5 - Modern Line Furniture
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VIPMODERNE<br />
Spring 2010<br />
Enter the Elite<br />
Reasons<br />
to Re-Style<br />
<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com<br />
<strong>Furniture</strong><br />
Showcase<br />
Lease<br />
Negotiatons
WELCOME TO VIP MODERNE<br />
Very Important Products, Very Important Philosophies, for Very Important People<br />
<strong>Modern</strong> <strong>Line</strong> <strong>Furniture</strong> is a national supplier of<br />
cutting edge furniture for the nightclub, bar, restaurant,<br />
hospitality, and special event industries.<br />
With the introduction of VIP MODERNE, we aim<br />
to inform the owners of such varied establishments<br />
not only what we can offer them, but also how to improve<br />
their venue through both better products and best practices.<br />
Our primary goal, of course, is to provide durable furnishing<br />
options at wholesale prices. We work tirelessly to design, manufacture,<br />
and import all of our furniture, thereby cutting out the<br />
middlemen and providing best-in-class service to our customers.<br />
We are the only supplier in the United States that offers modular<br />
furniture for your indoor and outdoor facilities.<br />
We believe that utilizing modular furniture versus other furnishing<br />
options offers several advantages, such as lower initial investment,<br />
lower replacement costs, and the ability to change the<br />
layout of your establishment to suit the needs of your guests.<br />
When a patron enters your establishment, he or she needs<br />
to feel like a VIP, and <strong>Modern</strong> <strong>Line</strong> <strong>Furniture</strong> wants to help make<br />
that possible. By reading the articles presented in this publication<br />
IN THE VIP<br />
13<br />
<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com<br />
Indoor <strong>Furniture</strong><br />
Showcase<br />
<strong>Modern</strong> <strong>Line</strong> <strong>Furniture</strong> shows off its<br />
extensive and exquisite selection of indoor<br />
furniture for bars, clubs, lounges, and<br />
restaurants.<br />
18 Lease Negotiations<br />
20 Lighting and Sound<br />
and incorporating their physical and philosophical suggestions for<br />
improvement, we think your club can become an example of VIP<br />
MODERNE, as well as a modern MVP of the nightlife game.<br />
BORIS ZHURAVEL<br />
Director of Business Development,<br />
<strong>Modern</strong> <strong>Line</strong> <strong>Furniture</strong><br />
02 Industry Overview<br />
04 Why Re-Style?<br />
06 Tequila<br />
Everyone’s favorite partystarter<br />
spirit sometimes gets<br />
a bad name for being rough<br />
on the palate. But we offer a<br />
look at some smooth<br />
sipping suggestions.<br />
07 Outdoor <strong>Furniture</strong> Showcase<br />
Just because the party is<br />
outside, doesn’t mean the<br />
furnishings should falter.<br />
Here’s what <strong>Modern</strong> <strong>Line</strong><br />
<strong>Furniture</strong> can do for you.<br />
10 Top 5 Reasons To<br />
Create a VIP Room<br />
www.modernlinefurniture.com Spring 2010 | VIP <strong>Modern</strong>e Magazine 1
STATE OF THE INDUSTRY:<br />
Additional survey results revealed a positive<br />
view of the coming year:<br />
UNDER THE INFLUENCE OF CUSTOMER SERVICE<br />
You see, I just got back from three days of sailing<br />
around the Bahamas with some of the top club<br />
DJs in the world and 850 of their most rabid fans,<br />
thanks to the good people at Whet Travel and their<br />
fantastic Groove Cruise excursions. Rumor has it<br />
that our group consumed more alcohol over the three days than<br />
any Norwegian Cruise line has ever seen before. And those 850<br />
people? They spent nearly $1,000 each to drink and dance to<br />
their favorite DJs spinning house music. Granted, we were on a<br />
cruise ship in the middle of the Bahamas, but I think this says<br />
something very important about our industry: by land or by sea,<br />
if you give them what they want, the people will always pay to<br />
party.<br />
And back on land, that’s where you come in. Are you giving<br />
them what they want? Because, as a bar, club, or lounge owner,<br />
that should be your one-line job description.<br />
RANDOM PERSON: “What do you do for a living?”<br />
YOU: “I give people what they want.”<br />
It’s just that simple. And if you’ve read the last few issues<br />
of Bar Business Magazine, you know that, now more than ever,<br />
we are preaching customer service as the apex of the business<br />
plan pyramid in these times of constricted consumer budgets.<br />
All facets of your establishment should be influenced by the<br />
notion of providing a superior patron experience; with customer<br />
service at the top of the pyramid, everything underneath is a<br />
building block.<br />
By Chris Ytuarte<br />
Editor-in-Chief,<br />
Bar Business Magazine<br />
I’LL BE HONEST WITH YOU: RIGHT NOW, THE STATE OF OUR INDUSTRY LOOKS PRETTY GOOD TO ME.<br />
