Remember When Margaritaville Was a Mom & Pop Shop?

The Empire Started as a Funky Gift Shop

The empire started as a funky gift shop down at Lands End Village, across from the Half-Shell Raw Bar in 1984. The space was small, less than 400 square feet, decorated with burlap coffee sacks and stacks of shrimp crates positioned to present t-shirt inventory. 

It was my Mom’s shop. Pop was in federal prison in West Texas, serving a five year sentence on RICO charges for running a fleet of sailboats laden deep with Jamaican herb to midnight ports in the Keys, the Carolinas, and beyond. So Pop wasn’t involved with the launch of Margaritaville, though it was Papa’s fate that led Sunshine Smith to find herself a single mom in search of salvation, with two young boys in tow.

As a nine-year-old boy, there was nothing romantic about Key West and its various characters, save for the regular parties the adults would throw, when all rules went out the window.  We could drink as much Coca-Cola as we wanted, stay up all night watching weird betamax films, craft arsenals of homemade weapons, and generally roam the island on bikes at all hours. But when the parents weren’t partying, life for the kids in Key West was hot, slow, and boring. As a kid on the island in 1984, Mom’s gift-shop concept seemed lame. Margaritaville? No one was listening to that kind of music.  Who would want to buy one of those t-shirts? Rap was the hottest music. Let’s move to New York City where there’s some action.

Jimmy had recently returned to Key West from Aspen, escaping the snow-fueled late night celebrity enclave to seek balance and grounding by the sea, on the island muse that inspired his initial round of successful albums. The pirates of the Chart Room had dispersed. Many fled the country, some were in prison, others had died. Key West was changing. Louie’s backyard was under new ownership, and the Sands Beach Club was being developed into a large resort. The island had been discovered. Air Sunshine’s famed DC-3’s had given way to Air Florida’s new jet service. Tourism was on the march. 

Jimmy was a local again, fishing and partying, planning his next move.  He was looking for options in case the music thing didn’t work out (remember, this was 1984). Album sales were lackluster, touring was in a slump, and people were pirating his lyrics and printing them on t-shirts at nearly every venue. He decided to diversify and place some bets on Key West.

On a fall evening that year, he stopped by our house on Eisenhower Drive, and asked my mom to be his business partner.  The business plan was basic. “Let’s call it Margaritaville, print the song lyrics on t-shirts, and see what happens.”

Sunshine and the Spirit of the Great Heart

Mom’s mystical intuition and dogged perseverance allowed her to graduate both high school and college a year early, fly and jump out of airplanes before she turned twenty-one, travel Europe by motorcycle, and birth her first child in the hills of Jamaica when she was twenty-four.  Sunshine was a Key West character in the Golden Era of Key West characters. She and Jimmy had been friends for a decade, and though they ran at different speeds, they shared a common sense of creativity and adventure, and whole-hearted faith in cosmic providence.

The business began very simply.  Sunshine would manage all aspects of the business, so Jimmy could focus on his music. They applied for a 30K line of credit from First State Bank and secured a small retail space at Lands End across from the busy Half-Shell Raw Bar.

At the foot of Margaret Street, Land’s End was actually pretty cool at the time. The docks were home base for the remaining shrimping fleet, and the Half-Shell Raw Bar was a happening menagerie of hustlers, fishermen, treasure salvors, run-aways and the occasional lost tourist. Before Margaritaville, Mom worked for the Half-Shell’s owner, and renovated most of the buildings on Land’s End property. She was a natural entrepreneur.

“I remember when Sunshine and Jimmy became partners and leased that spot next to Turtle Kraals,” recalls restaurateur Bobby Mongelli. “Nobody had a clue it was going to take off the way it did.” It was magic.

Sunshine says, “Locals heard Jimmy and I were opening a store, so people started dropping in before we were ready to open, drinking beer, hanging out. Everyone wanted to have their dollar be the first dollar spent in Margaritaville.  We told them we’d staple the first dollar to the wall, and it kinda created a feeding frenzy.  When we finally opened, we sold all our t-shirts in the first month.  We didn’t know anything about inventory management.”

“Then people started calling us from different parts of the country. ‘Hey, can you send me a t-shirt in the mail?’ Sure, why not.  We’d send them a shirt, and tell them to mail us a check once they were sure it was the right size, so then we started a mail order business and newsletter called The Coconut Telegraph.”

Everyone was having fun, and business grew swiftly, surprising both Jimmy and Sunshine.  Jimmy was so impressed, he decided to upgrade the business relationship. 

“Sunshine, can you run my life?”

In addition to managing the newly launched Margaritaville Store, Sunshine agreed to help Jimmy manage his personal schedule, travel, photo shoots, and art direction for the growing brand.  Mostly, it was keeping Jimmy out of trouble when he was off-the-road and hanging out in Key West.

