Crowded Hollywood club scene turns bearish

Hard to spin turnaround tales lately

Gurus to today’s struggling firms find value in the small victories

Why Companies Don’t Need Headquarters

David F. Carr, 06.03.10, 6:00 AM ET

James Sinclair, head of the hospitality industry turnaround firm OnSite Consulting, says one of the biggest challenges his employees have had adapting to the way he runs his business is answering the question, “But where is your company based?”

The answer: Wherever the work needs to be done. “We have 65 people, and we have no office,” Sinclair explains. Headquarters is a post office box; he also has an Internet-based phone and unified communications system.

Sinclair used to have an office. “Sure, we picked out a nice office with a conference room and people working away. But our clients don’t want to see our office, don’t want to see the conference room. They want us to come to them,” he says.

OnSite is in the business of reviving restaurants, hotels and casinos that are in trouble, sometimes on the verge of bankruptcy. In past years the company has bought and rehabilitated some facilities, but today it focuses on working with current owners on overhauling management and operations. Sinclair himself has long been a road warrior, and was rarely in the office anyway. When he did come in, he believed employees felt obliged to pepper him with issues they had been managing just fine while he was away. Or he saw them doing busywork solely to impress him with their industriousness.

About 18 months ago Sinclair decided to send all his employees into the field, where they could be more productive. That made a lot of sense for consultants and salespeople. But Sinclair went further, also dispersing his administrative workers. The person who handles billing, for example, now has a desk at the site of a longtime client.

“At first a couple of clients did say something like, ‘Let me get this straight: You gave up your office so you can use our office for free?’” Sinclair concedes. But he convinced them that any employee he parked at their location could at least serve as a point of contact, helping ensure a smoother working relationship.

Although employees found the “Where is your headquarters?” question awkward at first, Sinclair likes to turn it around, telling potential clients the OnSite consultants will be, well, on site 90% of the time, precisely because they don’t have an office to retreat back to.

The technologies Sinclair uses include Microsoft’s Office Communications Server for Internet call-routing and integration with other communication modes, such as e-mail and instant messaging. He also relies on Microsoft SharePoint for collaboration and BlackBerry Enterprise Server for mobility. OnSite has no IT staff of its own, so the technology is all managed and hosted under contract with 123together.com.

I heard a similar story from Doane Hadley, president of BizTech Solutions. I’m never quite as impressed when technology companies turn out to be showcase users of the technologies they promote, and BizTech had been a longtime beta tester for Microsoft SharePoint before adopting Office Communications Server.

Still, when Hadley decided to get rid of the firm’s office in New Jersey, he did it for his own reasons. Once his company had adopted unified communications, it became easier to tell people it was OK to work at home more–especially as gas prices spiked or the weather was bad. When his office manager announced she was moving to North Carolina, Hadley decided she could work from home.

“It got to the point where there weren’t a lot of people in the office anyway, and there didn’t need to be,” Hadley says. So he did away with it, and now all his employees work from home or from client sites.

Hadley has an agreement with a shared office facility in New Jersey, where he has one person stationed more or less full-time, and where he can have the use of a conference room if he needs it. But instead of running servers in his own data center, he now rents space in a commercial data center. “At the end of the day it’s better, because we have guaranteed uptime and higher connectivity,” he says.

OnSite’s Sinclair believes the decision to do away with his office has been worth more than $1 million in savings, supplemented by the increased business he has netted from a more productive workforce.

One of the side benefits is that people who were formerly confined to back-room tasks are now in contact with customers, giving them the opportunity to prove their worth. And employees are happier as a result, Sinclair says. “Some of them are earning double what they were a couple of years ago–because they’ve proven that they should be.”

David F. Carr is Forbes’ columnist on technology for small to midsize businesses. Contact him at david@carrcommunications.com.

Hollywood Cues Up Food Fight

Rolling Stone to launch eatery near Hard Rock.

Photo by Ringo Chiu

Rolling Stone’s space at Hollywood & Highland.

Rolling Stone is making its red carpet premiere this summer at the Hollywood & Highland Center with the opening of its first restaurant and lounge, but it won’t be the only rock star on that mall’s stage.

That’s because Rolling Stone is set to open its doors just as Hard Rock Café is scheduled to launch a restaurant and live event venue in the same center – in a first-ever competition between the two iconic names.

Entrepreneurs Niall Donnelly and Joe Altounian licensed the Rolling Stone brand to develop the multilevel, 10,000-square-foot space, which sits on the back side of the entertainment complex along Highland Avenue. They’re using the venue’s Hollywood debut as a test case: If it’s a hit, the partners plan to turn it into a national chain.

“We are bringing the magazine and the culture and what it represents to life,” said Altounian, a real estate developer.

“The plan is to absolutely open more,” said Donnelly, an Irishman who moved to Los Angeles a year and half ago after a successful run of operating bars and nightclubs in the United Kingdom.

Meanwhile, Hard Rock, which operates a restaurant at Universal City Walk, has spent the last few years looking to strengthen its presence in the L.A. area. Company executives view the opening of a 20,000-square-foot Hard Rock Café along Hollywood Boulevard – complete with a retail store, restaurant and live event stage – as a way to make a splash.

“We’ve been looking into the Los Angeles area for quite a time for a second location,” said John Galloway, vice president and chief marketing officer at Orlando, Fla.-based Hard Rock Café International Inc. “An opportunity opened up on Hollywood Boulevard and we jumped at it. The opportunity to be in such a vibrant area as Hollywood is one that we couldn’t pass by.”

While executives from Rolling Stone and Hard Rock said the Hollywood & Highland complex is the ideal location for their establishments, they insist that any similarities between the two stop there.

“We are a different concept,” said Rolling Stone’s Donnelly. “They are a memorabilia restaurant and we are slightly different. Our design is vintage chic. It’s a very cool, modern design.”

But some industry observers said a sort of battle of the bands between the music-inspired venues seems inevitable. That’s because Rolling Stone and Hard Rock will be vying for the dollars spent by the 15 million people estimated to visit the Hollywood & Highland complex each year – the majority of them tourists passing through just once.

“Rolling Stone might be a little bit more upscale than Hard Rock and they might have a different menu choice,” said Gary Levy, a hospitality consultant at Roseland, N.J.-based J.H. Cohn LLP. “But it seems to me that they are going to be competing for the same diner.”

Slow start

The Hollywood & Highland open-air mall is anchored by the Kodak Theater – site of the Academy Awards and the future home of a Cirque du Soleil show. Lining the walkways of the multilevel mall are more than 60 stores and nine restaurants. When the complex first opened in 2001 it struggled to draw a steady crowd. The $10 parking fee kept people away, and critics said the layout made it difficult to easily access the restaurants and stores.

Parking charges were lowered, and Hollywood real estate investment company CIM Group Inc. purchased the center in 2004 and spent millions on improvements designed to boost foot traffic.

It worked. Tourists and locals can now be found walking through Hollywood & Highland late into the night.

What’s more, the center’s popularity as also been boosted by the ongoing redevelopment of the area. Hollywood backers said the opening of Rolling Stone and Hard Rock are a testament to the renaissance there.

“To come to this point where we have two iconic brands coming to Hollywood and locating at Hollywood & Highland is a reaffirmation that Hollywood is back,” said Leron Gubler, chief executive of the Hollywood Chamber of Commerce.

The high-profile Hollywood premieres of Rolling Stone and Hard Rock are likely to become an additional draw.

“They are going to be battling,” said B. Biggs, who works as a security guard in the L.A. area and who spends his free time relaxing at the Starbucks near the future site of Rolling Stone. “It’s going to be a tough run, but I think Rolling Stone will be for the old schoolers and Hard Rock for the young ballers.”

Rocking out

Rolling Stone magazine was founded in 1976 by Jann Wenner and music critic Ralph Gleason. The publication became a force in politics, rock and pop culture with the gonzo-style journalism of Hunter S. Thompson and memorable covers – among the best known is a posthumous naked John Lennon wrapped around Yoko Ono.

The magazine has continued to leave its mark on society with provocative photos of stars such as Britney Spears posing with a Teletubby and Lady Gaga covered in bubbles. But Rolling Stone has also been faced with a decline in advertising revenue, which dropped 15 percent from 2008 to 2009, according to Publishers Information Bureau. The decline is blamed on a weak economy and overall slowdown in magazine advertising.

Donnelly and Altounian approached Rolling Stone with the concept of opening an establishment inspired by the magazine about a year ago, around the same time as Hard Rock announced it was coming to Hollywood & Highland.

Donnelly and Altounian are working with Brodin Design in Beverly Hills to turn the space into something that fits with the Rolling Stone concept. The selected motifs are black brick, tufted leather and vaulted ceilings, and there will also be an antique iron staircase connecting the second-floor restaurant with the first-floor lounge.

The pair hasn’t finalized the menu offerings, but Donnelly said the restaurant will serve American fare “with a twist.”

“It will be good quality food at a good price,” he said.

The restaurant will be accessible from inside the Hollywood & Highland complex and cater to the tourist crowd during the day. There won’t be a Rolling Stone retail store comparable to what Hard Rock offers, but tourists will be able to pick up a Rolling Stone T-shirt and other merchandise emblazoned with the magazine’s time-tested logo.

The bar and lounge area will be accessible from the street along Highland, and Donnelly and Altounian are hoping to turn the spot into a hangout for locals by offering pricey bottle service, access to two VIP entrances and celebrity deejays.

“It will be a higher-end lounge where people come to enjoy, relax and get bottle service, and listen to good music and get taken care of,” Altounian said.

The pair also plans to host private corporate events there, and Donnelly said the Rolling Stone name has already helped them book several groups.

Some industry insiders said they’ve got a few hurdles to overcome.

Jim Hustead, an executive with hospitality consultancy OnSite Consulting LLC, said Rolling Stone is less visible to passers-by since it faces the back of the complex. What’s more, Hustead said Donnelly and Altounian will likely have a challenge making a lounge at Hollywood & Highland a draw for locals.

“A nightclub doesn’t work for Hollywood & Highland,” he said. “You are never going to have the cool kids from Sunset Boulevard and West Hollywood. It’s the tourist mecca of Los Angeles.”

But Donnelly and Altounian swear by the site. They note that it’s visible from Highland, and they’ll attract people from the crowds who go to the mall’s second floor for views of the Hollywood sign.

“I prefer that it’s slightly off of Hollywood Boulevard because it’s not an obvious space,” Altounian said. “We are creating our own area there, and a lot of eyebrows are being raised as people drive by there.”

L.A. roots

They’ll be vying for dollars with a formidable competitor. The new Hard Rock Café will be sitting just around the corner on the more traveled Hollywood Boulevard.

Hard Rock, founded by L.A. businessman Peter Morton, opened its first U.S. location in 1982 at the Beverly Center and then opened a second L.A. restaurant in 1996 at Universal City Walk. Hard Rock now operates 150 venues in 52 countries, including 125 cafes, and nine hotels and casinos.

