The late-licence sector
The PMA Team takes a peek into his crystal ball
How will late-licence operators fare under the new licensing regime? Some well-seasoned observers believe that nightclub companies have little to fear from pubs operating a little later under the 2003 Licensing Act. They point to the explosion in late licences granted by magistrates in the past five years or so; those pubs for whom there is commercial benefit in trading late are already doing so. Indeed, there may even be profit gains if traditional late-licence operators are not required to serve food under the new regime.
Food provision has been a requirement of the 1964 Licensing Act for those wanting to trade later. Revellers seldom fancy food when they want a late-night drink food takings can be 5% or lower for some operators in this market. Many would be hard-pressed to claim food is a profit generator and margins could well increase once food is dropped. And if current Government proposals to allow smoking in non-food premises harden into legislation, there may be further gains for those operators happy to focus on their core smoking clientele.
Some City analysts argue that for nightclubs offering a quality and differentiated environment, more late-trading pubs hold few fears. After all, the city and centre circuits function on the principle of 'multiple experiences.
Customers migrate through a variety of drinking environments with the largest venue, normally a nightclub, as the final destination. For those nightclubs, especially perhaps those in small towns, that have survived profitably because there are few other drinking options post-11pm, the future is less certain. These venues are often under-invested and have created resentment among customers who dislike the soles of their shoes sticking to carpet so old that spilt beer has turned into a yeasty glue. Other observers believe that more drinking opportunities late at night necessarily mean fewer customers at the end of the evening for existing late operators. On any circuit on a Saturday night, it's possible to spot a group of customers who part with their £5 admission money with acute resentment. Given more choices, the chances are that they would migrate to a lower-cost alternative. There will be plenty of community pubs that operate a little later under the new regime that come to be known for creating a perfectly good craic for those looking for a non-disco alternative.
What is certain is that nightclubs continue to trade across Europe in countries that have had more liberalised licensing laws than the UK. Those venues that have sizeable dance floors and create a unique buzz by dint of scale are meeting needs that verge on the primaeval. Boys need to meet girls (and vice-versa) in an environment that allows them to show their athletic prowess. Dancing, like all exercise, provides a body-generated chemical catharsis that is its own reward. People like to be entertained and nightclubs can be uniquely entertaining.
