Levy Restaurants L.P. Business Information, Profile, and History

History of Levy Restaurants L.P.

A fast-growing foodservice operator based in Chicago, Levy Restaurants L.P. operates nearly two dozen restaurants in the United States and provides specialty concessions to an equal number of sports complexes, amusement parks, and convention centers. Levy Restaurants began as a traditional restaurant operator, developing popular dining concepts that tapped into just-emerging dining trends. During the 1980s, the company also began providing specialty catering services, a business that eventually developed into its mainstay operating segment. This concession business, operated through Levy Restaurants' Sports and Entertainment Group, supplies gourmet food to corporate skyboxes, luxury suites, and private clubs at baseball, football, and basketball venues throughout the United States. In addition, the concession division supplies food to amusement centers, convention halls, zoos, and parks. Levy Restaurants' smallest business segment--its Consulting and Advisory Services Group&mdash′ovides consulting services to other restaurant operators seeking to develop new dining concepts. Lawrence F. Levy owned the company.

Origins

The Levy brothers began their involvement in the restaurant business in Chicago, where they built the core of their food service business around a faltering delicatessen during the late 1970s. In the months prior to going into business together, Larry and Mark Levy had established careers independent of one another. Although both had relocated from St. Louis to Chicago, they had made the journey separately and upon arrival had begun working for different companies. Mark joined the insurance business and Larry delved into real estate, each accumulating enough financial wherewithal to jointly open a delicatessen named D.B. Kaplan's with a third partner in 1976. Initially, the business was intended to be a sideline venture for each brother. Said Larry: "I had always loved deli food and thought there was no good deli food in Chicago. I found a backer to do it, and I thought I would continue at my other company." In a matter of months, however, closer, hands-on involvement was required. The operation of the delicatessen and its 285-item menu quickly proved too much an undertaking for the Levys' third partner, prompting Larry and Mark to fire him. Mark quit his insurance job and, along with his wife, took on the responsibility of D.B. Kaplan's daily operation. Immediately afterwards, according to the brothers, the delicatessen showed strong signs of improvement, transforming from a money-loser to a profitable enterprise under the direct stewardship of Mark Levy. Two years later, in 1978, Larry quit his job as well and joined his brother in the restaurant business, embarking on a career that allowed his natural talents to flower.

At an early age, Larry Levy showed himself to be an entrepreneur at heart. Before he was ten years old, Levy sold magazine subscriptions and handmade pot holders door to door. During his high school years, he developed a discount card that his fellow students could use when buying merchandise from selected merchants. While attending the Kellogg School of Management at Northwestern University during the late 1960s, Levy shuttled through the dormitories selling sandwiches and charter airline tickets to Europe, making extra money while he earned his M.B.A. degree. "I've always been an entrepreneur," Levy explained years after D.B. Kaplan's success spawned a small empire of restaurant properties. "When I found the restaurant business," he said, "my entrepreneurial skills met passion. It's something I truly love doing."

After Levy left his real estate job in 1978, he and his brother formed Levy Restaurants and the Levy Organization, a commercial real estate company. With the establishment of these two companies, the corporate vehicles for expansion were in place, but the success of the delicatessen did not give birth to a chain of D.B. Kaplan clones. Instead, the two brothers developed new restaurant concepts, pursuing a strategy that would lead to a heterogeneous patchwork of restaurants all owned by Levy Restaurants. During the first years of Levy Restaurants, the Levys developed several major restaurants in Water Tower Place, one of Chicago's premier high-rise shopping malls. One of the restaurants located in Water Tower Place was Chestnut Street Grill, a grilled seafood restaurant that quickly became highly popular. It was one of the first Chicago restaurants to feature grilled seafood, offering the public a welcomed alternative to deep-fried or sautéed fish. A number of other restaurants were opened, each one buttressed by a distinctive concept that, in several cases, represented a harbinger of national restaurant trends. Grilled seafood became the rage during the 1980s, and the Levys were one of the first restaurateurs to capitalize, if not engender, the trend, as they were with the craze for upscale, Italian restaurants with wood-burning ovens. In the early 1980s, the Levy Organization built an office and residential tower in Chicago and inside established Spiaggia, an upscale Italian eatery featuring a wood-burning oven, built by the restaurant division in 1984. By paying close attention to detail, emphasizing service, and carefully crafting attractive concepts, the Levys recorded eye-catching success, emerging as well-known, well-respected restaurateurs on a national scale by the mid-1980s.

Concession Business in the 1980s

Within a decade, the Levys had established a thriving, diverse family of restaurants, but neither brother was satisfied with his solid success in a notoriously capricious area of business. Together, they began moving into a different niche of the foodservice industry as they added to their collection of restaurants. The Levys became involved in specialty catering, providing foodservice at Chicago's Ravinia Festival, an outdoor music amphitheater, and in the corporate suites at Comiskey Park, the home of Major League Baseball's Chicago White Sox. Begun as a sidelight venture, the foray into concession foodservice expanded as the original restaurant division grew. Walt Disney Company selected the Levys to create, own, and operate two restaurants at its Pleasure Island complex in Orlando, leading to the opening of the Fireworks Factory and the Portobello Yacht Club in 1985. The diversification proved to be intrinsic to Levy Restaurants' later success, evolving into an indispensable component of the Levy empire.

