Morrison Restaurants Inc. Business Information, Profile, and History

History of Morrison Restaurants Inc.

One of the companies responsible for bringing the cafeteria concept of dining to the Southern United States, Morrison Restaurants Inc. evolved from one cafeteria in Mobile, Alabama, into a network of cafeterias and casual and family-dining restaurants composing a $1.2 billion food-service empire. Through one of its two main operating segments, the Ruby Tuesday Group, the company operates nearly 300 casual dining restaurants, known variously as Mozzarella's Cafe, Sweetpea's Restaurants, and Ruby Tuesday. The other segment, the Morrison Group, is comprised of more than 435 retail and health-care outlets, including the vestiges of the company's original line of business, Morrison's Cafeterias.

The first Morrison cafeteria opened during the fall of 1920 in Mobile, Alabama. A novel dining concept for the area, the cafeteria caused the proprietor, J. A. Morrison, more than the usual entrepreneurial nervousness associated with starting a new business. Aside from the fear that customers would not be willing to experiment with a new type of dining establishment, Morrison also had to impart his vision of how a cafeteria should look and operate to his initial staff of 40 employees, all unfamiliar with the concept. For the location of his new cafeteria, Morrison opted for the first floor of an existing building, and for the interior he supervised the installment of stamped tin to cover the ceilings, a material that also was used for the moldings. The floor was made of white rock maple that was scrubbed with beach sand and a deck broom to ensure it was "sanitary and vermin-proof" for the cafeteria's expected clientele, recently introduced to the dangers of bacteria.

With each employee trained by Morrison, the cafeteria opened on September 4, 1920, its success dependent on the judgment of Morrison's storeroom manager as much as it was on the arrival of customers through the doors. The storeroom manager, whose job it was to issue the correct amount of food from the cafeteria's refrigerated storeroom for the coming business day, dictated, to a large extent, the profits for the day. Once food was removed from the storeroom, it was either cooked or discarded, eroding profits as the food rotted because Morrison's business, unlike other Mobile restaurants, was predicated on volume. Initially, the cafeteria offered 73 different items with the typical meal costing $.31, a menu variety and cost structure Mobile residents immediately welcomed. Within a week, Morrison and his staff were serving lunch and supper to 1,000 patrons each day, assuaging any of Morrison's anxiety regarding the peculiarity of cafeteria-style dining for Mobile's citizens.

Morrison's success carried beyond the first week, as his inexpensive dining alternative attracted enough customers to sustain further growth. In 1928, Morrison incorporated his growing concern in Louisiana, naming the enterprise Morrison's Cafeterias Consolidated, Inc. Customers continued to frequent Morrison Cafeterias throughout the Great Depression--700,000 customers a year were eating at the company's cafeterias by 1938--with Morrison's dining concept extending into other Southern states as the number of cafeterias increased. By 1950, the last year Morrison Cafeterias would be entirely devoted to operating cafeterias, there were 17 such establishments, composing a modestly sized, prosperous company that had achieved more than a modicum of success in 30 years of operation and was destined to become much more.

In 1951, Morrison Cafeterias diversified into noncommercial feeding by providing meals on the set of the film The Greatest Show on Earth. The catering contract with the film's producers represented the first of many such contracts to follow, a line of business that would constitute one of the primary business segments of the company for the next 40 years. Another key contributor to the company's future growth was added the following year, when Morrison Cafeterias signed a catering agreement with Loyola University, paving the way for future education contracts and broadening the scope of the company's catering clientele. In 1953, the company signed a catering contract with Mound Park Hospital in St. Petersburg, Florida, adding the third arm of the company's catering business, health care. Before the close of the decade, Morrison Cafeterias, now structured as a catering and cafeteria company, made one more signal move by opening the company's first suburban cafeteria in Gentilly Woods, Louisiana, a harbinger of the direction the company would later follow, when it operated properties exclusively in shopping malls and other retail-oriented centers.

The company entered the 1960s with designs to further diversify, this time in nonfood related directions. Following the corporate trend of the era, Morrison Cafeterias embarked on a mission to become a vertically integrated company, acquiring assets that would supply its cafeteria and catering needs as well as steer the company away from food service altogether in a bid to become a multidimensional corporation. In 1968, Morrison Cafeterias Consolidated, Inc. changed its name to Morrison Incorporated. The new Morrison Inc. completed several acquisitions in the late 1960s and throughout the 1970s, adding to the company's corporate umbrella a motel chain, a china and small wares facility, an insurance carrier specializing in coverage for strip mines, a distribution company, and a breading plant. With each acquisition, Morrison replaced existing management with Morrison personnel, attempting to meld the disparate organizations into one corporate body.