THEN AGAIN, WHAT DOESN’T LOOK GOOD FROM THE TOP DECK OF A LUXURY CRUISE SHIP?<br />
First, let’s look at some basic statistics that speak to the environment<br />
in which we are all working these days. A recent joint<br />
report from industry media company BevNET and staffing<br />
agency BEVFORCE surveyed over 1,000 beverage professionals,<br />
who showed continuing optimism on the state of our bar<br />
business. The survey indicated that industry professionals see<br />
hiring rates remaining consistent in 2010, with fewer layoffs and<br />
less internal restructuring.<br />
“Employment is typically a lagging economic indicator, so<br />
coming out of a recession, it’s assumed that jobs are the last<br />
thing to return,” said Josh Wand, President of BEVFORCE.<br />
“The beverage industry is ahead of the curve; not only has<br />
there been a steady flow of job opportunities available over the<br />
past few months, but as the economy continues to improve, we<br />
anticipate a continuous upswing in the number of jobs available<br />
for qualified beverage professionals.”<br />
75% of respondents anticipate positive growth for<br />
their company in 2010.<br />
67% of respondents think that their company will<br />
be hiring in 2010.<br />
75% of respondents feel secure in their current<br />
position, despite the current economic climate.<br />
6% of respondents think that their company will<br />
conduct a round of layoffs in 2010, while 25%<br />
conducted a round of layoffs in 2009.<br />
15% of respondents think that their company will go<br />
through a re-organization in 2010, while 34%<br />
reorganized in 2009.<br />
71% of respondents anticipate making new hires in<br />
2010, while in 2009 67% hired new employees and<br />
in 2008 69% hired new employees.<br />
The survey would seem to indicate that, if nothing else,<br />
on-premise professionals want to have a better year in 2010,<br />
and sometimes will-power can be a strong ally in creating the<br />
best opportunities. You’ve already made the decision to improve<br />
business, now you need the tools to execute—the first of which<br />
being knowledge. And that’s where we come in.<br />
Of course, additional statistics show that challenges still<br />
exist, but optimism remains. The Distilled Spirits Council of<br />
the United States (DISCUS) said that U.S. revenue for spirits<br />
makers was flat in 2009, despite the fact that sales volume rose<br />
slightly, indicating that budget-conscious consumers didn’t<br />
stop drinking all together, but likely turned to lower-cost drink<br />
choices. According to DISCUS, volume sales of the cheapest<br />
spirits rose 5.5 percent, while those at the highest price points<br />
saw their volume fall 5.1 percent.<br />
“We’re cautiously, cautiously hopeful that things will get a<br />
<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com<br />
IN PRINT · IN PERSON · ONLINE<br />
little better,” said DISCUS CEO Peter Cressy. “If the economy<br />
continues to move forward and if we begin to see, in this first<br />
quarter, some return to job growth, I think things will get better.<br />
In our view, we can begin to see the light at the end of the<br />
tunnel here in the recession, but your guess is as good as ours<br />
how long that tunnel is.”<br />
The strongest performing beverage categories in 2009 were<br />
tequila, with a 5.2 percent rise in volume, vodka with a 4.9<br />
percent rise, and the brandy and cognac category with a 3.3<br />
percent increase. On the opposite end of the spectrum, the<br />
cordial category fell 4.3 percent in volume sales.<br />
“The industry has always recovered in past recessions and<br />
the high-end share has always continued to grow,” said DIS-<br />
CUS Chief Economist David Ozgo. “I see no reason why the<br />
pattern would be broken.”<br />
But all the numbers in the world and all these statistics don’t<br />
add up to much without your customers coming through the<br />
door. Creating the best possible environment and experience<br />
for them should be priority #1, and that’s the only number you<br />
need to remember. This informative edition of VIP MODERNE<br />
is a great starting point for finding various ways to ensure that<br />
your VIP visions include every patron that bellies up to your<br />
bar. ML<br />
The Industry’s Premier How-To Resource<br />
BAR BUSINE$$<br />
M A G A Z I N E<br />
www.barbizmag.com<br />
2 VIP <strong>Modern</strong>e Magazine | Spring 2010 www.modernlinefurniture.com<br />
www.modernlinefurniture.com Spring 2010 | VIP <strong>Modern</strong>e Magazine 3
5<br />
Reasons to Re-style<br />
Your Bar or Nightclub<br />
Furnishing a bar or nightclub is not something that only happens at opening. A successful<br />
venue should be re-styled more than once, because furniture wears and the “look” of a<br />
bar or club can lose its appeal over time. Whether you’re wondering if you should—or can<br />
afford to—update your look, this article is for you. Learn how to improve patronage and<br />
increase the sales in your establishment on any budget.<br />
