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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


<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com


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 />

<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com


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 />

<strong>Modern</strong><strong>Line</strong><strong>Furniture</strong>.com

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