Big Think

Question: Where is Magnolia headed?

Steve Abrams: So we have lease in West Hollywood that also is supposed to open in November, December. I’m on a steep learning curve here on how to roll this out, so what I found out is that although I know the New York’s construction codes very well and how long things take to get through, I don’t know wherever else I want to go, so L.A. was quite a wake-up call. As bad as we think New York is, it’s worse elsewhere, and it’s even worse when you don’t know. So I found that it’s probably going to open in January or early February. And then the world exclusive with Big Think: in February we’re actually opening up a store in Dubai inside a Bloomingdales which will be the first Bloomindales outside of the United States ever, and we’re working with Marvin Traub who was the chairman of Bloomingdales for 25 years on it. And that certainly was of interest to us to work with someone with that type of experience.

Question: How did the partnership come about?

Steve Abrams: We get, on a weekly basis, somewhere between five and 10 requests for a franchise opportunity, and it runs the gamut from mom and pop’s “Hi, I just got out of school and I went there on vacation, and I want to open a Magnolia” to: “Hi, we’re a three and a half billion dollar company, and we like your concept.” And we’ve been very clear with ourselves not to do any individual franchising. We don’t want to be in that business. I don’t think we can adhere to the integrity of our product by doing it that way, and since we’re not looking to be that big, it’s not necessary; it’s very exploitive, and we don’t want to be in that position. I don’t want to be a policeman going from store to store correcting people.

I have a very, very anal vision. Everyone who works for me is very anal, and we all skew towards exactly what we’re supposed to do, and once you break that out to other people, you’re subject to their whims, personalities, financial issues, etcetera, so we haven’t gone down that road. But we also understand that we need to expand the brand, and there are going to be instances where geographically and culturally we’re not going to be able to do it ourselves.

So we get an enormous amount of requests from the Gulf States region – Dubai obviously was very hot and still is, even though it’s gone through the recession like everybody else; it’s on the rebound. We were talking to one of the cousin’s of the Royal Family in Abu Dhabi who flew us there last November to talk about buying in and taking over the Gulf States region as a licensee which we would be partners with. Those talks didn’t work out. In April I got contacted by a woman who was representing a very large group who was very interested in having us come there, and we were very, very impressed with her. I mean, being a woman in an Arab country rising to be the president of a three billion dollar group is very impressive and probably doubly hard than to do anywhere else. So it was somebody we did want to get involved with, but the timing wasn’t right for us. And we were very clear to her, “If there’s anyone we’d want to be in business with it’s you, but we just can’t do it now”; this was maybe March, April. We were figuring out our expansion plans, putting our finances together. I had just come off a long illness and it wasn’t right.

In August I got a call from Marvin Traub. Marvin is not someone you don’t call back, and obviously, I was very intrigued. It was about going into the first Bloomingdales that’s going to be out of the country. Little did I know that the woman I was speaking with in April was actually the person’s group who was bringing or licensing the Bloomingdales, so it was this very serendipitous circle, and I of course contacted Marvin; met with him I think that day, possibly. At the very least, I want to pick his brain about what I’m doing. You don’t get access to people like this very frequently, and we were able to come to terms. The timing was better for us. Our resources were better. The reality is it’s very easy to have your eyes too big for your stomach and grow, but if you don’t have the infrastructure, it’s very dangerous, and since we’re not looking like I said earlier to take over the world right now, we have the luxury of planning this properly and not putting our self in reaction positions on a continual basis. We get to be very proactive in the way we’re going to address it and do it very methodically. This wasn’t something we were looking for, but we also knew it was something that was ultimately necessary, and we wouldn’t necessarily be in this position again to be involved with this group with Marvin in this way. So we jumped at the chance, and we’re opening, I believe, February 10th.

Question: What will the menu look like?

Steve Abrams: It will be the exact same menu. We’re talking to the group there now to see if there’s any nod we should make to the local culture. For example, dates and figs are very big in that culture. It might be very easy for us to make a cookie with dates in it or to make a cheesecake with figs on top or even make some sort of date or fig or other type of cupcake that would resonate with the local population, and I think that’s perfectly in line with our brand.

Recorded on September 30, 2009