Nightcap will pause expansion plans but focus on broadening its offer to mitigate the decline in consumer demand over the beginning of its financial year, CEO Sarah Willingham tells MCA.
The owner of The Cocktail Club, Adventure Bar Group, and Barrio group of bars reported the results from its first full year of trading yesterday (10 November). While revenue was up from £6m last year to £36m for the year ended 3 July 2022, the operator experienced a 15% like-for-like decrease in revenue in the 13 weeks to 2 October, compared to the same period in FY21.
“I’m proud to announce a £36m turnover for our first full year results, mostly through organic growth,” Willingham says. “Coming into the autumn, we are definitely seeing demand softening.
“We’re doing the sensible thing by continuing to give our customers the best experience they can get and keep focusing on our core estate.”
The late night operator has renewed its focus on branching out into an all-day offer, with bottomless brunches and entertainment rolled out across the majority of its estate. Corporate bookings have also been “higher than ever” across the group for Christmas this year, according to Willingham.
The drop over the summer was attributed to a combination of unusually hot weather, rail strikes, and the cost of living crisis.
“When rail strikes affect a big area, we see the impact in all city centres,” Willingham adds. “When they’re just in London, areas like Bristol, Cardiff, Exeter, and Reading still do really well, with London disproportionately affected.
“Having said that, we just opened in Canary Wharf and soft launched in Covent Garden, both of which have opened extremely successfully.”
The business is also seeing demand softening on Fridays due to work from home, although suburbs and regions are holding up better, while Thursdays and Saturdays are stronger than they used to be.
Nightcap currently operates 36 bars but will pause its rollout to instead focus on its existing estate. However, Willingham expects the property market to be even more favourable next year.
“Nightcap was founded [in 2020] on the basis of raising a lot of capital to take advantage of the changing property landscape,” she says. “That window of opportunity is bigger than ever due to the recession.”
Despite the halt in expansion plans, the business has recently opened six big sites – such as Canary Wharf and Covent Garden – that are helping it hit its targets “turnover-wise,” Willingham explains.
“We had the foresight to fix most of our energy costs as well, so we’re not exposed to that across the majority of the business.
“We need to be mindful and cautious in terms of growth. Our bookings are telling us we’ll have a goof Christmas, but Q1 will be very tough for hospitality and retail.”
Future expansion will be consistent with Nightcap’s cluster model of opening multiple sites across its brands in major cities across the country.
“We’re focusing on running the business tightly until spring next year, when we’ll have more visibility on the economy,” Willingham says. “The opportunities in the property market will be bigger than ever next year.
“At the moment, we can see the impact of energy prices, mortgage rates, and consumer confidence.
“We have to be the best of the best – there’s no time for mediocrity in a recession.”
