Top execs decry DC's legislative assault

Nation's Restaurant News, Oct 11, 1993 by Bill Carlino

LOS ANGELES -- With the looming presence of perhaps the most lethal competitor to their bottom line -- government legislation -- seven of the nation's top foodservice executives echoed the anti-Washington sentiment currently reverberating throughout the industry.

Issues like mandated health care and Congress' 30-percent reduction in meal deductibility were cited as critical industry concerns during the annual Presidents' Panel at the 1993 MUFSO conference here.

"If mandated health care is passed, what you'll see is more part-time employees," predicted C. Stephen Lynn, chairman of Sonic Corp., a 1,200-unit drive-in burger operation. "We as an industry certainly aren't doing all we can. We need to form more coalitions and begin grass-roots lobbying efforts."

During the executive forum, the approximately 1,200 MUFSO attendees were afforded an opportunity to quiz the industry's elite with questions on such subjects as legislation, franchisee relations, hiring and retaining employees, and concept development.

"We studied our healthcare policy a year ago," said Chris Sullivan, chairman of the Tampa, Fla.-based Outback Steakhouse chain. "We changed our deductibles to $1,000, and our costs dropped to about $600 per employee.

Abe Gustin Jr., chairman and president of the 315-unit Applebee's International, explained that when his company proposed underwriting 60 percent of each employee's insurance and health-care premiums, just 40 percent to 45 percent opted to have the money deducted from their paychecks.

It's [government] obviously a big concern for us," said Ron Magruder, president of The Olive Garden, General Mills' 420-unit casual Italian dinner house. "Employers will take a big hit on mandated health care, and many entry-level jobs will be taken away."

With racial and sexual discrimination lawsuits snowballing throughout the country, the panel was asked what strategies each takes toward promoting women and minorities.

"Over half our managers are women," responded Lawrence Levy, chairman and chief executive of the Chicago-based Levy Organization -- a consortium of specialty concession operations and themed independent restaurants. "We've also begun minority programs like 'Keys to the Future,' where our managers are asked to find great service employees and become their mentors during a one-year intensified training program."

A heartfelt welcome back

Presidents' Panel co-moderator Norman Brinker, chairman of Brinker International in Dallas, said his company has hired a black executive to help the casual-themed dinner-house operator focus on minority and cultural diversity issues.

Currently, about 27 percent of Brinker International unit managers are women, and the company has two women on its board of directors.

Brinker, who brazenly defied his medical critics to battle back from a near-fatal polo accident and subsequent coma, provided perhaps the most memorable vignette of the four-day conference.

The crowd attending the Presidents' Panel greeted Brinker with a heartfelt standing ovation as he slowly made his way to the dais to lead the round table for the 10th consecutive year.

Faced with the ancient problem of labor and adequate staffing, the panel was asked what steps they follow to hire and develop employees.

"As a rule, we don't go outside to hire; we promote from within," said Larry Flax, co-founder of California Pizza Kitchen, a 35-unit chain specializing in wood-fired designer pizza. "We treat the back- and the front-of-the-house as equal partners. Our employee credo at CPK is ROCK -- respect, opportunity, communication and kindness."

"You do need the best people at every level," Magruder of The Olive Garden agreed. "But if everyone is on a learning curve at the same time, it can be a time bomb."

In regard to maintaining good relationships with franchisees, Sonic's Lynn, who also serves as president of the International Franchise Association, said one must think of them as "partners," not simply licensees.

"Profitable franchisees are, as a rule, a whole lot happier," he said. "My job is to help my franchisees any way I can."

Meanwhile, Sullivan said at Outback each franchisee sends a kitchen manager to attend the company's corporate meetings as a way of keeping the lines of communication open.

Those on the dais were asked if they felt the casual-themed segment was becoming saturated as themed and ethnic concepts proliferate.

"I feel that this is just the beginning," Flax said. "The casual segment is one that is being recognized as an area with a lot of opportunities."

"The growth in casual-theme restaurants comes from a disenchantment with white-tablecloth and a trade-up from quick service," said Rick Rosenfield, Flax's partner and co-founder in the CPK concept. "Now you have families with both parents working, who want a casual, full-service experience with a good price-value relationship."

'People want choices'

"People want more choices today," Magruder said. "Twenty years ago a family chose between one or two restaurants. Now there's more out there."