TW Services pools its resources for new menu ideas

Nation's Restaurant News, Oct 26, 1987 by Peter Romeo

TW Services pools its resources for new menuideas

TW Services is attempting to infuse its three food-service businesses with a multitude of new menu ideas by having the triad's respective food experts work in concert on a regular basis, said chairman Frank Salizzoni.

Pulling together the menu planners of Denny's Inc., Canteen Corp., and Quincy's franchisor Spartan Food Systems Inc. is TW's first effort to leverage resources greatly expanded through the recent $843 million acquisition of Denny's.

Strapped with debt, the conglomerate is wielding its new-found might to maximize cash flow from its three food-service powers, which collectively will generate $3.3 billion annually, Salizzoni projected.

Among other things, he said, TW will step up franchising of Denny's. In recent years most additions to the 1,191-unit coffee shop chain have been company stores.

"If we're right about El Pollo Loco, we also have great growth opportunities there,' said Salizzoni, referring to Denny's fledgling 71-unit fast-food grilled-chicken chain. "Near term, we'll start moving it out on a franchise basis.'

Increased franchise revenues will supplement "a lot of fresh cash from Canteen and Spartan that we can use to pay down debt,' Salizzoni said. "I see us having no dilution of earnings in 1988.'

Denny's Inc. wholly owns the Denny's and El Pollo Loco chains and holds a 42-percent stake in Winchell's Donuts. Salizzoni did not detail any changes for the doughnut maker.

While it garners increased franchise revenues, TW will seek to cut costs by retooling Denny's food-processing and distribution business to service Canteen, the No. 2 contract feeder, and Spartan, which operates 400 Hardee's franchises as well as the 215-store Quincy's steak house system.

"We're not sure we can do it, but we think we can,' Salizzoni commented in his 40th-floor office overlooking the East River.

Similarly, he said, TW is exploring the possibility of having Spartan's in-house construction business build units for Denny's, which currently uses outside contractors.

TW has already slashed Denny's overhead by laying off 10 percent of the company's headquarters staff in La Mirada, Calif.

"Any organization over time gets a little fat,' Salizzoni commented.

He mentioned that New York-based TW will not attempt to cut costs by relocating Denny's headquarters here. Rather, he said, newly named TW president Jerry Richardson will rack up a slew of frequent flyer awards by shuttling to and from New York, La Mirada, and Spartanburg, S.C., where Spartan is located.

Richardson was given the president's post, with responsibility for TW's 1,850 restaurants, when TW completed the purchase of Denny's from its management on Sept. 14. He also remains president of Spartan.

Donald Pierce, who retained the presidency of Denny's, reports to Richardson. He in turn answers to Salizzoni, who describes himself as "a numbers guy' who knows little about restaurant operations.

Vern Curtis, a driving force behind Denny's, has left the company "to take it easy, maybe do something different,' Salizzoni said.

Robert Kozlowski, president of Chicago-based Canteen, continues to report to Salizzoni.

Shortly after closing the Denny's deal, Salizzoni notified the food specialists of Canteen, Denny's and Spartan, that they would convene in the Midwest on Sept. 28 to brainstorm menu ideas.

"We'll be doing more of this,' Salizzoni said.

The results of the meeting were not revealed.

TW's far-flung food-service empire has seldom worked in unison, reflecting the three components' radically different markets and the geographic dispersion of their headquarters.

However, Salizzoni said a tentative step toward bringing the businesses closer together was taken last year. Spartan executives shared their biscuit-making know-how with peers at Canteen while the latter was developing its Bigger Better Biscuits breakfast line for business-and-industry feeding operations.

"We've sold literally millions of biscuits,' said R.L. Ritchie, Canteen's vice president of food operations.

Canteen's employee-feeding operations recently added a signature pizza line called Pazzelli's to blunt fierce competition at lunch from restaurants.

"We've got to start thinking like the big restaurant chains,' he commented in announcing the rollout.

Photo: Frank Salizzoni