“We had to establish a few ground rules,” recalls Sunshine. “Number one: no local girls, imports only. Too much trouble. Also, any promises made to people after midnight are null and void.  And, we applied the two week rule to all impulse purchases and crazy new business ideas.”

Sunshine also developed a basic philosophy for managing Margaritaville, which now required more staff to keep up with growth while she managed  Jimmy’s affairs. “We believed in having fun, following the golden rule, taking care of your employees like they were family–because we really were a family – and don’t let your customers’ bad taste get in the way of making money.  Early on, we made a commitment to give five percent of our profits to our employees, and five percent to the community.”

There’s Booze in the Blender

Mom’s Margaritaville Store blossomed, and the party raged on.  The staff’s day drinking started innocently with the latest weight loss craze, Slim Fast for lunch with a sensible dinner. Gina Knight, one of the earliest employees, brought a blender to work, and started adding bananas to her Slim Fast lunch. Before long others were adding ice and rum, and the daily party kicked into gear.  “We were living the life the songs were about . . . there’s booze in the blender.  We had a lot of fun, and kinda made it up as we went along, but we knew we had an important responsibility to protect Jimmy’s image.  We were really careful when we put his name on products or published things about him. It was a big family, really.”

Margaritaville became a pillar of the Key West business community and a small, but significant, tourist destination.  When Jimmy was touring across America, he would tell everyone to come to Key West and stop by his store . . . and they did!  Key West was on the map.  Within months of Margaritaville’s grand opening, Key West treasure hunter Mel Fisher discovered the $450 million motherlode of the Nuestra Senora de Atocha, making Key West headline news, luring adventure seekers to the southernmost point. Margaritaville and Key West were becoming one-and-the-same for many tourists. Jimmy Carter, Johnny Carson, and Hulk Hogan all visited Margaritaville that first year, looking for Jimmy’s t-shirt shop. The next year Gregory Hines and Billy Crystal filmed Running Scared, with the closing scene showing the duo pulling-up to Margaritaville on the Conch Train.  The same year, Harrison Ford, shot Mosquito Coast in Belize, and invited Jimmy and Mom down to hang on set, where Sunshine coordinated Jimmy’s album shoot for Floridays at the Belize Zoo. Ford brought the yacht to Key West and the party continued at the little Margaritaville Store.

I think we need a restaurant to start feeding these people.

Within two years it became clear food and beverage were needed.  Jimmy always wanted to own a bar in Key West, to have a place to play if it all fell down.  Kevin Bouche was scalped from the Pier House and brought in as a partner to launch the new Margaritaville Cafe on Duval St. in the historic Kress Building.  Kevin had NYC cred as the former manager at JP’s in Manhattan, a late night jet set scene and regular stop for Jagger, Joel, and Buffett.

With retail, food & beverage, and mail order, the small business continued to grow with over fifty employees.  The New Year’s parties at the club were legendary, with Jimmy holding court with special guests like the Neville Brothers, Steve Winwood, Steve Cropper, Ed Bradley, and more.  At this point, I had to admit, this Margaritaville thing was pretty cool.

Mom was very busy, focused on both Jimmy and the growing enterprise.  Jimmy started flying seaplanes, and reconnecting with his home port of Mobile Bay and his initial stomping grounds, New Orleans.  Flying between Key West and New Orleans was easy, and it was time to expand Margaritaville to the French Quarter.  After New Orleans, Sunshine opened the Margaritaville Store in Charleston.  At this point, the Coconut Telegraph mail order business alone was doing $5 million a year. Sunshine’s little Margaritaville was making a lot of money, and Jimmy’s tour manager, accountant, attorney, and wife took close notice.  It was time, they decided, to lever this valuable brand into a sophisticated money machine.  They recruited a youngish, Harvard-trained private equity deal-maker from New York to lead the team as managing partner, tasked with growing the company exponentially, forever.  And he has!

Big deals in landlocked cities marked the end of the mom & pop shop, and the beginning of a new and fantastic chapter in the brand story. Sunshine remains a partner, and is now considered Keeper of the Myth.  Corporate headquarters moved to Orlando, and a new generation of Margaritians took the helm. Business is still booming, and the brand is everywhere.  Last Summer, Margaritaville finally made it to Manhattan, launching a thirty-two story resort in Times Square–you know, where all the action is.

There’s still some magic left in this tourist town.

Margaritaville is an indelible part of my childhood.  So, for me, it’s important to remember how it began: simply, in a small, funky shop next to a fish market, a few yards from the shrimp boats.  Margaritaville, Jimmy, and Sunshine caught a lightning bolt and rode a rainbow party through time and space forged by the stories, characters, and spirit of Old Key West. 


Rob Smith-Martin
Latest posts by Rob Smith-Martin (see all)
View All Articles