Why bar owners are happy to see the Dow decline
By Charles Passy, Reporter
August 24, 2015
As the Dow DJIA, -3.57% drops, could bars enjoy a bullish run?
That’s the question many bar owners are asking in light of the ongoing stock market decline. The theory is that investors are likely to reach for a cold one — or two or three — when they see the hit their retirement accounts have taken. And for bars close to financial hubs, like New York’s Wall Street, there’s a potential added boost from financial professionals looking to unwind after a long day minding the ticker.
People seemed to be feeling thirstier recently at the Dead Rabbit, a popular bar located near Wall Street, which says it saw a 33% jump in business last week compared with the same time a year ago. And while the Dead Rabbit’s management team says other factors may be partially responsible for the boost, including the fact the bar was recently named “World’s Best” at a prestigious industry gathering, they also say that when the Dow tumbles, people feel the need to socialize.
“You definitely have spikes when the market does something interesting,” says Peter Poulakakos, whose company, HPH, owns the Dead Rabbit and other prominent New York watering holes, including Harry’s, Pier A Harbor House and Ulysses’ Folk House.
Which is not to say that sustained bad market news is good news for the bar business. While the liquor industry itself has long been considered recession proof — in 2008 and 2009, booze brands actually saw sales growth of 1.7% and 1.4%, respectively, according to the Distilled Spirits Council of the U. S. — bars aren’t as insulated from downward economic trends. From 2007 to 2009, bar revenue dropped 10% to $17.9 billion, according to industry researcher IBISWorld.
Jon Taffer, a veteran bar industry consultant who hosts “Bar Rescue” on the Spike cable network, puts the matter into perspective by noting that when the market tanks on a given day, the “lick-your-wounds culture” kicks in and there’s a need to gather at the local watering hole and dissect what happened. But when “it happens again and again, it’s not an incident, it’s a bummer,” says Taffer. And that’s simply no longer a boon for business, Taffer adds.
Of course, there are ways to lick your wounds beyond enjoying a cold one. And that may explain why marijuana entrepreneurs are wondering if market spikes will have a positive effect on their business, especially in the four states (Alaska, Colorado, Oregon, Washington) where pot has been approved for recreational use. Granted, the era of legalized pot has largely come after the 2008-09 market decline, so it’s difficult to put the question into historical perspective. But Wendy Robbins, co-host of “The Marijuana Show,” a Web-based reality series that’s been dubbed “’Shark Tank’ for ganjapreneurs,” says some pot proprietors see dollar signs in today’s market woes.
Reaching for a joint in tough times “is just like someone having a martini,” says Robbins.