Scott Gerber – Principal & CEO, Gerber Group

Scott Gerber is the principal and chief executive officer of hospitality industry leader Gerber Group. Setting out to provide an innovative nightlife experience, Gerber Group opened their first property, The Whiskey at the Paramount Hotel, in 1991. Soon after, Scott took the lead in forging a partnership with Starwood Hotels & Resorts to develop the W Hotel brand, which now features Gerber Group venues throughout the U.S. and in select properties internationally. The partnership is widely credited for changing the landscape of the nightlife industry by creating unique, innovative venues that have redefined the hotel bar. Today, Scott manages the company and its full portfolio of properties and continues to redefine the hospitality industry with innovative dining concepts and bars featuring renowned beverage programs accompanied by exceptional culinary talents.

Gerber Group encompasses fourteen venues under such brands as Whiskey Blue, Whiskey Park, Irvington, Kingside, The Roof, and Mr. Purple. Scott oversees the company’s growth, opening two venues this past year: Irvington, a New American bar and restaurant at W New York – Union Square, and Mr. Purple, a rooftop bar and restaurant located on the fifteenth floor of the new Hotel Indigo Lower East Side. In addition, Scott manages Gerber Group’s strategic partnerships with Starwood Hotels & Resorts, Host Hotels & Resorts, Noble Investment Group, American Realty Capital, Viceroy Hotels and Resorts, and InterContinental Hotels Group.

Scott is widely viewed as a leading entrepreneur in the hospitality industry, appearing on shows such as CNBC’s Squawk on the Street, Fox Business Network’s America’s Nightly Scoreboard, MSNBC’s Your Business, Food Network’s Food Fortunes, and most recently CBS’s Undercover Boss. Scott has also been quoted in the Wall Street Journal, USA Today, Forbes, Market Watch, Crain’s New York Business, Bloomberg Businessweek, Hotel Business, Nightclub & Bar, and Bar Business Magazine, among others.

Scott, who holds a BS in finance and real estate from the University of Arizona, was previously a principal at a commercial real estate firm and represented notable clients such as Giorgio Armani, Hermès, and Dolce & Gabbana.

Tell me about your background.
I grew up on the south shore of Long Island, in the town of Hewlett. My family was in the women’s jeans business, so I sold jeans for a couple of summers to see if I wanted to go into the family business, which I ultimately decided not to. I went to the University of Arizona because I wanted to get away from New York and see a different part of the country and a different lifestyle. I loved that. I came back to New York and got a job in the real estate business, as a real estate broker, because I majored in finance and real estate. I thought I would come back to New York, learn the business a little bit, and move back out to Arizona or Colorado, but I never went back. I became successful in New York, and I didn’t want to leave. So that was my early life. Just by accident, I ended up in the bar business, which was twenty-five years ago.

So you started your career as a real estate broker?
Yes. I studied finance and real estate in college. When I was trying to figure out what to major in, I picked up a copy of Forbes magazine and saw the list of the 400 Wealthiest People in the World, and this was probably in 1980. At that time, to be on the list you were either in the oil business, you inherited your wealth, or you were in the real estate business. As my father assured me I wouldn’t be inheriting my wealth and I thought that anyone in the oil business had to live in Texas and I wasn’t really too excited about that, I studied finance and real estate. I got my broker’s license and came back to New York, and I thought I was going to build these big office buildings in New York. I was basically told I had no experience, but if I want to be a real estate broker: here’s a desk, a phone, and good luck. And that’s how my business career started.

Did you have a successful career as a real estate broker?
Yes, I started off doing mainly tenant representation for large corporate tenants. We were representing a lot of foreign banks, and I had some really good success with that. And then I was given an opportunity to work for Giorgio Armani, so I structured a very difficult deal for them on Madison Avenue, which is currently their flagship store. After being able to put that assemblage together, they asked me to represent them nationally, so I would find locations for all of Armani’s stores across the country. That included San Francisco, Los Angeles, Texas, Boston, and New York. And that led me to representing other high-end fashion tenants like Dolce & Gabbana and Hermès. So, yes, I had a lot of success in the commercial brokerage business.

