Rescuing a failing business - with a slight difference - Business Works
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Rescuing a failing business - with a slight difference

John Sprecht, VP UK, Spearmint Rhino It's a business like any other - well, maybe not quite like any any other in some ways, but the business challenges are exactly the same. John Sprecht, VP of Spearmint Rhino UK, talks to Roger about how he took a failing business in hand and made is successful - in only a couple of years. In addition to the usual business challenges, John has some extra ones, as well as an attitude to his business that he says comes mostly from ignorance and the fact that there are some less-professional operators in the same sector.

q:  How did you get into the business?

a:  I was originally in the US military. I started very young, at almost 19, and was there for two terms, around ten years. Originally, I was in Combat Control Pararescue - rather like the Army Rangers and Navy Seals, but I had an accident and broke my back in five places, so I couldn't continue with that.

I studied whilst I was in service and cross-trained to become Chief Purchasing Supply Officer. It was a lot of fun, but it just wasn't challenging anymore. I couldn't change positions as I was the highest ranking military person there - most others were civilian postings by that time. So, I was pretty fed up and decided not to sign on for a third term.

I always had a second job as a security guy in a big night club in LA though, to earn some money to supplement the pay. I worked there part-time for several years: it was good money and I enjoyed the work.

q:  So, how did you end up with Spearmint Rhino?

John at Spearmint Rhino

a:  My Uncle owns a big car dealership in the US and one day a guy called Alex came in, bought a car and got talking to him. It turned out that he owned a strip club in Hollywood and, as I was just about to leave the military with no real plans, when my Uncle mentioned it, I thought that it would be cool to work with him. It turned out that he wanted a part-time guy to work as sort of an Assistant Manager some days and security at the door on others. At around 28 years old, what an option - working in a strip club with lots of girls! He offered me $15 per hour - vastly more than in the military - and it was fun too!

After a few months, Spearmint Rhino bought the club and one day two people turned up and said that we all worked for them now. They told us to keep running the club as normal and that they'd be back in a couple of days to update us.

Sure enough, a few days later they came back and held a meeting. It turned out that there were some legal issues with the purchase which meant that Spearmint Rhino had to close the club down. I was the only one that used to show up in a jacket and tie and apparently I had made an impression on them so, along with one other guy who they kept as Manager, they kept me on as Security.

I had no idea who Spearmint Rhino was so I got on the internet and checked it out. It looked good and they moved me to a high-earning nearby club that had a really good team in place. I quickly learned that it isn't easy to get a job at Spearmint Rhino in America - people earn good money, the conditions are good and good people just stay in their jobs.

The guy that hired me was Regional Manager and he told the General Manager of that club to hire me. I don't think he really wanted to, but I guess he didn't have much option. He gave me the absolute worst shifts you could work in downtown LA - Wednesday, Saturday and Sunday in the day - that's 11am to 7pm. Downtown LA on Saturday and Sunday is a ghost town, but I'd get there early for my shift, clean the place up, make sure everything was good - even cleaning the bathrooms - and I liked it.

I gradually got to know people and met the guys on the night shifts on Friday and Saturday nights and found that they were making big money. That's a thousand dollars a week just in tips - in cash!

q:  How did you get into management then?

John at Spearmint Rhino, London

a:  I worked really, really hard and eventually, after three months, I got to the A team on the night shift. During that time, the company was growing and opening more clubs, so they needed more Managers. They like to hire from within, but, for some reason, everyone they promoted at that time got fired after a short time. I have no idea why. So, it was known that taking the management training would mean getting fired.

I was offered the chance to do the training and, despite all that, I took it on. The Manager was making serious money and I just knew that was where I wanted to be. I did the programme and made it through with no problem and got appointed as General Manager in a new club in north Hollywood.

I worked real hard and impressed everyone. It was a takeover club - we re-developed it, re-branded it and introduced our model. The result was this amazing new club which I took from nothing to being successful - from around $14,000 to around $40,000 a week.

q:  Then what?

a:  After around three months, they opened another new club and asked me if I wanted to spearhead the whole re-modelling and stuff. I had learned how it was done in north Hollywood by taking the pressure off the Regional Manager and effectively doing that there, so I had the knowledge and experience.

Again, I do everything and get the new club open, do the big opening night launch and it's all great. Then they told me they'd just got two new clubs in Idaho and they asked if I'd like to go and get them going. I was more-or-less becoming the expert in opening new clubs.

