The Science of a Sizzling Club
Brett Nelson and Laurence Holland
Forbes.com
The anxious crowd pooling in front of the stone façade is 200 strong, maybe more. By all accounts, summer is "slow season" on the Manhattan nightclub circuit. And yet there they were, a herd of sleek and stylish 20-somethings sweating in the city steam, hungrily waiting an invitation to come inside -- if only for a brief glimpse. The time is already 3:15 a.m.; the club closes at 4.
This peculiar drama plays out year round at Marquee, a mainstay among New York City's nightlife aficionados. Most clubs have the lifespan of a fruit fly; two years is considered a respectable run.
Yet Marquee -- which opened in December 2003 on Manhattan's far west side -- has managed to preserve its precious allure and keep the fickle and fashionable coming back for more.
How'd they do it? Not quickly. The club's good fortune was years in the making, thanks to a decade-long customer cultivation campaign, feverish attention to detail and, as is the case with every successful small business, lots and lots of hours. And luck.
Marquee's success is even more impressive -- or bizarre, if you're used to a casual beer and a decent night's sleep -- considering what customers pay for the privilege.
Like other ultra-trendy clubs, Marquee uses a two-tiered pricing approach. The hoi polloi waiting in line pay a $20 cover charge, while the famous and well-heeled, who often reserve seats ahead of time, are expected to purchase entire bottles of alcohol at obscene premiums. A bottle of Absolut vodka that retails for around $25 at the local grocery store goes for $310 at Marquee -- a 1,240 percent markup. (For that, you get to mix your own drinks; juice, tonic and ice bucket are included.)
At that price, if you ordered by the drink and the bartender believed in 2-ounce pours, you would be shelling out roughly $24 per cocktail. One enthusiastic bubbly connoisseur forked over $10,000 for a bottle of Dom Perignon Vintage Methusalem.
Who in their right mind would do this? Celebrities, for starters, and the rubbernecking masses who want to party with (or at least near) them.
Take last week's event lineup. Tuesday: Christina Aguilera's album-release party. (Rapper Diddy, R&B singer Babyface and clothing designer Marc Jacobs were on hand.) Wednesday: Paris Hilton's album-release party. Thursday: Club founder Noah Tepperberg's birthday bash (he turned 31), which brought in 1,500 people during the course of the night. And the weekend hadn't even begun.
Tepperberg crows that this quarter (it's "slow" season, remember?) is shaping up to be Marquee's best ever, in terms of sales. Since its opening two and a half years ago, the club has pulled in more than $30 million, says Judy Tepperberg, Noah's sister and director of special events. As for profits, the club broke even inside of a year, she says.
The Formula
To understand Marquee's secret, you have to wind the clock back a decade to Tepperberg's days as a promoter and party organizer at the University of Miami. (He did his time behind the bar and working the front door, too.) On a good week during his senior year, he pocketed $2,000 for drumming up business at local clubs.
Right after graduation, Tepperberg, with high school pal Jason Strauss, launched a Manhattan-based event-marketing company -- basically, a group of ten to 15 promoters who cold-call, hand out fliers, run direct-mail campaigns and, well, hang out at clubs. And not just in New York: They also jetted to Miami, L.A. and Paris to talk up big parties in the city.
While Tepperberg logged at least six nights a week on the town (and has a gravelly voice to show for it), each outing laid the groundwork for something far bigger.
"By the time we opened Marquee, we had a huge network," he says. "Almost all club owners boast a database. But we herded our crowd from club to club for years. We had a bona fide following."
The real challenge was figuring out how to keep all those people coming back -- and paying those ridiculous tabs. Tepperberg's working formula: "We wanted a place that was exclusive, but big enough where you wouldn't see the same people every night."
Tepperberg and Strauss spent a year touring at least 25 locations -- some existing clubs, others mere empty shells -- looking for the right one. They finally settled on a 7,500-square-foot garbage-truck garage on Manhattan's far west side. Maximum capacity: 600. The transformation -- which cost around $2.5 million (Tepperberg won't say how much he put in) -- involved ripping off the roof and replacing it with 15-foot vaulted ceilings.
Behind The Rope
Today, Marquee has three bars in three distinct rooms, each playing its own kind of music.
"We knew there wasn't a good nightclub that played both house music and R&B" in the same venue, says Tepperberg, who will shell out $15,000 for a celebrity DJ at the drop of a hat, without a big promotion. "It's a special surprise. It makes the crowd feel like you're doing something for them." As if cocktail waitresses who spend their off hours modeling for the style section of the New York Times weren't enough.
The Marquee guys thought through the little things, too. The tops of the banquettes, for instance, are wide enough to sit and dance on, but curved so you can't perch a drink there; the seats also contain hidden drawers for storing purses and other accessories. There's no avoiding traffic jams in a packed house, so a bathroom run can be a chore; once there, though, the women's room has seven stalls to keep things moving.
If things happen to get out of hand, one of 12 to 14 NFL-lineman-sized bouncers in crisp black suits are there to diffuse the problem -- in a hurry. On that same recent summer evening, a couple was playfully tossing small pieces of ice into each others' mouths when another, rather intoxicated patron started throwing his own cubes at them. Seconds later, a large hand landed on his shoulder, and a bouncer's voice ordered him to stop. Barely fazed, the rowdy customer reached for the ice bucket, at which point the bouncer simply yanked him over the top of the banquette and out of the club. No one flinched.
Tepperberg still shells out big money for promoters, who might snag 15 percent of the business they bring in, while sister Judy adds to the buzz by running corporate events for huge companies like Citigroup, Virgin Records and Reebok. Special events now account for roughly 15 percent of Marquee's overall revenues.
That's a smart strategy, says competitor David Rabin, owner of The Double Seven and Lotus clubs and president of the New York Nightlife Association, a lobbying group: "Private events are crucial, as they not only bring in revenue and high-profile guests, they also generate press hits that last long after the party is over."
While he and Tepperberg duke it out for nightclub domination (indeed, Lotus has lost some staffers to Marquee), Rabin has to give his archrival his due. "Noah understands that nightlife is not just a party," he says. "The reason Marquee has been open for two and a half years -- and Lotus almost seven -- is because of the hard work the team puts into it. Anyone who can keep such a large place hot for more than a few months in Manhattan is certainly doing something right."
Of course, no club can thump like Marquee forever. That's one reason why Tepperberg is looking to diversify: Eleven months ago, he opened his second club, the Asian-themed Tao in Las Vegas, which so far seems a solid hit. As for Marquee's future, that will depend on whether it continues to entice its toughest customer: Tepperberg himself.
"When I'm tired of going there, it might be time to hang it up," he says. "But I'm still having a blast."
Slideshow: 18 Sizzling Clubs (Forbes)
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