A lot of college graduates are thrown into the same situation you were thrown in, whether it’s real estate or financial services. They’re given a desk and a phone and told good luck. What do you think is the key to succeeding in that type of environment?
Well, back when I was doing it, it was way before 9/11 and security wasn’t the way it is today. You could actually go into an office building, take an elevator to the top floor, and stop at each floor and try to befriend the receptionist to figure out who was handling the real estate. So that’s how I would spend my days, and I would either try and meet with somebody by just being nice to them or I’d come back to them by making a phone call and try to make an appointment with them. And that’s really what it was about. I studied the market and knew the market really well, as far as what office space was worth and where deals were being transacted. And I just worked really, really hard to establish relationships with people and would maintain those relationships. So, in office space, it’s not like when you’re trying to find an apartment and you can find one in two or three weeks. Office tenants usually plan, at a minimum, a year out. Probably more like two or three years out. And so you just establish those relationships, provide them with information, even if you don’t have a requirement, and then hopefully they give you an opportunity to find a space for them.

How did the Gerber Group get started?
My brother, Rande, went to school with me at the University of Arizona. When he graduated, he saw that I already had some success. I’m eighteen months older than Rande is, so he graduated two years after I did. And he figured, “Well, real estate seems to be pretty good, so I’m going to go into the real estate business as well.” One of his clients was Ian Schrager, when he developed the Paramount Hotel. Ian was looking for a bar operator for the hotel, and Rande was his real estate broker. We would go out to bars at night, so we kind of knew what was happening at the time, but Ian didn’t really like any of the bar owners Rande brought to him. After about six months to a year, he turned to my brother, and I had met Ian a bunch of times and he said, “Look, why don’t I tell you guys how to do this? I can’t be involved, but I’ll tell you how to do it. I’ll bring all of my friends, and you guys just run it.” My brother and I said, “Okay, that sounds like a fun idea.” That’s how we ended up in the bar business. I raised some money, through some friends, and my brother was in charge of running the bar.

So you took over the company a few years ago?
We had a lot of success with that bar, which was called The Whiskey at the Paramount Hotel. And then we did another deal with Ian Schrager to build Morgan’s Bar at the Morgan Hotel. And another one called Sky Bar in Los Angeles at the Mondrian Hotel. We then created a few other venues on our own, and then Giorgio Armani approached me and said, “We’ve got these restaurants in some of our boutiques, would you consider taking those over for us?” So we took over five of those restaurants in Armani’s boutiques. And then, when Starwood Hotels was looking to go into the boutique hotel business, they figured the best way to do it was to buy an existing boutique hotel company, so they tried to buy Ian Schrager’s hotels. That deal was being discussed for about a year, but at the end of the day, it didn’t happen. So Barry Sternlicht, who was the chairman of Starwood at the time, said, “Look, I’m going to build this boutique hotel company. Why don’t you guys do it with me?” So my brother and I decided to join forces with Starwood and help them develop the W Hotel. A large part of that deal was that Starwood would make an investment into our company, in our existing business, so we moved forward with the W Hotels and Starwood. So that was going great for a very long time, and my brother and I were partners. Then, about six years ago, my brother decided that he wanted to go into the tequila business, and the liquor licensing laws are as such that you cannot own a liquor company as well as own bars and restaurants. So, at that time, I bought my brother out of our business and he developed Casamigos Tequila, and now I own Gerber Group.

What were some of the challenges you faced when you took over the Gerber Group?
When my brother and I were partners, we had very distinct responsibilities. I was responsible for the business side and Rande was responsible for all of the design of the bars, the creative, the music, the uniforms, etc. So it was a very long time where I was just in the background. Nobody even knew that I was involved in the business, which was fine. I didn’t mind that much at all. Rande was the face of the business. I only have two brothers and a half-sister. My brother Kenny had managed some of our properties, but he had decided to stay in Los Angeles. At that time, I basically had to take over everything. So now I was the one who was designing the bars with the architects. I was the one coming up with the uniforms. I was the one coming up with the music. I was the one who was doing the press, but my press is very different. I’m not a public figure like my brother and his wife. So my press was really geared around business press. In addition to running the business, now I had to take on all these other responsibilities. It was a huge challenge. I hired some very talented people to help me with the business, but they weren’t my brother. In the past six years with the help of my great and talented managing partners, we have had tremendous success.

