Sports Bar Business Plan

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Take Five Sports Bar and Grill

Opportunity

Problem & Solution

Problem Worth Solving

Watching sports is a group activity. Going to each other’s houses get tedious. People need a place to go to watch, to cheer, to eat their favorite game foods, and get their favorite drinks. After, a night of enjoyment, they happily go home

Our Solution

Take Five Sports Bar and Grill strives to be the premier sports theme restaurant in the Southeast Region. Our goal is to be a step ahead of the competition. We want our customers to have more fun during their leisure time. We provide more televisions with more sporting events than anywhere else in the region. We provide state-of-the-art table-top audio control at each table so the customer can listen to the selected program of his or her choice without interference from background noise. We combine menu selection, atmosphere, ambiance, and service to create a sense of "place" in order to reach our goal of over-all value in a dining/entertainment experience.

Target Market

Market Size & Segments

With the onset of the recession in 2008, revenue for the Nightclubs Industry contracted for the first time in more than 10 years. At the height of the recession in 2009, industry revenue declined 10.1% in 2009 to $1.9 billion. Revenue rebounded marginally in 2010 by 0.1% as the economy began its recovery, and grew 2.2% in 2011 to $1.9 billion. Sales of spirits, wine and beer in restaurants, bars and other licensed on-premise locations increased 4.9 percent to reach $93.7 billion in 2011. Adult beverage on-premise volume declined slightly in 2011 (-1.1 percent).  The on-premise channel accounts for one-quarter of total adult beverage volume and slightly less than half of total dollars. 

Last years total Restaurant and Bar (Drinking Establishments) Industry Sales accounted for $710 billion with 970,000 locations. According to the Restaurant Industry Association and Dun & Bradstreet, Nightclubs generated approximately $26 billion in combined annual sales revenue. The 2015 Top 100 Nightclub list was developed by Nightclub & Bar in partnership with Technomic Inc. using secondary research and yielded primary data from 1,444 nightclub, bar and lounge locations.

  According to Technomic’s BarTAB (Trends in Adult Beverage) report, the 2013 Top 100 Nightclub & Bar venues generated $1.5 billion in total revenue. More than two-thirds (68.2%) of operators surveyed experienced revenue growth in 2012, and nearly two-thirds of them (31.4%) reported revenue growth in excess of 10%. Once again, the top nightclub and bar venues outperformed the industry overall. The bar and nightclub segment grew 3.9% in 2012. Projected sales of alcoholic beverages at bars and restaurants are expected to rise 2.7% in 2015, with wine projected to be the top growth driver, followed by spirits and beer, according to Technomic’s recent BarTAB Report. The beer category will see 2.3% growth, as domestic beers lose share to craft brews, cider and imports, said Technomic Director of Research Eric Schmidt. The industry is projected to continue experiencing competition from non-industry establishments such as restaurants as well as from people opting to drink at home.

Vegas is a major hub of nightclubs based on revenue for "Large Box Clubs." Of the Top 100, the top 3 nightclubs are in Las Vegas, NV and make $60-70mm each;  the No. 1-ranked Marquee Nightclub & Dayclub in Las Vegas generated record-breaking annual revenues in excess of $80 million; the 4th made $45-60mm in 2011 and is in Miami. The next four nightclubs made revenues of $35-45mm each and three are in Las Vegas. The following six nightclubs made revenues of $15-10mm each and three are in Las Vegas. The next 35 venues #23 thru #57 had revenues of $10-5mm each; and the remaining venues reported revenues less than $5mm each which includes "small box clubs."

One quarter of the list — 25 venues — are located in California, with 15 in the Los Angeles area, seven in San Diego, two in San Francisco and one in Sacramento. Las Vegas contributes 22 venues, with eight of the top 10 venues located in Las Vegas. Ten are in the five boroughs of New York City. Chicago contributes five venues, Texas delivers four and Atlantic City and Washington, D.C., each offer up three. It’s expected that the major markets dominate the Top 100 list, but operators in a number of other markets — including Atlanta; Denver; Ocean City, Md.; Destin, Fla.; Lake Cuomo, N.J.; Kansas City, Mo.; Scottsdale, Ariz.; Myrtle Beach, S.C.; and Knoxville, Tenn. — also succeeded in bringing in the crowds and revenue.

