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Curry House Japanese Curry and Spaghetti has shuttered, closing all 9 units in Southern California
Employees learned of closure when arriving for work Monday
May 1, 2006
Patricia Hochwarth
STRONG THEMES: The six-unit Napa Valley Grille (below) captures the spirit of that popular region, while charming Cafe del Rey (above) makes the most of its waterfront setting. |
THE SEEKERS: Lockwood (left) and Goff have their eyes open for possible acquisitions. |
SIGNATURES: Chefs have a lot of latitude on Tavistock menus, which tend to be seasonal. |
BETTER BREW: A seasonal menu and hand-crafted beers are the hallmarks of Alcatraz Brewing Co. |
HOW WAS IT? Guests are asked pointedly, "Would you order that again?" |
"You know your business is going down the tubes when you're managing cash flow twice a day and all of a sudden your job becomes negotiating for baloney. There's no clarity to anything you're trying to do, you're in survival mode, you're pinching a buffalo off a nickel...."
This scary scenario (can you relate?) was the precarious position Constellation Concepts found itself in three years ago, recalls Bryan Lockwood, the straight-talking president of Tavistock Restaurants. In 2003, his company rescued and revived the foundering group of 17 California-based restaurants. At the time, it was operating under Chapter 11 federal bankruptcy protection.
Lockwood doesn't blame anyone for the company's troubles. Sometime it's simply a matter of undercapitalization and a run of bad luck. Such was the case with Constellation Concepts, he believes.
"There was significant venture capital in the former company, a lot of debt for its size," Lockwood explains. "I think they'd taken their eye off the ball on some growth opportunities, felt pressure from investors and made some poor decisions." Other factors contributing to its decline included the effects of the dot-com bust and the fallout of the Sept. 11 terrorist attacks.
"All those things piled up and it just became so tough to recover," Lockwood says.
So what does it take to turn around a foundering restaurant company, beset by low morale, a mutinous staff and neglected product? A cash infusion certainly helps, and Tavistock fortunately has deep pockets. But Lockwood contends it takes much more than that, including a clear mission statement, a commitment to renewal and a passion for service.
Lockwood and Tavistock CEO Barry Goff saw in the group of restaurants a diamond in the rough, and moved quickly to complete due diligence and acquire the company for $7.2 million. Tavistock is a privately held investment company backed by Lewis Family Trusts, which is controlled by Joe Lewis, an English businessman. The firm also holds interests in such diverse areas as golf courses, football clubs, financial services and biotechnology.
"One of the reasons we liked this deal is that we thought we could come in and take what we felt were some very solid brands and bring in a totally clean capital structure," says Goff. "We don't have any debt, we don't borrow any money. We do an all-equity acquisition with incremental capital that we put in as working capital. Then we bring in some new philosophies, a breath of fresh air and a new focus on building those brands—taking them back to basics. Also, it's about coming in with a fresh perspective on every aspect of the business— in talent, operations, marketing, etc. We all know that in this business you've got to constantly reinvent, dramatically in some cases, like renaming or a total remodel. Or, in other cases, it's less dramatic, behind the scenes, operational issues."
The challenge, Goff says, is coming in as an outsider and instilling confidence and commitment in the existing organization. "You have to work fast," he points out. "People think you're going to go in on the first day with all the answers, but that's rarely the case. You must have confidence that you've got the team to develop the right answers. Sometimes you have to go in and closely observe and that's just what we did. We spent the first 45-60 days on what we called a 'world tour' visiting every single restaurant, talking with people and observing.
"It was wild—and fascinating. We had to figure out what we'd bought."
RALLYING THE TROOPS
What Tavistock had bought was a company with solid assets, but troubling issues. "There was a lot of negativity there: morale issues, talent challenges and branding issues," says Goff.
"We had to give (the staff) a reason to be excited, to reassure them they now had a well-capitalized company with no baggage and no sacred cows and if something needs to be killed, let's do it."
These two men certainly have the credentials to get the job done. CEO Goff brings to the table extensive experience in restaurant acquisitions, finance, operations and real estate. Prior to the formation of Tavistock Restaurants, Goff served as president of CNL Restaurant properties, one of the largest restaurant investment companies in the U.S. He was responsible for more than $1.6 billion of restaurant investments, including $100-plus million of venture capital investments in operating restaurant assets. During his five-year career at CNL, Goff took part in the acquisition, financing and/or operation of more than 40 concepts, including T.G.I. Friday's, Bennigan's, Applebee's, IHOP, Arby's, Steak & Ale and Denny's.
Lockwood, with three decades of restaurant operations expertise, has served as a principal, investor, franchisor, franchisee, consultant and executive with various restaurant companies. His experience spans a wide variety of restaurant concepts, including J. Gilbert's Wood Fired Grille, Houlihan's, Fuddruckers, Wendy's, Plata Grande Mexican Restaurants and Margarita Maggie's nightclubs.
Together, Goff and Lockwood make a formidable pair. But what strikes one most about them is their passion to make things work and a knack for instilling loyalty and commitment in their teams.
When finalizing the Constellation Concepts deal, what most impressed them were two of the company's more promising concepts, California Café and Napa Valley Grille. Both are well-defined brands with a loyal clientele, distinct menus and established systems. California Café has six units, has expanded beyond California and features chef-driven, California-style seasonal menus divided into small plates and main plates, all served in a contemporary interior with warm earth-tone colors, natural fabrics and woods and original artwork.
Napa Valley Grille, with six units, aims to capture the casual elegance and old-world charm of the Napa Valley region, and of course, celebrate wine. The wine country, local ingredients and artisan products inspire its chef-driven offerings in a rustic yet refined setting.