The look of your bar or nightclub determines the<br />
prices you can charge for drinks and bottle service.<br />
Do you want to raise your drink prices by $2 or increase the<br />
price of the bottles by $50? Unless you improve the profile of<br />
your bar or nightclub, partygoers won’t react well to a hit to<br />
their wallet. For example, you can furnish a 1,000 square foot<br />
VIP room for as little as $5,000, and adding a new hip look to<br />
your bar will allow you to raise prices without losing patronage.<br />
2<br />
1<br />
Increasing patronage – people get bored of the<br />
“same old thing.” By updating your bar or nightclub’s look<br />
and feel, you can give your patrons a bar they can get excited<br />
about, even if they’ve been there before. These days, retailers<br />
offer prices that make it easy to re-style your establishment<br />
frequently while still effectively managing costs.<br />
Keeping up with the times. Have you ever walked into<br />
someone’s home and noticed that the furniture has not been<br />
changed since Nixon was president? Feels like you’re in a time<br />
warp, right? The same is true when it comes to bars and nightclubs.<br />
Your patrons want to go to the “it” bar in town, that<br />
looks like somewhere Jay-Z or Travis Barker would party.<br />
<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com<br />
So now that you’ve decided to update the look of your<br />
bar or nightclub, you may find yourself wondering,<br />
“What do I do next?” While many bar owners enlist the<br />
services of a designer, often these professionals will buy<br />
furniture at regular retail prices and mark up the cost<br />
when they bill you. These days, the Internet makes it<br />
extremely easy find high-quality, low-cost, stylish furniture<br />
for your bar or nightclub on your own.<br />
There are suppliers out there that offer high-style,<br />
functionality, and superior service at a fraction of the<br />
price you would expect to pay at retail. They buy directly<br />
from the manufacturer and pass the savings along to you.<br />
Often you will find they have all their offerings in stock,<br />
3<br />
5<br />
Differentiate yourself from the competition. If you’re<br />
the only game in town, more power to you; but the majority of<br />
bars and nightclubs have stiff competition. When everyone in<br />
town is pouring the same beer and mixing the same drinks, it is<br />
the presentation that sets your establishment apart from everyone<br />
else.<br />
4<br />
Revenue, revenue, revenue, and more revenue. You<br />
got into the bar business to make money, and re-styling your bar<br />
or nightclub will allow you to raise prices, increase patronage<br />
and differentiate yourself from the competition, all of which puts<br />
more profits in your pocket!<br />
making delivery exceptionally speedy.<br />
Many suppliers offer customizable seating solutions to<br />
outfit everything from a VIP room to the main bar area.<br />
Such customizable options give you the ability to change<br />
up your look without having to incur the expense of buying<br />
new furniture.<br />
As a club owner, you have many decisions to make in<br />
order to ensure the success of your business, and re-styling<br />
your establishment should be the easiest. Furnishing<br />
your bar or nightclub with high-quality, functional furniture<br />
is an investment that will pay for itself in no time,<br />
and will bring you new and increased business.<br />
4 VIP <strong>Modern</strong>e Magazine | Spring 2010 www.modernlinefurniture.com<br />
www.modernlinefurniture.com Spring 2010 | VIP <strong>Modern</strong>e Magazine 5
Discovering the REAL TEQUILA<br />
EVERYONE HAS A TEQUILA STORY<br />
There is a jingle that goes, “One tequila, two tequila, three tequila<br />
floor.” So it comes as no surprise that, for many, their first<br />
tequila experience also is their last.<br />
TEQUILA’S PRIDEFUL ROOTS<br />
Tequila’s earliest roots date back to the Aztecs, but the history<br />
of the spirit as we know it dates back four centuries, as a sipping<br />
delicacy shared among friends and family. Later, it became<br />
recognized as the national spirit of Mexico.<br />
True tequila is made from at least 51% blue agave, a succulent<br />
(not a cactus) that grows wild all over Mexico and<br />
Central America, and must be distilled and bottled in one of<br />
five Mexican states. Many quality tequilas are made from 100%<br />
blue agave, which take at least eight years to reach harvesting<br />
maturity.<br />
Over the years, mass marketers have convinced people that<br />
tequila should be disposed of quickly or mixed with something<br />
else to be enjoyed. More than 90 percent of people consume<br />
tequila as a shot or in a bright-colored concoction. But neither<br />
of those forms reflects the authentic Mexican tequila culture.<br />
RECLAIMING TEQUILA’S AUTHENTIC SPIRIT<br />
Today, tequila trends are shifting, with artisan sipping tequilas<br />
quickly gaining favor among new fans of the spirit, as well as<br />