Of the Top 100 survey participants, 42.8% identified their venues as nightclubs; 70.6% of them described their hotspots as dance clubs. Of those identifying their venue as bars, 31.7% are sports bars and 29.3% are traditional bar/taverns. DJs and live entertainment are featured by 88.3% and 73.6% of total respondents, respectively. Nearly 80% offer a dance floor, 70.1% provide VIP areas and 65% offer bottle service.

The majority reported solid growth in 2011. In fact, 70% of respondents to the Top 100 survey indicated their venues’ revenues increased, and of them, nearly half (48%) reported revenue increases exceeding 10%. Consistent revenue was cited by 20% of survey respondents, while 3.4% cited revenue declines. Drinks generate the lion’s share of venue revenues – 56% of sales from alcohol is the mean among Top 100 survey participants. While in the venues, partyers favored spirits, which generate 44% of alcohol sales. Beer contributes 25% and wine 9%. A full food menu is offered by 68% of survey respondents’ venues. Gaming, such as pool tables, video game systems and jukeboxes, are available at 42% of respondents’ venues. Nearly three quarters (73%) have outdoor patio, terrace or rooftop space, which is an increase from 63% a year ago.

 

Venues dont report cover charge revenue information specifically, but average fees range at $5 to a local bar event, $10 Guest list cover, $20 average entry fees and higher for concert or performance style events. This would exclude Las Vegas where entry fees can range from $20 – $200. Current ticket prices for nightclub events are sourced from http://vip.wantickets.com

 

Mike Ginley, Partner at Next Level Marketing, provided the latest on-premise consumer research study fielded exclusively for the 2014 VIBE Conference. The study was conducted using Next Level’s custom on-line survey tool. The study includes 1,000 on-premise national chain beverage alcohol consumers. The 2014 study includes 21+ consumers from all of the top casual dining, fine dining and hotel chains. Here are a few statistics relating to the consumer that will help owners and operators to better understand their patrons:

-55% of respondents are going out as often as last year
-70% visit the same types of restaurants and bars
-15% are going to less expensive places
-15% are going to more expensive places – Millennials are the group skewing to better places
-65% order drinks most to all the time with males ordering more frequently than females. Surprisingly, Millennials order less frequently than older consumers.
-79% try a new drink every 90 days with new drink trial highest among Millennials.
-73% have ordered a beer at a restaurant or bar in the past 30 days and 62% order the highest quality beer at the best price
-70% of consumers have ordered seasonal beers and there is growing interest
-65% have ordered wine at a restaurant or bar in the past 30 days with 64% ordering the highest quality wine at the best price
-59% have ordered a spirit cocktail at a restaurant or bar in the past 30 days

The average consumer order 2.3 drinks per occasion with males ordering more than females and Millennials ordering more than the older consumers. Asking for the order is the number one way to sell an extra drink per occasion followed by after dinner drinks, better quality drinks, faster service, smaller sizes and lighter drinks.

When consumers order that second drink, they have been hooked, they need to be reeled in and turned into a repeat customer. The most popular loyalty programs are TGI Fridays, Applebee’s, Chili’s, Olive Garden and Red Lobster.

In order to keep up with the top loyalty programs, restaurants need to stay on top of these consumer trends, such as electronic menus. Today, 25% of consumers have ordered from an electronic menu and this will grow rapidly as they are placed in more locations. Over half of the consumers studied are somewhat interested in ordering from an electronic menu – this is something that is not going away.

Information related to menu content concluded that 80% of consumers expect to see all drink prices listed on the menus that they order from. The majority of consumers feel more comfortable ordering drinks when the prices are published and over half are less likely to order a drink when the prices are not visible. 

 

A study conducted by Optimize Atlanta with participating Atlanta nightclubs and lounges, reveals interesting information about nightclubs, VIP, bottle service, and group dynamics. We learned that the average overall bottle price is $239; the overall average drink price is $10.50; 67 percent consume two or more drinks, shots or cocktails; and spend $55 on average. We also learned that most nightclubs and lounges also offer juices, mixers, bottled water, and energy drinks with VIP table reservations and bottle service.  Some even offer complimentary champagne.  This is in addition to the private tables and exclusivity.

 

Two reports from research firm GuestMetrics indicate a gentle if slow upswing in on-premise trends.

Traffic was just slightly positive during the 4-week period ending 10/5, enough to raise year to date figures to almost flat for the year. While traffic still was struggling to meet last year’s level, overall on-premise food and beverage sales were up 3% in the latest four weeks, an improvement on year to date trends .

