Los Angeles' wine bar list keeps growing.
Angelenos can supplement their Two-Buck Chuck chugging with upscale bottles at new wine spots Wilson in Culver City and Bin 8945 in West Hollywood. And if that's not enough, there are a number of other fledgling wine bars seeking oenophiles, including Vinoteca Farfalla, Bodega DeCordova, Lou and 626 Reserve.
What's behind the uncorking of the L.A. wine bar phenomenon?
David Haskell, managing partner of Haskell Restaurant Group LLC, which owns Bin 8945, said it is at least partially due to increased interest in wines from outside California. "L.A. is really starting to embrace wine now. People are trying things from Spain, from Australia," he said. "Owners and restaurateurs have tried to capitalize on that."
There's also a successful example to follow. Haskell said Suzanne Goin and Caroline Styne's A.O.C. on Beverly Boulevard has proved to the local restaurant community that there's a following for dining concepts with a wine focus.
"I was scared to come back to L.A. to open something because I didn't know if Angelenos would accept it, but watching A.O.C. thrive means that there is room for us," said Haskell, a Southern California native who left the area for jobs at such well-known restaurants as New York's Le Cirque and Aquavit.
In contrast to larger fine dining restaurants, wine bars are easier to locate in tiny spaces and can make it so a new venture will pencil out. At Wilson, tucked in the MODAA life/work loft building, co-owner Michael Wilson said a wine bar was appropriate because "when we found the space, it was too small for a full-fledged restaurant." And he added that Culver City residents were hungry for quality food and wine served in a casual atmosphere.
Haskell considered developing a 100-seat restaurant in Los Feliz, but believes his 45-seat, 1,200-square-foot wine bar was the smarter move. The 30-year-old said it is difficult to carry off such a grand project on a restaurateur's first try, and wine bars offer a good entry point into the market.
The larger location, Haskell concluded, "would have been too much, and we would have failed."
Hot Topic for Buyers?
Mall shoppers might be avoiding Hot Topic Inc., but private equity buyers could be giving the struggling retailer a look.
They'd be betting its Goth-tinged merchandise, now relegated to the back of teens' closets, will become fashionable again. And there are other reasons the City of Industry-based retailer has the makings of a candidate for a future deal.
First, the price could be right. Suffering through quarter after quarter of declining same-store sales, Hot Topic likely won't be able to command a high premium on its assets, including around 800 Hot Topic and Torrid stores across the country. Torrid is aimed at plus-sized customers.
Also, the chain has no long-term debt and has been showing signs of a turnaround that could be prodded by a private equity firm keen on ramping up return on investment. Although Hot Topic's June same-store sales dipped 3.4 percent, the same-store sales result was still above analysts' expectation of a 4.1 percent decline. And the company has been shuffling its executives to stimulate performance, with Gerald Cook assuming the role of president.
Finally, a private equity firm could push for growth by broadening Hot Topic's merchandise mix, which throughout the chain's almost 20-year history has been known for dark, music-inspired clothing. Another option would be to concentrate on boosting Torrid, which, with only about 120 stores, remains the smaller of Hot Topic's retail concepts.
"(Private equity firms) would obviously need another strategy for how they would turn things around," said Mark Vidergauz, managing director of the Sage Group LLC, a L.A.-based investment banking firm. "Sometimes it involves change of management, sometimes it involves closing non-performing stores. You need to check it out and see what is working."
Certainly, there is a lot of private equity money floating around, and the available properties are getting snatched up. Recent deals include the purchase by Texas Pacific Group and Warburg Pincus LLC of department store company Neiman Marcus Group Inc. last year for around $5 billion; Bain Capital Partners LLC, Kohlberg Kravis Roberts & Co. and Vornado Realty Trust bought out Toys 'R' Us Inc. for $6.6 billion last year; and arts and crafts retailer Michaels Stores Inc. was sold to Blackstone Group and Bain for $6 billion.
But Lloyd Greif, chief executive of Greif & Co., a Los Angeles-based investment bank, said that the fickle fashion industry can be distasteful to private equity firms. While it's great for a company to have a possible upside, stability is a key factor in determining what companies lure private equity firms.
"You can buy it when it is out of favor in terms of the consumer, but that also means there is more risk," said Greif.
Staff reporter Rachel Brown can be reached at firstname.lastname@example.org or at (323) 549-5225, ext. 224.
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