those who are trying it again for the first time. These premium<br />
tequilas honor the original spirit of tequila as a sipping delicacy—a<br />
tradition that remains alive and well south of the border.<br />
Too many things in life speed by. But good tequila—pure<br />
tequila—takes time to mature to perfection. And good tequila<br />
should be sipped, and savored, at your own pace.<br />
SOMETHING FOR EVERYONE<br />
Three types of tequila make up the majority of the premium sipping<br />
market and each one is crafted through unique distillation<br />
and aging approaches, resulting in distinctive aromas and tastes.<br />
Blanco (or Silver)<br />
Tequila purists often seek the most unmasked<br />
agave fl avor and infl uences of the land, so they<br />
reach for the blanco. Bottled directly following<br />
distillation without aging, the blanco can be<br />
enjoyed on its own, or as the base for a mixed<br />
drink.<br />
Reposado<br />
This “slightly rested” version is aged between<br />
two and twelve months in oak barrels,<br />
often giving it a smooth, slightly woody taste.<br />
The reposado offers the traditional agave<br />
infl uences with a wider variety of fl avors and<br />
complexities.<br />
Añejo<br />
The añejo is the scotch-fan’s tequila, and<br />
often is the version appreciated most by nontequila<br />
drinkers. Aged between one and three<br />
years, añejos mature in oak barrels hailing<br />
from different regions of the world. Some<br />
brands are aged in barrels that formerly held<br />
other spirits, such as cognac, whiskey, bourbon,<br />
or brandy, infusing familiar, but unique<br />
characteristics.<br />
<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com<br />
To fully release the aromas and flavors of a premium sipping<br />
tequila, use a brandy snifter, caballito glass, or the official<br />
Riedel tequila glass. Some people like to sip them neat (straight<br />
up) while others like to add one ice cube to soften the spirit and<br />
release hidden features and attributes.<br />
Good sipping tequilas stand on their own—no lime, no salt,<br />
no gimmicks necessary. Just a little glass of history, sharing<br />
tequila’s long lost story, and winning over scorned skeptics, one<br />
sip at a time. ML<br />
6 VIP <strong>Modern</strong>e Magazine | Spring 2010 www.modernlinefurniture.com
<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com
5 Reasons to Add a<br />
VIP ROOM<br />
Have you been looking for a new way to increase revenue<br />
at your bar or nightclub? Here’s a relatively low-cost and<br />
easy-to-implement idea sure to catch your customer’s<br />
attention: a VIP room or area. Creating a VIP room takes some<br />
thought and planning, and to help you decide whether this<br />
venture is for you, we’ve put together a list of five reasons<br />
to add a VIP area to your establishment, along with some<br />
helpful tips on how to make your new VIP area a success.<br />
By Boris Zhuravel<br />
Director of Business Development,<br />
<strong>Modern</strong> <strong>Line</strong> <strong>Furniture</strong><br />
1) EXCLUSIVITY – Everyone wants to feel like<br />
they’re part of an exclusive club where only the<br />
select few gain entry, and once members, people<br />
will pay-up for the privilege. Offering a VIP<br />
room or area in your bar or nightclub will give<br />
your deeper-pocketed guests their own private<br />
club for the night. Call it “the mystique of the<br />
velvet rope,” but where there are affluent guests,<br />
there are beautiful women; and where<br />
there are beautiful women, there are more affluent<br />
guests—and so the circle goes.<br />
2) PRIVACY FOR PRIVATE PARTIES – People<br />
love to celebrate birthdays, special holidays,<br />
league championships, you name it; these<br />
people are here to celebrate a common cause<br />
and don’t want to be scattered all over the<br />
place, they want their own space. A VIP area<br />
will allow you to accommodate these parties<br />
and charge the guests for the service, which<br />
brings us to #3 and #4…<br />
<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com<br />
3) OFFER BOTTLE SERVICE - Bar Business<br />
Magazine recently wrote a story about bottle service.<br />
The article profiled Michael Ault, a bottle service<br />
pioneer who has opened over 25 nightclubs world<br />
wide. Mr. Ault isquoted as saying: “What [one of his<br />
clubs] achieves with three nights a week, other bars<br />
need seven nights of operation to achieve. That<br />
is the benefit of bottle service.” Words to the<br />
wise: Mr. Ault advises that bottle service is not<br />
optimal for every establishment and that in<br />
order to have a successful bottle service area,<br />
“you have to offer something really special.”<br />
This is where having top-notch furniture really<br />
makes a difference, as evidenced in the same<br />
article: “…bottle clubs work [because] they are<br />
the most beautiful clubs, they have the coolest<br />
vibes and coolest people…The physical arrangement<br />
of furniture plays a key in generating the<br />
