Monthly expenses of running a nightclub
Below are the possible monthly expenses of running a nightclub.
For most jobs in your venue you can pay minimum wage or slightly above.
Bar staff: the number of staff you need depends on the size of the venue. Typically this will be 4-6% of sales but in rare cases it could go as high as 10%. If you want a guide for bartenders to refer to click here for our guide for bartenders
Host staff: These are people who take the drinks to customers however you don't need them and many bars don't.
Cashier: Sometimes the bar staff do this job.
Door staff and bouncers: a very small club can have one but most venues have two or more.
Office staff: The manager can do this job unless you have a big nightclub.
Manager: This would depend how profitable the nightclub is. On the low end you would pay $31,000 per year and on the high end this figure could raise to $125,000.
Other expenses of running a nightclub
Liquor: Champage is generally 12-25% of cost of goods sold and other liquor can be 3-8%. However you can adjust your own pricing as you see fit.
Sometimes there's waste with liquor and this can eat into your profit. Some venues calculate a number as a percentage by comparing the revenue from drinks to the total cost of ingredients. You may want to do this calculation weekly or monthly.
If the percentage is beyond your average markup you may have a problem with spillage and you may want to see if your staff can be trained better. A higher number may also indicate your venue is giving away drinks. Another possibly is thief and you should consider this if you don't see another explanation for abnormally high pour costs.
Music licensing: This can vary but could cost a few hundred dollars per month. In the US this is billed annually and you need to get licenses from 3 separate organizations. You can probably get a deal through your bar association to acquire the licenses from the three organizations.
Rent: This largely depends on the location that you're in and the size of the area.
Dry goods: These can be glassware, nibbles and cleaning supplies. Glassware can be a significant expense as breakage can happen often. In very large venues the monthly bill could be $6,000.
Electricity: This is a major expense and is usually based on sales. For bigger nighttclubs this can be at least $100,000 per year.
Insurance: This can be another significant expense as you need to power your lights and music. The amount depends on the size of the venue.
Legal expenses: This can be highly variable depending on how big your nightclub is Some clubs factor in $100,000 of expenses, but smaller nightclubs could get away with much less.
Capital expenses: This could involve paying back a loan or paying investors.
Promotion: This could be 5-20% of sales. You may not need as much promotion if you're a well known brand in your area. Also if you host events for others it's possible that they will handle the promotion.
Entertainment: This figure would largely depend on the type of music and the number of people involved in the act A single DJ would cost less than a four piece band.
On the low end DJs range from $50-$200 per hour.
Each member of a band would cost $100-200 per hour.
Lighting technicians: You're looking at $16 per hour per person.
Sound engineers: Each will charge $20 per hour.
Dancers: if you choose to hire professional dancers they could charge $150-$300 per night.
Maintenance: Depends on size of venue, bigger the venue, think full time employee(s).
Equipment can be rented or purchased. You may want to purchase if your business is long term. More information will be coming soon about products.
Equipment alone can set you back a few thousand however in my opinion it is small in comparison to the ongoing expense of running a nightclub.
Future development, safety nets and maintaining margins
In this business some nights are up, some are down. You should bank some as a safety net and for future development, generally aim for 10% but the higher the better. If there isn't enough for your future development fund after your safety net try banking more and/or doing something to raise revenue.
Ensuring staffing expenses do not exceed more than 7% of revenue can help maintain margins.
Now that you know the costs of maintaining a nightclub you can start planning and buy some equipment.
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