications, Mining, Finance and Real Estate. To
increase revenue fi rms need superior debt management, a stable
macroeconomic environment and a sound investment plan.
Beer, Wine & Liquor Stores
Egg & Poultry Wholesaling
Chain RestaurantsFish & Seafood WholesalingBars &
Nightclubs
Level The level of capital intensity is Medium
-
WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
24
Operating Conditions
Technology& Systems
The Bars and Nightclubs industry is subject to a low level of
technological change. In general, small business owners do not have
a strong incentive to invest heavily in new technology due to the
limited economies of scale available. The industry relies on a high
level of personalized service provided by bartenders, waiters,
servers and managers. The degree of personal service provided by a
bar is normally crucial to the establishments performance and can
often be the reason patrons are enticed to return. Moreover, many
owner-operators rely heavily on their own labor or extended family
and friends, usually at relatively low hourly rates. Consequently,
the main incentive to increase the use of technology, which is to
reduce a reliance on physical labor, is not as prevalent for this
industry, particularly at the small-scale end of the industry.
Business efficiencyTechnology can be used by bar and nightclub
operators to improve internal business processes, such as ordering
inputs and all other back-of-house functions. Back-of-house
operations have become more efficient due to technology.
Steam cooking ovens and super ovens that cook items much faster
than conventional ovens are beneficial to diners that are expected
to offer fast and efficient service. These improvements can deliver
a competitive advantage against competitors, which is especially
important given the fierce level of industry competition. Computer
software is also available to assist bar and nightclub operators to
monitor and control labor costs, inventory control and cash
management. Front-of-house booking systems are also used as portals
for venues to manage patrons and enable guests to seamlessly make
reservations through their smartphones.
SmartphonesThe ubiquitous use of smartphones throughout society
has had a minimal impact on the industry. Social networking sites
are now mainstream and can be used by bars and nightclubs as a
sales and marketing tool. Bar and nightclubs that have been the
most successful to-date essentially enable patrons to market for
them through sharing photos of the establishment on social networks
like Instagram or Facebook. The next
Capital Intensitycontinued
and revenue. Establishments in prime metropolitan locations can
sell for prices well into the millions of dollars.
Some rise in labor productivity can occur from investment in
technology. In recent years, many operators have invested heavily
in electronic ordering systems that are linked to kitchens,
allowing chefs to more efficiently process and prepare orders.
However, the majority of businesses are owner-operated small
businesses, and therefore find limited benefits from increased
capital investment, preferring instead to concentrate on training
their staff to improve services.
Capital intensity
0.5
0.0
0.1
0.2
0.3
0.4
SOURCE: WWW.IBISWORLD.COMDotted line shows a high level of
capital intensity
Capital units per labor unit
Bars & Nightclubs
Accommodation and Food Services
Economy
Level The level of Technology Change is Low
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WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
25
Operating Conditions
Revenue Volatility Revenue volatility for the Bars and
Nightclubs industry is moderate to low. The industrys performance
depends on consumers disposable income levels, their attitudes
toward entertainment and their feelings about their financial
situations (i.e. consumer sentiment). Regulation, such as
liquor-licensing laws, also play a role in the industrys
year-to-year performance, as do attitudes toward alcohol
consumption. Revenue also depends on the decisions of consumers to
purchase alcohol for consumption on the premises, versus alcohol to
be consumed off the premises.
Likewise, the choice to purchase hard alcohol over wine and beer
also contributes to revenue growth. Over the five years to 2014,
all these factors played into the industrys flat sales. The
recession also stifled personal income growth, meaning patrons were
more likely to cut spending at bars and nightclubs, which caused
revenue volatility to rise from its historical low level. Over the
next five years, revenue volatility is expected to temper as higher
consumer confidence and spending drives moderate growth of bar and
nightclub revenue.
Technology& Systemscontinued
smartphone trend that is likely to play a role in the industry
is near-field communication that allows phones and other devices to
talk to each other. This
technology allows customers to order additional bottles of wine
or make payments directly through their phones without the use of a
bartender or server.
SOURCE: WWW.IBISWORLD.COM
Volatility vs Growth
Reve
nue
vola
tility
* (%
)
1000
100
10
1
0.1
Five year annualized revenue growth (%)30 10 10 30 50 70
Hazardous
Stagnant
Rollercoaster
Blue Chip
* Axis is in logarithmic scale
Bars & Nightclubs
A higher level of revenue volatility implies greater industry
risk. Volatility can negatively affect long-term strategic
decisions, such as the time frame for capital investment.
When a fi rm makes poor investment decisions it may face
underutilized capacity if demand suddenly falls, or capacity
constraints if it rises quickly.
