In July 2009, Scott Santy, a 31-year-old former financial adviser, opened a franchised Flip Flop Shops inside Mandalay Bay Hotel & Casino in Las Vegas. Just over one year later, in August 2010, his store passed the $1 million mark in sales.
At first, Scott wanted to open a Flip Flop Shops outpost in his hometown of Wisconsin, but a brief holiday in Las Vegas changed his mind. “I was walking up and down the Strip and almost every person was wearing flip flops,” recalls Scott to CNN Money (To read the full story on CNN Money, click here).
Later, Scott called up Darin Kraetsch, CEO of Flip Flop Shops, and asked what he thought about opening a store in Las Vegas instead. As luck would have it, Kraetsch had just met with MGM Resorts International regarding real estate opportunities, and it turns out that the mega-casino operator wanted a Flip Flop Shops in one of their properties.
But despite Scott’s immediate success, it hasn’t been smooth sailing all the way. The major challenges that Scott faced were: high real estate prices, raising capital at the height of the recession (“I was very fortunate to have my parents loan me money. Otherwise, I would not have been able to do it.”), and convincing customers to buy his costlier flip flops (starting at $20, all the way up to $159 a pair) rather than the cheaper options available at nearby drugstores.
Mandalay Bay, known for having the largest and most impressive pool area on the strip, is by far my favorite hotel in Las Vegas. I can’t imagine a better location for a Flip Flops Shops than this massive hotel resort. Not only is the weather in Las Vegas conducive to wearing flip flops most months of the year, the special attributes of the hotel itself make this location a winner. We can’t really extrapolate the success of this unit to other branches in the system because this is a unique situation.
On the flip side, I imagine that the rent at Mandalay Bay would be sky high (a portion of the rent might even be based on sales) and it would take an equally impressive annual revenue figure to turn a profit. But if given the choice, I’d definitely favor a busy location with high rent (within reason) over a dead location that can be had for cheap. I’m with Scott.