What has been your marketing strategy with all of your venues?
Each venue is looked at on its own. We like to be in hotels. A lot of it depends upon the hotel that we’re in and what that brand is; what the physical space is; our demographic, which is similar in a lot of places but not always the same. So for instance, when we opened Kingside and The Roof at Viceroy New York on West 57th between 6th and 7th, we thought that demographic was going to be skewing a little bit older, probably a little bit more business-focused, especially during the week because of all the big companies that are right around that area. The Roof has views of Central Park, so we knew that would be a huge draw. We also hired the design firm Roman and Williams, who had designed the hotel, building, and the interiors of the hotel, and we’re now designing the restaurant and The Roof. So that was a big deal. We do a lot of private events at The Roof, but really the views speak for themselves. Our most recent deal is with a brand called Hotel Indigo, and we opened a place called Mr. Purple, which is on the Lower East Side, between Ludlow and Orchard Street. Mr. Purple has a huge rooftop with a pool. Because of its location on the Lower East Side, that demographic skews a little bit younger; the people who work for us are probably a little different than what you would find in Midtown. The music also changes a little bit because it’s a daytime pool scene, and on the weekends we have a big brunch that goes into early evening. It’s got incredible views—the Freedom Tower, the Brooklyn Bridge, the Empire State Building—and because most of the buildings are low, you really have unobstructed views. That combined with the fact that it’s got a pool makes it a very unique space.

How fast is the business growing?
We grow organically, so many of the deals we do, we get approached to do, and many of them are existing hotel partners. One of our hotel partners might say, “We’ve got a hotel in Washington, D.C., will you take a look at it?” Or anywhere in the country or around the world. We evaluate each opportunity, depending on the hotel brand, the city, the market, and really what our capacity is. We opened up Mr. Purple in November 2015, and now the next deal we’re going to be doing is a little bit out of the box for us because it’s not in a hotel. It’s an existing bar called the Campbell Apartment, which is located in Grand Central Terminal. We got involved in that one because they put out a Request for Proposal (RFP), and the real estate broker involved had called and said, “Would you be interested in looking at this? We think you’d be a great fit.” We never really participated in an RFP before, but we said we’d give it a shot, and we were awarded the RFP. I don’t know if you’ve been there, but it’s an iconic bar. If you Google the “top 10 iconic bars in New York,” it’s going to come up every time. It was built in the 1920s for a guy named John W. Campbell as his place to entertain friends. So it’s got a lot of historic value to it. The room itself is historic. We’re not going to be changing the room very much, but it is a renovation that will be all new equipment, air conditioning, furniture, sound system, and lighting, but the bones of the place will remain intact. And when you have a place in Grand Central, I mean, there’s 750,000 people each day that walk through Grand Central, so we think there’s a huge potential to expand upon what the prior tenant has already built. With our brand and cross marketing this property with a lot of our other properties, we think there’s a ton of potential for growth.

The Gerber Group brings in over $50 million a year in revenue?
We don’t comment on our financials, but somewhere around there.

How did the recession affect your business?
It’s interesting. The recession affected our business, but not as much as other businesses. We get impacted in two ways: 1) A good portion of our business is corporate events, and obviously when the recession comes, if companies are not doing so well, they’re not going to spend big money on their events, and 2) The other way that it has impacted us a little bit is, I think, our normal guest may come out and have three to four drinks a night and they don’t mind calling a top-shelf drink. I think we felt that maybe people were going either to a less expensive bar for the first drink or two or maybe having a drink or two at their apartment with some friends before they went out. You know, just to keep their bar tabs and food tabs down a little bit.

What do you think is the key to surviving during a recession?
It really depends upon what your business model is. If your business model is geared toward only the business community, then obviously it’s going to be a lot more difficult. If you have mostly restaurants and you’ve got big labor costs, the combination between labor rates and hourly rates increasing and that people are not spending as much money going out is kind of a recipe for disaster. So I think you have to be really conscientious about how you’re running your business, from an expense point of view. You have to make sure, more than ever, that your staff and your employees are just the friendliest people in the world, because when you have a limited amount of money to spend because times are not that great in your business, you want to go to the places that make you feel great. This is true all the time. I mean, obviously you want the food to be great and the drinks to be great, but you also want the experience to be great, and we preach that all the time. The most important part of our business is our staff and how friendly they are and what their level of hospitality is. Because at the end of the day, I cannot change the flavor of Heineken. So why are people going to come to our place as opposed to anyplace else? We’re not the least expensive guys on the block. We’re also not the most expensive either, but at the end of the day, you want to come to our places because you know the hospitality is going to be great, the cocktails and food are going to be great, and the music is going to be great. They are going to be comfortable places, and you’re going to feel good about spending your money with us.

