Rekom UK, the UK’s largest specialist nightclub and late-night bar operator, has just reported a strong performance across its 47 clubs and bars since reopening its venues on 19 July 2021.
Financial and operational highlights:
• Q3 2021 sales £30,354k - 39.8% up on 2019 at £21,706k
• Q4 2021 sales £27,961k - 11% up on 2019 at £25,191k
• Q1 2022 sales £22,802k - 15.1% up on 2019 at £19,814k
• Q2 2022 sales £20,631k - 7.5% up on 2019 at £19,193k
• Spend per head increased 23% to £21.82 (2019: £17.71)
• Venue EBITDA increased 112% to £26.3m (2019: £12.4m), or 40% when omitting the ‘post Covid surge’ between July-September
• Increase in total dwell time, with guests arriving earlier and staying longer
• Continued focus on full price sales, resulting in a reduction in free admissions and discounting.
The group is not alone in experiencing strong trading. Many quoted and private businesses across the late-night economy - whose target audience aged 18-24 is less likely to feel the impact of a pending recession - are reporting positive like-for-like sales compared with pre-Covid. By contrast, many of those businesses with more focus on an older demographic are yet to fully recover their sales.
Rekom UK is ushering in a new era - the ‘Great Reset’ - with the health of the company the strongest it has been in years.
Its guests, the majority of whom are aged 18-24 do not have the same levels of exposure to the cost-of-living crisis, with the majority having no major financial burdens, and view a night out as an affordable treat, that remains part of everyday living. In addition, the recent CGA Business Confidence survey reported that younger consumers as the strongest returners to the hospitality industry.
As a result, and as Rekom’s performance illustrates, in spite of pressures such as the cost-of-living crisis, rising interest rates, staffing and Covid-19 debt, one the best performing areas of post-covid hospitality in the UK is that which targets the younger guest.
This contrasts sharply with those operators that are food-led, serve an older or more price-sensitive customer demographic, or have high energy consumption and have understandable concerns over their viability in the short term.
Rekom’s performance reflects broader long-term consumer trends. History shows that socialising remains relatively stable, even in hard times, hospitality sales have been largely unaffected across UK town centres.
Furthermore, analysis of available public company results of the last pre-covid recession (2008/9) shows those that operate in town and city centre sites, in part or in the main, performed better than most in the wider leisure sector and other areas of discretionary leisure spending.
Most had like-for-like sales in the -2% to +2% range with Wetherspoon for example reporting a +7.2% profit stating that the recession had little impact on trade.
Chairman Peter Marks commented, “We recognise that many operators are struggling though, particularly those with covid debt. A simple, if temporary, drop in VAT to 12.5% or rates relief will help all hospitality businesses and we support efforts to get this assistance. Yet we are sceptical as to whether the government can or will help further.
“That said, Rekom UK is in rude health. Our revenues and margin shave improved dramatically to exceed 2019 levels and are now stable, driven by our industry-leading venues and continued focus on good value for our guests. A visit to any Rekom UK venue still only costs, on average, circa £20.
“Looking ahead, whilst we cannot control the global economy, we know that good value, well-invested propositions thrive through times of adversity. We will continue to focus on our guests and doing what we do best, creating fun, safe nights out, to ensure that Rekom capitalises on demand to emerge from these challenges stronger than ever.”