Tuesday, April 7, 2009

The Right Side of the Bottle


By Gamal Hennessy

There has been a lot written about how the practice of bottle service has become a scourge on nightlife culture. I know this is true because I’ve written quite a few of those articles myself. The recession has exposed a weakness in the business model that might put some operators out of business. But bottles are still flowing and some venues are thriving from it. So what is it that makes bottle service work for some venues and not work for others? A recent study suggests that it’s the patrons that hold the key to long term success.

Anita Elberse, Ryan Barlow and Sheldon Wong are students at Harvard Business School. They recently published a study called Marquee: The Business of Nightlife where they document the financial success of this long running venue and what goes on behind the scenes to make the venue work. One of the many interesting aspects of the study was the breakdown of Marquee’s bottle service clients. While this group is relatively small (40% of the patrons on any given night) they accounted for 80% of the revenue. And while any one could theoretically purchase bottle service, there were three main groups that Marquee provided this service to. There are celebrities who are so famous that they only have one name (think Diddy, Bono, and Paris). There are Upper East Side socialites who inspired the characters in The Devil Wears Prada, and Gossip Girl. Then there are the professionals who recently acquired wealth and were looking for a place to spend it. The last group has dwindled significantly, but between these three groups Marquee made more than two million dollars in their third year of operation.

The other point of interest in this dynamic is the time it took to cultivate the relationships that made bottle service work. The owners of Marquee, Noah Tepperberg and Jason Strauss claim to have spent half their lives developing relationships in the nightlife industry, interacting with potential clients in New York, Miami, Los Angeles and Las Vegas, and using Marquee as a national concierge service for established bottle service clientele. Their main focus was on the client who could consistently frequent the venue over several years, not the stock broker who would spend $100,000 in six months and then burn out. Based on the Harvard study, Marquee’s success is based on a decade and a half of work, not a flashy gimmick.

Marquee connects with people who have money to spend over an extended period of time. Among other things that they do, that practice has kept them running much longer than the average New York venue. Places that try to force bottle service on patrons who don’t have black Amex cards probably won’t last as long in this economy. And patrons who don’t have a name like Bono might want to think twice before trying to live this lifestyle. A prominent promoter I talked to last week explained it very well. ‘I don’t tell my customers what they should do with their money, but maybe the guys coming in from Newark who make $40,000 a year shouldn’t be spending $600 on a bottle of vodka. I think they can have just as much fun running a tab at the bar.’

Have fun.
G

5 comments:

Oremm said...

Here here to that last comment. Reminds me of a particularly lousy night out last year. A friend wanted to go to one of these self-aggrandizing "lounges" where they were ONLY admitting people who were going to purchase bottle service starting at $350. I was having none of that sillyness.

Just as well since on top of the bottle service madness, they wanted to take issue with my hat and shoes. (Polished retro NB's - CLEARLY not meant for running or the gym & a brand-new ZooYork cap. Both were perfectly matched to my outfit - everyone who saw me that night commented that I was particularly well-dressed.) Dress codes are fine, but the point of "no sneakers" is to make sure people are dressing up instead of down. If you couldn't tell just from looking at them - then maybe you don't belong at the rope, b/c your fashion sense is clearly shot.

New York Nights said...

Thanks for reading Oremm and thanks for the comment. I personally think that venues do better when they have a good mix of people with some variation in their fashion sense. There's no need to have every guy in the place wearing a striped button down shirt and jeans. If you know what looks good, stick to it. There are plenty of places where the doorman gets it.

Anonymous said...

Interesting article. I am surprised 40% of the people in marquee have bottle service. There seems to be much more floor space than tables.

I was there for the first time on a Friday night a few weeks ago it seemed pretty dumpy. Although I normally see a great deal of good looking people standing outside. Maybe they do so well because the police blocked off 27th st and everyone has to walk by.

Oremm, ah conformity sucks. I always wear sneakers to clubs. Where there is a will there is a way. Here is a way to do it don't stand in the line it gives them too much time to look at what you have on.

New York Nights said...

I think the numbers from the Harvard study are from the first three years of operation. The 40% that they referred to could be back before the market tanked and the finance, insurance and real estate guys were still expensing bottles in large numbers.

Thanks for the post.

Have fun.
G

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