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Trouble at Tony Packo’s

Thanks to the enduring popularity of TV sitcom M*A*S*H, Toledo, OH, restaurant Tony Packo's has worldwide name recognition to go along with a 73-year track record of solid operations. That’s not enough for its lender, Fifth Third Bank, which is foreclosing on the place. If you think a bottomless well of free publicity means smooth sailing for a restaurant, think again.

Tony Packo’s was a Toledo landmark even before screenwriters began to plug in references to it on M*A*S*H, beginning in 1976. That’s when an episode aired in which Toledo native Jamie Farr, playing the role of cross-dressing medical corpsman Corp. Max Klinger was interviewed by a reporter about his hometown. His lines: “If you’re ever in Toledo, OH, on the Hungarian side of town, Tony Packo’s has the greatest Hungarian hot dogs. Thirty-five cents….”

References were made to Tony Packo’s five other times over the course of the series, including a mention in the M*A*S*H finale. With 105 million viewers, that episode held the record as the most-watched TV event of all time, until being edged out by the New Orleans Saints-Indianapolis Colts Super Bowl earlier this year. Trivia buffs still like to cite the episode when the surgical team sought to use sausage casings sent by Packo’s in a blood-filtering machine.

All the attention made Tony Packo’s a dining destination for M*A*S*H fans around the country and the world. The place already had a steady business; the tourists were a bonus. The restaurant slowly added other Toledo locations, now numbering five, even opening a unit in retirement mecca The Villages in Florida. The restaurant offers a six-page menu with plenty of modestly priced Hungarian specialties, including the famous hot dogs. M*A*S*H reruns, still appearing nightly all around the globe, keep name recognition high.

It’s a setup most restaurant operators would be happy to have. But an interfamily dispute has caused lender Fifth Third Bank to lose faith in the value of its loan’s collateral. Earlier this month, the bank, saying it was owed $2.7 million, filed for foreclosure, asking also that a court-appointed receiver oversee the restaurant’s business affairs.

What happened? The foreclosure is the result of an internal family squabble between Tony Packo, Jr., the company’s president, and Robin Horvath, the company’s c.o.o. and treasurer. Horvath is Tony Packo, Jr.’s nephew and the grandson of founder Tony Packo. A court filing in the Lucas County Court of County Pleas sums up the situation this way: “The parties…are not capable of operating a business together.” The key issue is a series of “questionable disbursements” amounting to more than $100,000.

A court-appointed receiver, Steve Skutch, is now in charge of the business, meaning that the Tony Packo family no longer calls the shots at Tony Packo’s. The company’s 200-plus employees now take direction from Skutch. A sale or liquidation could take place to satisfy the bank loans.

If it does, this is a restaurant business that’s worth a look by any experienced operator. It’s always unfortunate when the second and third generations of a family-owned business can’t agree on how to run it. But whoever winds up in control of Tony Packo’s will have the kind of local restaurant chain the likes of which it would be almost impossible to duplicate.