Industry Analysis & Industry Trends
Reduced alcohol consumption and stricter regulatory oversight have resulted in contraction of the Bars and Nightclubs industry over the past five years. Alcohol has increasingly been consumed in private residences rather than industry establishments, and new pricing regulations aimed at stemming the trend of binge drinking have prevented operators from stimulating demand through special promotions. The industry has adapted to these challenges by increasingly targeting niche markets and offering ancillary products such as food and entertainment. In the next five years, improvements in the broader economy will drive increased consumer spending at bars and nightclubs, but will result in only a marginal expansion of revenue as competition remains fierce... purchase to read more
Industry Report - Industry Investment Chapter
IBISWorld estimates that for every $1.00 the industry spends on wages, $0.11 is required for capital equipment, including the use and replacement of buildings and fittings. As a result, the industry has a low degree of capital intensity given its dependency on labour to deliver services. Labour provides customer service in a variety of areas, including liquor and food sales as well as entertainment services. As a result, the industry is relies more on labour than fixed capital.
Operators can significantly reduce their capital investment by renting or leasing establishments, rather than purchasing. In this case, an operator's rental expense will be far greater as a percentage of revenue than depreciation expense... purchase to read more