An expensive coat check, “Euro Night” on Fridays and a 1,300 percent markup on a bottle of vodka. These are just some of the ways Marquee has remained a popular, if not outrageously profitable, fixture of New York City night life.
The rare peek into the business plan of a nightclub comes from the Harvard Business School, where associate professor Anita Elberse and MBA grads Ryan Barlow and Sheldon Wong conducted a detailed dissection of Marquee — the 5-year-old Chelsea hot spot where celebs including Jay-Z, Paris Hilton and Lindsay Lohan have partied.
The case study was presented last week in Elberse’s Strategic Marketing in Creative Industries class.
For the paper, the three authors worked closely with Marquee founders Noah Tepperberg and Jason Strauss. The two men provided insight into the way they run their business, including pages of data such as rent costs and their initial revenue projections for Marquee’s first few years.
Elberse says she, Barlow and Wong chose Marquee mainly because of the club’s longevity.
“I’m fascinated by this statistic — and I don’t know how thorough the research is — but that the average nightclub is around for 18 months,” she says. “And Marquee has been around for five years.”
The secret is: Be selective about whom you let past the velvet rope, limiting the “filler” in favor of the hip, with just enough bankers to make a profit but not to make the crowd too square.
“What I was most surprised about was how disciplined [the owners] were,” she says. “When you’ve invested a few million just launching a club, it’s tempting to say, ‘OK, we might not be around for a long time. We have to get high-paying customers in.’ But that’s the easiest way to ruin the brand of a club.”
The club has been beset with problems in the last year (a detail the Harvard write-up doesn’t mention).
Last week, Manhattan DA candidate Leslie Crocker Snyder was criticized for holding a fund-raiser there, because Marquee was shut down briefly last summer after people were arrested for selling cocaine inside. And in December, 25-year-old Laura Garza disappeared after leaving the club with a man she met inside. She has not been found.
Elberse says students in her class were evenly split about whether the owners should keep Marquee open or not as the economy falters and their moneyed customers dry up.
“There were quite a few who said they should ride it out. Why would they stop when it’s going strong?” she says. “But there were others who thought they should focus on a new club.”
And for anyone thinking they can make a killing in the nightlife business, there’s one number you should know: Even a club as successful as Marquee cleared just $2.4 million in profit in 2007. Try living on that after you’ve split it among all your bellyaching investors.