Level The level of Volatility is Low
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WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
26
Operating Conditions
Regulation & Policy The Bars and Nightclubs industry is
subject to a heavy, but steady level of regulation that is
increasing. There are regulations covering a range of areas, from
food safety and standards, to labor conditions and liquor
licensing. Most regulation is enacted and enforced at the state
level, but many federal laws also apply.
Liquor licensingA license is required to operate in the industry
and the issuing of licenses may be restricted in some states, such
as limiting the number of licenses in a given area or by
population. For example, in Wisconsin, there is a license quota of
one license per 500 people. Additionally, states are able to
mandate hours of operation, the price of each drink, who is able to
serve (e.g. age requirement for servers) and how long an unfinished
bottle of wine may be used in the bar.
Operators must comply with state and local service laws,
commonly called dram shop statutes. Dram shop statutes generally
prohibit serving alcoholic beverages to certain persons such as an
individual who is intoxicated or a minor. Nationally, no person
under 21 years can be legally served alcohol.
On the national level, a person must be 21 years of age to be
legally served alcohol, which has been in place since the passing
of the National Minimum Drinking Age Act of 1984. Nonetheless,
statistics from the US Department of Health indicate that the
highest prevalence of binge and heavy drinking occurs with young
adults aged 18 to 25 years, with a peak at 21 years. Binge drinking
is classified in 38.7% of young adults; however, at 21 years of
age, the rate of binge drinkers jumps to 48.2%. Research by Harvard
College further indicates that binge drinking among young adults is
highest in those states where binge drinking is highest. Binge
Drinking is being highlighted as a serious
problem, meaning additional restrictions on wine sales and
promotions may occur, including happy hours, sale of wine in large
containers and advertising.
Food safety and standardsThe industry is subject to laws and
regulations relating to the preparation and sale of food, including
regulations regarding product safety, nutritional content and menu
labeling. The main agency responsible for providing guidance and
regulation is the US Food and Drug Administrations (FDA). The FDAs
Model Food Code, which is a best-practice guide to food handling
and presentation, applies to this industry and is updated each
year. The FDA Nutritional Value applies as well. Since 1996, the
FDA regulations have set standards for nutritional values of
individual foods and meals. If claims like low fat or heart healthy
are on a menu, an owner must be able to demonstrate to officials
that there is a reasonable basis for the claim. For instance, the
meal may be based on a recipe from a health association or a
recognized dietary group. Complete nutritional information,
however, is not required to be on menus.
Labor relationsThe industry employs a high number of young and
low-skilled workers at hourly rates and, therefore, is subject to
minimum wage and employee benefits regulations. Workers in the US
are entitled to be paid no less than the statutory minimum wage,
which as of 2014 was $7.25 per hour. The minimum cash wage for
tipped employees is lower, with a federal mandated minimum of $2.13
per hour required to be paid, unless the employee receives total
tips equivalent to below $7.25 per hour. On top of this, each state
also formulates and regulates its own minimum wage, with some
states implementing rates higher than the federal rate.
Level & Trend The level of Regulation is Heavy and the trend
is Steady
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WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
27
Operating Conditions
Industry Assistance This industry receives no tariff protection
or other forms of assistance. In some states, restrictions on the
number of licenses issued per head of population applies, and this
may give advantages to existing license holders.
The industry is supported by a number of industry associations
that lobby on behalf of operators, undertake industry research, run
training and information programs and promote the industry. These
include the National Club Industry Association of America and
American Beverage Licensees.
Regulation & Policycontinued
Smoking bansSmoking in bars has also been banned in 60 of the
largest US cities, including Los Angeles, New York and Houston.
While there is a state-wide ban on smoking in all bars in
California and New York, in Texas
these laws are under the auspices of local government.
California was the first state to prohibit smoking in bars in 1995.
This legislation hampered industry revenue for a time, but most
wine bar operators have fully adapted to the change.