After those two, it just went on. The next one was in Australia - I grabbed the chance. I built a big and successful club in Melbourne - then it was Florida - and so on for many different places - Mexico, Canada, Czech Republic, the UK, all over America and so on!

q:  How did you end up in the UK?

a:  It got to a time when the flow of new clubs slowed up and then they appointed me as a sort of travelling executive moving around all over the world. I was self-sufficient and just got the job done. They left me alone and finally I got the position of Worldwide Operations Manager and then, in 2009 I moved here.

At one point there were probably around nine or ten clubs in the UK. Some have closed and some new ones have opened, but there was a break up between the partners and that's why I'm here.

The clubs hadn't been run to the American standards, so I had to rationalise the business - I now have six with one new one in Leicester and I'm now looking for more. The UK has always been a challenge and its my job to develop the business.

q:  What are the challenges of working internationally?

a:  Like when I got to Australia, when I got off the plane it was just me and I had to work it out. The biggest challenge was in the Czech Republic with the language issue. The challenge here is the difference in the way we work.

The employment laws here are just nuts. It's all about the employee and who cares about the employer. If you're going out of business, you're going bankrupt, you're still going to pay me or I'll sue you for £100,000. So, that's how I find the mentality here. Once someone gets locked into position, after around 12 months, they change. They lose that initial passion and hunger, but when they're in a permanent post and they know you can't do anything otherwise they'll throw in a grievance or say they were harassed. Then they go and find a pay-as-you-go lawyer and they see the big dollar opportunity for a settlement.

too many people here are lazy and complacent

I don't understand that mentality. There are a lot of people out there who are really hungry and will do the work, but I find too many people are lazy and complacent. They just want the pay cheque and not to have to work hard. The attitude with many is that you pay me and if you want me to work hard, you have to pay me more. It's not a criticism, but I just find it frustrating - if it needs doing, let's do it now.

q:  Was the Czech Republic like that?

a:  No, it was just the language barrier. They are really hungry there and work their butts off. Spearmint Rhino is an American company. It started there and has an American model. It has a consistent model, consistent quality, consistent service. British service, to be honest, isn't that great. If you've been to America, the service, compared to here, is phenomenal. Almost to the point that sometimes it is a bit much. Here, it is difficult to get people to give that level of service. DJs, for example, they just won't do what is wanted.

q:  How would you describe the brand?

a:  Spearmint Rhino, London If you walk into any of our clubs, you'll see just how beautiful they are. The level of construction, the materials, the service, the uniforms, the girls and everything. It is consistent - if you go to Spearmint Rhino London or West Palm Beach, Florida, you'll get the same experience - hopefully!

Other operators are very inconsistent. We like our customers to know what to expect - the level of comfort, the surroundings, the level of service - we are a very transparent company. I welcome complaints, problems and suggestions so we can improve. We have proper procedures and ways to handle things. We value our customers and we are here for the long-term, so we want loyal customers. It's a bit like if you always buy Mercedes, you'll always buy Mercedes - well, it's the same for us.

great surroundings and good service

It isn't just about having the girls, although they are the main focus of the entertainment. Of course, we have a wide variety of girls to cater for most people's tastes - we all find different things attractive. But we also have great surroundings, good service, drinks and great food. Where else could you go in London and get a really great meal at 3:30 in the morning? There's probably a few places, but not many.

q:  You must get some odd reactions when you tell people what business you are in?

a:  Yes! But it's just a business.

it's just a business

Every business has a product. My product is entertainment and that consists of drinks and food and female entertainment - it's just a product. Of course, I'm lucky - my product is great to look at!

When I first started in the whole strip club scene, I was overwhelmed with it all. As a young guy, it was amazing, but now I'm 40 years old and it's just my business. It's just like any other job - when I talk to bankers, I think, wow, that's a real cool job - I don't know much about it.

q:  How did you go about developing the business here in the UK?

a:  Before I arrived, the business was really on its last legs. The company hadn't turned a profit for several years and there was a deficit of around £1.5 million. There were too many people working, the spending was out of control: I really had a lot to do.