But the Beverly Center Hard Rock closed in late 2006 and the chain spent years looking for a higher-profile L.A. location that would draw both locals and tourists, many of whom frequent the establishment to sneak a peek at its rock memorabilia collection and snag some Hard Rock T-shirts, collectible pins and even golf balls. So when Virgin Megastore shuttered its Hollywood & Highland location last year, Hard Rock jumped at the opportunity to move in.

Hard Rock is turning the space into a 500-seat restaurant with a concert area and adjoining retail space. The store opened in November and sells limited-edition Hard Rock merchandise.

Hard Rock’s Galloway said the décor of the Hollywood & Highland location will reflect the flavor of Los Angeles by displaying memorabilia from local musicians, including rocks bands Guns N’ Roses and Motley Crue, composer and electric guitarist Frank Zappa, and pop singer Fergie of Black Eyed Peas.

“First and foremost, it will tell an L.A. story once you walk inside,” Galloway said. “The memorabilia will be focused and dedicated to Los Angeles and California music.”

While Hard Rock is known as a tourist-friendly brand, executives are hoping to attract Angelenos with the live music venue, which will feature performances by L.A. bands.

But industry insiders said Hard Rock will take center stage after it opens its doors to diners.

“This is a big splash to put yourself on the map,” said James Sinclair, a principle at OnSite Consulting. “I think this is one of their better moves – going back to what they do best.”

Indeed, entertainment-themed chains such as Planet Hollywood, which has filed for bankruptcy twice but has since made efforts to rebound with fewer locations and a Planet Hollywood Hotel and Resort on the Las Vegas strip, have struggled to turn a profit.

But if Rolling Stone and Hard Rock executives have it their way, both establishments will bring even larger crowds to Hollywood & Highland.

“I think it’s great for the center,” Donnelly said. “Cirque du Soleil, Rolling Stone and Hard Rock will draw in a crowd and feed off each other.”

Resort fees catch guests by surprise

Justin M. Bowen / File photo

A view of the Las Vegas Strip.

By Liz Benston (contact)

Saturday, May 8, 2010 | 2:01 a.m.

Chicago resident Tim Murtaugh keeps close tabs on his trip expenses, so when the Excalibur tacked a $4.50 “resort fee” on top of his $39 room rate for each night of his stay, the retired librarian sent a complaint letter to the resort’s management.

“I just didn’t think it was right,” Murtaugh says.

Neither do many others who have been surprised by resort fees charged for their stays in Las Vegas. The tide of complaints about the fees is rising in online forums, travel blogs and just about everywhere else that frequent travelers swap stories and post reviews.

Murtaugh had previously stayed at Las Vegas hotels that didn’t charge resort fees, so the added charge caught him off-guard. Resorts say the fees cover amenities such as high-speed Internet, gym and pool access and newspaper delivery.

They are relatively new in Las Vegas, but the fees are part of a growing trend in the hotel industry that’s expected to spread as tourism rebounds.

A 10 percent increase in hotel add-on fees this year is the prediction of New York University’s Preston Robert Tisch Center for Hospitality, Tourism and Sports Management.

Hotels are adding and raising room surcharges to boost profit, says the study’s author Bjorn Hanson, an associate professor of hospitality and tourism management at NYU.

It’s a risky strategy, as room rates are the No. 1 or No. 2 determining factor for leisure travelers who book rooms, rivaling the hotel’s brand name and what that represents, Hanson says.

“This is a period of grand experimentation to see what fees and surcharges guests will tolerate,” Hanson says.

The fees can vary by hotel, even hotels owned by the same company in the same city. That’s especially true in Las Vegas, where resort fees vary by property, though many are owned by a handful of companies. Most Strip hotels now charge resort fees. Some started charging them a few months ago; others have had them for a few years.

What’s more, Las Vegas hotels that formerly charged taxes only on the room cost are increasingly taxing the added fees as well, which can inflate the total bill.

Many consumers have complained that the fees are sometimes buried in fine print, so hotels and travel booking sites have improved disclosure in recent years.

Hotels in Las Vegas and elsewhere have trained employees to discuss such fees with customers if they are booking rooms by phone or as they are checking in.

They also have trained employees how to handle customer complaints from angry guests who don’t notice the fees until they check out and see their final bills, Hanson says.

These hotels graciously refuse to refund such charges, saying they were adequately disclosed beforehand.

Customers such as Cindy Weldon of San Francisco say they are fighting back by boycotting hotels that charge mandatory fees not included in the advertised rate. Weldon says some resort fees in Las Vegas can double the cost of a room. Weldon said some hotels still charge the fees even if they “comp” gamblers the room.

“It’s a sneaky, mandatory charge,” she says. “We used to only have to worry about taxes. Now we have to hunt to find out what these resort fees are.”

Station Casinos, which began charging resort fees ranging from about $15 to $25 per night in 2004, calls such customers a “vocal minority” because the fees are disclosed upfront, before customers book their rooms online or over the phone. On the company’s website, the amount of the “hotel amenity fee” is included as the fifth line item in a terms and conditions section that appears after customers select a date and room type at a particular hotel.

A small number of complaints about the fees crop up in guest surveys, but the vast majority accept the fees as a fair deal, says Michael Grisar, vice president of hotel operations for Station Casinos.

Previous to bundled fees, he says, customers were paying several times those amounts for services and amenities such spa access and shuttles to and from the Strip.

“Every time we added a new item it started costing more for the guest … you might be talking about an extra $60 to $70. We offer one low clean price for a package of amenities that guests have always wanted. We didn’t want to see them nickel and dimed for various things.”

Gordon Absher, a spokesman for MGM Mirage, which began introducing bundled resort fees two years ago, says the fees have spread at MGM hotels because “our guests see it as a convenience to have a single charge added to their overall bill” rather than a series of charges for things customers might not have expected needing, such as Internet access.

Likewise, guests like the convenience of sipping in-room bottled water and would end up paying more for water had they purchased it separately, he added.

Hospitality industry consultant James Sinclair of OnSite Consulting in Los Angeles advises his clients against charging mandatory fees in favor of a la carte fees or optional, bundled charges. Hotels that insist on charging mandatory fees shouldn’t make customers pay extra for basics like housekeeping, but rather, should include more tangible offerings such as access to the spa, he says.

“It’s not worth risking the angry customer who wasn’t looking for these fees or the customer who begins looking for resorts that don’t charge them.”

Sinclair calls mandatory fees “a deceitful way of making money,” given that hotels are reluctant to include them in advertised online rates so as not to get knocked out of a search for the lowest-priced hotels.

And yet, hotels feel pressured to implement them given that some competitors are tacking them on the back end of discounted rates, Sinclair adds. Many hotels — knowing that most people won’t dispute charges even if they don’t like them — are no longer removing charges for disgruntled customers now that business is picking up, he says.

Harrah’s Entertainment in Las Vegas is among a few companies resisting the resort fee trend. At a meeting this year, Harrah’s executives decided to charge for things the old fashioned way so as not to risk turning off customers.

At Harrah’s-owned properties in Las Vegas, customers can go down to the lobby to buy a bottle of water or a newspaper. They also pay for long distance calls and amenities such as the spa.

“If you want these extra things, we’re happy to sell them. But customers don’t necessarily want all these things,” says Marilyn Winn, regional president of three Harrah’s Strip resorts — Bally’s, Paris and Planet Hollywood.

The spread of resort fees is inevitable, much like the higher prices Las Vegas tourists now pay for improved amenities, says Mehmet Erdem, an assistant professor in hotel management at UNLV. People will grow accustomed to paying the fees, especially if they get a good deal on a room, he says.

“There’s a learning curve. When I first came to Las Vegas, there was no $20 buffet. Now that’s the norm. And you don’t see people getting sticker shock over it.”

Resistance to hotel fees isn’t so different from cruise ship customers who dispute mandatory tips and other previously disclosed add-ons when they receive their final bills, Erdem adds.

“On the day of debarkation, you will see this huge line of people at the front desk.”

And yet, such fees have become standard for the cruise industry, which attracts many repeat customers.

And resorts in Hawaii have long charged bundled resort fees, which have become a necessary and largely accepted cost of a Hawaii vacation, he said.

In fact, Murtaugh will be back at the Excalibur next month.

Based on his gambling activity, he’s getting three of his four nights for free, paying a resort fee for one night. Including taxes, the fee will cost him about $16.

“That was hard to turn down,” he says.

By Pamela Mills-Senn

PizzaToday.com

BY COURTENAY EDELHART, Californian staff writer
cedelhart@bakersfield.com | Wednesday, Apr 28 2010 12:29 PM

Frozen yogurt shops are back.

In the 1980s, they were as ubiquitous as big hair and ripped up sweatshirts.

Now it seems they are enjoying a renaissance. Bakersfield has two new ones so far this year, and a third is set to open downtown next month.

“The yogurt craze happened in the ’80s, again in the ’90s and again now,” said James Sinclair, a principal at Los Angeles hospitality consultant OnSite Consulting. “It’s almost every 10 years like clockwork.

“The key reason for this explosive growth and what seems like a yogurt brand in every available corner, strip mall and random location is actually purely economics,” he said.

The barriers to entry to this industry are so low that any time there is a depressed real estate market, yogurt stores spring up in all the newly affordable commercial real estate space, Sinclair said.

A yogurt store doesn’t require a lot of upfront expenses, he said. Inventory and equipment are fairly cheap, and it doesn’t take much time to train management and staff.

“An operator can open in almost no time at incredibly low cost,” Sinclair said.

With so many eateries going under in the soft economy, there also are good deals to be had on restaurant equipment, said Peter Siegel, founder of BizBen.com, a Web site for buyers and sellers of small businesses.

Then, too, it’s a simple matter of timing.

“Yogurt, ice cream and other cold food places tend to open just before summer, just like you see more coffee shops opening up right before winter,” Siegel said.

The frozen yogurt industry has done a really good job of marketing itself in franchise networks, too, Siegel added. Chains are attracting people interested in franchises by stressing strong profit margins and the low cost of the product at a time when consumers are watching their spending, he said.

That was one of the draws to the business for Churros and Yogurt, an independent frozen yogurt shop that opened March 25 at Valley Plaza mall.

“It’s a good, healthy treat and it’s affordable,” said Raoul Biteng, who started the store with business partner Logan Bui.

Churros and Yogurt offers eight flavors of yogurt and 27 toppings, including fresh fruit and candy, as well as, of course, churros.

Biteng said he chose to start out in the mall because of the built in foot-traffic there, but would like to expand to other areas and eventually sell franchises.

Another newcomer, Love Yogurt, opened in a strip mall this month at 6077 Coffee Road north of Olive Drive. The owner did not respond to repeated requests for an interview.

BurrBerry Frozen Yogurt is scheduled to open in a week or two in the Moronet Professional Building, 1514 18th St.