Level & Trend The level of Industry Assistance is Low and
the trend is Steady
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WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
28
Key StatisticsRevenue
($m)
Industry Value Added
($m)Establish-
ments Enterprises Employment Exports ImportsWages ($m)
Domestic Demand
Per capita expen-diture on alcohol
($)2005 21,648.4 6,840.9 71,717 71,185 376,438 -- -- 5,347.2 N/A
9,527.82006 22,201.0 7,304.1 71,124 70,576 386,610 -- -- 5,528.0
N/A 9,814.92007 22,469.7 7,415.0 73,447 72,797 391,548 -- --
5,621.3 N/A 10,035.52008 22,361.5 7,133.3 72,244 71,588 383,583 --
-- 5,590.3 N/A 9,999.22009 22,004.3 7,217.4 72,224 71,568 375,878
-- -- 5,501.1 N/A 9,842.92010 22,222.3 7,155.6 73,061 72,382
376,239 -- -- 5,555.5 N/A 10,035.92011 22,367.6 7,448.4 72,851
72,161 376,971 -- -- 5,591.9 N/A 10,291.32012 22,505.1 7,471.7
71,535 70,870 379,541 -- -- 5,603.8 N/A 10,517.62013 22,889.9
7,576.6 70,817 70,161 375,746 -- -- 5,676.7 N/A 10,723.02014
23,530.8 7,765.2 70,042 69,391 371,989 -- -- 5,647.6 N/A
11,017.02015 23,883.8 7,881.7 70,672 70,016 372,361 -- -- 5,732.3
N/A 11,326.62016 24,337.6 8,031.4 71,478 70,814 372,733 -- --
5,824.0 N/A 11,659.42017 24,605.3 8,119.7 71,950 71,281 373,852 --
-- 5,963.8 N/A 12,023.22018 25,146.6 8,323.5 72,900 72,222 374,225
-- -- 6,092.6 N/A 12,345.52019 26,051.9 8,623.2 74,475 73,782
376,874 -- -- 6,098.7 N/A 12,642.8Sector Rank 12/27 12/27 6/27 4/27
12/27 N/A N/A 12/27 N/A N/AEconomy Rank 382/1283 328/1283 126/1282
109/1282 111/1283 N/A N/A 275/1283 N/A N/A
IVA/Revenue (%)
Imports/Demand
(%)
Exports/Revenue
(%)
Revenue per Employee
($000)Wages/Revenue
(%)Employees
per Est.Average Wage
($)
Share of the Economy
(%)2005 31.60 N/A N/A 57.51 24.70 5.25 14,204.73 0.052006 32.90
N/A N/A 57.42 24.90 5.44 14,298.65 0.052007 33.00 N/A N/A 57.39
25.02 5.33 14,356.61 0.052008 31.90 N/A N/A 58.30 25.00 5.31
14,573.90 0.052009 32.80 N/A N/A 58.54 25.00 5.20 14,635.33
0.052010 32.20 N/A N/A 59.06 25.00 5.15 14,765.88 0.052011 33.30
N/A N/A 59.34 25.00 5.17 14,833.77 0.052012 33.20 N/A N/A 59.30
24.90 5.31 14,764.68 0.052013 33.10 N/A N/A 60.92 24.80 5.31
15,107.81 0.052014 33.00 N/A N/A 63.26 24.00 5.31 15,182.17
0.052015 33.00 N/A N/A 64.14 24.00 5.27 15,394.47 0.052016 33.00
N/A N/A 65.29 23.93 5.21 15,625.13 0.052017 33.00 N/A N/A 65.82
24.24 5.20 15,952.30 0.052018 33.10 N/A N/A 67.20 24.23 5.13
16,280.58 0.052019 33.10 N/A N/A 69.13 23.41 5.06 16,182.33
0.05Sector Rank 25/27 N/A N/A 14/27 24/27 23/27 19/27 12/27Economy
Rank 628/1283 N/A N/A 1161/1283 481/1283 914/1282 1205/1283
328/1283
Figures are inflation-adjusted 2014 dollars. Rank refers to 2014
data.
Revenue (%)
Industry Value Added
(%)
Establish-ments
(%)Enterprises
(%)Employment
(%)Exports
(%)Imports
(%)Wages
(%)
Domestic Demand
(%)
Per capita expen-diture on alcohol
(%)2006 2.6 6.8 -0.8 -0.9 2.7 N/A N/A 3.4 N/A 3.02007 1.2 1.5
3.3 3.1 1.3 N/A N/A 1.7 N/A 2.22008 -0.5 -3.8 -1.6 -1.7 -2.0 N/A
N/A -0.6 N/A -0.42009 -1.6 1.2 0.0 0.0 -2.0 N/A N/A -1.6 N/A
-1.62010 1.0 -0.9 1.2 1.1 0.1 N/A N/A 1.0 N/A 2.02011 0.7 4.1 -0.3
-0.3 0.2 N/A N/A 0.7 N/A 2.52012 0.6 0.3 -1.8 -1.8 0.7 N/A N/A 0.2
N/A 2.22013 1.7 1.4 -1.0 -1.0 -1.0 N/A N/A 1.3 N/A 2.02014 2.8 2.5
-1.1 -1.1 -1.0 N/A N/A -0.5 N/A 2.72015 1.5 1.5 0.9 0.9 0.1 N/A N/A
1.5 N/A 2.82016 1.9 1.9 1.1 1.1 0.1 N/A N/A 1.6 N/A 2.92017 1.1 1.1
0.7 0.7 0.3 N/A N/A 2.4 N/A 3.12018 2.2 2.5 1.3 1.3 0.1 N/A N/A 2.2
N/A 2.7
2019 3.6 3.6 2.2 2.2 0.7 N/A N/A 0.1 N/A 2.4Sector Rank 12/27
11/27 27/27 27/27 26/27 N/A N/A 26/27 N/A N/AEconomy Rank 602/1283
664/1283 1085/1282 1052/1282 1103/1283 N/A N/A 1025/1283 N/A
N/A
Annual Change
Key Ratios
Industry Data
SOURCE: WWW.IBISWORLD.COM
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WWW.IBISWORLD.COM Bars & Nightclubs in the US September 2014
29
Jargon & Glossary
BARRIERS TO ENTRY High barriers to entry mean that new companies
struggle to enter an industry, while low barriers mean it is easy
for new companies to enter an industry.