Casual dining traffic was up 0.5% over the latest four weeks counted versus down just under a point for the year; bars and clubs remained weak with traffic down just less than 2% for the latest 4 weeks and just over 2% for the year (down 2.2%). The fine dining segment slowed, with traffic down about 1.5% the latest four weeks.

In terms of beverages, beer volume was down about 3.5% in the latest four weeks measured, equivalent to the year to date trend. Beer sales were up 0.7% in the latest 4 weeks, but flat for the year after a strong July and August were followed by a weak September. Premium light share continued down (1.8%) in the latest 4 weeks vs -1.9% for the year; craft gains slowed to 1.6%, below its 2% year to date gain. Fastest growing segments were IPA which had a share gain of 1.4% and cider which had a share gain of 0.6%.

Guestmetrics also reported a gain in spirits on-premise. After declining nearly 1% during the first six months of 2014, volumes were up 0.5% during the third quarter. However, trends softened throughout the quarter, going from up 1.7% during the four weeks ending 8/10 to up 0.6% during the most recent four weeks ending 10/5.

Year to date spirits sales are up 1.7% in the on-premise, up 2.6% for the third quarter, with dollars up a stronger 3% for the four weeks ending 10/5. Dollar sales were driven by a combination of higher price and trade up to higher priced spirits, the firm said. Brown spirits generally out-performed white spirits in the latest four weeks – bourbons and blends volumes up 12% and brandy/Cognac up 5%. Vodka volume was down 3%, rum down 6%. Craft spirits continue to gain share, up about 2% in the third quarter.

 

Today’s consumers seek variety on drink menus. More than half of consumers surveyed say variety of spirits/cocktails (58%) and wine (54%) is important on restaurant menus, while nearly half say the same for beer selection (46%). Additional insights found in the Technomic 2014 BarTAB Report indicate that drink selection can drive traffic and enhance the overall experience of dining out, both of which are important to improving sales and profits.

Operators are responding to varied degrees: the number of adult beverage offerings on all on-premise menus tracked in the MenuMonitor tool rose 5.0% in the third quarter of 2014 as compared with the same period in 2013. During that time, however, national and regional chain restaurants actually reduced the number of beverage offerings (-0.3%). In recent conversations with chain operators, we’re hearing more about the need to trim adult beverage offerings to make drink programs more manageable. 

COMPETITIVE LANDSCAPE

Bars and nightclubs compete with other venues that offer alcoholic drinks or entertainment, including restaurants, hotels, casinos, and consumer homes.

Personal income and entertainment needs drive demand. The profitability of individual companies depends on the ability to drive traffic and develop a loyal clientele. Large companies can offer a wide variety of food, drinks, and entertainment, and have scale advantages in purchasing, financing, and marketing. Small companies can compete effectively by serving a local market, offering unique products, entertainment, or providing superior customer service. The industry is extremely labor-intensive: average annual revenue per worker is $60,000.

The barriers to entry are low and steady, given that an operator can lease premises, equipment, furniture and fittings, which lowers the initial capital costs, outlays and borrowings.  The main barrier to entry is in obtaining a suitable license. Entry costs can be lowered by either leasing or managing an establishment on behalf of the owner. Due to the small business nature of the industry and the low average revenue and profit margins per establishment, entry costs can also be low across some geographic locations.

Competition

Current Alternatives

Current alternatives are: 

Mazzy’s Sports Bar and Grill – Easy going friendly. Okay parking. We have much better bar food and run specials on sports nights. 

Empire sports Bar – They are more of a night club scene. They have a okay Dj. 

Barnacles Sports Bar and Grill – Good food, Good Prices. They have a mechanical bull which is a little too gimmicky, we wouldn’t do that. Closer than the others to what take five sports bar and grill is trying to be. 

Our Advantages

Take Five Sports Bar and Grill strives to be the premier sports theme restaurant in the Southeast Region. Our goal is to be a step ahead of the competition. We want our customers to have more fun during their leisure time. We provide more televisions with more sporting events than anywhere else in the region. We provide state-of-the-art table-top audio control at each table so the customer can listen to the selected program of his or her choice without interference from background noise. We combine menu selection, atmosphere, ambiance, and service to create a sense of "place" in order to reach our goal of over-all value in a dining/entertainment experience.

Keys to Success

Keys to Success

The keys to success in achieving our goals are:

  • Product quality. Not only great food but great service.
  • Managing finances to enable new locations to open at targeted intervals.
  • Controlling costs at all times without exception.
  • Instituting management controls to insure replicability of operations over multiple locations. This applies equally to product control and to financial control.
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