NTIA survey shows the devastating impact of cost inflation on night-time economy businesses

Following extensive research carried out by the NTIA into over 200 businesses within the night-time economy, 53.2% of respondents are seeing a 30% increase in operating costs compared to pre-pandemic levels.

  • 48% of respondents are ‘barely breaking even’ when asked if their business is still profitable based on the increase in trade cost, with a further 20.2% stating that they’re losing money.
  • 44.7% of respondents are ‘unsure’ if their business will survive the next 12 months, with an additional 20.8% stating they are “not confident”
  • Those who have renewed both Gas & Electricity contracts in the last 4 months have seen a 37% Increase in Energy Costs, with contract renewals in Electric seeing up to 54% increase and Gas contracts seeing up to
  • 151% increase for businesses.
  • 36.5% of respondents say their weekly sales have dropped by 30% in comparison to pre-pandemic trade levels, A further 15.5% of respondents have experienced up to a 50% loss in that period
  • Respondents on average were still carrying £133,957 worth of Supplier and Bank/Loan Debt

The culmination of pandemic debt, growing energy bills, workforce challenges, supply chain, increased insurance premiums and product cost increases have created a perfect storm. Operating cost pressures coupled with consumers with less disposable income have seen the early stages of a recession with slowing ticket sales and visitor frequency.

There is still some way to go to see the true impact of cost inflation on businesses, with over 53.8% of respondent businesses still renewing energy contracts. The uncertainty on costs and trading levels has seen over 44.7% of respondents “unsure” whether they will survive the next 12 months and 20.8% stating they are not confident, we need the Government and Chancellor to be decisive through a financial intervention.

The Chancellor must consider measures to support businesses, with business leaders calling for a reduction in VAT to 12.5% and an Energy Cap for SME Businesses.

Michael Kill CEO of NTIA Says:

“These figures are extremely hard to ignore, the situation is worsening day by day, with operating costs becoming untenable. We are starting to see the impact on customers through slowing ticket sales, bookings and frequency of visits.

Our industry is still extremely fragile, many will struggle to survive another crisis.

Time is running out, the Chancellor must act now, and answer the calls from the industry to reduce VAT back down to 12.5% and an energy cap for SME businesses.”

The Night Time Industries Association (NTIA) is the leading trade body representing businesses in the night-time economy in the UK. It has more than 1400 members, including nightclubs, bars, casinos, festivals, and supply chain businesses.

NTIA Survey of Cost Inflation & Trading Conditions
Case Studies of 200 Businesses within the night-time economy:

Pubs 25.6%
Nightclubs 21.6%
Late Night Bar 14.6%
Hybrid Venue 7%
Restaurant 7%
Live Music Venues 5.5%
Supplier 5.5%
Events Space 3%
Other 10.2%

Trading Conditions:

  • 36.5% of respondents say their weekly sales have dropped by 30% in comparison to pre-pandemic trade levels.
  • A further 15.5% of respondents have experienced up to a 50% loss in trade compared to pre-pandemic sales.

Energy:

  • 53.8% of Respondents are still to renew energy contracts in the coming months.
  • Of respondents who have renewed a contract within the last 4 months 44.3% have renewed both Gas & Electricity Contracts in the last 4 months / 40.9% Only Electric & 14.8% Only Gas.
  • Respondents who have renewed both Gas & Electric in the last 4 months have seen a 37% Increase in Energy Costs / Electric Supply Renewal up to 54% increase in cost & Gas up to 151% Increase in Costs.

Costs:

  • 53.2% of respondents say that their average running costs (wages, products, utilities, etc.) have increased up to 30% above pre-pandemic levels.
  • A further 24% have experienced at least a 40% increase in cost, 9% of which experience almost a 50% increase compared to pre-pandemic costs.
  • 48% of respondents are ‘barely breaking even’ when asked if their business is still profitable based on the increase in trade cost, with a further 20.2% stating that they’re losing money.
  • Respondents on Average were still carrying up to £133,957 worth of Supplier and Bank/Loan Debt.
  • 44.7% of respondents are ‘unsure’ if their business will survive the next 12 months, with an additional 20.8% stating they are ‘not confident’.
  • 54.8% of respondents say their business have ‘little scope’ to increase prices within their local market, with a further 20.8% stating they have no scope whatsoever.

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About the Author

Director and DJ, Ian French (Naif) is passionate about many genres of music from Breakbeat and Drum & Bass to Techno and Electronica. A man that lives in a world of bass and beats, Ian is an obsessive collector of music and a true geek at heart, with many years spent in application design.