Zagat Takes the Pulse of New York Nightlife

By Gamal Hennessy

The first name in restaurant reviews moves into its 40th year with its annual nightlife guide today. In addition to a broad based look at venues in all five boroughs, the book looks at the trends emerging in both patron behavior and new venues. While some of the data reflects the impact of the recession, the overall picture shows that New York remains a prime location for nightlife.

Zagat started in 1979 as a collection of reviews for New York restaurants. Over the next four decades the company has expanded to dozens of cities and offers books and websites on shopping, dining and nightlife. The 2009/10 Zagat Nightlife Book used a survey of 6,000 nightlife patrons to determine that while people have changed their behavior because of the economy, nightlife as an industry has proven resilient to the downturn.

According to Zagat, New York City currently has more than 1,300 nightlife venues, including 100 new venues added in the past year. This finding is supported by our own Club Report that has continued to track new venues opening almost every week in spite of the economy. While there is no mention of how many venues were lost in 2008, the number of new venues is remarkable considering the economy and the stiff competition for drinking dollars. When you look at the contraction of other local industries in the past year, the Zagat data shows the strength of nightlife as an economic force in the city.

When it comes to the behavior of nightlife patrons, there is a definite shift toward less extravagant evenings. People are opting to go to less expensive venues, ordering fewer drinks when they go to their normal venues, or going out about half as much as they used to in an effort to save money. There was no information on the impact on bottle service, but anecdotal conversations I’ve had with promoters and other operators back this up this finding. In 2007-8 the average spent per person on liquor used to be $50-75 per night, now that number is down to $25-40.

The Nightlife Book also tracked other trends. It found that rising areas of popularity for nightlife include LES, Harlem, Park Slope and Williamsburg. It found that more new venues are underground speakeasies as opposed to the rooftop bars that have been in vogue for the past two years. It also found that the speakeasy trend is supporting a parallel rise in mixology in both new and established venues.

The 2009/10 Nightlife Book is available today and www.zagat.com has updates that can be delivered to your handheld.

Have fun.
Gamal

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