Things are looking up for the nightclub industry


Entertainment businesses are subject to a great deal of regulation, and none more than the nightclub segment. The industry is used to having to comply with rules about room occupancy, food safety, alcohol service and noise limits, but nobody expected regulators to clamp down on dancing. Not until 2020, that is.

“We were shut down almost entirely for two years,” says David “Pup” Johnston, owner of The Blue Grotto, a legendary 21-and-over live-music club in Kamloops, B.C. “When they said no dancing allowed, we said at least we could bring in shows.” But in the fall of 2021, half the 50 attendees at a live event contracted COVID.

“Our ventilation system is better than a surgical room, everyone was in their seat, they were segregated; the only thing we could figure out is that people were probably socializing before and after the show,” he says.

Yes, it’s been a rough few years for the nightclub industry, but things are finally looking up. The main challenge for venue operators now may be to figure out how to cater to a new crop of adults who’ve reached the age of majority during lockdown and don’t know what to expect from a night of clubbing.

Rebounding attendance
Before the pandemic, the industry was going through a slow period, partly related to changing public attitudes towards alcohol consumption; then COVID closed venues entirely. Global industry research firm IBISWorld reports that the Canadian bar and nightclub market contracted by 3.3 per cent between 2017 and 2022, but predicts 8.7-per-cent growth in 2022 as an entertainment-starved population gains confidence in attending public gatherings again.

Sector-specific figures are tricky to pin down, since no single Canadian body is responsible for nightclubs. Even defining the sector can be difficult, says Erin Benjamin, president and CEO of the Canadian Live Music Association, based in Ottawa, which speaks for live-music venues.

“If dancing to a DJ is the primary reason people go there, it’s a nightclub,” she says. “If they go for live music, it’s a live-music venue.”

Johnston elaborates: “In a concert theatre, you can’t dance. In a bar, you can drink, but it’s not a place where you would get up and dance. A nightclub is that last place you go in the evening; it’s the place you go and enjoy yourself and dance with a stranger.” Complicating matters is the fact that some venues operate as a restaurant or bar in the daytime, but turn into a nightclub after dark. Others offer DJ dancing through the week and live music on weekends.

Opening doors again
In Kamloops, there’s only one other true nightclub apart from The Blue Grotto, Johnston says, but he and his wife Sherri Lynn King are in the process of re-opening a renowned local spot previously called Cactus Jack’s, which they are re-branding as The Nightshift on Fifth.

Others are likewise cautiously expanding. “The last two years were not the right time to open a 400-seat nightclub,” says Ryan Moreno, CEO and co-founder of The Joseph Richard Group, based in Surrey, B.C., which operates numerous properties across B.C.’s Lower Mainland. Now, however, the company is re-launching Rooster’s, an iconic Fraser Valley cabaret, and “we’ve completely re-vamped and renovated all the spaces,” he says.

In Toronto, too, things are starting to percolate again, says Rob Lisi, VP of Marketing with Charles Khabouth’s INK Entertainment Group. “Throughout the pandemic, we had to continuously adjust and adapt our nightclubs to accommodate the various restrictions; Cabana Pool Bar, for example, re-opened last year as an outdoor restaurant instead of a day club,” he says. “With that in mind, this year we have focused on getting our nightclubs and day clubs back to ‘normal’ at full capacity and providing some incredible experiences that our guests have been missing.”

There’s a pent-up demand for in-person entertainment, but “people are still very cautious,” says Erin Benjamin, who notes that the 40-plus audience is buying fewer event tickets and failing to use up to 20 per cent of the tickets they do buy. Also, she says “we need to be thinking about marketing to younger folks in a different way.”

Attracting new audiences
Inflation, real-estate costs and labour shortages notwithstanding, an “elevated experience” is what today’s nightclub guests demand. “We have seen a new, younger audience emerge at our nightclubs, including Rebel and Toybox, who weren’t 19 prior to the pandemic and want to make the most of the bigger nightclub experiences they missed out on with their friends,” says Lisi.

With younger nightclub patrons, tequila is having a moment, as are fruity, low-calorie vodka spritzers and hard seltzers such as White Claw, Truly, Nude and NÜTRL, apparently perceived as health-conscious options. The “elevated” side of the equation is satisfied by craft cocktails, which Moreno reports seeing more: “made from scratch, with multiple components; a lot of them are hand-curated ingredients.”

However, at The Blue Grotto, “I have tried to offer craft cocktails, but all we’re going through is Corona and vodka,” says Johnston, who reports that “if anything, I’ve found people have simplified their tastes when they come to my venue.”

Based on the demand for spritzers and seltzers, “I felt there was a trend leading to low- and zero-alcohol spirits,” he adds, “but nope, people don’t go for it.” Instead, he sees familiar demographic trends: craft beer for the hipsters (“the people who wear toques all summer”); pilsener for metalheads; PBR (Pabst Blue Ribbon) and Miller High Life for the punk scene. Otherwise, Corona, vodka with soda and lime or cranberry juice and the ubiquitous seltzers are the crowd favourites.

The ”app” in “appealing”
Social media, which has grown significantly over the pandemic, is a potent tool for reaching the new clubbers, and one that high-profile venues such as rapper Drake’s History in Toronto are using extensively.

“Instagram has always been an effective platform for us, even more so since the introduction of Reels, which has allowed us to create more meaningful content. TikTok has extended our reach even further, with an opportunity to create unique content that has longevity and can go viral in a short period of time, with minimal spend,” says Lisi.

“In the past, it would take us two to three days to create a recap video from an event, whereas now we can create and post content in real time, which drives our engagement and allows us to post a higher volume of content for each venue,” he says.

But social media can be a double-edged sword, say other operators. “It gives us connectivity to our customers in ways we didn’t have before; it’s also a lot easier for negative experiences to get shared really quickly,” says Moreno, pointing out that instant connectivity has upped the ante for food presentation, decor and overall impact: “The guests’ expectations are higher – and they should be.”

The long view
The future is “incredibly bright,” says Benjamin. “If other international markets are indicators, things will continue to be really positive. As long as government understands what kind of resources we’ll need, I think we’ll come out the other side of it.”

“Evolution is just part of our everyday,” says Moreno. “One of our passions is to create unique experiences; if COVID has shown us one thing, it’s that those experiences are still appreciated.”

By Sarah B. Hood

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