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A grim outlook for remaining nightclub businesses, reveals the latest data from Company Watch PDF Print E-mail
Monday, 24 August 2015

Recently, the ALMR (Association of Licensed Multiple Retailers) announced that around half of the UK’s nightclubs had closed their doors since 2005.

Company Watch, the corporate health monitors, has now looked at the financial health of the remaining privately-owned nightclub businesses currently trading.
 
Around 930 nightclub businesses have sufficient data in the public domain for Company Watch to produce an H-Score, which is its unique measure of a firm’s financial health based on a score from zero to 100. Firms with the highest H-Scores are financially the most robust.
 
However, firms with an H-Score of 25 or less fall into the Company Watch Warning Area, meaning they are at much greater risk of failing or needing refinancing.
 
·       Of the 930 nightclub businesses allocated an H-Score, a staggering 502 (54%) are in the Company Watch Warning Area.
 
·       312 nightclubs (a third) have an H-Score of only 10 or under.
 
·       That said, there are 176 nightclub firms in the top quartile (H-Scores of 75 to 100).
 
·       There are 88 firms with H-Scores between 90 and 100 (maximum).
 
·       According to market researchers Mintel, the value of the UK nightclub market is likely to fall to just 1.1bn by 2017. In 2007 it was worth 1.8bn, an expected fall of almost 40%.
 
One of the main reasons for the decline in nightclubs is that they are no longer as important for younger people seeking to find new partners. Dating apps such as Tinder are much cheaper alternatives to clubbing when seeking romance.
 
On top of this, nightclub businesses have also suffered from reduced bar income as clubbers prefer to drink cheaper supermarket alcohol before heading for their nights out. The indoor smoking ban and the lack of disposable income among young people in low paid work are also said to be contributory factors to the industry’s decline.
 
Denis Baker, Managing Director of Company Watch, said:

“We were surprised to note that just over half of the nightclub firms in the UK are in our Warning Area, making it one of the country’s more vulnerable sectors.  With so many on a financially insecure footing, there are worrying implications for staff, suppliers and lenders should any of these fail. Stakeholders need to be increasingly vigilant with businesses in this sector.”

(Source - Company Watch News Release)
 

 
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