A Different Kind of NYC Nightclub

When Ariel Palitz invested in a friend's bar in 2004, she was the only woman among eight investors and two owners.

Palitz saw the investment as a way to simplify her event-planning and fundraising company, Soulution Enterprises Inc., which involved working with nightclub owners across town to arrange her events. "I thought, 'Why don't I have a piece of the pie myself?' " She soon learned, however, that she and her partners didn't share the same vision.

"The whole thing slowly turned into a Survivor episode," she says. "Every time I tried to make a decision or interject my opinion, I had to form strategic alliances to get my opinion heard."

Ten months into the venture, Palitz discovered that her colleagues wanted to sell what had become a failing business. Sensing an opportunity, she made a deal with the prospective buyer to purchase the club as a 50-50 partnership. It turned out that the nightclub was $150,000 in debt. That, coupled with additional problems such as building code violations, persuaded her partner to bail out only two months later.

That's when Palitz voted everyone else off the island, buying out the remaining investors for less than $50,000 to become the sole owner. She spent months reconstructing the books. Then she set out to revamp and redesign the bar. She contacted her ex-boyfriend, Moses Comas, an electrical engineer, muralist and furniture designer who was running a business in Miami. She asked him to come to New York to gut, revamp and re-launch the bar. "We were open the entire time. I just took the old name off the window," Palitz says.

The remodeled nightclub, renamed Sutra Lounge, is a cozy Asian-influenced bar and lounge with two floors, plasma screens, a DJ booth and a mirrored, mosaic stairwell. Whereas she finds most nightclubs pretentious and elitist, at Sutra, "It doesn't matter what you wear or whom you know. Everybody's important," Palitz says. She strives for a warm, inviting experience that features the best music, the best service and affordable prices.

"People shouldn't pay an unrealistic amount for a bottle of beer or a bottle of vodka," she says. "It's not about the money; it's about providing people with a memorable experience."

Palitz wants Sutra to reflect New York's diversity. There's no target demographic, she says. The crowd at Sutra ranges from bankers and hipsters to hip-hoppers and rock 'n' rollers. "Sometimes you actually see a group of fiftysomethings hanging out with twentysomethings," she says.

Applying their enthusiasm, Palitz and Comas brought the company out of debt within one year. Now, four-and-a-half years later, the bar has grown 10 percent to 30 percent every year, according to Palitz. "There's no sign of slowing down," she adds. Revenue totaled more than $1 million in 2008, and Palitz is anticipating a 15 percent increase this year.

"My new goal is to make at least half as much next year in merchandizing as I do in liquor," she says. She's planning a Sutra boutique, online and off, selling products such as Sutra T-shirts and coffee mugs.

Palitz attributes her success to hard work, superior customer service, good hiring decisions and her refusal to copy the typical New York nightclub experience.

Sutra relies primarily on word-of-mouth to lure customers. That includes websites with customer reviews. The club also has a mailing list and a newsletter. However, because of size limitations, Palitz is careful not to over-promote the club. "We save our [marketing] dollars and use that money in hiring great, talented DJs and great staff. And upkeep: After 5 years, you need to reupholster. You need to repaint. You have to make sure your place looks brand new."

When it comes to philanthropy and giving back, Palitz offers nonprofit organizations a place to raise their money. She doesn't charge for the room, and the organization keeps 100 percent of the proceeds. "We don't open until 10 p.m. From 6 p.m. to 10 p.m. our doors are always open for any type of worthwhile organization that needs fundraising help," she says.

Palitz loves what she's doing. But for someone who's never been a waitress or a bartender, "a lot of it is trial and error; a lot of it is hiring people around you who can fill in the gaps you don't have so that you have a well-rounded team."

Despite the success that has brought her to her fifth year, "we're not trying to be a hot spot," Palitz says. "Hot spots come and go." Sutra caters to the average person who wants to celebrate a birthday or enjoy a night out. Customers know they can come to Sutra for good service and an atypical New York nightclub experience. "With quality comes success. People recognize quality, and they know when they're being cheated."

To Palitz, "New York is the center of the universe, and First and First (Sutra's location at First Street and First Avenue in the East Village) is the center of New York, so we have to represent all of New York and all of its people. I think that is the key to our success."