(Bloomberg) -- From the 3Q 2017 issue of Bloomberg Reserve, a Bloomberg Brief's publication. Interviewed by Kate Krader on June 13. Comments have been edited and condensed for clarity.
When Jim Meehan co-founded PDT in New York City in 2007, he brought speakeasy style drinking spots with first class service into vogue. His bar is still going strong, as is the liquor business at large. The tequila brand Casamigos, best known for famous owners George Clooney and Rande Gerber, sold for $1 billion in June. On the 10th anniversary of PDT, Meehan has a lot to say on topics ranging from whether a non-celebrity can make a billion dollars in the booze world to the best city in which to go drinking.
Kate Krader: Do you recommend investing in spirits, like George Clooney did?
Jim Meehan: Spirits, and high-end cocktail bars for that matter, are the whipped cream and cherry on top of your sundae. I would never ask investors for money to launch a spirits, wine, or beer brand that they couldn't afford to lose. The spirits world is saturated right now. I wouldn't say that spirits are a high risk investment, but they are for a specific investor: they're a lifestyle investment. If you happen to be Jay-Z, or if entertaining is part of your lifestyle and business, then it is a practical investment. But I don't think booze is the next tech sector.
What makes spirits a tricky investment?
There's a lot of physical overhead for the machinery to produce alcohol. And that's before spending thousands of dollars on PR to ensure your product is visible in the marketplace. There's a lot of outlay to get the money back. Especially with brown spirits that require aging, you won't see a return on investment for many years to come. Many new spirits are listing two to three times the cost of current benchmarks in the industry to make the numbers work. From my perspective, a $50 "craft" gin is the equivalent of someone launching a new computer company with a $200,000 laptop.
Are you okay paying $20 for a cocktail?
It's all about where you're drinking that drink. The price of cocktails is so intertwined with real estate: That's the area of drinks' cost that gets left out. If the only way you can make money in a business is by selling drinks and your highest fixed cost is your rent, then your drink price will always be a reflection of your real estate. The rising cost of rents is much more a cause for concern then the cost of lime juice—though lime juice prices can be a concern, too.
Is it a good thing—or bad—that bars are starting to spin off in the manner of Shake Shack?
You could view it as the Rande Gerber-ization of mixology. His bar concepts have spread all over the country. There's nothing new about this, as the Hard Rock Café and Trader Vic did in generations before him. Now, it's the commodification of this new art form—these singular bars. I'm 100 percent okay with it. It's bringing better bars to cities around the world. If there's demand for it, why not do it. This is capitalization, and there's nothing wrong with it. Bartenders, bar operators are opportunistic by nature. If you look at the cost benefit analysis of doing a pop up—in general, everyone benefits from it.
What's the best bar city in the world right now?
My favorite drinking city in the world is Tokyo. It's such a massive place with so many awesome little spots to drink; I love little bars. I also think that Japanese bartenders are the apotheosis of the trade. There are so many bars you can go to in Tokyo, run by the owner who has been running the place for decades. I love that passion and commitment.
What U.S. city do you most want to go drinking in?
The city that I'm most embarrassed not to have gone out drinking yet is Houston. Bobby Huegel has built an amazing empire of places like Anvil Bar and Refuge. And he just opened a bar and restaurant concept called Better Luck Tomorrow with Chef Justin Yu. Justin does the food at the Houston American Express Centurion Lounge [Meehan has developed the drinks for the lounges across the U.S.] so I know the pedigree of both of them.
Meehan at a Glance
Career: Besides PDT, works on trade-focused endeavors with spirits companies like Banks Rum, and writes for publications like Tasting Table, Lucky Peach, and Food & Wine. PDT was named the Best Bar in the World in 2009 by Tales of the Cocktail.
Books: The PDT Cocktail Book: The Compete Bartender's Guide from the Celebrated Speakeasy, written with Chris Gall. Meehan's Bartender Manual comes out October 2017 from Ten Speed Press.
What's Next: Prairie School, a bar inspired by the Midwest and its architectural legacy, in Chicago, opening Fall 2017.
Personal: When he's not on an airplane or drinking in Asia, Meehan lives in Portland, Oregon, with his wife, daughter and French bulldog.
To contact the editor responsible for this story: Peter Elliot at peterelliot@bloomberg.net.
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