Shoney's 'Project 500' fuels Lee's Famous

Nation's Restaurant News, July 30, 1990 by Peter O. Keegan

Shoney's `Project 500' fuels Lee's Famous

Chain hopeful that growth mandate plan will move it into national spotlight

NASHVILLE, Tenn. -- With an updated building design, new products, increased operational efficiencies and the force of "Project 500" behind it, Lee's Famous Recipe Chicken appears poised for flight.

Lee's parent company, Shoney's Inc., hopes to catapult the regional chain onto the national scene with a growth mandate it calls Project 500. Spearheading the expansion push is program architect Len Roberts, who joined Shoney's as chairman and chief executive officer in January.

Plans call for increased expansion from the current rate of 10 to 20 units annually to a target of 125 new units a year in 1995. Lee's grossed about $155 million last year.

Roberts and former Arby's colleagues Russ Cooper and Reg Steele are confident that they can grow Shoney's into a national presence and are counting on their experience with Arby's to back them up. During the last four years, the trio played key roles in a dramatic franchisee turnaround at Arby's, increasing revenues to more than $1.5 billion.

Project 500 aims to add 500 new franchises to the Shoney's system by 1995 and is looking to grow by 500 franchises per year thereafter. In addition to Lee's, Shoney's other concepts, Shoney's, the Captain D's fish chain, Shoney's family restaurants, Pargo's dinner houses, Fifth Quarter steak house restaurants and Shoney's Inn lodging concepts are included in the 500 franchises.

"Lee's will be about one-third of that growth," reported Steele, Shoney's vice president of franchising. Lee's plans to grow gradually, 30 units in 1991, 40 in 1992, 60 in 1993, 90 in 1994 and 125 in 1995. Now there are 300 restaurants in 18 states -- of which approximately 75 percent are franchised.

Shoney's is shoring up its properties to increase efficiency, ease growth problems and attract franchisees -- who will be a big part of their expansion. With a new "Farmhouse" design, Lee's has updated its image by giving the concept a fresher look, increasing seating capacity and adding space for labor efficiencies in kitchen and counter areas. Approximately 80 percent of units have been converted to the new design, which can be built or retrofitted with several options for interior layouts and decor packages.

"An extensive amount of work went into the new kitchen layouts," Steele said. "When we diversify the menu, franchisees won't have to add more people because of layout efficiencies."

Lee's menu consists of three kinds of chicken: Famous Recipe and Crispy Plus, which are batter dipped and pressure fried in non-cholesterol oil to reduce greasiness, and a roasted variety.

"The roasted chicken is hitting 10 to 12 percent of sales," said Lee's franchising director, Joseph Wilder. "As we grow and make more people aware of it, I'm sure it will do better."

Lee's also offers barbecued chicken sandwiches, country fried steak, a liver or gizzard dinner, steak sandwiches and a steak platter. Side dishes include red beans and rice, butter-milk biscuits, country rice, Pipin' Hot Apples, chicken-fried potatoes and corn on the cob.

Hot 'n Spicy wings, Lee's newest menu addition, is slated to be rolled out systemwide in late August. The wings are pressure fried and coated with a spicy pepper sauce and come with a choice of blue cheese or a sauce with increased spicing.

Lee's is testing a grilled chicken sandwich in two markets and is also testing all-white meat chicken strips.

"We're putting together some new menu options for franchisees," Wilder said. "But we won't offer them until they have been thoroughly tested."

Takeout percentages at the 60-seat units run a little more than 50 percent, and average tickets are about $5. Per-unit sales average $600,000.

Steele said that a company commissary system helps keep prices under control. Products can easily be delivered to Shoney's concepts in core areas in the Southeast and Midwest.

Shoney's also has its own foodservice manufacturer, Mike Rose Foods Inc., which makes salad dressing, dry batter, biscuit mixes and condiments for all of the concepts. "The concepts are fully integrated," Steele said.

"Were looking at the Northwest and Northeast," said Steele, adding that Lee's is getting ready to tap into the Northwest by opening in the Washington state area.

"It's taken us a few years to position things and get things just right," Wilder said. "Now that they're in place, we're ready to go!"

PHOTO : A Lee's Famous Recipe Chicken unit in Florida.