Visual appeal, unique ingredients, craft drinks and complex flavours are ruling the nightclubs and bars segment of the restaurant industry. Though it was anticipated that 2019 will be a year when we will see people preferably drinking at home, yet the nightclubs and bars across the country have left no stone unturned to lure its customers. The nightclubs and bars in India are now focussing more on creating intangible consumer experience across all their venues.
Manish Sharma, Founder, Molecule Air Bar, says, “The consumption patterns of eating and dining out have increased enormously. From office meetings to small and big celebrations to healthy eating and more, dining out has become a daily chore.”
As the competition for market share oomph up, the nightclub and bar players have been implementing new marketing strategies to attract their target audience. The capacity and demand at the nightclubs and bars are often managed by the various price promotions either on the entry or on drinks. Many of the industry players lower prices to target students during the midweek nights.
“However, with the rise in discounting applications, the “Spending Power” of the consumer has gone down. Customers, today, do not want to shell out huge sums when they know they can get a discounted price online, thus, they prefer casual bars and cafes which are affordable and not very highly-priced,” says Manish.
The minimum average spending per customer at most of the nightclubs and bars in India varies between Rs. 1500-2000.
At Molecule Air Bar, the highest-selling item is brewed beer whereas, at The Drunken Botanist, cocktails take the win affirms Manish Sharma.
Factors Contributing to the Growth of Business
The newer concepts have been playing a major role in the growth of the business of the nightclubs and bars. The Beer Cafe, for example, has been a pioneer of casual, inviting, neighbourhood hangout spaces in India. The innovations in providing superior consumer experiences have played a key role in establishing its domain leadership in India. The beers-on-tap concept has got much attention from the younger generation. The business growth of nightclubs and bars revolves around its products and concepts – beers-on-taps, freshly-brewed beer, crafty and artisan cocktails, delicious grubs and a comfortable-yet-classy ambience.
Franchise Startup cost
The franchise startup cost for a 4000-1000 sq ft area of a nightclub or bar lies between Rs 2-5 crore. Molecule air Bar is specific on location; it should be an urban posh area. The startup cost for the franchise unit involves lease rent, equipment, interiors, licenses and registration and franchise security deposit. The investment range for Xtreme Sports Bar & Grill, which has a presence in the South and Central India, is much lesser. For an area of 2500-8000 sq ft, the investment comes at Rs 1-2 crore.
Sound background, location and potential market are three necessary ingredients for franchise selection for any nightclubs and bars. Operation expenses include good manpower, salaries, rent, franchise fee, raw material and gas and other miscellaneous expenses such as electricity, water, etc. Depending upon the size of the property, it should range somewhere between 50 lakhs to 1 crore, tells Manish.
The earning for a franchisee depends on the size of the property, location and sale. On average the profit margin is 25-30 per cent of the sale. On average, the break-even time for nightclubs and bars franchise is 2-3 years; for some of the nightclubs and bars, the break-even time is just 12 months.
Brands like Molecule Air Bar and The Beer Cafe run on the FOCO Model and provides full backend support, supply-chain support, training, financial management and book-keeping to its franchisees; they also take care of the talent acquisition and marketing.
Unique Business Model
The Beer Cafe, which recently entered the retail business with Beerosphere, is 40+ outlets at present and offers 50 plus beers from 20 countries.
The Bar Stock Exchange (TBSE) is the first pub chain in India to own a proprietary bar stock exchange software using a comprehensive algorithm to determine and change the price of the drink for the next customer-based on demand. Being touted as the most technologically advanced bar in India, customers can also place an order via a specially-developed app (Android and iOS) that lets its customers monitor prices and order in real time. Customers can compete with each other and the system to score the best prices on their choice of drinks. “We have invested greatly in the development of this software and in creating adequate back-end support,” says Mihir Desai, Co-Owner TBSE. The brand aims at opening 200 outlets in India through the franchising model.
Many nightclub and bar players feel tier 2 and tier 3 cities in India are still untapped. “They have a huge potential,” says Manish Sharma.