It took a decade for Tony Habre and his partners to secure a foothold in Lebanon’s hospitality industry. Their company, Add Mind, creates, develops and manages food and beverage concepts. Today, it has its mind set on regional growth, emboldened by striking gold with their concepts of White and Iris, two nightlife venues that are icons of longevity and frequently on the lips of many Lebanese socialites. But Add Mind’s path to success was not easy; it was marked by venue closures and learning experiences that helped it to evolve into an operation employing 250 people in the peak season.
“Our industry is a black or white one, with no middle ground and with frequent political turmoil which affects business,” says Habre, now chief executive of Add Mind. “So, basically, we had to accept the losses, pay for them and move on. But we always had a place doing well so we were always making money, though it was being used to finance the losses.”
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Habre entered the nightlife business as a solo operator in 2001 at the age of 22, creating and operating a bar called Pulse in downtown Beirut. Two years and several hospitality projects on, Habre joined up with four partners to form Add Mind.
The company’s first project was converting Habre’s Pulse into a restaurant and café venture called House of Salads. The new concept catered to Gulf tourists, and it appeared to be more in harmony with what downtown was then becoming, a tourism hub. While initially a success, — it was franchised in Kuwait and Bahrain — they had to close shortly after the assassination of Prime Minister Rafiq Hariri in 2005. With business shaken across Beirut’s downtown, House of Salads was unable to maintain profits, and it was a huge loss for the company, says Habre.
Fortunately for Add Mind, the company had also acquired the franchise for Pascucci, an Italian coffeehouse. This venture kept them afloat for the time being, but eventually it closed down, as well.
Following these experiences, Add Mind saw a more secure future — and one more in tune with Habre’s skills and experience — in operating nightlife venues. “Clubs and alcohol and such are always the last to be affected in times of crisis. In nightlife, you make the most money in one bulk — during the holidays and weekends — and it is sustainable for the subsequent period, while in restaurants you make the same amount every day and so are more vulnerable to slumps in business,” explains Habre.
After several trials and errors, such as L Bar in Ashrafieh’s Monot Street, and Asia, a rooftop bar in downtown Beirut, Add Mind found the perfect location for a venue at the end of 2005. On the rooftop of the An Nahar building in downtown Beirut, they developed their first outdoor club, White.
Habre has a number of open-top bars in Lebanon
White was launched three weeks before the July 2006 war with Israel, but they still managed to turn a profit despite shutting down during the month-long war. With the general growth of the lower downtown area, and after some complaints from neighboring commercial establishments, White moved to the Dora seaside highway in 2011. Its space was replaced by Iris, a ‘quieter’ bar concept, at least when compared with White.
To this day, Habre considers White “a life changer” and eagerly speaks of how their relocation turned out to be for the better, as the much bigger space in Dora meant they could finally attract international performers — something only SkyBar could afford until recently — and be placed on the global nightlife scene. In fact, White and Iris together contribute 75 percent of the total revenues generated by Add Mind as a whole.
Planning the party
The other seven venues in the Add Mind portfolio consist of clubs, bars, beaches and one restaurant. Habre would not divulge the total revenues that the company achieves from each venue but says that the seven less-grossing ventures are also performing well. Each venue individually yields around 30 percent net profit.
Habre and Karim Jaber, one of the four partners who joined the company 10 years ago, are the largest shareholders in Add Mind and are joined by three more shareholders. Under the current business model, the company is a shareholder and managing partner in each of the nine venues, but each venue is incorporated as a standalone company with varying shareholdings by, across the portfolio of venues, 30 investors, 28 of whom are Lebanese.
The investor mix and participation varies from one venue to the other, depending on the investment cost of the venture. White required as much as $6 million, but Cassis, a street-level pub concept in downtown Beirut, needed only $450,000.
Add Mind works with two banks, Bank Audi and Societe Generale du Banque au Liban. The company’s solid relationship with these banks is built on its successful track record in the business, says Habre. When the company seeks new debt to finance a concept, he says the banks will be satisfied with Add Mind providing collateral either in the form of business guarantees from the other investing companies — one party guarantees the other in the case of lack of compliance with the loan terms — or from Add Mind’s shares in the venue.
Add Mind is working on splitting its management activities from its financial stakeholdings in the venues while consolidating ownership of their outlets as much as possible to allow a more organized approach to investments. In collaboration with some of the venues’ other investors, Add Mind is creating Capricorn, a sister company that will manage the outlets’ equity and growth, according to Habre. “Capricorn will be almost the sole investment arm of Add Mind; it will be for pure equity and expansion, while Add Mind will be for pure management. When you have one company with nine businesses, it’s much easier to approach banks and investors, and we can plan ahead more now,” says Habre.
The ever-popular White remains the largest venue in Add Mind's portfolio
Currently, explains Habre, new venues are set up as individual ventures with mixed funding from Add Mind’s operational profits, from investors and from bank loans, depending on the venue’s lease contracts and the size of the investment. Though he says that a mix of financing from investors and bank loans divides the financial risk between the two and is a good idea, Habre prefers debt over equity because his company stands to make more money that way.
Expanding to the Gulf
With the planned consolidation of their venues under Capricorn ownership, expansion is very much the plan — regionally and, to a lesser extent, locally. In Lebanon, Add Mind is taking another stab at the restaurant industry with their latest addition of Copla, an Andalusian brasserie in downtown Beirut. Giving their new run at the restaurants segment their best, the company recruited a chef for Copla who in an earlier position earned two-star Michelin credentials.
Add Mind’s focus abroad is mainly on Dubai and Abu Dhabi. The company first attempted to grow regionally in 2005 with a club in Jordan, but it closed three years later. A hard lesson was learned, says Habre, “I used to think that a good country to invest in is one where there is no competition but it turned out to be the opposite: no competition means there is no interest in such a style of venue.”
Their regional growth is currently limited to Eight, a club in Abu Dhabi which opened in 2009, but several venues are slotted to be launched in the United Arab Emirates soon, and Habre believes Dubai will take them to the next level. “Lebanese in Dubai make more money than in Lebanon and they spend more. It’s also a touristic, stable and party city,” explains Habre.
Add Mind plans to start with two new venues in Dubai, and one in Abu Dhabi and while they will surely be opening White and Iris there, they are also considering launching their smaller bars as they believe the market there lacks such personal concepts.
Investments for the UAE venues will be higher than those in Lebanon and will come from Capricorn, banks and, potentially, some partners. While Habre is not worried about the competition in Dubai, what concerns him are the legalities of operating there. “It’s easier to open in Beirut because we have a huge team which, over time, works like a well-oiled machine. In Dubai, we don’t have that yet and we have to deal with both the hotel’s owner and the management company, which is a hassle. Dubai is more business-oriented in the sense of paperwork and legal issues,” explains Habre.
Nightlife is tough business, but, per Add Mind’s success, failing, learning and growing from experience can combine with hard work and determination into a fizzing cocktail of success.