CAPITAL INTENSITY Compares the amount of money spent on capital
(plant, machinery and equipment) with that spent on labor.
IBISWorld uses the ratio of depreciation to wages as a proxy for
capital intensity. High capital intensity is more than $0.333 of
capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1
of labor; low is less than $0.125 of capital for every $1 of
labor.
CONSTANT PRICES The dollar figures in the Key Statistics table,
including forecasts, are adjusted for inflation using the current
year (i.e. year published) as the base year. This removes the
impact of changes in the purchasing power of the dollar, leaving
only the real growth or decline in industry metrics. The inflation
adjustments in IBISWorlds reports are made using the US Bureau of
Economic Analysis implicit GDP price deflator.
DOMESTIC DEMAND Spending on industry goods and services within
the United States, regardless of their country of origin. It is
derived by adding imports to industry revenue, and then subtracting
exports.
EMPLOYMENT The number of permanent, part-time, temporary and
seasonal employees, working proprietors, partners, managers and
executives within the industry.
ENTERPRISE A division that is separately managed and keeps
management accounts. Each enterprise consists of one or more
establishments that are under common ownership or control.
ESTABLISHMENT The smallest type of accounting unit within an
enterprise, an establishment is a single physical location where
business is conducted or where services or industrial operations
are performed. Multiple establishments under common control make up
an enterprise.
EXPORTS Total value of industry goods and services sold by US
companies to customers abroad.
IMPORTS Total value of industry goods and services brought in
from foreign countries to be sold in the United States.
INDUSTRY CONCENTRATION An indicator of the dominance of the top
four players in an industry. Concentration is considered high if
the top players account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE The total sales of industry goods and services
(exclusive of excise and sales tax); subsidies on production; all
other operating income from outside the firm (such as commission
income, repair and service income, and rent, leasing and hiring
income); and capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed tangible assets
are excluded.
INDUSTRY VALUE ADDED (IVA) The market value of goods and
services produced by the industry minus the cost of goods and
services used in production. IVA is also described as the industrys
contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE The level of international trade is
determined by ratios of exports to revenue and imports to domestic
demand. For exports/revenue: low is less than 5%, medium is 5% to
20%, and high is more than 20%. Imports/domestic demand: low is
less than 5%, medium is 5% to 35%, and high is more than 35%.
LIFE CYCLE All industries go through periods of growth, maturity
and decline. IBISWorld determines an industrys life cycle by
considering its growth rate (measured by IVA) compared with GDP;
the growth rate of the number of establishments; the amount of
change the industrys products are undergoing; the rate of
technological change; and the level of customer acceptance of
industry products and services.
NONEMPLOYING ESTABLISHMENT Businesses with no paid employment or
payroll, also known as nonemployers. These are mostly set up by
self-employed individuals.
PROFIT IBISWorld uses earnings before interest and tax (EBIT) as
an indicator of a companys profitability. It is calculated as
revenue minus expenses, excluding interest and tax.
VOLATILITY The level of volatility is determined by averaging
the absolute change in revenue in each of the past five years.
Volatility levels: very high is more than 20%; high volatility is
10% to 20%; moderate volatility is 3% to 10%; and low volatility is
less than 3%.
WAGES The gross total wages and salaries of all employees in the
industry. The cost of benefits is also included in this figure.
Industry Jargon
IBISWorld Glossary
OFF-PREMISE CONSUMPTION The purchase of alcoholic beverages for
consumption at home.
ON-PREMISE CONSUMPTION The purchase of alcoholic beverages for
consumption out of the home environment.
PACKAGED ALCOHOL Alcohol packaged for purchase in bottles, cans
or similar containers.
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