Attorney Bruce South is opening BurrBerry Frozen Yogurt downtown with wife and business partner Pam Boucher.

They thought downtown would be a good location for a yogurt shop.

“We sat out there for an hour one day and just counted the people walking by, and there were 130 pedestrians,” South said. “That’s a lot of potential foot traffic.”

Along with yogurt, the 1,300-square-foot store will sell low-fat pastries and a full line of gourmet coffees.

BurrBerry Frozen Yogurt is trying to differentiate itself from the competition by attracting the health conscious, South said.

“We want to provide a nutritious alternative to the Snickers bar in the afternoon,” he said.

So no high-fat yogurt flavors such as chocolate, and candy toppings will be gone in favor of such offerings as granola, fresh fruit and coconut.

The yogurt selection will be burrberry tart and a rotating flavor of the month. Or consumers can buy a swirled blend of the two.

Ice cream shop Cold Stone Creamery, which has three locations in Bakersfield, discontinued frozen yogurt at one point only to bring it back.

Frozen yogurt is not a fad, said general manager Violet Garcia.

“Customers are much more health conscious now, wanting the low-calorie or low-fat selections,” she said. “So many people are watching what they eat.

“I think we’re going to keep it around for a while.”

By DIANA RANSOM

With Earth Day just days away, consider greening your office. Or better yet, get rid of it altogether.

Thanks to improved technology and the high price of gasoline, working remotely has become an increasingly popular—and less expensive —option for both large and small work forces. Since 2006, the number of U.S. employees who worked remotely at least one day per month increased 39% to 17.2 million in 2008, according to the latest survey available from WorldatWork, global human resources association in Washington, D.C.

Employers that go this route typically like the reduced rents and technology savings telecommuting affords, while employees appreciate spending less time commuting and lower transportation costs. Despite these benefits, however, many employers remain concerned about whether they’re getting the most from employees, says Rieva Lesonsky, the founder and president of GrowBiz Media, a small business consultancy in Costa Mesa, Calif. “It’s a loss of control thing for them,” she says.

How to tackle the challenges of managing a remote work force? Here are six strategies.

Start off slow

Inevitably, there will be systemic kinks and bugs that will accompany a transition to a remote office. Instead of dispatching all of your workers simultaneously, transition gradually, suggests Ms. Lesonsky. “Until you get more comfortable with having a disparate work force, offer the ability to work from home one day a week or three days a month,” she says. Then, be sure to check on those workers at the end of the month. “See if there are any glitches,” says Ms. Lesonsky.

Probation periods

Unless you have a 100% virtual company, don’t let new employees work from home right away, says Ms. Lesonsky. Having a remote work force is built mostly on trust. “You have to be sure you can trust your new workers with the responsibility of working from home,” she says. Ms. Lesonsky suggests giving new workers a 60- to 90-day probationary period before giving them the OK. For fully virtual companies, hire workers who don’t require much managing and can thrive in an autonomous setting, she says.

Set expectations

Although working at home lends itself to more flexible hours and working in one’s PJs, it should be clear to employees what’s expected of them, says James Sinclair, the CEO of OnSite Consulting, a hospitality management and consulting firm in Los Angeles. Mr. Sinclair delegates the day-to-day management of his 65 employees to team leaders, each of whom heads groups of five or six workers. The leaders are responsible for defining project goals and making sure workers adhere to both daily and weekly tasks. “We don’t have people on our staff walking around looking for something to do,” says Mr. Sinclair. “But we do have to monitor and track them nonetheless.”

Use technology

Technology can also be vital for keeping up with virtual employees, says Andy Miller, the CEO of CardStar, a smartphone application provider that stores loyalty, rewards and club membership card information. His team is located in three different U.S. cities, and each employee has a laptop, cellphone and USB modem “so that they can connect anywhere,” says Mr. Miller. Texting and email, along with meeting via video Skype, provide something akin to face time. “When I was in corporate America, I realized that it was highly inefficient: There were so many meetings you didn’t have to be at but were required anyway,” says Mr. Miller. “You end up working harder and doing less.”

Don’t stalk employees

It’s perfectly acceptable to check in on workers and make sure they’re doing their jobs appropriately. However, there’s a fine line between just checking in and watching them, says Ms. Lesonsky. “The danger is if the employee goes home and you are constantly questioning them, they’ll feel like they are more under your eye,” she says, adding that retaining employees in such a situation will likely become difficult.

Establish performance measurements

Of course, it’s perfectly reasonable to want to know how remote workers spend their time, which after all you’re paying for. When Ken Clark, the CEO of 1-800-Translate, a translation and language management service in New York, started moving his work force home last year, he found it challenging to manage a 12-person staff, plus thousands of contractors around the world. To keep employees on track, Clark turned to performance reviews. Each time a job is completed, the company sends out quality assurance emails to customers. This practice helps signal early on which employees are doing well and which aren’t, he says. “For small businesses, especially, one bad apple can put you out of business,” Mr. Clark says. “Even a marginal employee is a tremendous strain on an organization. Our aim is to identify with them quickly.”

Write to Diana Ransom at dransom@smartmoney.com

Celebrity theme isn’t always a meal ticket

menkoji@sacbee.com

Published Sunday, Mar. 28, 2010

Here’s some sage advice for Sacramento Kings star Tyreke Evans: Think twice before you open a restaurant with your name stamped on it.

Restaurants with themes – particularly those with celebrity names – face particular challenges, which makes them vulnerable and often short-lived, say restaurant experts.

“Before you’ve even opened, all these odds are stacked against you,” said James Sinclair, a principal with OnSite Consulting in Los Angeles, which specializes in advising insolvent and underperforming restaurants.

“It’s a natural for sports celebrities to open a sports bar because, by extension, they are sports fans,” Sinclair said. “The name is not enough. The brand name brings in the customer for the first time; the quality of the product keeps them coming back. While it’s a simple concept in theory – serve food, get money, pay bills – it’s not.”

Celebrity names inflate expectations about a restaurant for consumers, he said. Diners often drop in just because they expect to see the namesake, and themed restaurants have to remain relevant and fresh on top of all the other requirements that keep people coming in the door, experts say.

In Sacramento, former Sacramento King Chris Webber’s restaurant closed recently after a few years. The rock ‘n’ roll-themed Hard Rock Cafe closed its downtown Sacramento location on Saturday after a 13-year run.

“Do themes get old? Can you go to the Hard Rock three times a week? I still think it’s a very strong brand, but it’s time to relook at the concept and redefine their model because there’s a lot of competition in the market right now,” Sinclair said.

There’s no shortage of theme restaurants nudging into the region.

Dave & Buster’s, a restaurant and gaming arcade combination, opens its first area site – its 57th nationally – on May 3 at the Fountains at Roseville, offering 65 percent of 17,000 square feet to games, from Skee-Ball to Guitar Hero.

“It’s interesting because they are looking for that competitive edge. That’s the Holy Grail,” Sinclair said of the Dallas-based chain.

Statistics on speciality restaurants and how they fare are scarce, but experts like Sinclair can name a slew of celebrities – athletes, actors and, now, celebrity chefs – who struggle to bring their star power to the table.

Scandal scrubbed Clemens

At headlinerdiners.com, Matt Bridgeford has gathered details – such as photos and recollections – on celebrity restaurants in 500 locations. He estimates that just under half were opened by sports celebrities.

Bridgeford, a Seattle assisted-care worker, figures he’s visited 50 of them. He’s seen the best and the worst of the concept, he said. Major-league pitcher Roger Clemens, scandal-ridden and disgraced over links to steroid use, had to scrap plans for a Houston restaurant before it even opened, he said.

He’s also marveled at New York Yankee Mickey Mantle’s restaurant that is going strong in the city that loved him, a legend that can draw in tourists and fans years after his death. He’s also sampled Danny DeVito’s steak house in Miami, an upscale menu that the rotund actor personally developed: try an 8-ounce rib-eye steak for $60.

“It was the best shrimp I ever had,” he said.

“I think there has to be a chance you are going to walk in and see the celebrity there, having fun, and you might take your picture with them or something,” he said of the ideal, successful celebrity restaurant.

If a celebrity or athlete doesn’t frequent the business, then those $20 hamburgers will be a hard sell, he said.

He had hoped to make it to Webber’s Center Court With C-Webb in Natomas, but after about three years it closed in November as the recession weeded out underperformers.

“It’s hard to expect that these places are going to last for 20 years,” Bridgeford said.

The food has to be good

The primary pitfall when celebs become entrepreneurs is they bank too heavily on their persona, said a Riverside restaurant consultant.

“I’ve seen a lot of celebrity restaurants in different parts of the country,” said Ron Santibanez. “The inherent problem I see is that they have focused more on the name than on the food and service. It’s still a restaurant. There is a still a level of service that needs to be met.”

After the initial hype, the aura could fade if execution falls short, he said: “Then you’re just left with a restaurant. If customers don’t leave a restaurant talking about the food, you’ve got a problem.”

Former NBA great Karl Malone had partnered in a short-lived restaurant that opened in Riverside County, more than an hour from the Los Angeles area where he played briefly late in his career, he said. After the Laker Girls and other teammates opened the place, the fanfare fizzled.

“Once everything was said and done, it wasn’t one of his hangouts and the food and service was mediocre,” he said.

De Niro doesn’t use name

On the other end, a popular concept could get overextended, Santibanez said.

He suggested that Wolfgang Puck, the Los Angeles celebrity chef, might be spreading himself too thin these days, with a couple dozen locations of varying concepts from fine to takeout dining, a line of frozen food and appliances. “No matter how famous a person is, it comes down to the execution,” he said.

Some celebrities are less interested in putting their name out there on a restaurant marquee, Sinclair said. Actor Robert De Niro has invested in two dozen fine-dining restaurants around the world – such as Nobu, his sushi restaurants – but none carry his name, Sinclair said.

“That’s a great example of a great product. It just so happens Robert De Niro is part owner.”

Owners and operators of themed restaurants realize the odds are stacked against them.

At the Fountains at Roseville, Tres Agaves opened in 2009 with a seemingly narrow theme: tequila.

“There’s definitely challenges in it,” said Ashley Miller, executive beverage director for the restaurant. “How do we keep it a hot place?”

The first restaurant opened nearly five years ago in San Francisco and tequila aficionado and rocker Sammy Hagar was originally involved but is no longer. The restaurant offers 130 kinds of tequila and cuisine from the Mexican state of Jalisco, the home of tequila.

With two locations, the owners have no intention of going beyond a handful, which narrows the focus, Miller said. “We don’t want to be a huge chain.”

Tequila is the fastest growing spirit in the country and the restaurant capitalizes on that trend with parties for Mexican holidays, a “passport” program for those who want to track their way through all 130 labels and food that remains true to the region.

“They come for the tequila, stay for the food and come back for the service,” Miller said.

