The freshman class of '94: three outstanding newcomers to the B.E. 100s point to emerging industries and savvy deal-making - emerging African American companies - Black Enterprise 100s - Cover Story

Black Enterprise, June, 1994 by Cassandra Hayes

EVERY YEAR, OUR ANNUAL REport on black business reveals a new generation of the nation's leading black-owned companies. These neophytes have the tenacity, vision and ingenuity to hold a spot on the BLACK ENTERPRISE INDUSTRIAL/SERVICE 100 list.

Here are the stories of three freshly minted companies. The CEOs of these enterprises tell how they adroitly met the challenges associated with mergers and acquisitions, government contracts and the booming high-tech arena, making them models of business achievement.

THOMPSON HOSPITALITY INC.

When the opportunity finally came for Warren M. Thompson to fulfill a childhood dream, he grabbed it. In 1992, the president and founder of Thompson Hospitality L.P. (THLP) purchased 31 Bob's Big Boy restaurants, becoming one of the largest black-owned franchisees in the nation. The $13.1 million deal satisfied the 34-year-old Thompson's lifelong desire--to own a large restaurant chain.

As a youth in Tidewater, Va., he raised hogs for his family's businesses. But the experience that ignited his entrepreneurial fire came later. While a student at Hampden Sydeny College, he took a summer job at a hardware store. "One day, the owner of the store told me, "Don't think, just do what I say," he recalls. "I knew then I had to own my own business."

Thompson's entrepreneurial drive is paying off. Last year, Reston, Va.-based THLP had revenues of $34.3 million. Twenty Big Boy restaurants accounted for 60% of sales last year; each generates $ 1.1 million annually. Shoney's is another popular family restaurant chain, and each of the 11 Shoney's that Thompson owns rakes in $1.6 million annually.

It's roughly four years since the former Marriott Corp. executive decided to venture out on his own and form THLP, currently the fifth-largest Shoney's Inc. franchisee. Thompson, who has an M.B.A. from the University of Virginia, had served nine years with Marriott Corp., rising through the ranks to become a regional vice president of Host International, a food service subsidiary of the Bethesda, Md.-based company.

In 1990, Marriott decided to exit the family restaurant business, selling its Roy Rogers fast-food chain to Hardee's Food Systems Inc. of North Carolina. When Marriott decided to sell the Big Boy restaurants two years later, Thompson's track record convinced the hotel chain that he was capable of running the restaurants profitably.

A close friend and TLC Beatrice International alumnus, Darryl B. Thompson, 31 (no relation), helped to enlist 15 people to invest $2 million. Using his expertise in mergers and acquisitions, the former special assistant to the late TLC Chairman Reginald Lewis structured the deal with Shoney, THLP and Marriott. With Shoney's as a backer and equity partner and Marriott financing the deal, THLP was able to acquire the suffering Big Boys. Under the deal, THLP would convert 26 of the restaurants to Shoney's in two years.

THLP's acquisition windfall came on the heels of a 1989 class-action suit filed against Shoney's by its African-American employees. They accused the company of discriminatory policies in hiring and promotions, and they won. Shoney's was required to pay $105 million in back pay and damages and to meet certain goals in ending discriminatory practices.

Taylor Henry, chairman and CEO of Shoney's Inc., says that since the suit, Shoney's has worked closely with African-American organizations to improve employment policies and to increase minority franchise ownership. Henry insists, however, that the deal with Thompson just made good business sense.

Thompson agrees: "I presented a good business deal to Shoney's and they recognized it as such. It does have some social implications, some strategic advantages for Shoney's, but I think the deal was done for economic reasons." Indeed, the BE 100s company will pay 10% of its royalties to Shoney's over the next 20 years.

So far, THLP has been able to convert just 11 of the Bob's Big Boys, due to a sluggish economy and two bitter winters. Another kind of storm Thompson has had to weather is employee relations. After three years on the "for sale" market, morale ebbed for the 2,000 Big Boy employees who questioned the company's future. "I bought the company with a lot of excitement and I had to get them as excited as I was," Thompson says.

The savvy entrepreneur has been most recently elated about THLP's new catering service and its plans to open fast-food facilities. Thompson hopes such expansionary moves will bolster the company to the $45 million mark by 1995.

DYNAMIC CONCEPTS INC.

Many businesses still fancy the idea of having an automated, paperless office, though stacks of paperwork seem inevitable. But that hasn't kept high-tech, companies like Washington, D.C.-based Dynamic Concepts Inc.(DCI) from deep-sixing a few file cabinets. The 15-year-old company, founded by Pedro Alfonso, president and CEO, and Benjamin Peasant, secretary and treasurer, is one of the nation's largest independent systems integrators in optical imaging.