A Lesson in Cutting Costs

As a restaurateur and operator, I was always focused on costs, control and expense reduction. But I got an incredible lesson from Jeffrey Chodorow one night.

We opened rumjungle and it was a smashing success. It was definitely the busiest nightclub in Las Vegas, and arguably the country, when we opened in 1999. After our first six months of operations, we’d gone through almost $250k worth of glassware. When the lights went up at the end of a Friday or Saturday night, it looked like a warzone with broken glass everywhere. I had approached Miller about producing hard, plastic, leopard-print, rumjungle logoed cups with the idea that, as we transitioned from restaurant to nightclub, we would put the glass away and only serve out of the plastic cups.

Jeffrey came to town one weekend and, after midnight, walked out of rumjungle and greeted me out front, where I was behind the ropes working the entry lines. Jeffrey, drink in hand, said, “How’s it going tonight?” to which I replied, “Great!” He asked how long the wait was to get in and I told him it was about an hour. He asked how much admission was, to which I replied, “$25” which, by the way, was the highest club entry in Vegas at the time. He looked inside and said, “How long does it take to get a drink at the bar once you get in?” I saw it was about three deep at the bar and told him about 10 minutes. He asked what the prices were for cocktail. I told him between $12 and $15 each. Then, he held up the rumjungle logoed plastic cup and said, “I wait an hour in line, pay $25 to get in, stand and wait 10 minutes at the bar, have to pay $12 to $15 for a drink, and I get it in this?!” I looked at him and told him about the quarter million dollars of glassware that we’d gone through in six months and he said, “Kelley, I appreciate that you’re watching expenses, but you worry about the top line. I’ll worry about the bottom.”

From that day forward, in all of my operations, I made sure to spend as much, if not more time, in growing sales as I did in reducing expenses. I’ve learned that volume and high sales certainly cure expenses and a lot of mistakes. No business has ever sustained itself by cutting costs to prosperity. You have to raise sales to be successful.

Speak Your Mind

*

14 − 2 =