Why bars, nightclubs are closing their doors

The vibrant nightlife of Kampala, undoubtedly East Africa’s party hub, is undergoing a seismic shift as a wave of high-profile bars and nightclubs close their doors, leaving patrons and proprietors bewildered. 

Earlier this week, Gabz Bar and Lounge, located on Luthuli Avenue in Bugolobi, joined the growing list of these establishments that have recently shuttered.

The closures, which include Levels Lounge opposite Uganda Museum in Kamwokya, The Garage on Tuunde Road in Ntinda, Luxe on John Babiiha Road in Kololo, and Mevek Lounge on Ntinda-Kisaasi road, are just a few examples of once-vibrant venues that have gone with the wind in the past six months. The list of casualties is expected to expand, according to industry experts.

The big question, however, is: why are these establishments shutting down? Interviews with industry insiders, bar owners, and patrons reveal a complex narrative that intertwines economic challenges, shifting consumer behaviours, and the lasting impact of the Covid-19 pandemic.

While the closures may seem sudden, the writing may have been on the wall for some time.

Struggling to break even
Morgan Kamoga, popularly known as Morgan MC in the nightlife circles, hosts theme nights at various bars and nightclubs across the city. He sheds light on a sobering reality within the financial landscape of these nocturnal establishments, admitting that “most bars struggle to break even.”

The equation for many bars is straightforward yet unyielding. They flourish primarily on select nights, typically weekends, when the city pulses with partygoers seeking an escape from the mundane.

However, the challenge lies in the remaining days of the week. Despite being open and prepared to serve, foot traffic significantly dwindles, forcing bar owners to shoulder operational costs without proportional returns.

For proprietors, operational costs have become an insurmountable burden. These costs encompass a myriad of expenditures, including rent, on-duty staff salaries, electricity bills, backup generators and fuel, equipment maintenance, and the ever-growing burden of taxes imposed by authorities. 

The predicament is exacerbated by the fact that revenue generated from bottle sales, the primary income source for bars, often falls short of covering these escalating costs.

Joel Martin Sengendo, a bar manager in Kololo, expresses the challenging tightrope act. He tells Sunday Monitor thus: “We must keep the lights on, pay our staff, and maintain the ambiance that draws patrons in. However, with operational costs soaring, the profit margins from bottle sales on certain nights simply aren’t sufficient.”

Despite the fluctuating patronage, bar owners remain steadfast in meeting their financial obligations. The livelihoods of staff members, from bartenders to security personnel, hinge on their wages. This unwavering commitment results in a relentless cycle of financial strain, pushing bar owners perilously close to closure.

Survival for the fittest
Japhet Higiro, a director at the recently closed Gabz Lounge, says their closure was a strategic move to adopt a new business model and compete favourably in the nightlife industry. He further adds that the proliferation of bars across the city makes it challenging for each one to sustain genuine profitability, fostering an environment where only the best survive.

Dr Innocent Nahabwe, who owned the now defunct Club Amnesia, emphasises that the volatile nature of nightclubs and bars prompts the market to continually shift towards the latest establishments, often causing the downfall of existing businesses.

Rugiirwa Katatumba, the chairperson of the Bar, Club, and Entertainment Owners Association, says one of the most significant challenges faced by bar owners is the exorbitant cost of rent, especially in prime locations. 

“Many high-end bars in Kololo, Nakasero, and Bugolobi pay an average of $10,000 (Shs38m) per month. Just imagine how much they need to sell in booze merely to cover rent, before factoring in other expenses,” he discloses.

Besides the staggering rent costs, taxes imposed on bars in popular areas add another layer of financial strain.

Shifting consumer behaviours
When Dr Nahabwe opened Club Amnesia on Plaza Building in Kampala more than 10 years ago, he observed that most, if not all, nightlife establishments at the time imposed an entrance fee at their doors. This was in addition to the charges for drinks people bought while partying. He recalls that during that period, a bar like his could generate a minimum of anywhere between Shs10m and Shs15m on a good night.

“On such a busy night, I would have around 70 staff on duty,” he recalls, emphasising that it was quite manageable to pay his staff and all bills because he had leverage on both entry collections and drinks.  As time passed, Nahabwe noticed an influx of new bars, especially open-space spots that later became known as lounges. These lounges offered free entry and exit, making them a favourite for partygoers at the time.