Former Sun shines

Almost in the shadow of Phoenix’s downtown NBA arena, former Phoenix Sun star Dan Majerle opened Majerle’s Sports Grill in 1992 and remains a majority owner of that and two newer suburban locations.

A year after the downtown restaurant opened, A.J. Sulka, the managing partner, realized the restaurant needed a focus besides the bar and bar food.

“If we want to be here for the long term, we need a good lunch,” Sulka recalled thinking at the time. The restaurant caters to a business lunch crowd with a consistent and rapidly served menu, Sulka said.

Majerle, a born crowd-pleaser on the court, carried the same personality to the business, Sulka said. At least four or five days a week, Majerle, who left the NBA in 2002, is behind the bar or serving a Cotton Club sandwich, named for the late Suns’ coach Cotton Fitzsimmons.

The restaurant has always fulfilled a fan’s fantasy with Suns players past and present dropping by, Sulka said. Sacramento Mayor Kevin Johnson, a former Sun, used to lunch at Majerle’s. Suns sensation Steve Nash comes by. And so does Suns center Amar’e Stoudemire – who lent his name to a downtown Phoenix restaurant that filed for bankruptcy protection recently.

Majerle’s survived recent lean summers in a downtown that saw more than a handful or restaurants come and go, Sulka said.

“If we run Majerle’s the way Dan played basketball, loyalty to the team, coaches and fans, and his hard work, determination and the consummate professional he was, no way could we fail,” he said.

© Copyright The Sacramento Bee. All rights reserved.

Harnessing New Semantic Search
By: John Rossheim, Monster Senior Contributing Writer

Many have called semantic search the future of resume search technology. But what exactly is semantic search?

Imagine search engines that don’t get hung up on the particular words that you and your perfect candidates use to describe a given profession. Instead, semantic search interprets the meaning behind the words and concepts.

If that simple concept still sounds murky, there’s good news: to reap the benefits of semantic search, you don’t need to know how it works.

Here’s a glimpse behind the curtain of semantic search that will help inform your use of it.

The Power of More Accurate Search
Basically, semantic search gets down to the meaning of words — the terms of your query and the prose in the resume database — to separate the wheat from the chaff much more effectively than conventional search.

“Semantic search creates strong job searches for the employer so it doesn’t take hundreds of clicks to sift through the results,” says James Sinclair, principal at OnSite Consulting, a hospitality consultancy in Los Angeles that performs executive searches for clients.

Maybe the most surprising aspect of semantic search is that it lets you describe who you’re looking for, almost as if you were speaking with a networking contact who knew all the top candidates out there.

“Our semantic search incorporates an engine that looks at context and addresses a lot of language pitfalls in resumes,” says Earl Rennison, vice president of architecture at Monster. For example, Monster’s Power Resume Search resolves misspellings, abbreviations (standard and otherwise) and synonyms and variations in terms. For example, SOX, Sarbanes-Oxley and Sarbox are all understood to refer to the Sarbanes-Oxley Act of 2002.

Recruiters find that it’s more effective to search on specific, hard skills, like C# programming, than on soft skills like team player. Those all-important soft skills are best evaluated by hiring managers and HR professionals in personal interactions.

Finds Candidates on their own Terms
Semantic search is necessary precisely because human language is so full of variations. “Candidates don’t create resumes thinking about how you will search for them,” Kforce vice president of recruiting Glen Cathey told attendees of SourceCon 2010.

Semantic search uses webs of related terms and their meanings to uncover resumes that use words closely related to your search terms. So, for example, when a recruiter or hiring manager runs a search on programmer, the results may also include jobs titled software engineer and developer, since they are potential synonyms.

Skills and traits are then weighted in semantic search to produce optimal ranking of results. Monster’s Power Resume Search gives more weight to a candidate’s experience that’s more recent, for example.

Even in the current buyer’s labor market, perfect candidates are often elusive. Thus Power Resume Search lets recruiters designate each desired skill as either required or nice to have.

Using Technology to Meld Information
To match your search query with the best candidates, semantic search combines advanced analytics with real-world knowledge of occupations in many industries.

“For each resume, the technology extracts concepts and tags sections,” says Rennison. “Then we analyze and summarize all the information in the resume,” to produce a conceptual portrait of the candidate.

Monster’s subject-matter experts encode knowledge from many professional fields, Rennison adds. They define a concept, find all the ways of referring to that concept, and determine where the concept fits in the “semantic space” of industries and occupations.

Here’s one such example: because advertising is a form of marketing communications, a resume with advertising copywriter in its Job Experience section can be presumed to belong to a candidate who has some marketing experience.

“Unless you have the right technology, making all of this come together is exceptionally difficult and fraught with problems,” says Rennison.

For instance, parsing errors can cause some words to be misinterpreted because their context is misconstrued. If a CPA’s resume states that she is marketing herself as a forensic accountant, the resume search engine should not classify her as a marketing professional. Sophisticated semantic search will analyze where in the resume marketing appears and interpret the word in that context.

Will Semantic Search Reshape Recruiting?
Who needs professional recruiters when semantic search is available? Most employers who have been using recruiters will find that these human experts will remain essential to the sourcing, recruiting and hiring cycles.

“Recruiting for top management still requires the personal touch,” says Sinclair. Additionally, concludes Cathey, “Intelligent search and match applications are not a replacement for creative, curious and investigative recruiters.”

Armed with semantic search in their tool belts, “recruiters can focus on developing relationships with clients and candidates,” says Rennison. Since semantic search streamlines the discovery of candidates, he adds, “recruiters can devote more time to determining whether candidates meet the promise of their resumes.”

When an Employee Stock Ownership Plan Makes Sense

Even though the employment market is flooded with unemployed top talent, smart companies need to always be thinking about the most effective ways to retain their best employees.

Perhaps one of the most powerful employee engagement tools is an employee stock ownership plan (ESOP). “What greater way to motivate each and every [employee] than by giving them all a little piece of the pie,” says James Sinclair, the principal of OnSite Consulting, a nationwide consultant to the hospitality industry. An ESOP “motivates employees, improves firm performance, fosters innovation, and promotes sound financial health,” says Sinclair. Indeed, studies show that employee motivation and productivity increase in companies with ESOPs.

By definition, an ESOP is a qualified defined-contribution employee benefit plan that invests primarily in the stock of the employer company and allows employees to become partial owners of the business. In the United States, more than 11,000 companies — from Fortune 500 firms to small, private types — have implemented an ESOP. That translates to an estimated 8 million employees who own stock in their companies through an ESOP. And according to Gary Young, a corporate attorney and advisor to small businesses on ESOP issues, the appeal of ESOPs for employees goes beyond participation in company ownership. “Like a pilot in a plane, passengers take some comfort in the fact that the pilot will share in the same fate as they will,” he says.

But using ESOPs as an employee engagement tool is often not the primary motivator for most business owners. The real motivation? Tax advantages. “ESOPs give [business owners] the most tax-favored option that the tax code provides anyone,” says Young. An ESOP provides a tax-advantaged vehicle to create liquidity, and a ready market for company shares so that the owner can take some cash out of the business. One of the potential tax advantages is that an entrepreneur who sells company stock with favorable capital gains treatment can possibly defer recognition of that gain indefinitely or altogether, says Young.

There are two types of ESOPs: leveraged and non-leveraged. Companies can make tax-deductible cash contributions to the ESOP to purchase stock or have the ESOP borrow money to buy the shares. Under a leveraged ESOP, an ESOP obtains a loan from a bank, usually with a company guarantee. The ESOP then uses the loan proceeds to buy stock from the company and/or existing shareholders, says David Johnson, an attorney with Turner Padget Graham & Laney in Florence, South Carolina. The company makes annual tax-deductible contributions of cash to the ESOP, which in turn repays the bank. With a non-leveraged ESOP, the company makes annual contributions to the trust either in the form of stock or in cash that is then used to buy shareholder stock.

Waiter, Bring Me a Fresh Idea
10 strategies that are working in the tough restaurant economy
By Jason Daley | Entrepreneur Magazine – March 2010

URL: http://www.entrepreneur.com/magazine/entrepreneur/2010/march/204986.html

It was about 20 years ago that the casual dining boom got started in the United States. It was a golden, batter-dipped age: We were lured in by the novelty of mozzarella sticks and artichoke dip, marveled at the cluttered walls and uniform flair and gulped down two-liter mango margaritas like every night was Friday.

But the bloom is off the bloomin’ onion when it comes to casual dining. The recession has customers trading down to fast food and the growing “fast-casual” segment of takeout specialists (think Chipotle (CMG), Noodles or Panera (PNRA)). Over the last couple decades, while drive-thru burger joints have kept their prices flat, the typical bill at casual dining chains has multiplied three or four times. And the quality of the food has remained pretty much the same while fast food has become better and more diverse. Add to that grumbles about predictable, high-fat menus and stale décor and it’s understandable why in 2009 the category was down 5 percent to 8 percent with a 3 percent to 5 percent drop forecast for 2010.

But some chains are figuring out ways to keep customers coming through their doors. Red Lobster (RT), for one, has designed a quick-turnaround lunch service designed to draw the time-strapped crowd, and its new wood-fired entrees are appealing to the health-conscious. Ruby Tuesday (DRI) redesigned its menu, retrained staff, modernized its décor–and brought in almost 2 percent more customers in late 2009 than in late 2008.

There are plenty of steps to take in a down market, and it’s important to remember that even individual franchisees are not powerless. We spoke with some of the leading thinkers in the casual dining field to find out what you can do to put a little flair back into your business.

1. Think locally
Casual dining chains are some of the most aggressive national advertisers out there. (Remember the “I want my baby back” jingle?) The problem is, plenty of franchisees think that’s enough, especially after a splashy grand opening with big media buys. “Local franchisees are advised to put 1 to 5 percent of their money into local advertising by their franchisors, but they think the national TV commercials are enough to drive customers,” says James Sinclair of OnSite Consulting, a Los Angeles firm that helps rescue flailing restaurants. “We often suggest local marketing like sponsoring soccer teams, participating in fundraisers, things like that. There’s no better advertising than getting buzz in the community.” Casual dining mom-and-pops haven’t been hurt as much by the recession, mainly because people feel a strong connection to the businesses. Becoming a local leader and integral part of the community, versus a faceless chain, can go a long way to developing customer loyalty.

2. Speed up lunch
Lunch is when the fast-food joints and casual restaurants go head to head–and where casual dining loses out. “Business users want to get in and out quickly, and most don’t have a full hour for lunch,” says Darren Tristano, executive vice president of Technomic, a Chicago-based food-industry consulting and research firm. Shaving 10 to 15 minutes off a visit can mean the difference between drawing a lunch crowd or sitting idle for the afternoon. Cracker Barrel (CBRL) and Chili’s have invested in system-wide redesigns of their kitchens and service procedures to help cut big chunks off their service time, but franchisees can help keep things moving by investing in more lunchtime staff, making sure servers are trained and efficient and streamlining the lunch menu to keep the kitchen on track. Tristano also suggests keeping prices competitive. Having lunch entrees in the $5-to-$8 range makes it less likely that budget customers will shift to the burger shack if times get tougher.

