August 12, 2011|By Erik Maza, The Baltimore Sun
Moore's ambitions are wide-ranging. In the Maryland application, Moore said Seacrets intends to apply for the same license in as many as 16 states, including California, Hawaii, Pennsylvania, South and North Dakota, Wisconsin, New York and eight other states. So far, Seacrets franchises can be sold in Pennsylvania and New York. The Maryland license was approved June 21.
The application calls for an initial investment on a franchise that ranges from $1.6 million to $3 million — $14 million and $22 million if the franchise includes a hotel.
Moore would have a hand in the design of the property and its development; and his crew would regularly visit the new franchises to supervise their progress.
"I want to have a crew that can go to different franchises and smell them, taste, get a feel for them and see what's not right and what works," he said. "We can't afford to fail, and we don't want to see anybody fail with our name."
In the nearly two months since Seacrets has been allowed to meet with franchisees in Maryland, they've met with five likely partners, two from Baltimore. Figgs said they are not near making a deal yet.
More important to Moore than a partner is a location. Given Seacrets' popularity among vacationing Baltimore residents, he would like the city to have one of the first franchises. But Baltimore is proving, by his own admission, "a tough nut to crack."
Moore wants to be by the water, but there's no beach and he knows of few other places that have water access. Zoning issues and noise restrictions have made other locations, like the Inner Harbor, unfeasible.
One possible location that's been discussed is Westport, the $1.5 billion mixed-use development near Cherry Hill. The area's developer, Patrick Turner, said a Seacrets in Baltimore would be "good for the city." But in an email, he also said it's still too early to say whether it would be constructed at one of his properties.
Moore also met with Struever about Port Covington, the mostly untapped patch of land in South Baltimore that's now better known for its Walmart, but Struever was also circumspect.
There are other obstacles going forward.
Moore is jumping into the franchising game at a time of uncertainty for the service industry. And while Seacrets has few peers, several indicators suggest possible problems.
After a boom in the 1990s, the industry is now experiencing "the most prolonged period of decline" since at least the 1970s, said Bonnie Riggs, a restaurant industry analyst at market research firm NPD Group. It is expected to grow at less than one percent a year.
Three percent, or over 8,000 independently owned restaurants, have closed since spring of last year, according to NPD's most recent industry report card.
Analysts say a big part of Seacrets' success has been its location. Take it outside that location, and it would have to compete with similar, established venues and all the entertainment options tourists already have at their disposal. In an urban setting, like Baltimore, bars like the Bay Cafe in Canton and Tiki Barge by HarborView Marina show there's an audience for island-themed nightlife; but they have solid fan bases who might be hard to peel away.
The economy has made all players, from small to big, reassess the need for expansion. Nightlife businesses, which traditionally have a harder time franchising, said Henkes, are especially vulnerable.
"On balance, it makes it challenging. To be expanding like [Seacrets] is certainly unpredictable," Henkes said.
One encouraging model for Seacrets is the Greene Turtle, a sports bar that started in 1981 with one location in Ocean City and parlayed its popularity into a hefty regional footprint. Greene Turtle's expansion moved at a glacial pace. By 2001, 20 years after it opened, exactly where Seacrets is now, it had just five other locations.
The Greene Turtle's expansion since then has sped up, but it's stayed clear of potential pitfalls by expanding gradually, said Greg Carey, vice president at Columbia-based JPB Partners, which bought a majority stake in the chain in 2007.
"We've taken the posture that we'll move out in concentric circles, growing into Virginia and Delaware and expanding out from the base," Carey said.
The strategy has worked for them because in neighboring states there's an awareness of the brand, and it increases efficiency in marketing and in management. Thirty years in business, there are now 28 locations in Maryland, Virginia and Delaware.
Figgs said competition is expected, but the number of local visitors they have every year suggests they would be welcomed in Baltimore. Stepping outside a resort town could create problems, but they're bullish on Baltimore's tourism industry.
Figgs isn't worried about the economy. Seacrets hasn't seen a drop in revenue or attendance in any of the recession years, he said.
He is aware of the possible hurdles ahead. Still, his most pressing concern is the location.
"It's a challenge," Figgs said. "But it's a challenge we want to at least try."
Starting small is a strategy that resonates with Moore, and he said he's in no hurry to make a splash.
Though it had been reported the company is planning on more than 30 franchises, he said he wants three to five clubs over the next five years that can accommodate 400 people each, at most. And even that seems like an aggressive plan in his eyes.
"My goal is that I am able to start slow with quality people in good locations and help them. I don't want to grant them the franchise and walk away," Moore said.
erik.maza@baltsun.com
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