What is your vision for the future of the Gerber Group?
My vision for the future is expanding with partners that we like. We’re in the fortunate position to say no to deals, and we’ll say no to deals if we don’t feel good about our partners. We’re great at what we do, and if someone sitting across the table feels they know better than I do, then they should do it themselves. They don’t need us. But we’d like to continue expanding our business into what we like doing, which is hotels. Or if there are freestanding opportunities like the Campbell Apartment, we’ll look at those as well. I love having people within my company grow in the business. Actually, three of my partners have been with me for twenty-five years. One of them started off as a doorman for me. My assistant is a partner in the company. She’s the best, and handles my whole life, both my business and my personal life. But we want to keep growing the business in a smart way. We don’t want to say yes to too many things because we don’t want to strain ourselves and “you’re only as good as your last deal,” so we have to be great at everything we do. But it’s fun coming to work every day. I love the creative aspect of designing these places. The difficult part is finding staff, because it’s a very competitive business, and with wages going up and healthcare going up and all of your costs going up, you can’t always pass those along to your guests. So your margins start getting squeezed just a little bit, and you just have to pay attention to operate these businesses as efficiently as you can.

What are some of your daily habits that have contributed to your success?
I have three kids, one of whom who still lives at home with us. She’s sixteen, so I try to get home every night at a reasonable hour to see her, and then I see her for a few minutes before she goes to school in the morning. Even if it’s just for a couple of minutes, it’s an incredible way to start my day. That’s the first thing. The second thing is that I make it a point, six days a week, to work out somehow, whether it be with a trainer or a spin class or take a run or something. That’s not only good for your physical health, but also for your mental health. I think that’s hugely important. And the third point is I make a ton of time to spend with my family. I basically schedule, for the summer time, a few weeks off at a time to be with my family. You have to prioritize those things, and if you don’t, at least for me, I don’t think I would be successful and happy in what I do.

How do you organize your day?
I don’t schedule my day to do certain things. What I usually do is get to work around 9:15-9:30 AM. I work out, usually, at 11:00 AM or 12:00 PM during the day. And then I’m either leaving my office at 7:00 PM or going out one night per week to visit some of the bars and restaurants. I do that Monday through Friday. My weekends, I try not to come into the city. Every month, we have PnL meetings, going through every single bar and restaurant, on a line-by-line basis. First thing I get on my desk is sales from the night before. I get reports of anything that happened—good, bad, different—in any of the locations. So I usually review those first thing in the morning. I read the newspaper in the morning, just to see what’s going on in the world, whether it be business-oriented or just in the world. And then, I guess depending upon where we are, sometimes I meet with architects and designers to design spaces. Sometimes I’m meeting with contractors to review budgets and how we are going to build certain places. Sometimes we’re going through repairs and maintenance at various bars to see what kind of work needs to be done to maintain them in the quality we want them to be maintained in. Sometimes I’m doing things like this [interview], but they could be also with magazines and television to talk about our business. It kind of really depends upon the day and where we are in the project.

Do you believe in the Law of Attraction?
I don’t know if I believe too much in that, but what I do believe very much in is treating our business as a family. Anybody can come into my office at any time. I have an open door policy. Anybody can text or email me, at any time during the day or night. We want to be there for our employees, and that’s led to us supporting them outside the workplace as well. So we do free yoga classes. We do free Soul Cycle classes. We’ll do bowling nights. We’ll send them to soccer games. Because we believe that if people are happy in their lives, they’re going to do a much better job for us in business, and that’s the most important to us. And if, God forbid, somebody has a family issue, we’re the first person to step up and pay for their plane fare for them to go take care of their family. That was probably instilled, in our business ethics, from when my father was alive. He was the most generous, friendly, and compassionate man you could ever imagine. He was my role model in life and business. He had a huge impact on our business and in my life! We believe that treating your employees well will always pay dividends.