3. Push the bottle
Booze is always a high-margin item for casual restaurants, but more importantly it’s a gateway to gaining customers for dinner. According to Technomic’s research, only 14 percent of customers find occasion to drink in the afternoon, which is why national chains have started placing a new emphasis on earlier happy hours. Ruby Tuesday recently revamped its bar lineup, retrained its bartenders and introduced $5 signature premium drinks. T.G.I. Friday’s offered free appetizers at the bar last year in an attempt to draw people in during the dead afternoon hours. Starting drink specials at 2 or 3 p.m. is a great way to attract shift workers, business people scheduling casual meetings or retirees looking for afternoon deals. “You have to remember,” says Jeff Davis, president of Sandelman & Associates, a food-service research firm in Irving, Texas, “when times are tough alcohol is the one thing people don’t cut back on.”

4. Push the plate
Besides offering an extended happy hour on booze, create a happy hour on menu items, suggests Tristano, who points out that Steak ‘n Shake’s afternoon half-price milkshake promotion can easily lead to an order of burger and fries, and Braxton Seafood Grill’s happy hour, when it sells lobsters at cost, often gets orders for a few beers and all the fixings. One innovative strategy to woo the late-afternoon crowd is offering items at ascending prices–$3 appetizers at 3 p.m., $4 at 4 p.m. and so on. “The only way to maximize opportunities is to trade up,” Davis says. “The main goal when you get someone through the door is to trade up.”

5. Focus on the quality
“If you’re at a Mexican restaurant, people are going to notice if you’re scraping broken tortilla chips from the bottom of the barrel and not filling their glasses to the top,” Tristano says. Many chains also make the mistake of charging for soft drink refills or reducing the number of servers to save money. This sends a clear message to the customer that you’re struggling. If it is necessary to reduce costs, he suggests making cuts across the board instead of pulling savings in the areas of servers and food costs. Instead of switching from a good cheddar to a block of “cheese product,” try to renegotiate prices with vendors. “Be careful to negotiate pricing and to take cost savings out of other areas,” he says, “not from areas where customers will feel it most.”

6. Don’t chase Subway
One of the big temptations in casual dining is to simply slash prices until hordes of $5 deal-seekers start filling the tables. But Sinclair says that’s exactly the wrong tactic. “All that does is draw in deal hunters, and when the promotion is over, they won’t return,” he says. “You can’t focus on the short term. You have to be focused on what is going to make the customer return. If you’re going to discount, rebuild the menu so the price of the dish doesn’t lose you money.” The same thing goes for cutting portions. For the most part, consumers see smaller portions as a loss of value–and the savings to the restaurant are small. In the end, Sinclair says, “you’re not saving money per dish, you’re losing customer satisfaction.” Some portion-cutting campaigns have been successful: T.G.I. Friday’s Right Portion, Right Price campaign hit a sweet spot and The Cheesecake Factory scored when it brought its lunch portions down to human scale. But the strategy was about “right-sizing” ridiculous portions. “Some places serve way too much,” Davis says. “Why pay $15 for a salad that I can only eat a third of?”

7. Give them something special
It might seem obvious: People go to a specific restaurant to get food they can’t get anywhere else. But that idea has become murky in casual dining, where fried appetizers and flatiron steaks have all melded into culinary clichés. Tristano says there are two ways to give your menu an edge: Offer items that are a healthful alternative for those looking to adopt a “better-for-you lifestyle” or dishes that most diners can’t cook at home. “Quality Mexican entrees are difficult for people to make at home, or Asian appetizers like pot stickers. For crème brûlée you need to have that little flamethrower,” he says. “People are drawn to items that require culinary expertise or ingredients that are difficult to purchase.”

8. Reward loyalty
The best way to earn loyalty–and repeat visits–is to provide quality food and service. But Americans are suckers for deals, and loyalty programs are one of the things that keep diners coming back to their favorite booth. Sinclair suggests implementing programs that don’t necessarily hand out freebies but still provide something meaningful to diners. Rewards can include priority seating, discounts or rebates on gift cards or–one of Sinclair’s favorites–the chance to sign up and win prize money. “The idea,” he says, “is to get customers involved in the brand and get them to feel a natural partnership with you.”

9. Get it out the door
Fast-casual establishments are striking a chord with Americans–the food is better than a drive-thru burger joint, but it doesn’t require an hour of time and a 20-percent tip. Full-service casual restaurants, however, can easily mimic fast casual. System-wide, Denny’s and IHOP are experimenting with fast-casual annexes attached to their restaurants, and Buffalo Wild Wings, which has dedicated takeout ordering stations, is successfully bridging the fast- and full-service divide. Tristano says providing alternatives to sit-down dining­–whether call-ahead, drive-thrus or catering­–is a great way to create new revenue streams. “The more you drive off-premises growth, the greater opportunity you’ll have to weather the economic storm,” he says. “You have to understand what the customer wants and adapt to this environment and this economy.”

10. Take time to train
In the constant rush of the restaurant business, sometimes it’s hard to stop and take a good hard look at the big picture. “We don’t always have time to train employees or go through a full menu evaluation,” Davis says. “Maybe, with the recession, we have that time now.” Don’t be scared off by the extra investment involved in training–when restaurants are fighting tooth and nail to earn repeat customers, exceptional service is a huge factor in their deciding where to go, and good training often leads to less staff turnover. “It will cost money,” he says, “but in the longer term, people who continue to invest in their businesses will succeed. Excellence always wins, top to bottom.”

Jason Daley is a freelance writer based in Madison, Wis.

www.jasondaley.com

Is W Hollywood A Scene Stealer?
By DAVID HALDANE – 2/15/2010
Los Angeles Business Journal Staff

Will the posh new 305-room W Hollywood Hotel & Residences supplant the nearby Hollywood Roosevelt Hotel as the hangout for hipsters?

Several of those who know the market believe that the two establishments may go head to head at first, but in the long run the competition will help them both.

Nonetheless, the historic Roosevelt on Hollywood Boulevard, as well as the more middle-of-the-road Renaissance Hollywood Hotel on North Highland Avenue, have wasted no time in making improvements to keep themselves in the game.

Among other things, the Renaissance has been adding musical events, and will soon remodel its restaurant and corridors, even though it just opened in 2001.

The Spanish colonial Roosevelt, extensively remodeled just five years ago, will feature “new nightlife venues” this year, said Jason Pomeranc, who is co-owner of Thompson Hotels of New York, which owns the Roosevelt. And next year will see some room renovations.

“People choose to stay at the Roosevelt not only because of its location, but because of multiple layers of physical beauty,” he said.

And while there’s nothing wrong with a little healthy competition from down the street, Pomeranc added, “people will continue to go to the Roosevelt because of its intellectual soul.”

Yet the splashy debut of the $360 million W last month featuring just about every power player in town and a host of celebrities – including Los Angeles Mayor Antonio Villaraigosa, TV host Jimmy Kimmel and Robin Thicke – put its hospitality competitors on notice.

And the arrival doesn’t come at a time when tourists are exactly swarming over Los Angeles. Last year, hotel occupancy rates dropped nearly 11 percentage points – to 66 percent – while the average cost of a room fell from $170.50 to $151.50.

With occupancy rates not predicted to improve this year even as room rates continue to drop, some analysts believe that, at least initially, the W’s two main competitors will take a hit.

“I think initially the Roosevelt will see a decline,” predicted James Sinclair, the principal at OnSite Consulting LLC, a nationwide L.A.-based hospitality consulting service. “The new kid on the block always creates that for the competition. As long as the Roosevelt rises to the occasion and understands that competition forces innovation, however, then its business will ultimately increase because of the buzz created by the W.”

Hollywood institution

In fact, as far as glamorous and hip Hollywood haunts go, the Roosevelt has long had the town to itself.

Opened in 1927, the 12-story hotel was at the center of the excitement and elegance of early Hollywood, hosting the first Academy Awards in 1929. Marilyn Monroe is said to have lived in Room 246 and her first photo shoot was taken on the diving board at the pool. But as happened to Hollywood in general, the hotel eventually experienced a decline.

Then, in 2005, amid the neighborhood’s resurgence, the 83-year-old institution underwent a $46 million head-to-toe makeover aimed at restoring its glory for a new generation. Led by hot designer Dodd Mitchell, workers stripped the lobby’s ceiling to expose wood beams and stuffed its interior with oversized leather chairs to give it a smoking lounge feel.

Several new watering holes were added to attract the young.

The effort was a definite success with the hotel attracting A-list actors and celebrities such as Kirsten Dunst, Cameron Diaz and the late Heath Ledger. Actress Lindsay Lohan had a birthday bash there in 2008. Robert Ritchie – known more popularly as Kid Rock – reportedly had an altercation there in 2006 that was breathlessly reported by the Web site TMZ.com.

The room rates run the gamut from $199 to $239 for a standard room, up to $1,500 for a two-bedroom suite and more than $6,000 for a penthouse. The 300 units include a heavy mix of 58 suites and 60 poolside cabana rooms with private terraces. All of which has led some to conclude that the hotel attracts a different enough crowd from the W to sidestep a hard blow.

“People who go to the Roosevelt wouldn’t necessarily go to the W,” said Kristofer Keith, the owner of Spacecraft Design which does hospitality design and construction in Hollywood. “The Roosevelt has more of a boutique-type vibe, while the W reeks of corporate. I don’t really see a conflict.”

On the other hand, the 632-room Renaissance Hollywood Hotel and Spa, owned by L.A. real estate developer CIM Group, has largely targeted the tourist and convention crowd. Rooms start at about $239 a night (though the hotel has 33 suites, including a 3,500-square-foot penthouse that rents for $7,500).

To make itself more competitive in the new Hollywood market, Dan Shaughnessy, sales and marketing director, said the hotel in the last year has added such attractions as Indy Thursdays, during which independent music artists showcase their talent in the hotel’s lobby, and Sunday Standards, a Sinatra-style show. In addition, the hotel is in the process of remodeling its guest rooms as well as two major suites. This fall it will begin remodeling the lobby, corridors, restaurant and meeting space.

“Where they’re pushing the edgier side,” Shaughnessy said of the Roosevelt, “we’re more in the middle. We’re just edgy enough to attract some of the hip crowd, but not too edgy to drive away the more conservative customers.”

Power operator

However, there is no doubt that the W will pose a threat. The brand was founded a decade ago by hospitality giant Starwood Hotels & Resorts Worldwide Inc., the operator of the Sheraton, Westin and other hotels, to respond to the fast growth of independent boutique hotels that attracted younger crowds.

