How Much Do Club Owners Make?
If you like meeting new people, hosting events, and making money while doing it, then owning a nightclub might be for you. The hospitality industry is booming, and people are always looking for the next cool place to spend their evenings.
But before you get started, do you know how much club owners make? After all, you want this business venture to be profitable, especially given that opening a nightclub can cost between $100,000 and $500,000.
Let’s look at club owner salaries so you can estimate how much your nightclub will make.
What is the average income for a club owner?
Although there is limited data on club owner income, Investopedia has calculated the average revenue and expenses for a nightclub. Using this data, we can find the average monthly and annual income for a club owner.
The average bar or nightclub brings in between $25,000 to $30,000 of revenue per month. Typical operating expenses (wages, rent, inventory, etc.) average around $20,000 per month.
If you take revenue minus expenses, the average nightclub owner earns between $5,000 to $10,000 per month. Multiply these amounts by 12, and the average annual salary ranges between $60,000 to $120,000.
Factors that affect nightclub profit
Keep in mind that no two nightclubs are the same. Your income could be vastly different depending on a range of factors.
Some common items that affect income include:
- Location: Rent prices vary across the country. Opening a club in Las Vegas will cost much more than starting one in a small city like Pittsburgh.
- Licenses: Liquor licenses and other permits are highly sought after and can be very expensive, especially if your government issues a limited amount.
- Clientele: Some nightclubs can charge high entrance fees, while others let guests in free.
- Debt: Monthly debt repayment can negate all earnings for the first year or two of business. Do not rush into opening your club without planning your debt repayment.
- Products: If you appeal to a low-spending crowd, you will need to sell high volume at low prices. If you appeal to a high-spending crowd, you can afford to have larger profit margins.
- Marketing: Until you are a staple nightclub in your city, you may need to hire promoters, run advertisements, and constantly market your business.
- Labor: Depending on which state you operate in, you will likely pay staff between $7.25 to $15 per hour. If your workers earn tips, you will pay between $2.13 to $14.00 per hour.
- Decor: People go to nightclubs for the music, lights, dancefloor, and other exciting factors. Decorating your space can be quite expensive if you are in a competitive market.
Tips to maximize your nightclubs profit potential
If you want to be one of the top-earning club owners, it takes careful planning and constant innovation. Although the industry is competitive, you can increase your revenue by implementing these strategies.
Use smart inventory management tools
Alcohol and soft drinks are your biggest products as a club owner. Luckily, the average profit margin on these drinks can be as high as 85% according to Chron.
However, too many bars and nightclubs lose money when serving drinks. For example, overpouring is a major issue. If a bartender has a heavy hand, you cannot accurately project profits.
Let’s imagine a bottle of liquor can serve 20 drinks before running out. If your bartended overpours, the bottle might be empty after 15 drinks. In this scenario, you will have 25% less revenue per bottle.
Likewise, it is not uncommon for bottles to break or become lost every once in a while. If you do not update your inventory when this happens, you might run out of liquor and fail to re-order more in time. You will then lose out on any potential sales until more arrives.
With inventory management tools, you can track all stock in real-time. You will know exactly how many bottles are in storage, on shelves, and even know how many pours are left in a bottle. As employees take stock at the end of the night, they can note any changes in inventory so you can address any shrinkage issues.
Analyze business performance
Owning a nightclub requires more than selling drinks and entertaining others. You have to keep track of key metrics to assess how well your business is doing.
Even if your club seems busy, you won’t know how profitable it is until you look at your sales. But you will want to do much more than simply look at daily sales reports.
With the right analytics platform, you can get a detailed view of all aspects of your business. From tracking what products sell best to seeing what days are busiest, you can use this data to make smarter decisions.
Build more efficient staff schedules
Customers will love when your bar is overstaffed on a slow night, but you certainly will not. Drinks will be poured quickly, but your labor cost will be higher than the nightly revenue.
Even worse, being understaffed on a busy night is a negative experience for everyone. Guests might leave because drink lines are too long, and staff might quit because the job is too demanding. Even if your labor to revenue ratio is low, you will ultimately gain a bad reputation among customers and staff.
To prevent this issue, use your club management software to track admission and sales. Once you notice a pattern and can spot your busiest nights, you can build a staff schedule that keeps your labor costs to a minimum but keeps up with consumer demand.
Use a reliable point of sale system
With the right point of sale system, you can do all of the above and more from one device. Your bar point of sale software will be your central hub for managing all aspects of your business, simplifying operating and collating data in one location.
Epos Now provides POS systems for hospitality establishments including bars and restaurants. Our hardware and software are designed to satisfy your unique needs and make club ownership easier.
Epos Now Bar POS systems are perfect for:
- Managing wet and dry inventory
- Building reports and dashboards
- Taking all types of payments
- Integrating with third-party apps like Mailchimp and QuickBooks
Contact Epos Now today to learn more about our nightclubs POS systems.