Do you set goals?
We set budgets every year, but with personal goals, I guess everybody does, so yes. Like I said, I always want to make time for my family. I want to make time to work out. I want to make time to be healthy, and I want to focus on growing our business. So I don’t think those goals change very often. I think what probably changes a little bit would be the focus we’ve really put, during the past two years, on just supporting our staff outside of work. That goes to charitable work they want to do. We’re putting a lot more focus on health and wellness and personal development of our staff, because the best thing you can do is keep people for a long time. We don’t have a lot of turnover, but in the hospitality business, very often you do. I have bar-backs and bussers that have been with the company for 20+ years whose kids are now working with our company. So to me, that’s a huge testament to the kind of business that we run, and I know that I can rely on these people for anything.

How many employees do you have?
Around five hundred.

What are some quotes that you live by?
I don’t know if it’s necessarily quotes. It’s just kind of how I live my life. I think it’s so important to have a healthy balance in your life. Like I said, my family is first, and they’ll always be first. But I don’t think I live by many quotes. My father always said, “Enjoy life, enjoy your success, be generous, and live your life every day, because you never know what tomorrow may bring. Enjoy your financial success, because you can’t take it with you.”

How do you define success?
I think the most important thing is having a balance in your life. I know I keep saying that, and I may even sound like a broken record, but I want to be a great father, a good husband, and a great boss. So, if you can balance all those things and still have time for yourself, that to me is success.

What is the key to success?
For our business, it’s to always be great at what you do. To treat people who work for you with respect, regardless of their position, the way you want to be treated. To respect them the way you want to be respected. And really just to maintain relationships and do the right thing. I think that the reputation you have, or that we have, has been great for us. People say to me, “What’s your competition?” Well, any bar or restaurant in the world is my competition, but there are not many people that are focused on being only in hotels. And I think that we’ve been able to create this relationship with the hotels where they could rely on us to do the food and beverage aspect of their business. They don’t have to worry about things, and at the same time, even though we are a third party provider, we act as a player on the team. So, for instance, if you’re staying in a hotel and you go to check in and your room is not ready so you go down to the bar to have a beer and you complain that you just got off a long flight and your room’s not ready, the last thing you want to hear from the bartender is, “That’s not us. That’s the hotel.” You want the bartender to be compassionate. You want him/her to say, “Maybe I could help you out with that.” So, even though we are a third party, we act like we’re part of the team. I think that’s what we’ve built our reputation on. We get along great with the general managers of the hotels. We get along great with the owners of the hotels. We work well. I always like to say that we play well in somebody else’s sandbox. And that’s a very big deal in the hotel business.

Did you always know you would be successful?
I don’t know if I always knew I would be successful. I always hoped that I would be successful. My father was very successful in his business. My grandparents were very successful, so I think I had the upbringing to be successful, but if you ask me, “Did you always know you would be in the bar business?” I had no idea. I really thought I was going to be in the real estate business. That was what I started in when I graduated from college, but we fell into the bar and restaurant business by mistake.

When faced with adversity, what pushes you to keep moving forward?
I think it’s probably that I have five hundred people who work for me and rely on me and our business for their livelihood. I have a family that relies on me for their livelihood. That’s not to say that if I were to quit today, they would be starving. Obviously, they wouldn’t be. But that’s what I get up for in the morning. I love what I do. And so if the time comes when I don’t love it anymore, then I’m not going to do it anymore, but I don’t really see that time coming any time soon because I love what I do.

What is the greatest lesson you’ve ever learned?
Probably one of the greatest lessons I’ve ever learned, which was from my father, is that regardless of somebody’s position in a company or in life, financially, title-wise, or whatever it is, it really doesn’t matter; you should be nice to everyone. You should treat everyone with respect. You shouldn’t be treating anyone differently because they’re the president of a company versus a bar-back or busser in your company. I’d say that’s probably the best trait I’ve learned from my father, and that’s what I live by today. I want to give everyone the respect that they deserve, and it really doesn’t matter what your position is, financially or title-wise, for what you have or you don’t have.