The importance of the company's concession business emerged during the late 1980s. At the time, Mark and Larry Levy found themselves waging against fierce competition as the number of heavily conceptualized restaurants throughout the country proliferated. Several of the Levys' restaurants were closed, abandoned in some cases because the concept created had failed to draw diners and in other instances the restaurants folded because of encroaching competitors. The late 1980s stumble did not represent a crisis, but it did serve as a turning point for the company's future direction. The Levys rethought their strategy in the foodservice business and opted to pursue a different course. Explained Larry Levy: "We said we could compete with everybody else in the world as concept creators, or we could look at how successful we had been with White Sox and Ravinia and saw that it could be a much bigger business." Although the Levys would continue to establish new restaurants, in the years ahead the emphasis would be on developing the concession side of their foodservice activities. Gradually, the concession division grew to equal, and then exceed, the size of the restaurant division in terms of annual sales.

1990s Growth

As the brothers moved forward with their plan, they focused on private dining and catering in sports arenas, amusement parks, zoos, and convention centers, marketing themselves as restaurateurs able to provide restaurant-quality food in locales previously dominated by traditional concessionaires. The strategy worked, generating ample new business. In 1991, Levy Restaurants began operating foodservice facilities in Chicago's McCormick Place convention center, the largest convention center in the United States, and added a wealth of other clients, such as Lincoln Park Zoo, Wrigley Field, Arlington International Racecourse, and the Centel Western Open, one of the Midwest's premier golf tournaments. By 1992, much had been achieved in a short time to bring about the type of company envisioned by the Levys in the late 1980s. Annual revenues for Levy Restaurants hovered around $100 million, with 45 percent of the total collected by the company's family of concept restaurants and 55 percent coming from its fast-growing concession business.

The mid-1990s were marked by progress for both facets of the company's business, but particularly its specialty concession business. When Cleveland's Jacobs Field opened in the spring of 1994, Levy Restaurants served as the specialty foodservice provider, operating all the food and beverage service for the stadium's 375-seat Terrace Club private dining room and 450-seat bar, its 124 private suites, and the ball park's Club Lounge, with 2,100 adjacent outdoor Club Seats for season ticket holders. Later in the year, Levy Restaurants began catering at Arrowhead Stadium, home of the National Football League's Kansas City Chiefs, and the following year the company began catering for suites and preferred seating at the new Oregon Arena, home of the National Basketball Association's Portland Trailblazers. The restaurant division was active as well, with its most notable achievement being the establishment in Los Angeles in 1994 of DIVE!, a restaurant concept created in partnership with director Steven Spielberg and Jeffrey Katzenberg, a former Disney executive. Managed by Levy Restaurants, DIVE!, on the outside, looked like a neon-lighted submarine crashing through 30-foot walls of water, with 35-foot lighthouses flanking each side. Inside, where diners selected from a menu of gourmet submarine sandwiches, the concept was carried to the fullest extent, complete with portholes, cinematic aquatic scenes outside the portholes, and a computer system that simulated a submarine dive every 45 minutes. The Los Angeles DIVE! generated $10 million in sales during its first year of operation and led to the opening of a second DIVE! in Las Vegas in June 1995.

By 1995, Levy Restaurants was a sprawling operation, with 23 conventional restaurants and 17 specialty concessions. Annual sales swelled to $150 million. Amid the flurry of activity that took place during the mid-1990s, Levy Restaurants was reorganized, as management came to grips with the growth of new business segments. The company was restructured, whittled down from five divisions to three divisions. For a number of years the company had been providing consulting services on an informal basis to other restaurant operators, assisting them in developing concepts, but by the mid-1980s these services had developed into a genuine business for Levy Restaurants and were organized into the company's new Consulting and Advisory Services Group. The other two divisions were the company's Restaurant Group, which operated the traditional concept restaurants that had been Levy Restaurants' hallmark since the late 1970s, and the Sports and Entertainment Group, which managed the company's specialty concessions.

Three years after the restructuring, a significant leadership change occurred that marked the end of a long-lived partnership and set the stage for Levy Restaurants entry into the 21st century. In August 1998, Mark Levy sold most of his interests in Levy Restaurants to start a new, self-funded investment firm, ending his 22-year business partnership with his brother. Larry Levy, who continued to serve as chairman and chief executive officer, remarked, "we wanted to do two separate things. Now we are both happy." On that amicable note, Larry Levy, without his brother as vice-chairman, looked toward the future, envisioning great things to come for his diversified foodservice company. With sales expected to reach $200 million at the end of 1998, Levy Restaurants stood poised to collect considerably more revenue in the years ahead, particularly from its Sports and Entertainment Group, which had signed contacts with a half-dozen major sports venues in Denver, Los Angeles, Atlanta, Indianapolis, Miami, and Cleveland. "More than half our business hasn't opened yet," Levy noted in the wake of his brother's departure. With the arrival of this new business fueling confidence for the future, the company charted its plans for the coming century, gradually creating an entirely different company than the small, delicatessen operator that had started business in 1976.

Principal Divisions: Restaurant Group; Sports and Entertainment Group; Consulting and Advisory Services Group.