Category: Nightlife

How Do Nightclubs Build Themselves Into $10 Million Plus Venues?

As of 2009 there were 43 nightclubs in the United States that did a reported $10,000,000+ in business per annum. XS and Tao, in Las Vegas, have been reported to gross as much as $60 million annually. Granted the top five clubs are in Las Vegas, so gambling money supplements that volume; but LIV in Miami, without any gambling, is now grossing up to $35 million. That’s a lot of alcohol even at $15-$18 per drink. How do these clubs spark enough desire for people to drop so much money? First, the mega-clubs have built themselves into entertainment destinations, not just simple bars. Multiple rooms and atmospheres, several veins of music style, and even swimming pools are the norm at the big clubs. They all have dedicated marketing departments to drive you to their particular venue; and talented managers and staff there to make your experience a memorable one. Unfortunately, the memories may come back to haunt you when your credit card bill arrives.

Many of us have stood in line at a popular nightspot waiting to be anointed with the privilege of an entrance. In the larger city venues whole businesses have sprouted promising quick entry, or inclusion on VIP lists, naturally for a fee. Think of it this way – you have to pay someone for the right to pay a nightclub an entrance fee, thereby giving you the opportunity to spend more money buying drinks. Is there something is wrong with this concept – I think so. Having been in the business for the last 20 years I can confirm that, barring fire department regulations, most night clubs easily accommodate the people standing in line.

One of the many marketing techniques is to maintain a healthy waiting line to pique the interest of those driving/walking by the club. One time, in fact, at a club in Manhattan, we actually advertised the opening one week before the real date. Anyone calling would be told the club was totally booked by private parties. I have also heard of clubs hiring people just to wait outside, spread rumors of this or that celebrity they saw going inside, thereby creating a buzz outside before anyone even got into the club. Once anyone got into the club they would be told those phantom celebrities are partying in the “private VIP room”. Basically, the club wants to have you believe you are special having been given the right to drop several hundred of your hard earned dollars visiting their venue. The latest version requires you, even after making reservations for a table, to purchase “bottle service” at your table.

For those who have not heard the term it is exactly what it sounds like. You buy a full bottle of liquor/wine/champagne; receive a bucket of ice, and various mixers. Thereafter, you are on your own to mix your drinks, your server disappears until/unless you want another bottle. Well and good, but these bottles have up to a 2000% markup. That’s right two-thousand percent – a normal $30 bottle of vodka can cost you $600. High-end champagne that retails for $150 will probably be $1250+. Not a bad profit, and you are doing all the work. They will also take your credit card before the bottle is brought, run the bill along with an automatic 18% tip, and you sign on delivery. If your order another bottle the same will occur. At the end of the night they will give you your final bill and leave a spot for you to tip again if you don’t realize what has happened. All this after you most likely paid $20+ per person just to walk in the door. Granted the clubs have some big costs – venue, labor, liquor, taxes, security, etc.; but I think they can cover them while doing $700,000 – $1,000,000 per week in business. I am sure your local bar or pub would be more than happy to do that amount of business in a whole year.

We can’t begrudge anyone making a lot of money but these clubs may be killing the goose that laid the golden egg. With the economy in the dumper, many people can only afford an outing to these expensive clubs once a month or so. It might make more sense for the clubs to moderate their prices enabling people to visit more often. Getting away from the rip-off reputation will also improve their staying power, customer loyalty, and overall public relations perception.

Leave A Review.

You must be logged in to post a comment.