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How One NYC-Based Entrepreneur Turns a Profit in 2 Notoriously Difficult Industries

City Winery’s CEO on music, winemaking, duck tacos, and the challenges of scaling intimacy

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BY Cathy Huyghe - 01 Aug 2017

PHOTO CREDIT: Getty Images

"The profits are in the popcorn."

It's an old adage in the live entertainment industry, where upwards of 75 to 80% of ticket sales go to the on-stage talent. Which means that event runners focus on food and beverage sales for their own share of revenue.

In the case of City Winery's founder and CEO Michael Dorf, it's even more specific: focus on food in order to support -- and sell more -- wine. That's the essence of City Winery's business model, with six locations already from New York to Nashville and plans to expand to Europe and Asia: combine the intimacy of a live music performance with a menu of sure-bet food items that, for their part, support consumption of a higher-profit beverage program that's anchored in their bespoke wines.

Dork puts it in words every kindergarten kid understands.

"We create a lemonade stand where we put on a show," Dorf explains. "We're making the lemonade to sell to our patrons."

There is an unexpected commonality between the people who make the music and the people who make the "lemonade" (that is, the winemakers) that, for Dorf, make the synergy very unique, and it has to do with communication.

""I watch a winemaker talk to a music maker in person and see that they actually share poetic descriptors for things, and can articulate their observations of not just wine or poetry or art but really the world," he said. The overlap of wine and music was initially a surprise to Dorf, but now he sees the pleasure of it.

Dorf points to wine educator Kevin Zraly, who founded the Windows on the World Wine School, and Michael Skurnik of Skurnik Wines & Spirits as colleagues with "dual artistic focal points." Zraly, Skurnik, and others in the alcohol distribution business love what they do and, because some of them are also musicians, they love the music performance component of what City Winery does as well.

The duality is a key to attracting the right audience to the City Winery venues. "We're able to bring people who really want to be here," Dorf explains, referring to both repeat clientele and staff that he's able to retain. "Maybe they come with wine expertise and love music, or vice versa."

The combination is working so far.

Here are three concepts on Dorf's mind in terms of growing the business even more.

Scaling Intimacy

Growth mode means scaling up and, with expansion plans for 10-15 venues each in North America, Europe, and Asia, Dorf and his team have their work cut out. That's especially true since the keys to success so far have been "close quarters" experiences like small performance spaces and the smells of fermenting grape juice nearby. How do you scale without losing that intimacy? The thinking and strategizing -- the answers -- behind this critical company dilemma are happening at Basecamp.

"Basecamp"

Dorf doesn't know how to make a cocktail, and he doesn't know how to make wine. What he does know how to do is build a team. His 8-person core group of company leaders have been with him since they launched the first City Winery in New York some ten years ago and, for almost that long, Dorf has organized "Basecamp," an "off-site" for managers and team leaders that has become one of the most sought-after invitations in the company. The whole scaling intimacy thing? This is where it gets sorted out.

Repeat What Works

So far in City Winery's successful growth to expansion cities, what's worked has been sticking to the same concept roughly 80% of the time. That goes for musicians (the team books the same artists in all of their markets) and for the core menu, which lists the same classic "sure bet" items in every market about 75 to 80% of the time. The 20% "wiggle room" is for local artists, and local dishes like shrimp and grits in Atlanta, that are at the individual chef's discretion.

The bottom line when it comes to growth is knowing their demographic, and engaging that customer base every time, in every individual market.

"I'm a firm believer that there's a cosmopolitan sophisticated kind of person, whether in Atlanta or Chicago or New York, who are the core of our audience," Dorf says. "They're looking for an experience, whether that's in the South or the North, male or female, black or white. We're looking for markets with a cultural and culinary scene that is strong enough for our model to work."