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Stellar Brand Equity
L.A.’s SBE Group Takes Nightlife to New Levels By Taylor Rau
At only 29 years old, real estate and development visionary Sam Nazarian already had achieved celebrity status in the hospitality industry, and that had less to do with his being in Hollywood than it did his far-sighted take on the evolution of nightlife as we know it. By any media-given nickname, Nazarian indeed has become the patriarch of profit, and his organization, the SBE Group, has evolved along with that vision to become one of the most solid and successful nightlife entities in existence. And, while the beginnings of SBE’s financial and creative foray into the on-premise realm garner interest, it is where this company
is today and where it plans to go tomorrow that truly captures the imagination.
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Key executives of Los Angeles’ prolific SBE Entertainment Group keep the company’s nightlife holdings (such as the new Hyde Lounge seen here) operating smoothly. Pictured, from left to right, is Reza Roohi, president of SBE Restaurant Group (SBERG); Brent Bolthouse, co-president, Bolthouse Productions; Costas Charalambous, VP of Sunset Crescent Management Company, which operates SBERG’s clubs; Daniela Danilovic, director of VIP guest services, SBERG; Sam Nazarian, CEO and founder of the SBE Group; Arich Berghammer, chief operating officer of SBERG; and Jenifer Rosero, co-president, Bolthouse Productions.
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The Creation of Concepts SBE Entertainment Group, to set the stage, is a privately held acquisition, management and development firm with expanding areas of interest in real estate, hospitality, restaurants and independent film production. Established in 2001, Los Angeles-based SBE Entertainment Group is the parent organization for a growing enterprise, which includes SBE Real Estate Group, SBE Hotel Group, SBE Restaurant Group (SBERG) and Element Films. Led by Nazarian, SBE focuses on the effective integration and cross marketing of its highly synergistic holdings, and it has many.
A young, dynamic and entrepreneurial organization, SBE has yielded some of L.A.’s trendiest hangouts (Shelter, Lobby, Prey and Privilege, to name a few) premier luxury hotels and prime real estate developments. And, with several high-profile projects currently in development, SBE continues to raise the bar on standards of excellence and provide its clientele with quality products that are synonymous with luxury, glamour and originality, and the company maintains a diverse portfolio of properties from coast to coast, including Hollywood hotspots Privilege and Hyde Lounge and the recently acquired Miami Ritz Plaza.
‘As we’re looking at concepts ... what we’re trying to create ... is the new venues for our generation — the 20-somethings, the 30-somethings — that are staples in the community.’
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— Sam Nazarian, CEO and founder, SBE , Los Angeles
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SBE also continues to expand its brands by forming strategic partnerships with the nation’s leading developers, such as The Kor Group, Makar Properties, APMC Group and Kimpton Hotel Group. “When Reza and I started (SBE Restaurant Group) in 2003, our goal was really reshaping L.A.’s nightlife,” Nazarian says. “We saw that, as the second biggest city in the country –– in the most powerful country in the world –– L.A. was years behind where Chicago, Miami, San Francisco, Vegas were on many sides –– on the integration of unbelievable design and architecture –– on the culinary world. We had only a handful of chefs, really, in Los Angeles. We also saw that there was an opportunity to really deliver quality service and the integration of synergies between different brands.”
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The interior décors of SBE Restaurant Group’s nightclubs and lounges change every six months or so to keep guests guessing and also to immerse them in new environments, keeping atmospheres and promotional opportunities fresh. This proactive tactic has bolstered the SBE nightlife brands and sets them apart from the competition –– not only in Los Angeles –– but in other U.S. markets as the company continues to grow. Seen here is Privilege, formerly known as Shelter, one of L.A.’s most in-demand hotspots.
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Nazarian expounds on the dynamic he and his Restaurant Group’s president (and veritable nightlife co-pilot) Reza Roohi share, and it’s plain to see just how and why the current SBERG strategies are unfolding with such precision.
“My background being real estate and hotels, Reza’s background for 22 years being nightclubs and mega-nightclubs, lounges, high-end restaurants –– we really had a vision to really bring a diverse portfolio of really high-end, high-designed, well-serviced food and beverage outlets and venues to L.A., and it was a vision we had in 2003,” Nazarian says. “And, here we are in mid-2006, and we have six places open and another 10 that are going to open by the end of next year, and we’ve, in essence, I think, solidified another business model which was the integration of locking all the major promoters for the first time –– getting them to realize that they’re not just promoters who come in per night, but really bringing them into a partnership. And I think when we acquired Brent Bolthouse Productions and Events, and when we signed for the first time these trendsetters and promoters in L.A. and brought them into our partnership on an exclusive nature, it was something that never really had been done before.”
Breaking the Molds
Of course, breaking molds, especially in a club market as competitive as L.A., has innate challenges. With SBE’s ahead-of-the-game mentality, however, it also has an innovative set of solutions. Here, Nazarian says a major key to success has been a careful and concentrated selection of personnel. Although SBE today employs nearly 900 people, he says the men and women who exemplify the standards of the SBE brand share his long-term vision.
“I think one of the hurdles or challenges ... is really the heavy turnover you find in this business from an employment standpoint,” Nazarian says. “But, with the track records of the kinds of people Reza has put together, it has been the fact that we have people with our company from day one, from bartenders to bar managers to directors of operations. So, when we first started off, it was Shelter, then Prey ... and Reza was very pivotal in putting together all the operational guys, and I was focusing more on the corporate side and the development and design side, obviously with Phillipe Starck and guys like Arich Berghammer from House of Blues. We also had a lady here — she was our chief creative officer, Theresa Fatino from Starwood (former VP of design and brand development for W Hotels), who created W.
“So, it’s a great partnership between Reza and I because he has my confidence in operating these places, and I have his confidence in developing and basically doing the deals for the future expansion of concepts.”
