Rekom: UK's Nightlife Giant Faces Turbulence, Contemplates Restructuring Amid Rising Costs

The United Kingdom's prominent nightclub operator, Rekom, is confronting financial hurdles and has announced plans to bring in administrators to address rising operational costs. The company, known for managing popular brands such as Atik and Pryzm, is contemplating a business restructure, with potential closures looming for some of its well-established nightclubs.

Rekom acknowledged the past year as a particularly challenging period for the industry, attributing its struggles to heightened energy prices and a reduction in patronage, notably from students cutting back due to the escalating cost of living.

The operator, responsible for approximately 35 clubs across the UK, revealed last year that its nightclubs were grappling with poor midweek trading, traditionally fueled by student activities. The impact was particularly pronounced on the larger venues in Rekom's portfolio.

On Monday, Rekom filed a notice of intention to appoint administrators for multiple companies within its group. According to Peter Marks, the chairman of the firm, this notice provides the business with essential "breathing space and protection" to collaboratively work with lenders, landlords, and stakeholders on a potential restructuring plan.

In addition to the financial strain imposed by the cost of living on its customer base, Rekom cited unexpected cost surges. The company anticipates further challenges following a minimum wage increase announced in the government's latest autumn statement, requiring an additional ￡2 million in wages.

Mr. Marks acknowledged that these circumstances compelled the recognition that the group could not sustain its current structure. He emphasised the necessity of the impending restructure to ensure the company's strength and viability in the future.

Addressing potential closures, Mr. Marks stated, "For any venues that may not continue as part of Rekom UK, we will do our best to find new owners and save jobs." The specific venues facing potential closure remain unclear, but Pryzm in Watford, Hertfordshire, shut down in January, with its owners citing a lack of alternatives.

Despite the challenging conditions, Rekom highlighted the success of its Nordic bars, including Heidi's Bier Bar in Birmingham and Cardiff, and Proud Mary in Cardiff and Swansea, which surpassed expectations.

Previously operating under the name Deltic Group, Rekom acquired the business in late 2020 after Deltic Group fell into administration due to the severe impact of the Covid-19 pandemic. Rekom also reassured that its bars and clubs in Denmark, Norway, and Finland would remain unaffected by the restructuring in the UK.