Things are Getting Ugly

Some company owners are really good at dancing on bars and sassing men. Others know how to expand and license their brand. It wasn't easy, but Lil Lovell, founder of the Coyote Ugly saloons, managed to master both.

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Liliana Lovell's Cabo San Lucas bar started out badly. Then it got worse. Back in 1993, Lovell, known as Lil, had founded the Coyote Ugly Saloon, a rowdy, honky-tonk dive in New York City's East Village. Seven years later her life as a barkeep changed drastically when Coyote Ugly, a movie set in a Hollywood version of her bar, was released. Seizing on the free publicity, Lovell ginned up plans to turn Coyote Ugly into an international chain.

She wasn't the only one with the idea, however. Shortly after the movie's release, Jorge Manterola, the brother of the well-known Mexican singer Patricia Manterola, set up a website claiming to be the "master franchise" for Coyote Ugly in Latin America.

"Just like you have seen in the movie," the website claimed, "there will be very preety [sic] and sensual women from all over the world serving drinks, dancing on the bar, and doing the most funniest and unimaginable things."

Lovell was not amused. The hard-drinking cowgirl brand that she'd spent years building was being hijacked. "People are taking my hard work, and it's frustrating," says Lovell, a petite woman who delivers tough talk in a smoky voice. "I put my time in and I paid my dues, and for people to steal things is weak of character." Her lawyers swung into action and by August 2001 she'd made a deal: She'd help Manterola open a huge Coyote Ugly in Cabo as long as he paid license royalties to her.

But Lovell's Baja problems didn't end. She could revoke the license if she wasn't paid, but she had little control over how the bar was run. It was bad enough for Lovell that Manterola wasn't paying all of the rent and taxes on a bar closely associated with her name. What was worse was what she heard from his employees. Manterola hired women from America to bartend with promises of housing and cabs to work, but they were e-mailing Lovell, who they'd met in Cabo, with claims that Manterola was neither paying them nor living up to his other promises (Manterola denies their claims). And Lovell could do nothing about it.

"I'm not willing to sit back and let someone else control my company."

Lovell's Cabo experience illustrates a dilemma faced by any small-business woman who wants to turn her first venture into something big. How do you expand and make money while still controlling your brand? In a short-term view, the answer seems simple: License willy-nilly, drive hard, and just go--which is exactly what Lovell did. This past September the ninth Coyote Ugly opened in Boston for Ugly Inc., Lovell's licensing company, which brought in $1.5 million in 2002 and is expected to make almost triple that this year. Together, the bars pull in between $22 million and $24 million annually and employ about 300 people. But after her experience in Cabo and after watching other licenses stray from the brand she defined, Lovell came to another conclusion: no more. Except for the 14 licenses she's already sold, she will protect her brand by keeping a controlling stake in all new Coyote Ugly Saloons. "If I license to too many people, it's going to lose its foundation. So I'm just going to stop," Lovell says. "I'm not willing to just sit back and let someone else control my company."

To understand Coyote Ugly, you have to understand a basic equation: Lil Lovell=Coyote Ugly. It was late 1992 and Lovell, then 24, had spent nearly three years managing the Village Idiot, a notorious New York City gin mill where owner Tom McNeil raced customers through pints of Guinness, chewed Pabst cans, and peed behind the jukebox. There, Lovell developed the style that became Coyote. "I'd get a few drinks in me and I'd jump on the bar and get the girls on it too," says the Westchester County, N.Y.-raised Lovell. When the Idiot starting receiving overdue tax notes, Lovell and one of her regulars, Tony Piccirillo, each gave Lovell's then-boyfriend $10,000 to buy up the stock of a foundering baseball card shop that would then be sold for a profit. Instead, the boyfriend leased a shuttered restaurant for $4,200 a month. Lovell and Piccirillo (now her husband) soon kicked him out and on January 27, 1993, Coyote Ugly was born.

Lovell's genius was to wrap the barfly fantasy in a tough-girl blanket. Her theory: Men would stay late and spend lavishly if the bartenders were smart enough to sass them and sexy enough to dance on the bar. "The whole concept is girls keeping patrons in the bar drinking," says Jacqui Squatriglia, the chain's choreographer and New York bar manager. "It's not about the prettiest girl. It's somebody with spark." It wasn't an entirely unique proposition--similar bars, like Hogs & Heifers Saloon in New York City's meatpacking district, were popping up--but it worked. Lovell and Squatriglia built a Thelma & Louise version of their lives. "Lil was pouring liquor down her body and off her toe. I was saying, 'I'll arm-wrestle you for a beer,'" Squatriglia recalls.

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