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Sarah Willingham: The business of party bars

Specifically designed to create bars that can be reproduced and rolled out nationwide, Nightcap, led by former Dragons’ Den judge Sarah Willingham, has quickly become one of the most popular companies in hospitality, as we discovered.

Sarah Willingham, Nightcap
Willingham founded Nightcap in 2020

*This feature was first published in the October issue of The Spirits Business magazine

Sarah Willingham is in the business of bringing party bars to the masses. The former Dragons’ Den star is a serial entrepreneur, investor, finance expert and the CEO of Nightcap, a hospitality empire that takes success and multiplies it.

Willingham and her husband, Michael Willingham-Toxvaerd, founded the drinks-led investment firm in 2020 with a goal of replicating scalable business models with nationwide rollout potential. Since then, the company has acquired some of the UK’s most notable and recognisable party bars, including The Cocktail Club chain (formerly known as London Cocktail Club), The Adventure Bar Group, which boasts an assortment of venues such as the pink-neon-clad Tonight Josephine, Covent Garden’s basement hot spot Blame Gloria, and the Waterloo rooftop-based Bar Elba, alongside the Latin American-inspired bars from the Barrio Familia.

Each venue in the portfolio is recognisably a Nightcap venue, but they have all retained their own identities, something that Willingham has prioritised. “We allow a level of fluidity to let individuality shine, while putting structures and processes underneath that allow for a sustainable rollable concept,” she says. “The key to a successful rollout is retaining the individuality, the spirit and the magic, the real soul of the site and the business, but putting systems and processes into place so that you have consistency.

“Personality and individuality [of our bars] never takes a backseat. First and foremost, every time we open a bar, we don’t think ‘oh, we’re opening another Cocktail Club’, we think ‘we’re opening a new bar that we want to be one of the most popular in Exeter, or Bristol, or Mansion House, or wherever we are’.”

Golden formula

Of course, there is a formula to scaling a business to the level of success Nightcap has seen over the past three years. The company generated £10.8 million (US$13.2m) in revenue during its fourth quarter, bringing its full-year revenue for fiscal 2022 to £35.9m. The group is said to now be regularly surpassing a weekly revenue of £1m.

“There are bits that we know work and that we don’t mess with,” Willingham continues. “At The Cocktail Clubs, the bar is always the heartbeat of the site that we choose, and we’ve got the signature swinging lights. We have started to take some ground-floor sites, which is controversial and exciting, and they’re working, but there’s no doubt that The Cocktail Club lends itself to dark underground basement sites.”

There are now 17 bars in The Cocktail Club family

This ‘if it ain’t broke, don’t fix it’ approach extends across Nightcap, with scalable recipes applied to each new opening. The openings are coming in thick and fast, something that Willingham credits to her love of scaling: “That’s the bit I’m good at – taking somebody else’s magic and putting in a framework, with foundations and structure to allow the magic to flourish.”

That magic is now flourishing throughout the UK thanks to Nightcap. Barrio Watford is soon to become the first in the Familia to be found outside of London, and larger formats of Tonight Josephine are in the works for Bristol and Liverpool. The Cocktail Club saw the doors of its largest venue to date open in Birmingham in September, while Canary Wharf became the 17th site in the collection in October.

Nightcap’s business model has been built to target a ‘resilient’ millennial audience, one that has shifted away from mid-market hospitality chains in favour of experience-led, quality nights out in unique, local-style venues.

However, generational swings are taking place, and a new late-night target audience is making its way up – but will this passing of the generational baton affect the way Nightcap will need to be run?

Meeting a need

Willingham doesn’t think so. Looking at how the UK’s nightlife culture has changed in the past decade, she believes the Nightcap venues are providing what consumers are now looking for on their nights out.

“Back in my day we used to go to a bar or a pub, and then we would go and queue to get into a nightclub, which would service our party needs between midnight to 3am. There’s definitely been a shift away from that. Now people don’t want to leave the bar; they want the bars to provide that late-night party. We’re finding that people are wanting to stay, as long as they know the music’s gonna get ramped up a bit and there’s space to dance.

“And that’s what we do, we do great party bars. We are taking on late licences. That’s us reacting to the needs of our consumers, and is a reflection of what the late Gen Z-Millennial crowd want: they want to be able to start the night drinking a decent cocktail (often with a happy hour); they want to be able to have a conversation; and then the option to stay for a party, and that is the big cultural shift.”

With scale comes a need for infrastructure. Nightcap is now close to employing 1,000 members of staff at its sites, and the firm launched Nightcap Bar Academy in August as part of the firm’s investment plans. “We need to make sure that we’ve got the right people in the right places to train,” Willingham says. “It’s much easier to do that when you’re growing because the management sees a future, which is also great for staff retention.”

Girls just wanna have fun at Tonight Josephine

The speed at which Nightcap is expanding its portfolio has been driven by the £14m in capital it raised in May 2021, and the £10m in financing recently provided by HSBC. By spending that money wisely and investing in the opening of new venues that generate a lot of cash (the group currently generates a Return on investment of 75%), the cycle is starting to pay for itself very quickly.

“It won’t be long before the amount of EBITDA [earnings before interest, taxes, depreciation, and amortisation] that comes out of the business actually pays for an extremely aggressive rollout schedule itself,” says Willingham. “There’s always a little bridge when you get there, and the HSBC loan gives us that ability to be able to stretch that, which is really, really important to us.”

Elephant in the room

There is, of course, a different financial elephant in the room that we were keen to discuss with the entrepreneur. With inflation and interest rates spiralling, how does the former Dragon plan to weather the impending recession? “The important thing is that we remain very agile so that we can take action extremely quickly. What’s really important with all of these businesses is to know we’re not driving an oil tanker, taking a month to turn one degree, we’re all on jet skis, and I want us to feel like we can react to things, see opportunities and move quickly if we need to.”

Willingham continues: “A lot of people often look at entrepreneurs and think we’re risk takers, but it could not be further from the truth. I’m all about downside protection, and I’m actually quite risk averse from that perspective. So we will, if we need to, adjust our capital expenditure and our growth to react to the change in the market, as well as adjust our operational model.

“One of the things that’s absolutely certain, certainly in the recessions that I’ve been through, is average is what fails. As long as you remain the best of the best, and are still the bar of choice, you will ride through the storm. That’s the most important message to our teams – be proud of what you do and continue to bring the magic. It’s never been more important, actually.”

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