By Emily Hawkins
Cocktail bar operator Nightcap is slowing down its expansion programme while its CEO told CityA.M. the sector faces “uncharted territory” this winter.
While the London-listed business would not halt openings entirely, it would “be more cautious” with new sites, CEO Sarah Willingham said.
In its annual report last week, the owner of The Adventure Bar Group, Barrio Familia and Cocktail Club brands pointed to increasing build costs as one reason to slow down plans for new site openings.
Nightcap also said trading in the first quarter of its new financial year had been “adversely impacted by record warm weather, train strikes and the cost of living crisis.”
Willingham’s approach is to focus on Nightcap’s core business, conserve cash and be cautious with growth. “In a bull market, it’s ‘grow, grow,’ in a bear [market], you have to keep an eye on every aspect of the business,” she said.
The group’s rapid expansion has seen it hit 36 sites, including a new Cocktail Club at Canary Wharf. A new Barrio site, billed as the world’s largest tequila bar, is also to open in Covent Garden soon.
Nightcap was in a “great position, with lots of cash in the bank,” yet the economic tumult meant it was sensible for the company to “take stock,” in the months to come, the Dragon’s Den star said.
Revenue at the group, which only launched in early 2021, has surged from £6m to £36m over the past year. Adjusted earnings have also shot up from £0.2m to £3.3m, boosted by acquisitions and openings of larger venues.
“People want to go out and party” this Christmas, especially after years without a festive session devoid of Covid-19 restrictions, Willingham said.
However, 2023 would be a “very difficult environment” for any consumer-focused business, particularly hospitality, she said.
Although Nightcap’s Gen Z and millennial clientele were “more resilient” than other groups, due to not being as affected by interest rates and energy prices, consumer confidence was still “a lot lower than we have seen it before.”
Punters had started somewhat shying away from bars at the start of the week, something “compounded” by multiple days of strike action this year.
The hospitality sector was “going into really uncharted territory” this winter, as the country writhes in the teeth of a recession, she said.
Even with a base of younger punters, who are still eager to splash their cash on nights out, there could be “just no place for mediocrity” at the moment, Willingham said.
The business has been adapting to the current climate by amping up its number of bottomless brunches on offer this winter, to boost trade in traditionally quieter times such as weekend afternoons.
“You have to wow your customers,” she said.
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