Progress & Profit
20-Year Reflections and Insights On a Booming Industry and How It Got Here
By Tad Wilkes
Twenty years ago, the on-premise industry, in comparison to
the present, was a completely different universe, in which monumental
changes were taking place. Major developments such as state after state
upping the drinking age to 21 to intensifying DUI laws to rising costs
of sports programming — to an incredible increase in patrons simply
wining and dining themselves at home with a rented movie — were
cultivating an atmosphere of every operator for himself, feeling his
way through the darkness of trying to make a buck selling beverage
alcohol. Indeed, the climate for opening a bar looked dismal at best.
But in 1985, a small handful of industry professionals, interested in
bettering the odds for bar owners, helped Dr. Ed Meek, through learned
advice and brainstorming, develop the small magazine concept Dr. Meek
bought from bar owner Jerriel Stephens. Nightclub & Bar magazine
soon would grow from that seed to become much more like the magazine it
is today, providing news, ideas and strategies to operators nationwide.
Covering hot promotions, trends in the field for every beverage from
rum to light beer, profiles of successful venues and much more, the
magazine became a singular resource.
After the magazine had begun circulating throughout the industry, Dr.
Meek and those same industry professionals created a trade show version
of the magazine — the first tiny Nightclub & Bar show. Dr. Meek and
these Founding Advisory Board members — followed by what are now called
Charter Advisory Board members –– set about the task of assembling a
central nerve center for the industry where industry experts and
operators could network, educate and learn in person about the ideas
and concepts reported year-round in the magazine. This new magazine and
show would attempt to be a group resource to help push operators to the
next level and propel the entire on-premise world to greater heights.
We talked recently with some board members who’ve been with us since
the start and some who have joined the campaign more recently to gather
their insights into what has changed in the industry since 1985 and
what roles Nightclub & Bar magazine and “The Show” have played in
it.
Major Trends and Sea Changes
“One of the most refreshing sea changes I’ve witnessed in the past 20
years is the emergence of the cocktail culture versus the wine and beer
culture that was predominant 20 years ago,” Christine Heller, senior
marketing manager with Bacardi, says. “Cocktails harken back to the
Roaring Twenties, and
it’s fun to be experiencing this elegance at the bar again.”
Ralph Aguera, vice president, trade relations, of Brown-Forman
Beverages Worldwide, cites new flavors, especially in vodkas, and
acceptance of spirits by all age groups as important trends. A need and
guest appeal for far greater product depth — such as small batch and
premium beverage products — is another key development in recent years,
Aguera says.
“In terms of the beverage alcohol industry as a whole, perhaps the most
significant trend of the past 20 years is the rapid growth of the super
premium spirits category,” says Ken Ruff, vice president of national
accounts for Future Brands LLC. “A number of factors have fueled this
growth, including the increased number of consumers who are trading up
to super-premium brands or abandoning beer in favor of spirits.”
But innovation is by no means limited to spirits, Asbury says.
“The last twenty years have seen incredible innovation on the part of
industry suppliers and nightclub and bar operators,” he says. “From
cocktail mixes to spirits and beer, new products are introduced almost
daily. Glassware has improved to the point that every cocktail or beer
can be a marketing show piece as they are carried through the bar.”
Jon Taffer, chairman of Taffer Dynamics Inc., based in West Palm Beach,
Fla., also has observed a general change in the face of who is staking
claims to the industry. “The ever growing corporate approach to
operating and developing operations has changed everything,” he says.
“Years ago, ‘The Show’ was all tattoos and bar people. Now. its mostly
corporate and far more sophisticated people.”
But, Taffer says, possibly the most important shift in the last 10
years is one on which operators have yet fully to get a handle. “Today,
gang members listen to the same music 21-year-old girls do, and if you
want the 21-year-old girls, you’re running a club that is musically
appealing to a very undesirable element,” he says. “It really isn’t a
black and white thing.