The first hotel in New York was a smash hit and since then Starwood has opened 54 W hotels. The Hollywood property is part of a complex that includes 143 condos and an adjacent apartment building. It has a spectacular, cavernous lobby designed for hanging out, with rooms ranging from about $219 to $850 a night. It includes 40 suites ranging from $3,000 to $10,000 per night. Next month, a swank $12 million Las Vegas-style rooftop nightclub called Drai’s Hollywood is scheduled to open.

“The response so far has been wow,” said General Manager Jim McPartlin, who said occupancy has hit 50 percent and is growing, “It’s been a thrill ride for the last two weeks. We’re about double where we thought we would be.”

Still, Seth Horowitz, vice president of operations for L.A.-based Luxe Hotels, which operates several establishments on the Westside, is another who believes that that W in the end will be good for business.

“Our position is that the more hotels there are in a particular area, the more visitors they can draw,” he said. “There is a desperate need for quality rooms in Hollywood. The Roosevelt and the Renaissance pretty much owned that neck of the woods; bringing in the W creates a triangle that will benefit the economy.”

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Will Your Texting Policy Stand Up in Court?

By Minda Zetlin

A new Supreme Court case casts a shadow on employee text messaging rules. The case involves an employer sued for reading an employee’s (highly sexual) text messages, even though he sent and received them using company-owned equipment.

You have a mobile workforce, so you issue mobile devices to your employees. You pay for their mobile service and make sure their equipment is working. Since it’s intended for business, you have the right to read employees’ text messages. What’s more, you have a policy that says so, in so many words. All employees must acknowledge this policy when receiving their Blackberry devices or other smartphones.

Legally, you might think you’re well covered — and you might be wrong. In Ontario, Calif., police officials reviewed an unusually large number of texts sent by a police sergeant named Jeff Quon. They found hundreds of sexually explicit texts. Quon sued, arguing that his bosses had no right to read the texts. The case made its way up the food chain to the Ninth Circuit Court of Appeals, which ruled in favor of the cop. Recently, the U.S. Supreme Court agreed to hear the case, with a final ruling expected this summer.

Whatever the court eventually rules, this is unlikely to be the last employment case involving text messages, and employers find themselves setting text and other communications policies in an increasingly confusing world. “Technology is changing fast and the courts are left to catch up,” notes Jason C. Gavejian, an associate at Jackson Lewis LLP. “The biggest challenge is the interplay between federal law, and state and local law,” he adds. “In one New Jersey case, the courts ruled that employers have an obligation to make sure employees are not viewing child pornography. That requires monitoring. Now the Supreme Court may rule that monitoring is illegal.” If it does, the two rulings will be in direct conflict, and employers in New Jersey will have to choose between disobeying state and federal courts.

It should be clear by now that setting an appropriate policy governing the use of mobile devices is a very serious business. But many small companies don’t take it seriously enough, says Michael McAuliffe Miller, partner in the labor and employment group at Eckert Seamans Cherin & Mellott, LLC. “The biggest mistake companies make is that they have no policy on texting and mobile communications,” he says. “Or else, they have an off-the-shelf policy that they’ve downloaded from the Internet. Then they’re inconsistent about enforcing the policy, especially with employees everybody likes.”

Develop a policy on texting

If the above is a good description of how not to handle texting policy, what’s the right way to do it, especially in light of the Quon case? Unfortunately, there’s no one right way, but here are some steps that may help:

Have the right people create policy. “In many companies we consult, these policies are set by an IT person,” notes James Sinclair, principal of OnSite Consulting, a hospitality industry consulting firm that specializes in helping financially troubled companies regain profitability. “I’m a big believer that these should be management decisions.” Top management should set mobile communications policy, with input from legal counsel.

Update the policy often. Especially any time you provide employees with new types of devices. “One of the issues in the Quon case is that the police force’s policy had been written to apply to e-mail, not texts.”

Reduce expectation of privacy. “Employers should have a policy that says employees have ‘no reasonable expectation of privacy.’ That’s the key phrase,” Miller says. The policy should be distributed to employees at regular intervals, and they should be asked to acknowledge their agreement. “Some employers make that consent interactive,” he adds. “It could be part of the employee’s log-in process.”

Specify who can change policy — and who can’t. In the Quon case, the police force had a formal policy that said texts weren’t private. But a lieutenant told Quon informally that if he paid for any texts beyond the 25,000 characters a month on his pager plan, no one would read his texts. “You should have in your policy that no one but a designated senior official of the company can change the policy,” Miller says.

Train managers about the policy. “You want to make sure managers get proper training so that when they inform employees about the policy they’re doing it in a uniform fashion, consistent with what the company wants to accomplish,” Gavejian says.

Specify how equipment is to be used. This is a tricky question. You can’t define unauthorized use too narrowly, Gavejian says. For instance, if you write a rule against sexually explicit text messages, it won’t apply to sexually explicit images. Instead he suggests a rule that company equipment be used only for business communications. At the same time, he acknowledges, such a rule may not be realistic. “You can’t stop someone from sending a message home saying ‘I’ll be late for dinner,’” he notes. “I don’t think there’s one universal policy everyone can apply. It has to be analyzed on a case-by-case basis, and depending what technology you’re using.”

Keep messages on your own servers. This is a potentially costly solution that isn’t right for every small company. But, because its clients’ data is always highly confidential, OnSite Consulting chose to route all e-mails and Blackberry messages through its own servers. “We worked with our general counsel and did a lot of research,” Sinclair explains. “By default, if you’re going through our server, you’re accepting our terms and conditions, and the messages are automatically copied and audited.”

This solution may become more popular in the wake of the Quon case: One of the questions at issue is whether his employer had the right to demand his text messages from their pager company, and whether the pager company was right in acceding to that demand. OnSite’s server is hosted and maintained by a hosting provider, but it does physically belong to OnSite. “We made it a priority and spent a significant sum for a technology we can’t see or directly use and that does not contribute to our return on investment,” Sinclair says. “But it provides another layer of protection for our clients.” It also provides a real-world model of how to most safely handle employee communications. “We have to do it,” Sinclair says. “We can’t walk in there as a consulting company and have a less-than-perfect system ourselves.”

West Hollywood reaches out to gay and lesbian tourists

The city is trying to shore up revenues by wooing a ‘very lucrative segment.’

Newest hot spot for a $78 steak: A shopping mall

by Megan Finnerty – Oct. 26, 2009 12:00 AM
The Arizona Republic

Malls are destinations for spending on new shoes, jeans and purses.

But now Valley residents are asking themselves if they’re ready to go to the mall for a $78 steak and a fancy cocktail.

Modern Steak opens today at Scottsdale Fashion Square with all the opulence of a high-end steakhouse – mirrored ceilings, glittering chandeliers and even a concierge desk. There are cozy leather booths for canoodling couples and an airy patio for those who prefer to be more conspicuously observed.

But the patio is topped with a white-metal awning that blocks the view of the parking lot. And, while diners at interior tables hear a trendy music mix, those who sit overlooking the mall get Muzak.

Yes, it’s a glamorous steakhouse, and it’s across from Banana Republic. But several signs say this might be just the right fit.

Dozens of high-end shopping centers across the country have added elegant dining during the past few years, and it’s worked when the restaurants are as swanky as the stores, says hospitality consultant James Sinclair. Malls want the new customers, and restaurateurs want the critical mass of prospective diners.

“More retail outlets are pursuing destination dining, name restaurants and name chefs, opening up the market for diners, tourists, dates, not just people going to the mall,” said Sinclair, president of Los Angeles-based OnSite Consulting.

Shopping at Scottsdale Fashion Square is decidedly luxurious: Shoppers might spend $975 on a sleek trench at Burberry or drop $395 on a Comme des Garçons dress shirt at the new Barneys New York.

The mall is one of America’s 10 most profitable, with $618 in sales per square foot vs. the national average of $420, according to a study by U.S. News and World Report and Green Street Advisors, a Newport Beach, Calif., investment-research firm.

Similar upscale dining-shopping mixes can be found at other top malls such as the Forum Shops at Caesars Palace in Las Vegas, with a Sushi Roku and a Spago, or the Ala Moana Center in Honolulu, with a Morton’s the Steakhouse.

So, when rebuilding the east wing as part of the Barneys expansion, mall-owner Westcor invited longtime Valley restaurateur Sam Fox to develop something to “wow customers,” said Greg Cochran, Westcor’s vice president of leasing.

“We want it to be one-stop shopping . . . the movies, bookstore, department stores and a unique dining experience. It keeps them in the mall longer,” he said.

Fox says it’s the perfect location. He has already been successful with Olive & Ivy (the destination for the trendy over-35 set) at the Scottsdale Waterfront, and the fast-casual pizza chain Sauce (six locations Valley-wide).

The corner of Scottsdale and Camelback roads is close to luxury resorts, expensive homes and similarly style-conscious restaurants. And that’s a mix that’s already proven successful for restaurant-and-retail pairings at less traditional Valley malls. Phoenix’s Biltmore Fashion Park has always been as much about dining as shopping, anchored by foodie favorites like Christopher’s Fermier Brasserie, now updated as Christopher’s & Crush Lounge. Kierland Commons is home to upscale eateries including Mastro’s Ocean Club, NoRTH and the Greene House. The latter two are also Fox’s.

But those are both outdoor shopping spots, not traditional malls, and neither has a restaurant with two “Conspicuous Consumption” wines at $140 per bottle.

So, at the 9,420-square-foot Modern Steak, Fox has tweaked some steakhouse conventions to speak to the mall crowd. During the day, it’s ladies-who-lunch friendly, with an $11 Cobb salad, a $10 Margherita pizza and a $15 maple-bacon-glazed salmon, placing it just a few dollars above the food court’s Pita Jungle.

Dinner is pricier but familiar, with an $18 warm Maine lobster salad, a $95 seafood tower, and that $78 HeartBrand Akaushi 8-ounce filet.

It’s the decor that makes this place as fancy as the sequined camisoles at the nearby J. Crew – and as appealing.

“It has to be used by all kinds of people . . . so it has to be gorgeous, welcoming, lush, vibrant and gracious,” Fox said.

Fox worked on the designs with Phoenix architect and interior designer Catherine Hayes, creating a space for everyone.

Older customers will like that many of the chairs have arms. Men will appreciate the extra-big stools at the bar. Moms will enjoy the stroller-friendly wide aisles and the airy brightness of a room finished in shimmering drapery, blue lacquer walls and a custom, white latticework ceiling. And fashionistas will swoon over the breathtakingly pink women’s restroom.

Eric Schaefer, writer of the Valley food blog Eric Eats Out, said he’s impressed with Modern Steak’s distinctive vibe.

“The common perception is that we don’t need another steakhouse,” said Schaefer, 36. “But (Fox is) making it a little more friendly, a little less stuffy, a little hipper and better for a wider range of price points.

“Bottom line, I would pay $70 to eat a steak anywhere if the food was good.”

