Owning Up: Jackrabbit Supper Club & Lounge
Jon Valz, co-owner of a highly successful bottle service burlesque bar known as The Jackrabbit Supper Club & Lounge in Scottsdale, Arizona, discusses celebrity clientele, the down economy’s reverse effect, and turning a profit in just 15 hours a week.
BBM: How did you get involved with ownership of The Jackrabbit Lounge?
Valz: I was a stock trader with Morgan Stanley for nine years and I got my MBA. After that, I wanted to own my own business, but I didn’t really know what to do. Two of my friends here in Scottsdale had a lot of bar experience and were managing one of the more popular bars in town. They were making a lot of money for the owner, but the owner wasn’t paying them very much, so they basically said, ‘Screw it, we can do this ourselves.’ So it’s a good marriage of talents. I have two partners and the three of us work well because I do the business operations and those guys do the bar operations.
BBM: To what type of clientele does The Jackrabbit cater, and how does that shape your ownership/management style? 
Valz: The nightclub scene in Phoenix is actually in Scottsdale, if that makes sense. Most of the bars in Scottsdale are the typical lounge nightclubs with a DJ and trendy décor catering to the 21- to 28-year-olds. We were the first ones in Scottsdale to cater to bottle service. About 50 percent of our revenue comes from bottle service. So our place was designed for people who are between 25 and 40. We do bottle service, plus we have live entertainment. There was a bar called 40 Deuce in L.A. that was a little dive. But once an hour, a live three-piece band would come on and a girl would do a modern burlesque show. It was really cool. We thought an idea like that in Scottsdale would just kill it. I think it completely breaks up the night, in a good way. You’re at the bar and the DJ is playing and you’re having a drink. All of a sudden, the lights go down, stage lights come on, and behind the main bar a live three-piece band comes on doing everything from the old Peggy Lee tunes like ‘Hey Big Spender,’ to Aerosmith, to AC/DC, to Beyoncé. All done with a three-piece band and a girl who comes out and does a burlesque show. So the two things that separate us from every other bar in town are that we cater to bottle service and we have live entertainment.
BBM: The Jackrabbit draws a celebrity crowd at times. As an owner, is that something you cultivate and build as part of your brand, and if so, how?
Valz: We have a strict policy of not paying celebrities to come. Too many bars tell you to come because Audrina from ‘The Hills’ is hosting a party, or Carmen Electra, or whoever. When the Super Bowl was here last year, we got all these calls from celebrity managers saying, “Pay Carmen Electra $20,000 and she’ll show up.” We did not do that at all. We don’t advertise when celebrities party here, so they come here because they can just hang out and be normal. Plus, in Phoenix, we have four professional sports teams – hockey, basketball, baseball, and football. Those guys come in all the time.
BBM: How does the desired style and atmosphere of your club affect both your staffing practices and your door policies?
Valz: The key is that we’re after the older crowd, as in the 25 to 40 range-the person who goes out once or twice a week, who wants to go to a place where he doesn’t have to deal with the B.S., like doormen holding the line at ten o’clock when there’s no one in the place. We don’t do that kind of stuff. And we definitely strive for high-class clientele. Again, the key is the bottle service. We don’t charge girls-ever. I don’t know why bars charge girls to get inside. About 55 to 60% of our clientele is female. I work the door, my other partner bartends, and my other partner does the stage lighting. We’re operators. People like that. It’s like going to a restaurant and having the owner cook your meal. It’s that personal touch that is key; especially when people are coming in and spending $500 to $2,000 bucks on a table. They want a waitress who is in a good mood, is friendly, and wants to have a good time.
BBM: As an owner, how do you constantly keep things interesting for patrons?
Valz: You can get away doing the same show in L.A., New York, or Vegas because you get a different crowd each week. Here in Scottsdale, we get pretty much the same crowd on a weekly or bi-weekly basis. Because of that you have to change it up. You have to mix up the DJs; you have to mix up the live entertainment. The band has to do new performances and new songs. Always have DJs on rotation. The second thing is the staff. You can have the coolest place in the world, but at the end of the day you’re selling a product that people can buy at a supermarket. They’re coming in to your place because of the staff. The first thing we explain when we hire them is this is a customer service business. You’re selling the experience. Our tagline is ‘People can buy the same product at the local supermarket, but the key is selling the atmosphere.’ That begins and ends with staff.
BBM: What are some differences between owning a high-end club like The Jackrabbit and owning a sports bar or tavern?
Valz: We’re open only three nights a week: Thursday, Friday, Saturday, from 9 p.m. to 2 a.m. That’s 15 hours a week. So we’re under the gun. We have to make all of our profit in those 15 hours, and realistically people don’t show up till 10:00, so it’s really a 12-hour window. So the biggest difference between us and the local sports bar/tavern is that we have to crank out a whole lot of sales in a very short amount of time. In order to do that we are dependant on bottle sales. Again, it’s usually 50% of our revenue. The irony of it was that the first two and a half years, 50% of our sales were bar sales and 50% were table sales. The economy crashed hard here in Phoenix and Scottsdale because of dependance on the housing market. We thought all these people who were buying bottles were going to start drinking over the bar instead. We thought our bottle sales would plummet and our bar sales would spike. The irony is that the exact opposite happened. The percentage of sales coming from bottles actually went up to 60% and our sales from over the bar went down to 40%. And we asked people why that is and the answer was, even though people don’t have as much money, their philosophy was they’d rather go out once a month and do bottle service and get a table and have a huge night out than go out a couple times a week and have a few cocktails. We didn’t really expect that.
BBM: What is one mistake you’ve made as an owner that you learned the most from?
Valz: We’re in the process of building another Jackrabbit in Dallas, Texas. When the market was great, our investors had the money to do the next two projects, but we didn’t want to just take any space. We wanted to find the right space. We don’t go to banks, all of our money is raised privately, and our biggest mistake was not hitting up our investors for the next project immediately after paying them back a healthy profit on this one. Our investors made their money back in ten months. So by year two, they had doubled their money, and my mistake was not expanding fast enough. So we’re in a situation where we still want to expand to Dallas and San Diego but the credit market and the investor capital market has dried up, as it has in every industry. The same guy who gave us $900,000 to open Jackrabbit in Scottsdale doesn’t have the $700,000 to open up in Dallas. So I’m scrambling to get money from other sources, and banks are so tight right now, they won’t help. Even though we have a track record and tax returns that show we’ve done $2.5 million in sales a year and we make a 48% profit margin, it doesn’t mean anything. The truth is, we just had our three-year anniversary and I have two projects ready to go. I just need a check. We’ll get it done and we’re going to get other investors. But after our first year, we were just killing it and we paid back our investors in ten months, and they wanted to do another one and we were ready to go, and we should have. On the other hand, what we did right was we didn’t just find any spot and buy it. We wanted to make sure it was a good deal. Going to a city like Dallas is just like going to Scottsdale: you don’t really hear about it that much, but it’s very cosmopolitan. People have money. But the flip side is that there’s not a lot of trendy competition there.
Click here for more information about the Jackrabbit Supper Club & Lounge
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To read the full article “Owning Up: 15 Hours of Fame” check out the
November/December 2009 DIGITAL EDITION of Bar Business Magazine
