The group, led by former Dragons’ Den star Sarah Willingham, has released a trading update for the first 26 weeks of its financial year ended 31 December 2023, stating revenue had risen by 42.1% to £33.4m for the period versus the same period a year ago.
It said this was driven by the acquisition of Dirty Martini, the successful collaboration with The Piano Works over the Christmas period and the maturing of sites opened in the previous year.
On current trading and the future, the group said business has “been challenging” since the start of 2024 and it expects this to continue until the end of its 2024 financial year (FY24).
It expects the start of a gradual recovery later this year as lower inflation, lower energy costs, lower interest rates and higher disposable income begin to “embed” in the economy and improve the financial outlook for its customer base.
Remain optimistic
It added: “The group is trading in line with market expectations. The Nightcap estate is of a higher quality, better operated and with better trained and more engaged teams than ever before. We therefore remain optimistic about the future of the group.”
In its trading update, adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation) increased 5% to £2.1m (versus the same period in FY23) despite train strikes and “higher-than-expected Dirty Martini integration costs”.
The Piano Works acquisition was completed on 19 February 2024, securing the Piano Works presence at our Covent Garden site, adding a new site at Farringdon and providing the opportunity for Nightcap to roll out The Piano Works concept further.
Like-for-like sales decreased 10.0% for H1 FY24 largely due to the ongoing train strikes and the impact of the cost of living crisis.
Nightcap CEO Sarah Willingham said: “I am pleased that we continue to show great progress in building the UK’s leading bar group. Five acquisitions and 13 openings in just over three years is an incredible achievement.
“To deliver an increase in revenue of 42.1% and an increase in IAS 17 Adjusted EBITDA of 5% for the half year during such a tough period for the hospitality industry is down to the dedication of our incredible team.”
Sticky dance floors
She continued: “We set out to build a great business at the back end of Covid and the economy has moved through several additional challenges from the energy crisis and rail strikes to interest rates, inflation and cost of living crisis – throwing just about everything at us.
“This environment is where some of the best businesses are built. With a rapidly changing landscape away from nightclubs and sticky dance floors to late-night party bars that are safer, more flexible and more inclusive environments.
“No other bar group is as well positioned to take advantage than Nightcap with the brands and estate that we have acquired and built over the past three years.
“While we have entered the next stage of our development where we will start to enjoy the benefits of the scale we have built in a short time, I continue to see great opportunities for growth in the market. Our ambition to double the size of our estate in the medium term is achievable.
“We expect the second half of FY2024 to continue to be uncertain and challenging, but I believe hospitality has gone through the worst of this downturn with many economic indicators showing a likely recovery later on this year.”