What makes a great leader?
A great leader is someone who is decisive in what they do. I think a great leader is someone who wants to hear other people’s opinions and takes them into consideration, whether they follow them or not. I want to hear what people think about how to improve our business. I want to hear about people’s issues with our business. What’s right? What’s wrong? And it could be anybody in our business, but I think listening is a hugely important thing in business. I don’t always want to tell people what to do. I want to hear their input. I want people to feel that they are part of our business because without our people, we don’t have a business. So you need to respect them. You need to listen to what they want to do. Again, I don’t have to follow them all the time, but I do want to listen to it. I want people to feel like they can come in and talk to me about things, whether it’s a personal or professional issue. Whatever it might be, and I think you have to be compassionate and understanding about people, because sometimes shit happens.

What do you think is the most common mistake entrepreneurs make?
There’s a couple. First, I think that very often the number one reason for failure in our business is because you’re undercapitalized. You don’t understand how long it’s going to take for you to get your feet off the ground, get your business up and going, because then you’ll eventually become undercapitalized, and you don’t have enough money so you’re out. So I think that’s the number one mistake. The second most common mistake is that you think you know too much. That you know everything. One of the things that I know is that I know what I don’t know, and I’m not afraid to ask questions. I’ve been doing this for a very long time, but I don’t know everything about my business. I always want to learn, and I’m not afraid to ask questions, because I know the things that I don’t know. So I think those are two of the biggest mistakes that cause people to not be successful when they’re starting off in a business like mine.

What advice would you give to entrepreneurs who want to open a venue but have no access to capital or valuable connections?
It’s different than when I started in business. I had worked in a different industry, and I started off in this business, really, as an investor. I think that somebody today, if you can get a job working for a reputable company like Gerber Group, that does a tremendous amount for your ability to attract not only people but also capital. To know that you are trained under a company like ours and have seen a successful business like ours work I think is very important. And then it’s just about the more people that you meet. In our business, some people just want a vanity investment. They don’t really look at the business part of it, so if you’ve got a good personality and if you’ve been working for a great company and working with a lot of people, you’ll find some people that are ready to invest behind you. But I think the most important thing is to realize that owning a bar or restaurant is not like going out to a bar or restaurant. I mean, everybody thinks it’s all fun and games. You’ll get to be hanging out with your friends and having drinks and food and just having a great time. It’s not like that. It’s a job. You need to be able to differentiate when you’re going out for dinner and going out for drinks with your friends from when you’re working. And if you let those two things collide too often, you’re guaranteed for failure.

What advice would you give to young entrepreneurs, as a whole?
I’ve got two kids who are in college, and what I hear is that kids today could have up to ten careers in up to twenty to thirty jobs. I believe there’s no mistake in taking a job, and I tell this to my kids all the time. One of two things is going to happen: 1) You’re either going to love what you do, or 2) You’re going to realize that you don’t want to do that and you’re going to want to move on. So I think that the more experiences you can avail yourself of and the more experience you can get in different fields, at some point you’re going to find something that you love. And when you find something that you love, then you’ve found something that you can be great at and be hugely successful. I don’t think if you don’t love something that you could have the same level of success you’ve been longing for.

Do you believe the American Dream is dead?
No. I definitely don’t believe the American Dream is dead. Think about all of the things that have been created in the past ten years. Ten years ago, I’m sure that nobody thought there was anything new to create. But I think there’s so many things that you can’t even think about today that will continue to be created. That could be in technology or even physical things. It could be in so many different areas, but no, I don’t believe the American Dream is dead at all. I believe that for bright, aggressive people, they’re going to be hugely successful. They’re going to figure out how to have balance in their lives. They’ll figure out how to have a great quality of life. I don’t know if the American Dream is only tied to how wealthy you can get. I think a lot of people are choosing lifestyle over wealth and are trying to balance those two things out. I interview kids who, ten to fifteen years ago, would’ve been going to Wall Street, and that would’ve been their only choice. Today, they’re like, “I don’t want to be on Wall Street. I don’t want to work eighteen to twenty hours a day crunching numbers and have a miserable life. I want a life.” So I think those are the choices that people are making, and maybe the definition of the American Dream is changing or evolving, but no, I don’t believe it’s dead at all.

This interview is an excerpt from American Dream: Interviews with Industry-Leading Professionals by Jason Navallo.

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Interviews are conducted for research purposes by author Jason Navallo for his upcoming book, Underdog.

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