“Years ago, I could segment music and keep the dirt bags out. When
Gangsta Rap took over, if you don’t play DMX and Snoop Dogg and all
that stuff, you can’t get girls under 25. So, we cannot segment by
music anymore. That is part of the reason we have such a huge burden on
security and safety. When we do concepts today, we really look hard at
how to position it from an entertainment standpoint so that it drives
revenues but doesn’t pull an undesirable element. Once you put in a
dance floor, that becomes a real challenge. It’s a powerful dynamic.
“For a while, we had a break with the cigar bars, and we could get away
with playing Sinatra and stuff for a little while. R.E.M. for a while
was helping us out there. But we’ve lost that stuff, and we’re back to
the Snoop Doggs to fill our clubs.”
Tough Challenges
Difficulty segmenting target audiences by music is, from another
standpoint, just the tip of the iceberg of problems that have faced
operators in the last two decades.
“On the downside, during this same period, there has been a substantial
burden of responsibility shifted onto the shoulders of restaurant and
bar operators,” Asbury says. “Everything from tip reporting to sexual
harassment has become the responsibility of owners and managers. As a
result of Mothers Against Drunk Driving (MADD), state regulatory
agencies and the pot of money available through an operator’s liquor
liability insurance, guests’ responsibility for over-consumption and
driving under the influence has been shifted in part or in some cases,
entirely, over to restaurant and bar operators and their staff members.
In many states, operators are now responsible for policing their
guests’ smoking. And there’s more to come.”
“One of the biggest challenges we face in this industry is the trend
toward drinking less and the overregulation attached to beverage
alcohol,” says George Borello of Top-Shelf Marketing. “The days of just
serving alcohol and being successful are over. Licensed establishments
need to provide more value-added products and services to create a
unique experience for their guests. This is where Nightclub & Bar
has been so crucial to our industry. It has provided education,
innovative ideas and an opportunity to give a collective voice to those
of us involved in the hospitality industry.”
“The educational seminars provided by ‘The Show’ have provided the
catalyst for the operator to learn to investigate the tools necessary
to avoid the issues that lead to poor operations and litigation,” says
Charlie Greener, CEO of Dallas-based Harborage International Ltd.
Tax increases at the federal and state levels have made a substantial dent in on-premise profits, Aguera says.
But legal challenges and operational issues have not been the only obstacles to on-premise growth over the last two decades.
Taffer points to one of the biggest hurdles operators have faced in the
last 20 years: the competitive influence of national brands and at home
entertainment upon independent operators. Further, Taffer says,
escalating media costs, due to the consolidation of radio and TV
stations, have had a profound effect — particularly Clear Channel,
whose conglomeration, he estimates, has increased advertising costs by
more than 60 percent in many markets.
Higher operating costs on virtually every line item, especially
insurance and supplies, have affected bottom lines nationwide, Taffer
adds.
Nuts and Bolts Become a Science
In the mid-1980s, chain restaurants weren’t direct competitors for the
beverage dollars of independent establishments emphasizing drinks.
Today, chains increasingly are building behemoth beverage programs, and
independents are looking for ways to streamline operations and
eliminate waste to squeeze out maximum profit — previously an advantage
the chains held over the independents.
“The attendance in the technical seminars at ‘The Show’ has increased
each year, indicating that operators have an increasing desire to run
their operations efficiently and effectively,” Greener says. “The
operators that are in for the long haul are using operating systems and
manuals to run their business professionally. The days of running a
hospitality business by the seat of one’s pants has ended, and the
operator who operates without the proper information will fail. The
operations that are run properly and professionally will be the
survivors thru all of the challenges life brings.”
“The beverage alcohol business obviously has been influenced by
technology, as have all industries, and many purchasing decisions have
gone from gut reaction and ‘guesstimating’ to data that analyzes every
aspect of sales, distribution and merchandising,” Heller says.
“Back of the house operations have been improved immensely with new
dispensing systems, hand-held scanners for inventory control and so
on,” Asbury says.
