'This Year Almost Broke Me': Tom Schwartz Reveals 'Scandoval' Almost Shut Down His Restaurant After Losing 80% of His Business

Tom Schwartz is ready to talk about “it” — but he’s not expecting you to feel bad for him.

“This year almost broke me,” Schwartz tells Entrepreneur. “I’m glad we persevered, [but] there was a moment there I wasn’t sure if we were going to.”

For those not well-versed in the Bravo universe, in March 2023, a romantic affair between “Vanderpump Rules” castmates Tom Sandoval (who was dating longtime cast member Ariana Madix) and Raquel Leviss, turned into a pop culture phenomenon as the lying was exposed in real-time (and on camera). It was dubbed “Scandoval.”

Schwartz & Sandy’s, a bar that Sandoval and Schwartz opened in November 2022, just four months before the drama unfolded, was publicly canceled in the fallout.

Related: Lisa Vanderpump Says If You Want to Run a Business, Get Some Thicker Skin

It’s estimated that Season 10 of “Vanderpump Rules” averaged 11.4 million total viewers across all platforms, making it the most-watched cable series in 2023 among the 18-49 demographic. The first part of the season’s finale, which aired on May 24, 2023, is Bravo’s most-watched episode of any program of all time, with an estimated 5.9 million viewers in a 35-day period, per Nielsen.

“There were times during the scandal on a Saturday night when there were five people in the bar. Two of those people were me and Tom.”

Schwartz estimates that, at its lowest, “Scandoval” cost him 80% of the bar’s total business.

Our names are on the side of this building, which comes with a certain responsibility,” Schwartz said. “I’ve never experienced such a concentrated dose of negativity, especially online. It was a spectacle.”

Related: He Owns and Operates a Dozen Popular Nightlife Venues in New York — Here’s How He Kept All of His Businesses Afloat in a Crisis

Entrepreneur spoke exclusively with Schwartz and business partner and veteran restauranteur, Greg Morris, about the fallout of “Scandoval” and how they keep their business running in the face of public scandal.

Entrepreneur: What was your experience working in restaurants before you were thrust into the world on-camera? Did you always want to be in hospitality?

Tom Schwartz: I’ve been working in the industry since I was 15. My first job was at TGI Fridays! I feel like it’s kind of ingrained in my DNA. It was a dream of mine.

Do you feel like that early experience helped prepare you for making the jump to owning your own business?

TS: Honestly, nothing could have prepared me for what it takes to open a bar or restaurant. But I think it’s important to get in there and work every position at least once to have a better feeling for the business in general. I think on some level, the restaurant business is overly romanticized. It’s glamorous on the surface.

How so?

TS: With Tom Tom [Schwartz and Sandoval’s first bar with business partner Lisa Vanderpump], that was a great way to get my foot in the door. [Sandoval and I] were minority stakeholders, I was an investor, and we got our hands dirty. But for the most part, it was smooth sailing. We did the cocktail program, we were the ambassadors, the promoters, investors. Schwartz & Sandy’s was the first time getting in there — blood, sweat, tears, sacrifices, time, energy, money. This is the real deal, you know? It’s intense.

Speaking of intense, when it comes to “Scandoval,” was it good or bad for business? What were the immediate effects of the real-time fallout?

Greg Morris: Following our opening in November 2022, the business was doing a modest 60% of the revenues we had forecasted, however, as the weeks went by we were seeing an increase in those figures by 12-15% and had counted on being at our projected numbers within six months. Immediately following “Scandoval,” though, we saw a quick rise in business, but it was short-lived. After experiencing a 30% increase in our revenue numbers within four to five weeks, we watched as our numbers declined precipitously. Week after week we watched the numbers tumble, sometimes down 50% per week. At our lowest, we dropped approximately 80% of our business.

TS: I learned from firsthand experience that not all publicity is good publicity. I don’t know where to begin. People really rallied against us. We discussed rebranding or temporarily shutting down.

1715716637 DSF4483Tom Schwartz and Tom Sandoval inside of Schwartz & Sandy’s (Jon Premosch)

You were really ready to pull the plug?

TS: I know the risks inherent in this business. But it’s unfortunate. We had great reviews on Yelp and Google before, I think we had 4.6 stars. And in the wake of that, I think we were down in the dumps to around 2.5 stars. It’s really detrimental to businesses — cancel culture and keyboard critics. It was such a bizarro world experience to be in. People were irate; they were fired up. Things got dark and weird.

GM: After a month or so, it turned dark. People were blowing up our emails and phone lines 24/7, sometimes creating a hostile environment for our staff with overzealous fans. There was at least one night where we had to close because people were calling with death threats. It’s hard enough to be successful in the restaurant industry, but when you have the real world chanting your death, it makes it a little bit tough to come in here and put a smile on your face.

That must have been a jarring experience for your staff. How did you handle making sure your employees felt safe?

GM: It was really difficult. Customers would come in looking for gossip and when the employee didn’t have an answer, they would say things like, ‘Well, your tip’s going to reflect on that.” And it really did create a really kind of high anxiety, tense atmosphere. Some people were here for the wrong reasons, and we didn’t realize it then. We stripped down and went to a basic staff. Many of the staff we have here today are people who were with us through that.

What did you say to yourselves to keep going amid the turmoil?

TS: This is my odyssey. Without a doubt, from a business standpoint, this has been the most harrowing experience in my life. The bar business, ironically, is one of the more sobering businesses. Maybe I had it too good before this situation. I was living large, you get a little soft. Now I’m back chiseling away at the statue within, and I’m stronger because of it. But it got rough for a while there. My confidence was shaken.

GM: There were times during the scandal on a Saturday night when there’d be five people in the bar and out of those five people, two were me and Tom. There were some very dismal, bleak nights.

How did you turn it around?

GM: [We] quickly adjusted our expectations and reduced operational costs. We withstood such a huge decrease in revenue, but [were able to] stabilize and to keep the business alive. [Now, we’re focusing] on one customer at a time and have clawed our way back from being “canceled” to watching the business grow week to week. By our estimations, we are about 70% back to the number of pre-Scandoval.

Is Tom Sandoval still involved?

TS: Tom [Sandoval] is back in the mix. He’s on tour right now, but he’s back [with the business], we have synergy now, and it’s nice to be a united front moving forward.

What’s next for the business?

TS: We’re working on new food right now, new drinks, and a new music program. We’re going to do some subtle redesigns. I have a newfound sense of optimism and excitement that I haven’t had in a long time. We’re also working on something to tie all these [VPR] places together. People call it the “Vandercrawl,” so we’re putting together a little tour for Tom Tom, Jax’s Studio City (owned by former castmate Jax Taylor), and Schwartz and Sandy’s. It’s in motion, and I think people are going to really dig it. It’s going to be special.

GM: I think more than ever, we’re all on the same page. We’re rehiring or hiring new people, and we are very optimistic about the future of the business. Experience, determination, and the ability to make crucial decisions quickly have given Schwartz & Sandy’s a second chance and one we intend to capitalize on.

This interview has been lightly edited and condensed for clarity.

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