I started from the basics. My goal was to get right down into the nitty gritty and look at all our suppliers and contractors. The whole shooting match. I pretty much got rid of many people and renegotiated new contracts with the rest. I started to have meetings in the club itself, started to get the rotas sorted out, make sure the cleaning was done properly, started training for all the staff, right across the board. Of course, learning the labour laws was a huge challenge to start with - I just didn't get it - now I do, but is was all so strange for me.

there isn't a job in the club I can't do

The basics need to be there and that took about a year-and-a-half. I was the enemy - they used to call me "the American" or "the terminator" - you can imagine! I can understand - if some English guy came to America to tell me what to do, I wouldn't be so happy. It was a nightmare, but now it's very different. They know that there isn't anything in the club that I can't do as well as, if not better than, them - bartender, DJ, waiter, receptionist, cook, manager - the whole lot. That's really important - how can you lead people if you don't know what they are doing. I need to know how they do their job - that's a critical part of the training - otherwise how would I know if they're doing it right - or if they're stealing or something. I still go and work posts in clubs randomly - I drop in and say, "Hey, take the evening off" and I pay them, but take over for the evening.

I am pretty easy going, but I want it done right and 'now'. Our customers have options - we all have options - and I know that we have to be the best. People will go elsewhere if the product is better there. I'm not interested in mediocre, so I expect my customers to be the same. I want everyone to make our customers welcome, know what they like, what they want to drink or eat, which girls they like - that's what makes the experience first class.

Spearmint Rhino

q:  How do you instil that philosophy in your staff?

a:  It's interesting. There's no training school for strip club managers, bar tenders or DJs in strip clubs. Sure, if you want to learn to be a waiter in a high-class restaurant or a chef or a bar tender or a DJ on the radio, there are training schools. There's nothing to prepare people for this business and I'm continually trying to help people understand that this is a business - a unique business, with its standards, quality expectations, customer service, food quality - everything to make the customer's experience the best.

People say that the business is 'sleazy' or 'trashy', so helping people to realise that this isn't true and that it's just a job, but one that demands the highest standards, is sometimes a challenge. Some people get it, some don't. Some are really good team players and enthusiastic about working real well and professionally; some are more 'just do the job well, but I'm really in it for the money'. Both have their value, but what's important is that they don't bring their problems along - the customers sure don't want to hear them and nor do I. Show up on time, do the job well, that's fine, but the long-term people who really have their heart in it are the best. We have a lot of long-term people.

q:  How do you overcome the prurient interest in the business - people fixated on it being sleazy or dirty?

a:  I have to fight it all the time. Because there are so many bad operators out there who have given the business a bad reputation, it's a constant battle. People get the impression from the bad guys that the business abuses women, it's all about drugs, alcohol and sex. Sure, we catch people with drugs sometimes, but if we catch them, we bring them to a secure area under video surveillance, take the drugs, bag them up and call the cops. There's no violence in here. No trouble, no crime. We don't have 18 year old drunks - sure we get the occasional younger person who sometimes overdoes it, but generally, it's mature men and women who want to enjoy themselves and have a nice evening.

q:  Do you have many female customers?

a:  We have quite a lot of women customers. There's nothing sleazy about what we do and many enjoy a nice evening out here.

Of course, we get accused of exploiting women all the time. I've invited critics to come and spend time here with me and I'll introduce them to people, walk them around, let them see for themselves. What a surprise, nobody has taken me up on the offer. The people who come out with all the rubbish have usually never been to one of our clubs, so how can they express a valid opinion? It's all rubbish. You won't change such people - they have their bias and are happy with it.

q:  Where do you see the business going in the next few years?

John at Spearmint Rhino

a:  As I mentioned, when I arrived we were about £1.5 million in the negative. After the first year, I'd reduced that to about £150k and now we are in profit. Things are always changing and we have some properties that we aren't currently using - if it wasn't for them, the profit would have been well over a million last year.

Where's it going? Well, it's a never-ending process. We're not the Bank of America or whatever, so it's all about keeping the standards up, making sure we're providing the right level of service and doing the right thing for our customers. Running this business is like having 2500 kids - we have around that number of entertainers plus around 300 employees on top of that. With that many people, every day is a challenge and new ones come up all the time.

I am still trimming the fat and I'm still looking for more locations. I'd like around a dozen clubs within about an hour's journey from London, so there's a way to go, but I'm getting there.

I'll give your readers a free entry to experience it for themselves

I'm also changing my views on 'super clubs' - the real big ones like in central London. My Leicester location is medium-sized (around 6000 square feet - compared to 25,000 in the big London club) and I think that's better in some ways - of course, it's all about location, location, location. That allows us to constrain the overheads, keep things in house (like cleaning) and maintain the profits - bigger doesn't mean better. I think you can give great service, a fantastic product, an excellent atmosphere with the right-sized venue in the right location. We can go head to head with anyone and win hands down - in fact, if your readers want to mention this article, I'll give them a free entry so they can see what great a great product and service we offer for themselves.

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