Renewed Shoney's targets Baltimore


December 11, 1992|By Michael Dresser | Michael Dresser,Staff Writer

Shoney's Inc. is a company renewed and ready to grow.

After 3 1/2 years of living under the cloud of one of the largest race-discrimination suits ever, the Nashville-based restaurant chain cleared the air last month with a $105 million settlement. For Len Roberts, Shoney's chief executive, it's money well spent.

"There was a stigma," Mr. Roberts said. "Now the stigma's behind us."

The settlement leaves Mr. Roberts free to concentrate on his true passion -- growth. The former Arby's chief executive, who has led Shoney's for the past three years, is charting 60 percent growth over the next three years -- and Baltimore will play a big part in his plans.

Mr. Roberts calls it the "gateway" to the Northeast for Shoney's, a quiet company with an earnings record that speaks volumes. The chain, with more than 1,900 Shoney's and other restaurants across the country, sports a record of 134 straight quarters of year-to-year gains in operating earnings. Sales for 1992 are expected to pass $1 billion.

Leading the charge for Shoney's in the Baltimore-Washington region will be Warren Thompson, a 33-year-old former Marriott Corp. executive who struck a deal this year to buy 31 Big Boy Restaurants from Marriott and convert 27 of them, including four in metropolitan Baltimore, to Shoney's franchises.

The deal will make his Thompson Hospitality L.P., based in Reston, Va., one of the country's largest minority-owned employers, with an estimated 3,000 workers and $40 million in annual sales.

Last week, Mr. Roberts and Mr. Thompson came to Baltimore to talk about their plans for Shoney's and the region. They're ambitious.

The first step will be the conversion over the next 18 months of the 27 Big Boys to Shoney's restaurants -- a process that has begun. (Ten to 15 area Big Boy restaurants remain in Marriott's hands.)

In addition, the Tennessee company is midway through a plan to convert nine Big Boys into corporately owned Shoney's restaurants in Maryland, six of them in the Baltimore area. Previously, the only Shoney's restaurant in the Baltimore area was one near Security Boulevard and the Beltway.

Mr. Roberts said the expansion is only the beginning. He said that by the time his company is through, it will have about 70 Shoney's restaurants in the Washington-Baltimore region.

"You're going to see a lot of this company in this market," said Mr. Roberts, a dapper, energetic 43-year-old with a loud laugh.

Mr. Thompson and Mr. Roberts said they expect Thompson Hospitality franchises to be Shoney's chief growth vehicle in the region. "That growth could take the form of more Shoney's or other concepts under the Shoney's umbrella," Mr. Thompson said.

Among the other Shoney's restaurant chains are Captain D's Seafood, with more than 650 restaurants, and Lee's Famous Recipe Chicken, with about 300 outlets. Neither has a foothold in the Baltimore market yet. In addition, Shoney's intends to expand its specialty division, which includes Pargo's, a casual dining concept similar to Bennigan's, and Fifth Quarter, an upscale steakhouse.

It's a heady growth plan for a company that started in 1971 in a merger of two Big Boys franchisees. Shoney's Big Boy Enterprises became Shoney's Inc. in 1976 and later jettisoned its Big Boy affiliation and began to make Shoney's restaurants a familiar sight to travelers in the Southeast.

There's nothing fancy about the Shoney's concept, which it describes as "great American Food." Entrees are staples such as pot roast and fried chicken.

Mr. Roberts said one of the keys to Shoney's success was its balanced business throughout the day -- with breakfast, lunch and dinner each holding about a one-third share. The company depends on repeat business and word-of-mouth recommendations, he said, with only 3.5 percent of the budget for marketing.

Shoney's method has won support from industry analysts. "They've always been very innovative and resourceful," said Neil Kaplan of Scott & Stringfellow in Richmond.

Steve Rockwell of Alex. Brown & Sons, who upgraded his "buy" recommendation to a "strong buy" Nov. 5 after the proposed race discrimination settlement was announced, said the settlement was structured in a way that is unlikely to have any serious effect on Shoney's growth or future earnings.

The market also has reacted enthusiastically. The company's stock, which traded as low as $16 in early October, jumped after the deal was announced and has recently been trading in the $24-$26 range.

Under the settlement, Shoney's did not admit any discrimination, but Mr. Roberts said the company has learned from the experience.

"If the lawsuit helped us examine our problems, it was very helpful to our future growth," he said, noting that the company has implemented aggressive programs for recruitment and advancement of minority employees.

Mr. Thompson said Shoney's was now a company he feels comfortable joining forces with.

"I don't think this business was done because I'm black or because Shoney's had problems in the past," he said. "Black people don't want to be looked at any more as black people. We want to be looked at as people with economic value."

And Mr. Roberts said Shoney's recognizes that. Looking ahead, he said the company will "tap into a whole different labor force."

"If we relied upon the white male core for our growth, we would not be able to do it," he said.

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