House Of Blues: Oh Yeah, They Also Serve Food
On the barometer of excess, this year's Super Bowl halftime show may have set records. Amid a barrage of fireworks, the show culminated with the Blues Brothers, James Brown, and ZZ Top, all on a 4,000-square-foot stage, encircled by hundreds of bikers on Harleys and shimmying dancers. Billed as a tribute to New Orleans, the extravaganza was also a brand-building exercise for HOB Entertainment Inc., a West Hollywood-based chain of four House of Blues restaurants and nightclubs with grandiose ambitions.
Of course, theme restaurants aren't new. Entertainment-oriented eateries such as Planet Hollywood Inc. are on every corner. What makes HOB different is founder Isaac B. Tigrett's plan to create an entertainment emporium centered around live music. HOB is the first theme restaurant with a concert hall used as a production studio, and HOB-linked programming can be found in every media outlet. "We are creating media properties as tools for the brand," says Tigrett, 48.
"RECKLESS." Certainly, the chain-smoking Tennessean does not lack ambition. In 1971, with a loan from his father, he co-founded Hard Rock Cafe, then sold out for $108 million in 1988 to meditate in India. Now he's back, and the only part of the Hard Rock he wants to replicate is its legendary brand.
Working with Indian mystic Sai Baba--a spiritual adviser who blesses all strategic efforts--Tigrett has the four-year-old House of Blues in overdrive. It has ventures in records, publishing, concert tours, and radio. A syndicated TV show ran for a season, and a Web site broadcasts live concerts. Clubs will open this year in Orlando--financed by Walt Disney Co.--and in Myrtle Beach, S.C. A Chicago hotel is being built. HOB even plans four concert tours, although a Joe Cocker tour last year was so disorganized several stops were canceled. The only thing missing is a profit: Last year, the private company lost an estimated $14 million on sales of about $60 million.
Blues music, too, seems hard to find. Tigrett admits only 20% of the L.A. acts are blues, but argues that a bluesy image helps broaden HOB's appeal. "The blues is the root of all music created in the U.S.," he says. "Through the blues, we can become synonymous with all live music."
To finance his new empire, Tigrett has raised over $65 million in private placements from the likes of the Harvard Management Co., the university's investment arm, and the rock group Aerosmith. Walt Disney owns 10% of HOB, while an on-again, off-again initial public offering is tentatively scheduled for later this year. And although he can't offer the star power of Planet Hollywood investor Arnold Schwarzenegger, Tigrett does have Dan Aykroyd and John Goodman.
So far, Tigrett has spent tons of his investors' money building name recognition. He will assemble an HOB presence anywhere cameras gather--at last summer's Olympics in Atlanta, for example, where HOB put up a temporary nightclub in a church. But that venture, says one investor, lost $11.2 million and prompted the defection of several execs. "The concept is genius, but his spending is reckless," says Michael J. Klenfer, an independent music industry and former HOB consultant. Tigrett won't confirm the number, but blames the Centennial Park bombing for the loss.
LONG LINES. Most of the big bucks go into the four restaurants themselves, built to showcase African-American folk art and blues artifacts. The largest, in Chicago, seats 1,500 and cost about $20 million to erect. The Los Angeles club is encased in metal from a 100-year-old Mississippi cotton gin. At showtime, a 55-foot bar shellacked with license plates and bottle caps splits open to reveal the stage. While owners of classic blues clubs snicker, the clubs draw long lines. "There's great energy," says club visitor Jennifer L. Aaker, assistant professor of marketing at the University of California, Los Angeles.
Still, creating a national brand is no easy task, even for a company whose motto is "On a mission from God." One investor says last year's IPO was scrapped because House of Blues wasn't profitable. Tigrett remains brash. "I am the innovator," he says, claiming the company should turn a profit this year. "They are all watching me." If he can't pull it off, however, he could find himself singing--not selling--the blues.