The Up Side of Down Sizing

Restaurants can take a tip from retail brands that offer smaller portions and charge a premium. By Dale Buss

Like the slew of retail companies that offer 100-calorie, portion-controlled products to consumers, a handful of quick-serve operators are also jumping on the trend. Boloco, a regional burrito chain based in Boston, drove check averages up about 5 percent in the two outlets where it is testing a mini-size dinner-menu option.

But so far most chains have restrained from such a “better for you” marketing gambit and, in fact, show little inclination to back away from a recession-proof emphasis on volume as value.

“I see no evidence of chains using portion control for positioning, and I’ve traveled all over the country looking at quick serves,” says Elizabeth Howlett, a University of Arkansas marketing professor. Howlett recently co-authored a study in which the main conclusion was that many consumers have a poor understanding of the calorie, fat, and sodium content of quick-serve meals.

Even some chains who could tout new options as health-oriented are refraining from doing so. Burger King is mainly marketing its new Burger Shots, for example, as great for sharing with fellow diners. The Miami-based chain isn’t even mentioning the dietary benefits of consuming fewer calories than in its traditional meals.

Portion-control positioning is rare so far for a few reasons. First, the primary middle- and low-income market for most chains still largely equates ample food with value

“In the quick-serve environment, where quality is not as much of an issue, it costs next to nothing for [chains] to satisfy that criterion,” says James Sinclair, president of OnSite Consulting, a Los Angeles–based firm that serves the hospitality and foodservice industries.

Second, any pioneering chain that promotes a different value equation may have to “do a lot of consumer education,” according to Howlett, to get consumers to think otherwise.

New York City diners may appreciate the mandatory nutrition information on menuboards, but it only provides extra information to influence their decisions—the presence of the data itself doesn’t restrict their options.

Third, the potential margin and cost implications of portion-control initiatives are murkier than it might seem. Brands could arguably boost margins by offering smaller portions and pricing them at a per-ounce premium to regular and large sizes.

“You’re giving customers more choices,” says Darren Tristano, executive vice president of Technomic, the Chicago-based foodservice consulting firm.

“But the payoff might not be there because, after all, most consumers say they want salads but they still eat fries. And meanwhile, it’s more difficult for the operator because they have to prepare and deal with more items and more sizes and promote them all.”

But Boloco, with 16 outlets, has been offering mini breakfast burritos for a year and a half with great success. As a result, CEO and co-founder John Pepper is trying mini burritos in other dayparts as well.

“All these minis are higher-margin items,” he says. “People are paying a premium for them, but it’s allowing people not to have to think so hard about whether they really want to go get a Boloco.”

September 18, 2009

Sam Nazarian’s Mi-6

The club maestro is back on the L.A. scene with Mi-6 in West

Hollywood, a sleek space with visions of James Bond.

By Scott T. Sterling

Just call it the Sam Nazarian experience.

After three years cultivating hotels and restaurants as the head of famed hospitality firm SBE, Nazarian has returned to the Los Angeles club scene this week with his new West Hollywood club Mi-6 — named after the British Secret Intelligence Service (a.k.a. MI6) and meant to conjure the sleek luxury of the James Bond movies.

“It’s good to be back,” Nazarian laughs inside of a black custom Mercedes-Benz Sprinter minibus, which SBE uses to shuttle VIPs from the SLS Hotel of Beverly Hills to any of his growing stable of area properties, which includes clubs Area and Hyde, as well as the restaurants Katsuya and XVI, both of which are partnerships with designer Philippe Starck.

The scene that trailed Nazarian from the club to the minibus was worthy of HBO’s “Entourage”: A phalanx of publicists, handlers, a videographer and even a waitress with a tray of sushi paraded through the crowd straining to get inside. Many called out Nazarian’s name, and he stopped to greet some guests before hopping inside for the interview.

“It was very important for me to focus on the SLS and Katsuya, because I wanted them to be world-class establishments,” he says. “So I stepped away from night life for three years. Now I’m ready to take the L.A. club scene to yet another level of sophistication.”

It’s hard to see anyone other than Nazarian pulling off something as ambitious as Mi-6. It’s in the old Foxtail space, wedged in between two institutions: music venue the Troubadour and restaurant/lounge Dan Tana’s. The klieg light-saturated red carpet crush of willowy models, discreet celebrities and swarming paparazzi is exceedingly conspicuous on this generally low-key corner of Santa Monica Boulevard.

“We’ve developed a really good relationship with the city of West Hollywood, which is the only way we were able to pull this off,” says Bill Tremper, SBE’s vice president of sales and marketing. “They already know us through our partnership with the Abbey Food & Bar right down the street.”

“I realize it’s especially competitive in L.A. night life right now, with fantastic new clubs like Playhouse, H.wood and MyHouse,” Nazarian says. “But I believe I have something special to offer the scene. I’m working with the company MomentFactory, who produce unique multimedia environments. They did the visuals for the Nine Inch Nails tour last year, which was outstanding. What they did inside Mi-6 is really impressive.”

The fruits of MomentFactory’s labor aren’t easy to see: massive (and hidden) mirrors that double as video screens and switch between the two at intervals. The dark, three-story club was so packed that just moving around was akin to a high-fashion rugby match with the entire roster of actors on the CW network. DJs pumped a mix of Top 40 hits while tattooed waitresses brought huge bottles of alcohol festooned with sparklers to tables on the first floor. The lighting system has the ability to emit a wide array of color schemes at the push of a button.

“Competition is always a good thing. It forces innovation, better pricing and more amenities,” says James Sinclair, former club owner and now the president of night life specialists OnSite Consulting, commenting on Nazarian’s new club. “In the end, it benefits the consumer.”

Where Nazarian has a real advantage, says Sinclair, is his solid portfolio.

“Unlike someone whose entire life is invested in one location,” Sinclair explains, “Nazarian has enough profitable ventures that he can close a place for a few months while he decides what to do with it. His is a hugely mitigated risk.”

Back in the minibus, Nazarian rattled off a slew of upcoming projects, including renovating La Cienega club Halo, SBE’s recent acquisition of stalwart Malibu restaurant Gladstone’s and the impending launch of a club Hyde space inside Staples Center.

“It’s all about creating world-class establishments,” Nazarian reiterates before wading through the crowd outside of Mi-6. “I brought a level of sophistication to the Sunset Strip with XIV, which people said couldn’t be done. The SLS Hotel won best achievement in design from Virtuoso magazine, putting us next to establishments in China, Dubai and Italy. Being responsible for helping make Los Angeles part of that conversation is extremely gratifying.”

Mi-6

Where: 9077 Santa Monica Blvd., West Hollywood

When: 9 p.m. to 2 a.m. Tuesdays and Saturdays

Price: Varies according to night; call ahead

Contact: (323) 655-8000, www.sbe.com

INTERNATIONAL

PHILADELPHIA. Two of the 17 chefs on the sixth season of Bravo’s “Top Chef” hail from Philadelphia. Even more surprisingly — or, perhaps not — both are women.

Jennifer Carroll, the chef de cuisine at Eric Ripert’s 10 Arts inside the Ritz-Carlton, and Jennifer Zavala, who left Northern Liberties’ El Camino Real this month and is now working at Xochitl, will battle it out on the popular reality show.

Meanwhile, Alison Barshak (Alison at Bluebell), Luciana Spurio (Le Virtu) and Marcie Turney (Lolita and Bindi) are among the other female chefs putting great dishes together around the region. Philadelphia, it seems, hosts a growing hotbed of respected female chefs.

“Most of the time, delivery people still go right to one of the male line chefs, assuming that he’s the head chef,” says Sheri Waide, the chef at Southwark, in-between prepping for a dinner shift. “So I think anything in the media, like ‘Top Chef,’ helps make people more aware of women in these jobs.”

Running the kitchen of a fine dining establishment has it’s own unique challenges for women. Many see it as one of the firmest glass ceilings out there.

“A female executive chef is probably 10 times stronger than any male based on what she has probably had to endure to get to this point,” says James Sinclair, the Los Angeles-based author of “How to Save Your Restaurant in Ten Days.” “Young women who see female contestants on ‘Top Chef’ in fierce kitchen environments, which are traditionally a bastion of testosterone, have new role models.”

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By ALEXA  HYLAND - 7/6/2009

Los Angeles Business Journal Staff

The line of well-dressed twentysomething guys and gals waiting to get the OK from the doorman at Hollywood hot spot Les Deux starts forming at about 10 p.m. The line is about as long as ever, despite the recession.

But once those people make it beyond the velvet ropes, they don’t drop thousands of dollars for their wild night out like they used to. They spend less than ever, because of the recession.

“The extravagance of buying 10 bottles of champagne for $5,000, you don’t really see that anymore,” said Sylvain Bitton, co-owner of Les Deux, where partiers can sneak a peek at the nightclub’s celebrity clientele, including starlets Lindsay Lohan and Rihanna. “People are definitely cost-conscious.”

Bitton and other veterans of Hollywood’s world-famous celebrity nightlife said that times are so hard due to layoffs and the weak economy that they are offering specials that look more like coupons for Denny’s or ads for Payless shoes: buy one bottle of vodka, get the next one for half-price.

Some clubs are offering free cocktails. Others are dropping the old $400-a-bottle prices faster than a drunken partygoer spills a drink.

Clubgoers are getting savvy about the situation, too, and ask servers and managers for deep discounts.

“Everyone wants a deal now – they wanted a deal then, they just didn’t have the ground to stand on to ask,” Bitton said. “Now, with the financial situation, these 21-year-old kids in here, they want some sort of break.”

The average check for a table has dropped from about $2,000 to $1,000, he said.

The occasional Saudi prince will still swing by Ecco Ultra Lounge in Hollywood and drop $10,000 in a night – as one did recently – but that’s the exception, not the rule. Bottle service – which is offered to VIP guests who book a table in advance, then keep the drinks flowing – is down 40 percent to 50 percent, club owners said.

To keep customers spending, Les Deux started offering bottle service discounts, a significant revenue stream for most nightclubs. Clubgoers who buy one bottle of liquor get the second for half price. Or they can get single bottle discounts.

For example, customers can purchase bottles of vodka for $200 each, down from $375; and bottles of champagne for $100, down from $300. For that, the customers get a table, plus ice and mixers and the bottle, of course. Les Deux is also offering an open bar from 10 to 11 p.m., when customers get free cocktails.

The club, which is owned by L.A. hospitality company the Dolce Group, isn’t the only hot spot offering deals.

At the recently opened Hollywood nightclub Halo, customers who’ve ordered two bottles of vodka and one bottle of champagne have negotiated management from the menu price of $900 all the way down to $500. At Hollywood spot Crimson/Opera, clubbers can get the $800 promotional rate for two bottles of vodka and one bottle of champagne, instead of the $1,050 menu price.

