Gen Z Is Drinking Less and Clubs Aren’t Thrilled

David Slutes says it took him a while to notice that bar tabs had fallen at a number of the shows he oversees at the 325-capacity Club Congress in Tucson, Ariz. “Coming out of COVID-19, everything about the live-music business was turned upside down,” says Slutes, who serves as the venue’s entertainment director. “We weren’t sure why the numbers were like this. Then we did a deeper dive, and at every event aimed at a Gen Z crowd, we saw numbers that were very different” — money spent on alcohol dropped by as much as 25% relative to shows that catered to older generations. (Gen Z refers to those born between 1997 and 2012.)

“Gen Zers are just simply not drinking the same amount” as their predecessors, Slutes says. Dayna Frank, president/CEO of First Avenue Productions, a concert venue and promotion business in Minneapolis, remarked on the same shift during a recent panel at the Music Biz conference in Nashville: “One of the big trends we’re seeing is that Gen Z doesn’t drink as much,” she told the audience. “They’re either eating edibles before they come or there’s more of a sober, mental health [focus]… Most of the ticket price goes on to the band, so really what [venues] subsist on is beverages. That’s not going to be a sustainable revenue stream.”

This change in behavior appears especially noticeable at smaller venues. “It’s an interesting thing to applaud on one hand” — Gen Z’s embrace of healthier habits — “but [we] have to be creative about making money on the other,” Slutes adds.

Alcohol consumption “has been declining in adolescents and in young adults for the past decade and a half, maybe even two decades,” according to Ty Schepis, a professor in the psychology department at Texas State University. Schepis co-authored a 2020 study that found that the number of college students from ages 18 to 22 who abstained from alcohol increased from 20% to 28% between 2002 and 2018. Rates of alcohol abuse in that group were nearly cut in half in the same period.

In addition, “the amount that people [in this cohort] drink when they do drink tends to be lower than it was in older generations,” Schepis says. “This is most obvious in Gen Z, but this is a continuation of a trend.” Also notable, if not surprising: Schepis’ study found that use of marijuana, which is now legal for recreation in over 20 U.S. states, increased among college students.

Not every small venue is seeing a change in the way concert goers spend their money. Anthony Makes, who runs the independent concert promotion company Brooklyn Made, hasn’t noticed much shift in alcohol consumption at his venues. (He says there are big differences across genres — country and rock tend to be “drinking shows,” for example — but those are not new.) On the flip side, Mikey Wheeler, who worked as the general manager at the Mohawk in Austin, Texas until recently, saw drinking fall regardless of age. “Alcohol sales per person has dropped since reopening” after the pandemic, he says. “Not even just from Gen Z, but from our older audiences as well.”

While a drop in drinking may have a positive health impact, it does represent a potential challenge for some venues. “Bar sales are important for every music venue, but especially for smaller ones since there aren’t as many revenue sources compared to the large arenas,” explains Evan Johnson, talent buyer for Daydream State, which owns and operates several music venues in Seattle. “Ticket prices and fees are generally cheaper in smaller rooms, so there isn’t as much money being brought in [for the venue]. Bar sales are where venues can hope to profit off any given show.”

Meanwhile, as this revenue stream dries up at some concerts, venue costs have risen. “The cost of insurance is going up, labor costs are going up — there’s so much pressure on these spaces that are not particularly profitable endeavors in the best of times,” says Stephen Chilton, owner/talent buyer at the Rebel Lounge. “This is making those margins even tighter.” At Music Biz, Frank said her venues’ costs have risen by 30%.

Wheeler says it’s more important than ever for venues to “find the other revenue streams that might be healthier for our guests.” Supplemental income could come through “getting a solid private events program going at times that your venue is not being utilized,” selling venue merch, and stocking various “sparkling waters and kombucha” to entice “guests that aren’t necessarily wanting to have a bunch of alcohol.”

Slutes is tinkering with new programs that might help boost beverage sales. “Things I laughed at a year or two ago, like mocktails, we’re now really looking into,” he says. He also points to CBD-based drinks as a possible way to make money from music fans who are more interested in cannabis than booze.

But Chilton says: “If this trend goes too much further, that could put a lot more [financial] pressure on small venues.”