Alcatraz Brewing Company, with a San Francisco focus and hand-crafted beers brewed on site, is located in Orange, CA and Indianapolis.
Rounding out the company lineup, all single units, are Blackhawk Grille, in Danville, CA; Café del Rey, Marina del Rey, CA; Horizons in Sausalito, CA; and Ondine, a private function space on the waterfront in Sausalito.
FACING FACTS
In addition to the world tour of its restaurants, Goff and Lockwood flew all 17 GMs and the multiunit managers into its Emeryville, CA headquarters for a three-day conference. They used the time to dissect the "brutal reality of the situation," says Goff. "We spent hours talking about the challenges, the negatives that crop into the culture, and how we could change that. We discussed the common characteristics and attributes and beliefs of what we and they considered world-class companies and how we'd become a world-class company. We had to figure out what our culture was going to look like and how we're going to operate and interact with each other."
One mistake they made from the get-go was not including chefs in the three-day conference. "Our economic model reflects that the GMs and chefs are 50/50 partners and we missed the mark on that one," says Lockwood.
Because Tavistock restaurants are chef-driven, chefs are encouraged to work with seasonal ingredients and frequently change menus. "The challenge in that regard is how to define a brand like California Café because it's going to mean different things to different people in different areas," Lockwood says. "It's going to be a different experience for people at King of Prussia, PA than in Los Gatos. There has to be some consistency."
Guest feedback is important to the company. One of Tavistock's first directives upon acquiring the restaurants was to narrow the menu at California Café by about 25-30 percent for clarity and to better convey the essence of the brand. Guests are asked whether they would order a dish again. "If they don't say 'yes,' we start digging." Lockwood says.
In addition to the philosophical issues, there were hard operational issues to address, including outdated or inefficient systems, inconsistent standards across brands and dated physical plants. All these issues are being addressed unit by unit.
Goff and Lockwood frequently toss around the term "guest obsessed," which has become a mantra for the company. "Being guest-obsessed means everything we do centers around what we want the guest experience to be," Goff says. "It's not about what the food costs should be, necessarily. For example, the Napa Valley Grille experience has got to be all about the Napa Valley experience for each guest. We need to be obsessed with that and every single detail. That plastic thing on the table—is it Napa Valley? No? So buy the real thing. We try hard to deliver an emotional connection."
To back up its commitment to being a learning organization, the company developed the Tavistock Restaurants Learning Center. Based out of its flagship Napa Valley Grille in Yountville, CA, the TLC is an ongoing educational program for the company, combining culinary, oenological and cultural training for all new Tavistock Restaurant GMs and executive chefs. Katie Doherty, director of training for the program, works with local purveyors and winery partners to develop and implement the core curriculum.
"Because Northern California, specifically wine country, is such an integral part of each of our brands, we felt it necessary for key staff members to experience Napa Valley firsthand," says Lockwood.
Dubbed "Napa Valley Boot Camp," the TLC is a program of up to 10 days that is part study, part experiential.
A sure-fire employee morale booster and motivator is an attractive compensation package, and Tavistock puts its money where its mouth is in that regard. "We initially put in a very performance-based compensation program," explains Goff, "but rather than give equity, what we did is come up with a program our GMs and chefs like. If they meet certain hurdles, they are handsomely compensated based on a combination of top and bottom lines. We've aligned them in their restaurants with what we want to happen not only in their locations but company-wide as well. A common mistake is not to (treat) your people in a way that their incentives are identical to your incentives. We've had people who've cashed the biggest checks of their lives since they started working with us, too."
Standout restaurants in terms of performance have been the Westwood/LA Napa Valley Grille, Café del Rey in Marina del Rey and the Los Gatos, CA California Café.
In the space of two years, the company has turned around and boasts some impressive achievements:
After three years of consolidated negative same store sales trends, the Tavistock turnaround has resulted in 11 consecutive period of positive year over year sales.
30 percent of the units are up double digits in sales year over year.
A well-defined beverage program of core signature cocktails, a progressive wine list format and revamped wine buying and selling strategies have reduced wine inventory by 18 percent in the last year.
"We're very happy and excited about our progress," says Goff. "But there's still room for improvement and we're looking to grow in both additional units and some acquisition growth as well. At the same time, we don't want to make the mistake a lot of restaurateurs do, and that's to grow and add units before we're ready."
Goff now spends most of his time searching for new opportunities; Lockwood focuses on operations.
"We're setting the bar higher for everyone here," says Lockwood. "We're not looking for incremental results. We're looking for exponential results."
True to its promise to aggressively seek new acquisition opportunities, Tavistock Restaurants in January finalized the acquisition of three Sal & Carvão Brazilian Churrascaria restaurants, located in Chicago. Tavistock Restaurants II (which will own and develop the Sal & Carvão brand) intends to maintain the integrity of the Sal & Carvão brand by keeping the style of service and menus now in place at each location. The Sal & Carvão concept is pretty basic. A fixed price menu allows guests to choose from a large selection of meats, which are seasoned to perfection and slow-roasted over an open flame to capture their individual flavors. The savory cuts are then presented on swords and carved tableside by gaucho chefs. The concept also has an extensive salad bar, which varies daily, and is offered with the meal. "This is an exciting opportunity for us, as we believe that this is a very strong brand, as evidenced by average unit sales in excess of $5 million," says Tavistock CEO Barry Goff. "Our goal now is to become the market segment leader in developing churrascaria-style restaurants around the world." Immediate plans call for developing one to two new units over the next year. |
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