Into the Great Wide Open
When all the analysis and operational crunching is done, though, the
on-premise experience still stands strong mainly because of its roots
in the fundamentals.
“There still remains the camaraderie and relationship aspect of doing
business, however,” Heller says, “and at the end of the day, it is
about fun and good times.”
And the near future is bright.
Taffer foresees a huge demographic boom in 22- to 25-year-olds
occurring in the next few years. “This will have a huge impact on
youthful clubs and concepts over the next seven to eight years; it
happened in the late ‘70s and ‘80s and caused an industry explosion.”
“The next 20 years will prove to be even more challenging than the
last,” Borello says. “We will face more and more competition for that
consumer entertainment dollar while also battling the ‘new
Prohibitionists’ who distort the facts and continue to push us toward
their ultimate goal of criminalizing beverage alcohol. We need to
continue to provide the hospitality industry with creative and
profitable solutions as well as being a sounding board for the
challenges we face.”
Ruff sees an increase in the trend of consumers being more educated about spirits.
“Consumers will become increasingly savvy as they embrace spirits and
explore new brands,” he says. “As a result ... the super-premium
spirits category will keep expanding. Consumers will always look
for new flavors and the next hottest cocktail, and bartenders, in turn,
will seek mixable and versatile spirits in order to create new drinks
and fuel consumer demand. Bars will continue to set trends, but
expect the cocktail culture to permeate off-premise as consumers gain
confidence in their ability to mix drinks at home.” NCB
Back to the Future
As the many trends, changes and movements of the on-premise industry
have come and gone — or stayed — over the last 20 years, Nightclub
& Bar magazine and ‘The Show’ have been there to keep operators
educated about how to improve operations.
“Through it all, Nightclub & Bar magazine has been there to inform
restaurant, bar and nightclub operators of the latest and greatest
trends from the front of the house to the back of the house,” says Bill
Asbury, president and CEO of Pencom International, which produces
training and internal marketing products for independent and chain
restaurant and hotel operators.
“From product innovations to marketing
and operational ideas and issues to impending regulatory issues, the
pages of Nightclub & Bar have kept the industry informed and on
target. The trade shows have brought together the best industry
suppliers and operators, allowing a discovery process and interaction
that brings operators the latest industry innovations and keeps
suppliers abreast of areas where they can improve their products and
services.”
As one of only a handful of individuals who can say his companies have
exhibited at every Vegas show, Wyatt Magnum, president of CMS and MMG,
certainly can speak to the growth of the show over 20 years. “Very few
booths were at the first show in 1985, maybe a couple of hundred,”
Magnum says. “In fact there weren’t any nightclubs in Las Vegas at the
time, which was really strange for a nightclub and bar convention.
“The growth of the magazine and ‘The Show’ and our industry in general
has a lot to do with the advances in technology. It’s just so much
easier to do so many different things than it was 20 years ago.”
“‘The Show’ is the single most influential source of new industry
trends, ideas and business protecting strategies,” says Jon Taffer,
chairman of Taffer Dynamics Inc., based in West Palm Beach, Fla.
The result of two decades of education is an improved on-premise
product, says Charlie Greener, CEO of Dallas-based Harborage
International Ltd. “The bar and restaurant is and has been evolving
into the serious business that it always should have been,” he says.
Asbury agrees, saying, “The industry has been catapulted forward,
providing guests with a higher degree of entertainment, a greater sense
of adventure and a vastly improved overall experience.”
Twenty years ago, the on-premise industry, in comparison to
the present, was a completely different universe, in which monumental
changes were taking place. Major developments such as state after state
upping the drinking age to 21 to intensifying DUI laws to rising costs
of sports programming — to an incredible increase in patrons simply
wining and dining themselves at home with a rented movie — were
cultivating an atmosphere of every operator for himself, feeling his
way through the darkness of trying to make a buck selling beverage
alcohol. Indeed, the climate for opening a bar looked dismal at best.