right buzz in a bottle club.”<br />
4) OFFER A SPECIAL COCKTAIL SELECTION<br />
FOR VIP GUESTS – If you want to add to the<br />
aura of exclusivity, you can offer your VIP<br />
clients a special mixed cocktail menu that is not<br />
available to regular patrons. We’re not talking<br />
about substituting Bombay Sapphire for Gordon’s<br />
in a gin and tonic; we’re talking about a Sofia &<br />
Eros (1 ounce vodka, ½ ounce limoncello, ½<br />
ounce raspicello, ½ ounce lemon juice). These<br />
are the kinds of exotic drinks with unusually<br />
unique ingredients that, when combined,<br />
are a treat to the taste buds. Although these<br />
drinks require more ingredients than a vodka and<br />
cranberry, the cost of making each drink is not<br />
that much greater. However, specialty drinks<br />
are routinely priced $5 to $10 higher than typical<br />
cocktails.<br />
10 VIP <strong>Modern</strong>e Magazine | Spring 2010 www.modernlinefurniture.com<br />
www.modernlinefurniture.com Spring 2010 | VIP <strong>Modern</strong>e Magazine 11
5) ATTRACT CORPORATE CLIENTS – People who<br />
crunch numbers during the day want to party like<br />
rock stars at night. A VIP room will allow you to<br />
attract the ever-elusive corporate client by allow<br />
ing “the suits” to feel like very important people<br />
for an evening. Moreover, corporate reps need to<br />
entertain their clients in style, and what better place<br />
to bring an important client than the VIP room of<br />
the hottest bar or nightclub in town. Remember,<br />
when the company pays, people spend like crazy.<br />
It’s important to note that there is a right way and a<br />
wrong way to operate a VIP area in your establishment.<br />
You can’t just follow the “if you build it, they will come”<br />
philosophy—this is not Field of Dreams and you are not<br />
Kevin Costner. However, if operated correctly, a VIP area<br />
can generate a “Field of Green.” Here are some things to<br />
consider when opening and operating a VIP area:<br />
VIP Atmosphere. Create a luxury room or area that<br />
has great furniture and décor. Remember, a private room<br />
is not necessarily a VIP room—it has to ooze luxury.<br />
VIP Menus and Products. Bottle service, exclusive<br />
drinks, and food menus are some of the most basic VIP<br />
room offerings. It is vital to remember that presentation<br />
is everything. Be sure to train your staff to present the<br />
products well and offer unique service trays. How about<br />
a private bartender for the VIP room who mixes drinks<br />
like Tom Cruise in Cocktail by putting on a bottle<br />
tossing spectacle? You get the idea—make the<br />
environment special.<br />
VIP Staff. This is a people business, so you have to<br />
make sure that you have the best staff servicing your VIP<br />
clients. Also make sure that you have a designated security<br />
staff watching your VIP area.<br />
VIP List. Create a VIP list, talk to promoters and<br />
other contacts. Keep the list exclusive and difficult to get<br />
on. Send out special invites to VIP guests. Remember the<br />
little touches—call these people on their birthday, send<br />
special holiday cards or gifts. It’s these actions that make<br />
it fun and worthwhile to be a VIP.<br />
VIP Recognition Program. This is an important<br />
element. Throw special parties for your VIPs. Offer<br />
them incentives to come back. If a VIP spends a certain<br />
amount of money, give them a bottle on the house, and<br />
so on.<br />
The nightclub business is very competitive, and having<br />
a VIP room or area is a good way to separate yourself<br />
from the competition while putting more money in your<br />
own pocket. However, people won’t shell out the big<br />
bucks for no reason. They want more than just a place to<br />
sit and a bottle to drink—VIPs want<br />
to feel like very important<br />
people, and hopefully these<br />
tips will help you do that<br />
for them. ML<br />
<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com<br />
12 VIP <strong>Modern</strong>e Magazine | Spring 2010 www.modernlinefurniture.com
<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com
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GET A HEAD<br />
START<br />
The Basics of Commercial Space Leasing for Nightclub, Bar,<br />
and Restaurant Owners: A Conversation with Yana Zhuravel, Esq.<br />
One of the first things you do when opening up a bar, nightclub or<br />
restaurant is to lease a space that suits your needs. Finding a space<br />
and negotiating a lease is a time-consuming and complex process<br />
that is crucial to your success and bottom line. In fact, rent is the<br />
single largest expense for any establishment. VIP MODERNE spoke<br />
with Yana Zhuravel, an attorney in New York State who specializes in<br />
the nightclub and bar industry. Yana has helped dozens of nightclub<br />
and bar owners negotiate and structure their leases in order to limit<br />
the owners’ financial and legal liability.<br />
VIP MODERNE: What is the first step that a nightclub/bar/restaurant<br />
