DJ-turned-businessman Simon Digby. Photo: Supplied
Eyebrows rose when popular cocktail bar and nightclub, Alumbra, relocated to the far end of a pier at Melbourne's Docklands in 2008, after the Victorian government compulsorily acquired its original venue at South Wharf (along the Yarra River) to redevelop the new Melbourne Convention Centre precinct. But a long-term business strategy has paid off.
Alumbra's co-founder/director and international DJ, Simon Digby, reflects on 10 years of business success.
What attracted you to the Docklands and would you have chosen the same location if you were making the decision today?
Simon Digby's Docklands venue Alumbra.
We had some key criteria when choosing the new location for Alumbra – somewhere with a similar vibe to South Wharf; warehouse/shed type space with water views and near the CBD and St Kilda. So, moving to Docklands felt right. At that stage Docklands was 'unknown', but our loyal clientele followed us.
Although Docklands was seen as high-risk by many in the industry at the time, l would definitely make the same decision today. There is still no other location that can meet all our specific requirements the way Docklands has done.
Did you receive any rent concessions or start-up help/enticements from Docklands developers to entice you to open a vibrant bar at the location?
We had a commercial arrangement where we were rent free until the first day of trade, in the event of construction delays. In saying this it was still a hugely risky investment – upfront we paid about $4 million (in start-up costs, such as rent, venue design and fit-out, stock and consultants).
How, and why, did you diversify your business?
We established regular nightclub nights, targeting different audiences so they didn't compete. We wanted to get this structure right, being the bread and butter of the business. Then we focused on transforming the space to suit a range of events, from corporate events and wedding receptions, to daytime barbecue functions and breakfast meetings. This allows us to use the venue during all hours of the day and make the most of our weekly rent cycle. It also gives the business a 'Plan B' (if required). It's also been important for us to diversify through complementary business ventures, like off-site events across Australia and internationally, CDs, music labels and different nightclub offerings.
What is the best business decision you have made since starting your venture?
Going into business with Hatem Saleh (restaurateur-turned-businessman and managing director of the Atlantic Group [v]) in the first place. He helped me transition from an international DJ to an international businessman. He's a good example of someone who has experienced success from hard work, passion and commitment and he is hugely inspirational to me.
What's the biggest challenge in the hospitality/entertainment industry?
This industry always throws you curve balls. You need to run a tight ship when it comes to liquor licensing. Alcohol seems to be getting connected to anti-social behaviour and this industry can easily get caught in the firing line, so it's vital you run your venue responsibly. The other potential issue is staff. Your roster needs to be rock-solid, we don't rely on one employee for anything and everyone knows the business back-to-front.
What has been your most successful marketing strategy/tool?
Word-of-mouth certainly played a huge role from get-go. We've never relied on advertising. With social media we're able to extend the word-of-mouth philosophy even further. Another successful strategy has been differentiating our nightclub offering, which we set in place from the start. Our nights don't cannibalise each other because they appeal to specific crowds and demographics. That's not to say that each night is 'exclusive' or 'unwelcoming', but rather, the music focus attracts specific crowds.
To what do you credit your business's longevity?
Having a keen focus on long-term business outcomes, benchmarking international best practice, being strategic in our vision and diversifying our offering have all helped us make it to our 10-year anniversary. Because we are in the global business of music and beverage, it's crucial we travel to see what's happening around the world and get inspired and keep our offering current. This is something we take very seriously and is of course, a nice by-product of the job.
As co-owner, how do you manage 'who does what' to ensure a harmonious partnership?
My business partner, Hatem, and I sat down at the start and defined roles and responsibilities. We are each our own and are accountable for different areas of the business. We also meet on a weekly basis to iron out any issues. Open communication between the partners, but also the wider team, is crucial.
How long did it take to make a profit?
It took about six to 12 months. Once we got the team right, we were off and running. Like all businesses, we've had our up and downs, but we review the financials on a weekly and monthly basis to keep on top of things. My father once said: “(In business) in tough times, the fat get skinny and the skinny die”. We ensure we have some buffers in our cash flow should we get'skinny'.
What else is on the drawing board?
We are looking for new locations to take the Alumbra brand beyond Central Pier. Personally, I am looking at setting up a pho/cocktail bar in Fitzroy. In the long-term, I would love to help people develop successful hospitality businesses and make money through consulting.
- Interviewed by Belinda Williams