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Roohi and Nazarian share a great dynamic. Roohi focuses on nightlife operations, and Nazarian concentrates on property acquisition and development. |
Roohi, who used to work with Limelight in Atlanta, says he went to New York City and watched the growth of nightclubs — as well as the factors behind that growth — and he always wanted to do similar operations such as set design, to go in and create event space.
“The event designers were so used to doing parties for the likes of Motorola and Nintendo, they would come in on a low budget of $200,000, $300,000, $400,000, $500,000 and kind of take these stress properties and make them look like event spaces,” Roohi says. “It gives people excitement, so I tried to use that philosophy when the new Shelter went in and spend the release money when it went, and it became a great success because no one really had done it, and we brought in DJs like DJ A-M and DJ Vise. Where these guys are now, they’re almost celebrity, after we started them about three years ago.
“We found a niche for the music with Hip-Hop and Rock because the clientele we were really going after was the young Hollywood scene, like Leonardo DiCaprio, Tobey Maguire, Kirsten Dunst and some of these guys ... we knew they were into that kind of music, like heavy Hip-Hop and Rock ‘n’ Roll — so we went after that, and it became a great success. And, what we tried to do right when the place was hot enough, when I see the energy kind of changes as you are running those places, we came up with a brand-new concept while the concept was already working.”
Build off-site, come in during a few down days, change it up. That’s the way to stay on top of the game, Roohi says.
Of course, breaking molds and executing bold moves — especially in a club market as competitive as L.A. — has innate challenges. With SBE’s ahead-of-the-game mentality, however, it also has an innovative set of solutions.
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Nazarian agrees, noting that fickle crowds (A-list, celebrity or not) call for very creative solutions. This theory applies to L.A. and to SBE’s underway Miami projects, at least. “But, L.A. is very permit-intensive and entitlement-intensive,” Nazarian says, “and having that as my background, we really went and worked with the community, worked with the city, and started picking up the best liquor licenses, dance licenses and DJ licenses that really kind of perpetuated one single area. First, we focused on West Hollywood, Sunset Strip, Restaurant Row — and really made that our base — and now we kind of control that market here, but again, if you look ... as you see places today like Hyde, which we opened several months ago, which has now become probably the most exclusive place in the country — which is our version of Bungalow 8 — but at the same time, that’s a space that we committed about $700 per foot to, and occupancy is about 95. And, it was really something that L.A. had never seen; it was different from Teddy’s at the Roosevelt Hotel, still.”
Superlative Service
One facet of SBERG’s success with its nightclubs and lounges, beyond changing up environments to stimulate guests, is a heavy interest in technology and the guest-pleasing benefits that technology can afford.
Nazarian says SBE’s multi-million-dollar technology investments have been hugely rewarding for the venues, the operators and the patrons. Examples of this are abundant, too, from biometric POS terminals at every venue to wireless earpieces for every employee to the beta testing of new operations software at SBERG’s clubs. “It’s not just hardware,” Nazarian says. It’s inventing, creating and writing new software. For example, we have two people here who worked for Micros for 10 years, and they’re consistently designing better applications to streamline service.”
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Chic décor, such as at Lobby, seen here, dazzles guests while conveying an image of sophistication and opulence.
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Other benefits of SBE’s technological investment in its clubs shine through VIP service. It may be a tall order to wow the many celebrities who walk through the doors of Lobby, Privilege or Hyde Lounge, but SBERG has done it and continues to innovate new ways to impress patrons.
“We have an organic list of questions –– they change all the time –– asking our VIPs certain different things,” Nazarian says. “Daniela (Danilovic) leads that. Every week, we have a new list of four to five questions we’ll ask, and that just keeps growing in our database. And, through our technology, if you and your wife are having your anniversary on March 3rd, about a month before it –– if you’re a certain level VIP –– we’ll send you to one of our hotels as a night on us. And, in that gift basket for your wife; we know she likes Veuve Cliquot; we set it in there. It’s always surprising the customer and making them feel that much more special.”
There also is the company’s Concierge Service, which Roohi says often will send samples of new beverage products to select guests whose preferences are carefully tracked.
Branding at Its Best
So, today, while SBE and SBERG continue to cultivate new nightlife concepts and push the envelope of operational efficiency, the world has paid attention –– and it’s eager for more of the SBE brand. Nazarian says he is a believer in the power nightclubs have in a market. As a club is successful and paves the way, then come restaurants, then hotels and then residential areas.
“Nighclubs are very crucial, and that’s one of the reasons why we’re in this business,” he says, “because we can kind of know where the energy of cities is changing –– just based on having our finger on the pulse of the nightclub business.”
With that in mind, SBERG continues to ease forward, poised for nationwide expansion of its carefully cultivated concepts. It recently purchased The Abbey, the highest-grossing bar in Los Angeles, and that is one of many brands now under the SBE wing that will have dedicated support to launch in other markets around the United States.
“I think the way the world is moving to, it’s very brand heavy,” Nazarian says. “I think people feel comfortable once they recognize a specific brand. On all levels, we really look at why things are successful. We study it. We analyze it. We’re students of this business.” NCB
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The Logic of Vision | |
Despite the fact that Los Angeles-based SBE Group has a sturdy corporate structure, what makes the company’s concepts so successful is its attentive focus on making guests feel comfortable –– something different from L.A.’s old days of cold velvet ropes. SBE founder and CEO Sam Nazarian has pioneered a method to make VIPs more welcome: partnerships with promoters.
“The difference with us is that since we operate our VIP services under a computerized system, it’s irrelevant who’s working, who’s the promoter of the night,” he says. “When people are coming to an SBE property, they know what to expect, and that’s something that we’re very proud of.”
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