owner should take when leasing a space?<br />
ZHURAVEL: The first thing an owner should do is to become<br />
familiar with some of the basics and terminology of real estate<br />
leases and then enlist the help of a professional tenant representative<br />
to help find the right space at the right price. Also, the<br />
nightclub/bar/restaurant business is unique because it involves<br />
food and alcohol services. Therefore, enlisting the help of an<br />
experienced attorney to properly negotiate and structure the<br />
lease in accordance with the establishment’s operational needs<br />
will not only maximize the overall economics, but will also limit<br />
the owner’s liability exposure and allow for smooth ongoing<br />
business operation. An attorney can also help with satisfying<br />
building code, fire code, and licensing requirements. Any<br />
landlord will have a listing agent and an attorney on their team<br />
when working on a lease transaction, and you should do the<br />
same to protect your rights and interests.<br />
VIP MODERNE: Can the owner just let his attorney and tenant rep<br />
run with the leasing process?<br />
ZHURAVEL: Absolutely not! No one understands your business<br />
needs better than you. Think of the tenant rep and the attorney<br />
as advisors who will work on your behalf and provide you with<br />
information and counsel to achieve an optimal outcome.<br />
VIP MODERNE: What are some key elements of commercial real<br />
estate leases that a nightclub owner needs to understand?<br />
ZHURAVEL: The most critical element of a lease is the manner in<br />
which rent and operating expenses are denoted. There are four<br />
basic types of leases: absolute net, triple net, gross, and modified<br />
gross. Ultimately, you end up paying rent for the space plus<br />
a reimbursement for a certain part of the property operating<br />
expenses, and knowing the difference between these lease structures<br />
can help you compare rents at different properties and<br />
make sure that you’re getting the best deal. Here is a breakdown<br />
of each:<br />
Absolute Net. A net rent agreement simply means that the<br />
rental rate per square foot (as noted in the lease) is net of reimbursement<br />
for operating expenses. Under an absolute net lease<br />
the tenant reimburses the landlord for all operating expenses<br />
associated with the property. This is a common lease structure<br />
for a single-tenant building or a pad site.<br />
Triple Net Lease (NNN). This is similar to an absolute net<br />
lease, but here the tenant reimburses the landlord the pro-rata<br />
share of property operating expenses.<br />
Gross Lease. All operating expenses are included in the<br />
rent and the tenant is not required to pay additional reimbursements<br />
to the landlord. If you come across a gross lease, make<br />
sure you get a breakdown of expenses per square foot from<br />
the landlord so that you understand the amount of operating<br />
expenses at the property. Being able to quantify these two components<br />
of the rent may help you to negotiate a better deal and<br />
can help you compare a gross lease rate to a NNN lease rate.<br />
Modified Gross Lease. This is the most complicated lease<br />
structure, as it requires the tenant to reimburse the landlord the<br />
pro-rata share of property operating expenses above a certain<br />
base year. Sounds complicated, right? Here is an example. Let’s<br />
say that you leased 10,000 square feet in a 100,000 square foot<br />
property in 2009 for $10 per square foot. 2009 will serve as<br />
your base year. In 2009, operating expenses were $100,000,<br />
but in 2010 these expenses increased to $200,000. You are now<br />
responsible to reimburse the landlord 10% of the $100,000<br />
increase in expenses of $10,000.<br />
VIP MODERNE: What are some other lease elements that a bar<br />
owner needs to know about?<br />
ZHURAVEL: This is a very comprehensive question, so allow me<br />
to provide a quick checklist of some key things that come to<br />
mind:<br />
Lease Term. The duration of a lease can range from monthto-month<br />
(MTM) to 25 years. A short-term lease carries a risk<br />
of rental increases, while a long term lease exposes the owner to<br />
significant long-term liability.<br />
Extension Options. A great feature because it provides<br />
short-term security and eliminates long-term liability. If you’re<br />
opening up a new lounge concept and are uncertain of its success,<br />
you can sign a three- or five-year lease with several extension<br />
options to be exercised at the discretion of the tenant.<br />
Tenant Improvement Allowance (TI). Landlords frequently<br />
offer reimbursement of improvement expenses that you<br />
make to your space. You should look at TIs as a loan to buildout<br />
your space. A lot of times a landlord will offer you an extra<br />
TI allowance in return for a higher rent. When you compare the<br />
upfront allowance to the rent increase, you’ll find that you’re<br />
being charged an interest rate between 10% and 20%, so be<br />