This trend prompted him and some colleagues in the enclosed bar business to eliminate entry charges to remain competitive. Consequently, they now relied solely on drink sales to sustain their operations. It is this that, Nahabwe notes, became the biggest challenge bar and nightclub owners face. It is so grave to the extent that many hangout places have ended up closing simply because profits off drinks alone hardly enable one to stay afloat.

In a statement announcing the closure of Club Amnesia in August 2019, Nahabwe emphasised, “We should, as business owners, be aware of the trends our industry is taking and, if possible, anticipate the direction our consumer habits are heading.”

On why there is a deluge of bars closing nowadays, Dr Nahabwe is quick to cite the challenge of dealing with a big number of partygoers who only hop from one bar to another without settling at any particular venue.  

Morgan MC concurs, stating that some revellers enter a bar but spend considerably less on drinks, opting for only one or two bottles throughout the entire night. Addressing the reasons behind this behaviour, Eva Nakato, a nightlife enthusiast, points to economic hardships hindering people from overspending on alcohol in bars.

“The prices of alcohol in bars are inflated simply because it’s their only profit catch. Unfortunately, a large section of the bar clientele is facing economic hardships and would rather allocate more funds to other necessities than alcohol,” she says. 

Nakato notes that despite economic challenges, these patrons still seek the nightlife experience.
Consequently, some individuals choose to consume drinks purchased at regular prices from home or their local bars (Kafunda) and only visit the bigger bars for one or two drinks, thereby saving money. In simple terms, they visit the bar for the experience rather than primarily for drinking, affecting bar owners who traditionally rely on drink sales as a significant source of revenue.

The road ahead
Bars continue to grapple with numerous challenges, prompting proprietors to explore innovative solutions to navigate the storm. Strategies such as introducing more creative theme nights, collaborating with event organisers, and diversifying offerings beyond alcoholic beverages have been employed to attract a broader customer base.

Dr Nahabwe says the key for nightclub and bar owners is to operate their establishments for a period, perhaps a few years, and then strategically close and open elsewhere. He argues that this approach pays off in the long run because patrons tend to associate with newer establishments rather than those that have outlived their uniqueness. Nahabwe emphasises that when a bar is in its prime, selling becomes more lucrative, enabling it to recoup its initial investment costs in a short period, as it becomes a favourite among the masses.

Once the peak has been reached, proprietors should shift their focus to earning from the establishment while planning to close it and open elsewhere with a more unique space and experience. This cycle allows for a continuous rejuvenation of the business, ensuring sustained interest and appeal among patrons.

Covid-19 factor

While the correlation between Covid-19 and the closure of bars during and shortly after the pandemic is undeniable, Rugiirwa Katatumba, the chairperson of the Bar, Club, and Entertainment Owners Association points out that the association he leads currently has more than 2,000 registered bars and clubs in Kampala alone. 

“We lost around 356 bars alone in Kampala due to Covid-19 because tenants couldn’t afford to maintain the rents during and after Covid,” he states.

With all this in play, understanding the extent of Covid-19’s influence on the current trend of bars closing doors requires a deeper exploration of the coping dynamics people employed during the pandemic.

For many, the pandemic served as a catalyst for re-evaluating priorities and reconsidering traditional socialising norms. The periodic lockdowns and restrictions on nightlife activities during the pandemic forced individuals to explore alternative ways of maintaining social connections. 

House parties, virtual hangouts, and private gatherings became the norm, offering a level of control and safety that was elusive in public spaces like bars and nightclubs.

“The pandemic taught us the value of our personal spaces and the importance of being selective about where we choose to socialise. Many realised they could create memorable experiences without being in crowded bars or clubs,” asserts Nakato.

Joan Bella, a bar and nightclub marketer in Bugolobi, another Kampala suburb, acknowledges that post-Covid, the number of nightlife revellers went down. She attributes this to the surge in alternative entertainment options people got accustomed to when the pandemic curbs were in place.

Bella notes that pre-Covid, bars and nightclubs thrived on live performances, DJ sets, and theme nights and events that kept patrons returning, something that the pandemic disrupted. This disruption called for more unique experiences, forcing establishments to rethink their business models. 

For some who have since failed to adhere to this reality, they are the ones making the difficult decision of closing down.