Insiders said clubgoers can strike deals on bottle service at SBE Entertainment Group LLC’s West Hollywood nightclubs, including Area, Foxtail and Hyde Lounge. A representative for SBE did not return a call for comment, but someone familiar with the club who spoke on condition of anonymity said those clubs were offering half off every third bottle.

Saturated market

Industry watchers said nightclub owners are being forced to offer discounts, especially on bottle service, to keep customers spending and to remain viable in a saturated market – there are more than 50 nightclubs within Hollywood’s 3.5-mile radius.

“We have to offer next-to-nothing prices on bottle specials just to keep the bottles selling,” said BoJesse Christopher, a 20-year industry veteran and chief executive of L.A. promotion company BJC Events Inc.

Even at cheaper prices, the Hollywood wannabes who frequent these nightclubs aren’t stocking up.

Danijel Bajric used to get four or five bottles of liquor at his table when the economy was booming. But the other night at Les Deux, there were just two bottles of Grey Goose vodka in front of him. “Last year, I would spend $300 more in one night on alcohol than now,” said Bajric, a native of Sweden who moved to Los Angeles three years ago in hopes of becoming an actor. The menu price for the two bottles of Grey Goose was $800; he got them for $500.

Hollywood nightclubs have a tough market. In New York, the population base is so huge that clubs can survive through a years-long cycle of step-downs: First the club is ultratrendy, then the rest of the city comes, then there is a whole world of suburbs from which to draw crowds. In Las Vegas, the ever-changing tourists are a constant fuel for business.

But in Hollywood, clubs cater to a fairly defined but extremely fickle group, which is always looking for the next hot spot. Translation: Whatever place is now frequented by celebrities.

As a result, most Hollywood nightclubs are popular and very profitable for only one year before revenue starts to slide. The problem now is that the trendy clubs, even though they are drawing big crowds, aren’t drawing big spenders. And that means that even the few trendy nightclubs aren’t making money like they used to during their short life spans in the limelight.

While a club still may rake in what seems to be huge sums of cash, it is also likely the owner gambled millions of dollars by developing a club that may not be popular or will be popular for a short while.

“If you do a year where you are catering to a clientele with a large disposable income, you have beaten the odds,” said David Judaken, chief executive of L.A. nightclub operator Syndicate Inc. “Most clubs don’t even hit a level that is deemed successful any longer.”

At the moment, Judaken is looking to capitalize on the success he’s experiencing with MyHouse, a sleek nightclub that opened in January. Judaken spent millions renovating the 10,000-square foot space, which features $8,000 couches now occupied by Paris Hilton and her crowd.

“MyHouse is generating historic numbers and revenue,” Judaken said. “But if we are lucky, we will have 12 months out of that unique microeconomy.”

‘Working twice as hard’

As a promoter responsible for putting on events that draw crowds, Christopher is taking a hit, too. Generally, he gets 10 percent to 20 percent of the profits from his events. In this economy, that means the amount he makes in one night has dropped from about $30,000 to $15,000.

“We are working twice as hard and making half as much,” Christopher said. “But at least we are still in business.” Others might not be so lucky.

James Sinclair, co-founder of L.A. hospitality consultancy OnSite Consulting, said that anybody can run a nightclub in a good economy, but only the professionals will be able to make money these days.

“The economic operator who understands his numbers, and is more than just a pretty face, will survive in this market,” Sinclair said.

But in Hollywood, image sometimes prevails over economics. Nightclub owners and promoters may be staging what looks like a lucrative event, but nobody knows who got what for free.

“We’ve given a lot away just to survive the perception that nightlife is still recession proof,” Christopher said.

OnSite Consulting is a nationwide hospitality management & consulting company
www.onsiteconsult.com

WEST HOLLYWOOD UNVEILS ECONOMIC HARDSHIP PROGRAM
Program targets City’s Retail Stores, Restaurants & Hotels

In an attempt to boost local business during the economic downturn, the City of West Hollywood has partnered with the West Hollywood Chamber of Commerce to offer a special economic hardship package to local retailers, restaurants, hotels and other businesses.

The package was created by an ad-hoc committee comprised of businesses that assisted in the development of specific measures the city council should consider to sustain retail activity in tough economic times. The committee worked with the city, the West Hollywood Chamber, the Sunset Strip Business Association, Avenues of Art and Design, and the West Hollywood Marketing and Visitors Bureau to develop the newly released package.

While some elements of the package are still under review by the city council, including an increase to special events allowed per business from four per year to 12 per year, some of the package’s components have already been implemented. As of April, for instance, DJ’s are allowed to function as providers of ambient music in restaurants, and promoters are allowed to operate under a single permit, rather than a permit for each location in which they work. A reduction in fees for certain special event permits is also in place.

West Hollywood Mayor Abbe Land said the package is a great tool for businesses suffering economic hardship.

“While we are fortunate that our city budget is strong, we recognized that some of our businesses were struggling,” Land said. ” It is important to us as a city to have a vibrant, diverse and healthy business community, and so in addition to the Economic Hardship Package, we also continue to encourage our local residents and businesses to support each other by shopping West Hollywood and spending their dollars here.”

Sharon Sandow, president and CEO of the West Hollywood Chamber of Commerce, was a member of the committee that made the proposals outlined in the package. She said the city has been expeditious in getting the package enacted.

“The city wants to help business along, which I think is really commendable and really necessary,” Sandow said. “We are very grateful for the quick action the city has taken on this. They are trying to give businesses the most assistance possible in a short amount of time.”

James Sinclair, president of Onsite Consulting, operators of O-Bar in West Hollywood, said the economic hardship package is not only a financial measure, but one that will raise morale amongst business owners.

“Right now, restaurants have an increase in raw material costs and high minimum wage requirements,” Sinclair said. “With the sales tax increase, we can’t raise our prices right now if we want to get customers in the door. West Hollywood stepped up of their own accord to protect its own community. I have restaurants nationwide and I have never seen a city so proactive in protecting its businesses.”

Many of the items pending council review will be heard at the July 13 and July 20 West Hollywood City Council meetings. For more information, visit www.weho.org.

OnSite Consulting is a nationwide hospitality management & consulting company www.onsiteconsult.com

Feel like drowning your recession sorrows? There are a whole lot of
San Diego nightspots practically lining up to buy the first round.

Commonly perceived as recession-proof – who doesn't want to knock one
back when times get tough? – many area nightclubs, bars and lounges are
seeing the same hefty sales declines that have plagued their more-staid
restaurant brethren in recent months.

Among those hardest hit are the nightspots that soared highest in
boom economic times, the swank nightclubs that offered $300 bottle
service and the trendy watering holes in ritzy boutique hotels.

Which means with a little logistic ingenuity, a resilient liver, and
a designated driver, it's possible on almost any day of the week to
hopscotch from La Jolla to downtown's Gaslamp Quarter, imbibing premium
cocktails or several draft beers and filling up on discounted appetizers
or free food buffets, for as little as $15.

For instance, at Hillcrest's glitzy Universal nightclub, which opened
in April as the recession was warming up, management is advertising a
“first drink on us” for customers who come to the club this month.

At downtown's exclusive Ivy Hotel, where a Grey Goose vodka martini
goes for about $15, the hotel's Quarter Kitchen bar began last month to
offer its first ever happy hour – dubbed the “Happier Hour” – complete
with the same martini for $5 most evenings between 5 and 9 p.m.

And at Clay's La Jolla, a penthouse lounge and restaurant with
panoramic ocean views, chef Clay Bordan began serving up an expanded
happy hour value menu last week, washed down with $4 well drinks or a $3
large draft beer.

“More people are checking out the happy hours because they are on a
budget,” said Brad Nemire, founder and publisher of San Diego's Happy
Hour magazine. “And there are a lot of cheap deals out there now, so
this is the time to explore places where before you might have flinched
at the prices.”

Indeed, some of the deals verge on “panic”
marketing, and in the end may damage brand images and help push weak
nightclub and bar operators into bankruptcy, some industry experts
caution.

“If I were to drink, this would be my paradise
right now,” said James Sinclair, principal of Onsite Consulting, a Los
Angeles firm that specializes in turnarounds for insolvent or troubled
nightclubs, bars and restaurants. “But one has to ask who is doing the
cost-benefit analysis, because at a certain point these operators are
giving everything away.

“Clubs are shooting from the hip with marketing
efforts, doing whatever they can to get people through the door, from $3
shots to free nightclub entry and champagne for groups of girls,”
Sinclair said. “A lot of people are being forced into emergency measures
for emergency times, which is the actual reason for eventual failure –
panic.”

For some nightspots, particularly those in areas that have relied
heavily on tourists and business travelers to belly up to the bar, happy
hours, coupons, two-for-one appetizers and other promotions are a way to
woo a new customer base – the locals.

Tourism is expected to drop precipitously in coming months, and
forecasts, which have been revised downward frequently, now peg the
decline in local hotel occupancy at at least 7 percent this year.

With that kind of drop in out-of-town dollars, downtown hotels, bars
and nightclubs are “getting very creative” in efforts to lure locals,
said Jimmy Parker, executive director of downtown's Gaslamp Quarter
Association.

“We're seeing spa specials to locals, staycation packages, and places
that never had happy hours are doing happy hours,” Parker said.

Last month, Maloney's Tavern, a workaday bar on Fifth Avenue, began
offering an all-day special called “The Bailout” – either a $2 draft or
a $2 shot.

“We thought customers should be able to order it anytime because
everyone is hurting all the time,” said Dan Long, general manager of
Maloney's.

To market its first-ever Happier Hour, the Ivy Hotel on F Street sent
mailers to residents of the downtown 92101 ZIP code, e-mailed its
customer list and placed banner ads on its Web site.

Jessica Cline, a spokeswoman for the Ivy Hotel, said the response has
been good.

“We've been able to reach a different clientele, locals who feel like
they can come to the hotel and the Quarter Kitchen bar and have an
upscale experience without breaking their wallets,” Cline said. “It gets
people to think of the Ivy in a more accessible way.”

Of course, not every bar and club needs to reinvent itself or launch
a new program to keep customers coming through the doors. Some
moderately priced nightspots are seeing little change in revenue, in
part because they've always offered value and have loyal working-class
customers with little or no stock portfolio to be beaten down in the
market.

Daniel Drayne, owner of The Field, an Irish pub on Fifth Street, said
revenue was up 7 percent last year over 2007 – the second best year
since the pub opened in 1998.

And Drayne doesn't credit the luck of the Irish.

“We've always been good value, we've always had specials, coupons,
happy hour, no cover to get through the door,” Drayne said. “It's the
fine dining places and the expensive clubs that have been hit hard.

“People want a place to go where they can slip in for a drink or two,
get an appetizer – without feeling like they have to stay all evening
because they spent a couple of hundred dollars for bottle service.”

Penni Crabtree: (619) 293-1237;

penni.crabtree@uniontrib.com

Penni
Crabtree: (619) 293-1237; (Contact)

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