careful when accepting such an offer. You can always request<br />
a TI allowance from the landlord as part of your negotiating<br />
strategy, but be careful if he increases the rent as a result.<br />
Exclusive Use Clause. This allows you to make sure that<br />
the landlord can’t lease space to a similar establishment at the<br />
property without your permission to avoid competition.<br />
Liability. Make sure that your liability is limited only to activities<br />
within your leased space and not the common areas. For<br />
example, if someone is walking in front of your restaurant and<br />
falls on the sidewalk (which is considered a common area), you<br />
don’t want to be named party to a lawsuit as a result. A liability<br />
waiver is especially critical if the landlord is responsible for<br />
cleaning the snow or any other debris in front of your establishment.<br />
You should not be responsible for the accident if it’s the<br />
landlord’s responsibility to take preventative measures.<br />
Hours of Operation. Make sure that your lease expressly<br />
states your permissible hours of operation. I’ve seen many clients<br />
who ran into significant problems because they overlooked<br />
this critical clause in the lease. Also be mindful that sometimes<br />
landlords will require your establishment to stay open during<br />
certain off-peak hours (or holidays), which may not be beneficial<br />
for you and your business.<br />
Grace Period. This is a rent-free period (typically two to six<br />
months) given to the bar owner to perform build-out. It’s really<br />
important to negotiate a grace period because you don’t want<br />
<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com<br />
to pay rent during the time that your business is not operational.<br />
Grace periods are standard, so don’t let anyone tell you<br />
otherwise, but it’s up to you and your attorney to negotiate the<br />
best deal possible.<br />
There are countless other nuances to consider when analyzing<br />
and structuring lease agreements such as insurance requirements,<br />
exclusive parking space allowances, zoning and fire code<br />
compliance and ingress/egress easements, just to name a few.<br />
VIP MODERNE: Do you have any parting words for our readers?<br />
ZHURAVEL: Leasing sounds like a fairly straight-forward process:<br />
find a space, lease a space, open for business. However, this<br />
process has certain complexities that need to be recognized and<br />
addressed, so if you decide not to seek the assistance of a legal<br />
or real estate professional, you should do some research on real<br />
estate leases so that you may understand your financial and<br />
legal liability exposure. ML<br />
Yana Zhuravel is a practicing attorney in New York State. She<br />
specializes in real estate, construction, business and licensing<br />
issues, and serves the nightclub, bar and restaurant industries in<br />
the New York City area.<br />
The information contained in this article is provided for information<br />
purposes only, and should not be construed as legal advice on any<br />
subject matter. No recipients of content from this article should act or<br />
refrain from acting on the basis of any content contained in this article<br />
without seeking proper legal consultation based on their specific facts<br />
from an attorney licensed in the reader’s state. The content in this article<br />
is general information and may not reflect current legal developments.<br />
Yana Zhuravel, Esq., expressly disclaims all liability in respect<br />
to actions taken or not taken based on any content of this article.<br />
Yana Zhuravel, Esq.<br />
Providing Tailored Legal Services for the Nightclub,<br />
Bar and Restaurant Industries<br />
Yana Zhuravel helps owners and investors limit their<br />
legal liability and ensure smooth, continuous operation<br />
to maximize profitability.<br />
• Commercial Leasing: Drafting, Review and<br />
Negotiation of Real Estate and Equipment Leases.<br />
• Business Organization: Creation and Dissolution<br />
of Corporations and Partnerships<br />
• License Procurement and Renewal: Liquor<br />
Licenses and Café/Sidewalk Permits<br />
• Employee Manuals: Limit Your Liability for the<br />
Actions of Your Employees<br />
• Regulatory Violation Defense<br />
• Collections<br />
• Real Estate Law<br />
Yana Zhuravel, Esq.<br />
2753 Coney Island Avenue, #212 Brooklyn, N.Y. 11235<br />
Tel: (347) 579-9262 Fax: (347) 710-1908<br />
18 VIP <strong>Modern</strong>e Magazine | Spring 2010 www.modernlinefurniture.com<br />
www.modernlinefurniture.com Spring 2010 | VIP <strong>Modern</strong>e Magazine 19
DIVINE LAB<br />
INTERVENTION<br />
If there’s one company that knows<br />
how to put it all together, it’s Sound<br />
Investment Audio (SIA). With<br />
projects such as LIV at the Fontainebleau<br />
in Miami or Cielo in New<br />
York under its belt, as well as several spots<br />
throughout Las Vegas and Los Angeles, this<br />
company has designed the hottest nightclubs<br />
