Cocktail Kings Shake Up Bar Business

By Thomas Heath
Monday, January 5, 2009

My three vices in life (at least the ones I am willing to talk about) are fireworks, cigars and cocktails. And swanky hotels. Oh, and politically incorrect food like foie gras, and heart-stoppers like sweetbreads. Butter. Traveling first class. Sharp hats. Okay, so there are a lot more than three.

I gave up fireworks after nearly blowing myself up celebrating Fourth of July. I am down to about one cigar a month (I smoke a house brand from Nat Sherman's in New York.) Call it a concession to my health.

But I still search for the Great American Cocktail. I love a well-crafted potable. Sometimes I love them too much.

My cocktail search recently took me to Bourbon, a restaurant and bar in the District's trendy Adams Morgan neighborhood, where several skilled "mixologists" were holding a seminar on how to make holiday drinks. I watched these masters blend such classics as a Tom & Jerry, a Holiday Mojito and Baltimore Egg Nog, but the real takeaway was an introduction to a cadre of young men and women bartenders creating complex and original drinks at several destination bars around the Washington region.

At 38, Todd Thrasher is a godfather to the young craft bartenders around Washington. He owns a part of Restaurant Eve in Old Town Alexandria, where he bartends. He and partners also own PX, his creation on King Street that seats 32. Eight seats at the bar are for walk-ins; the rest must be reserved.

Thrasher charges $11 to $19 for a cocktail.

"My drinks are expensive," he said.

For that, you get homemade cola for your rum and Coke. Quinine is shipped in weekly from a health-food store in Carson City, Nev., for his tonic. Thrasher even makes his own ginger ale. You get the idea. There are no canned juices or canned mixers. PX's bitters -- the cocktail equivalent of a spice rack -- are homemade and plentiful, including a special cherry bitters.

You also get more expensive booze. He pays $24 for a bottle of high-end gin, compared with $6.25 for the cheap stuff. He calls PX, which has been open two years, the cocktail version of fine dining but without the expensive overhead.

Cocktails normally have high profit margins. That means if you charge $6 for a drink in your average bar, you make $5 or $5.50 after the cost of the alcohol and the ingredients.

So, how do places like PX make money when they are spending more on ingredients and ambiance and are employing craft bartenders?

Thrasher's answer: hammering down his costs. His experience enables him to make homemade tonic water in half the time it took five years ago. Same with the cola and everything else. He shares his mortgage with the profitable Eamonn's fish-and-chips restaurant downstairs, which he also partly owns.

Thrasher says PX is profitable. "I don't want a hobby," he said.

PX is open 208 days a year. It fills up its 32 seats on Wednesday and Thursdays, and averages 90 customers each on Friday and Saturday. At about $25 spent per customer, I estimate PX is grossing over $300,000 a year. Thrasher said profits are rolled into a management company owned by investors.

Thrasher said he is not getting rich. He gets paid a salary and owns a piece of Restaurant Eve as well as PX. That said, his income is less than $100,000 a year. But he is doing what he loves and building something that he hopes might someday produce a windfall.

He is part of the cocktail couture renaissance, led by places like the Pegu Club and Death & Co. in New York. These modern-day speak-easies are arriving in Washington. It's the distilled spirits version of artisanal bread bakers, specialty cheesemakers or microbreweries.

We are talking here about local bartenders such as Thrasher, whose mean grog costs $12. Consultant Derek Brown gets behind the bar at the Gibson on 14th Street in the District, where you can sip a London Special and get a primer on the great drinks of New Orleans. Owen Thomson of Bourbon will mix up Manhattans with William Heaven Hill bourbon at $55 a glass.

Like master chefs, these craftsmen take themselves and their cocktails seriously. No "fake-tinis" where you throw something in a martini glass and call it a cocktail.

"Cocktails are America's original culinary pursuit," said Thomson, 27. "It's a lost art form. I would like to think that what we are doing is to bring back the simple art form."

PX and the Gibson allow only as many customers as can be seated. No standing. Call ahead for reservations. You walk into the Gibson (if you can find it; there is no sign) and if there is room among the 48 seats, you can sit down. If not, leave your number or e-mail and they will buzz you when someone leaves. This is high art. The Gibson uses Kold Draft ice cubes, which are harder and larger than most, allowing the bartender to shake or stir the cocktail harder, which mixes the ingredients without diluting them.

Ambiance is key. Eric Hilton sank around $200,000 into the Gibson, which opened a month ago. The interior was hand-built with lots of woodworking. The bar is covered with embossed leather.

"It's custom-built for intimacy, to look like a place befitting someone coming in and spending good money on a good cocktail," said Hilton, who also owns the Marvin nearby and Eighteenth Street Lounge.

Hilton said he hopes to break even or make a slight monthly profit on the Gibson; his and his partners' usual goal is to make their capital investment back in a year.

"The high-end cocktail bar is a particular labor of love," said Hilton, whose Gibson is named for a local jazz pianist who passed away. "It's not like a dive bar where you pack them in and sell cheap beer and make a lot of money. This is not churn and burn."

The churn at Bourbon is making Bill Thomas a ton of money.

Thomas, 38, comes from a Prince George's County family that has been in the restaurant business for more than a century.

Bourbon has fancy and tasty cocktails, but it doesn't aspire to be a speak-easy like PX and the Gibson. It has 180 brands of whiskey, and its head of operations, Thomson, has created a lively cocktail menu based on American classics like the Manhattan and the Old Fashioned.

Owner Thomas (not Thomson) gave me a detailed rundown of his revenues and costs. He has one big advantage over the speak-easies: Bourbon is less selective about the number of customers it allows in. He also makes a lot of money selling run-of-the-mill drinks. There's more money in the masses.

"You always make the most on vodka-soda, vodka-tonic, vodka-orange juice," Thomas said. "You charge $5 and make $4.50."

The Adams Morgan Bourbon (the original is in Glover Park) grossed around $120,000 in November. Thomas pays himself a salary of $10,000 to $20,000 a month. He has his mother and brother on the payroll. He has made enough to buy two row houses nearby, one of which has four rental units. He also bought some commercial space on Florida Avenue. Thomas took $150,000 in profits out recently to open a third bar on Wisconsin Avenue.

It hasn't been a completely smooth ride. Thomas spent hundreds of thousands of dollars -- and passed on salary for several years -- to buy out a partner who disagreed with his business plan.

In the meantime, Thomson labors at turning normal customers into cocktail aficionados.

"I want the customer to pay the same amount as elsewhere, but I want to give them something better for it," Thomson said. "So at $13 or $14, I am going to give you something better. Fresh juice. Original bitters. It's not like they are unwilling to pay $12 for a drink. But they want something more for their money."

They want great American cocktails.

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