and lounges in the country. Having<br />
enhanced the sound systems at most of the<br />
W Hotel lounges in the country, as well as<br />
other hot boutique hotel venues throughout<br />
the U.S., it’s no surprise that SIA is on the<br />
entertaiment industry’s cutting edge. We<br />
spoke with SIA’s David Sullivan (dsullivan@<br />
soundinvestmentav.com):<br />
VIP <strong>Modern</strong>e: What are some of the latest<br />
nightclub technical gear trends?<br />
SIA: In the world of audio, the use of digital<br />
control and processing has become a growing<br />
trend. We have been the leaders in this highend<br />
technology for about ten years. We see a<br />
more sophisticated club owner and club goer.<br />
Why? Because all of the media they work with,<br />
listen to, and enjoy themselves is digital, so<br />
their standards are higher, with high signalto-noise<br />
ratio. The use of digital has also enhcanced<br />
power amplifer technology to create a<br />
more efficient—dare we say, green—product.<br />
The use of LED lights and video has<br />
almost taken over the way clubs are lit and<br />
designed. LEDs are extremely reliable; they<br />
have high lamp life (40,000 to 50,000 hours<br />
compared to 6,000 hours on more traditional<br />
lamps) and low heat. Video creates a dynamic<br />
visual, and the latest technology fits within<br />
most budgets. All this technology leads to<br />
lower costs for the owner/operator.<br />
An interview with Sound Investment Audio<br />
Visit any high-end nightclub or lounge and you<br />
will ffiifi nd yourself in awe of the entire experience—the<br />
room, the atmosphere, the music, the<br />
party. But what really ignites your senses is the<br />
dynamic mix of sound, lighting, and video—<br />
three elements that will make (or break) a venue.<br />
VIP <strong>Modern</strong>e: What are some of the latest<br />
nightclub design trends?<br />
SIA: We are seeing more clubs and lounges<br />
developed in local areas, as a opposed to everyone<br />
wanting to invest in the latest big city<br />
hotspot. We see this in our office in the L.A.<br />
area. We’ve had a big boom in this area where<br />
people used to travel to Vegas every weekend<br />
but now are staying and partying local. Also,<br />
lounges have become very popular, and are<br />
much easier to fill and make your money<br />
back. We are seeing more of what we describe<br />
as “architainment” type spaces.<br />
Examples of this would be mixed-use<br />
space, like a resturant with a DJ that converts<br />
into a lounge, or a retail space that converts<br />
into a bar. World-famous tattoo artist Mario<br />
Barth just opened a tattoo parlor in Las Vegas<br />
that becomes a lounge at night. We see this<br />
trend growing as a way for owners to maxamize<br />
the use of a space and generate more<br />
revenue from a larger group of customers.<br />
VIP <strong>Modern</strong>e: What should a client’s main<br />
priorities be when installing a new system?<br />
SIA: Find the right people and bring them on<br />
early in the design process. Audio is sometimes<br />
the last thing owners think about and it<br />
usually gets the smallest cut of the budget on<br />
a project. But without sound there is no club!<br />
Without a quality system, customers will not<br />
stay for long periods and tend not to order as<br />
many beverages. When we design an entertainment<br />
venue, we design it to be successful.<br />
We design it as if it’s our place—a place we<br />
would want to stay and play.<br />
VIP <strong>Modern</strong>e: What should be avoided when<br />
designing a place?<br />
SIA: Here are five things we suggest an owner<br />
NOT do when looking to hire a sound/lighting/video<br />
contractor:<br />
1. Don’t let your DJ install your sound system,<br />
lights, or video. This is a fatal mistake. A great<br />
DJ knows where his talent ends and where the<br />
talent of a systems contractor begins.<br />
2. The guitar player at the big chain/local<br />
music store is not the right guy to design or<br />
install your sound system.<br />
3. Avoid the person who says he has a friend<br />
who can get you gear at cost. The only things<br />
he can get you might be five years in the slammer<br />
for owning stolen equipment or some<br />
offshore gear that you will be replacing every<br />
three weeks.<br />
4. Whenever we hear, “My interior designer or<br />
architect or electrican are taking care of that,”<br />
we ask, ‘Would you let them pick your alcohol<br />
selection? Then why would you let them<br />
handle your sound and lighting system, which<br />
is a part of your cash-generating machine?’<br />
This is not their area of expertise. ML<br />
20 VIP <strong>Modern</strong>e Magazine | Spring 2010 www.modernlinefurniture.com<br />
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For more information, contact:<br />
MODERN LINE FURNITURE<br />
1296 Lawrence Street<br />
Rahway, NJ 07065<br />
800-637-5596<br />
www.modernlinefurniture.com<br />
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