Late in the 1970s, the company began to flounder, as its widespread interests had created bureaucratic layers that led to confusion and significantly lower profit margins. In 1980, the company selected a new chief executive, Ernest Eugene Bishop. Bishop had joined Morrison in 1947 at age 16, intent on earning money to help pay for a college education. He never entered college and instead stayed at Morrison, rising through the company's ranks from cafeteria counter worker, to district manager, and, ultimately, to Morrison's chief executive officer. Recognizing the problems that saddled the company, Bishop divested all of the company's nonrestaurant holdings, noting later to Nation's Restaurant News that the company's management "fell into the integration trap in the late 1960s and into the 1970s because it was in vogue." Bishop also realized that many of the company's top management and board of directors were too much alike, that the views and opinions expressed by the company's leadership were too similar, leading him to conclude that Morrison's management needed representation from outside the Morrison organization.

Bishop's new vision for Morrison was put the test in 1982, when the company completed the most important acquisition in its history, the 15-unit restaurant chain, Ruby Tuesday, Inc. Ruby Tuesday was founded in 1972 by five college students attending the University of Tennessee. This group of young entrepreneurs, led by Samuel E. (Sandy) Beall III, converted an old house on the University's campus in Knoxville into a small, casual-style dining establishment that featured barn wood walls and a hamburger served on an English muffin priced at $1.45. Beall, who had managed a Pizza Hut restaurant as an 18-year-old freshman at the university, then used a cash gift from one of the early developers of the Pizza Hut chain to start Ruby Tuesday. Like Bishop, Beall never completed his education, and instead, devoted his energies toward making his fledgling enterprise a success.

By 1982, Ruby Tuesday had grown into a 15-unit chain, roughly the size of Morrison Cafeterias when Bishop joined the organization. Bishop decided to acquire the budding restaurant chain, paying $15 million in a combination of cash and stocks, as he effected a strategic shift away from the cafeteria side of the company's business toward casual, inexpensively priced restaurants. The incorporation of the Ruby Tuesday organization into Morrison highlighted the significant differences between Bishop's management style and that of his predecessors, which led to confusion and rivalry among Morrison's various divisions before Bishop gained control of the company. With this acquisition, Bishop granted Beall and Ruby Tuesday's management virtual autonomy in controlling their organization instead of replacing them with Morrison personnel. Furthermore, he named Beall president of Morrison's newly created Specialty Restaurant Division, grooming him for an executive leadership position at Morrison's headquarters in Mobile. Beall remained in Knoxville until 1985, by which time he had been promoted to corporate executive vice-president in charge of the company's specialty restaurant and cafeteria business. Two years later, Beall was named president and chief operating officer and was well on his way toward assuming control of Morrison.

Beall and Bishop increasingly worked in concert as Morrison increased its interests in the restaurant business. Within two years of the Ruby Tuesday purchase, the company added Silver Spoon Cafe and L&N Seafood Grill, both of which offered inexpensively priced menu items. In 1984, Morrison, through its food contract, cafeteria, and restaurant business, generated $464.4 million in annual revenue, a total that would triple in the coming decade largely because of the company's focus on its specialty restaurants.

The growth of this segment of the company's business was accelerated considerably by the acquisition of three contract food service companies in 1987, including the purchase of Pennsylvania-based Custom Management Corp., which lent its name to the formation of Morrison Custom Management, a division containing Morrison's food contracting businesses. Remaining a stable contributor to the company's overall revenue total, contract food accounts provided a consistent revenue base from which Morrison could invest in its higher-growth restaurant business. By 1988, this division serviced more than 800 accounts, ranging from providing meals for single tenants in large office buildings, to food service contracts with factories, universities, and health care facilities. This division would provide a solid foundation for the restructuring of Morrison in the early 1990s, as stewardship of the company passed from Bishop to Beall.

Beall was named chief executive officer of Morrison in 1992. This year also featured the reorganization of Morrison's various businesses into three primary divisions, Morrison's Family Dining Group, Casual Dining Group, and Hospitality Group. The oldest business segment and the former mainstay of Morrison Cafeteria, the Family Dining Group comprised the company's 147 cafeterias and Sadie's Buffet & Grill, Morrison's entry into the all-you-can-eat market. The Casual Dining Group included Ruby Tuesday, of which there were over 200 establishments, L&N Seafood Grill, and Silver Spoon Cafe units. Morrison's third business segment, its Hospitality Group, comprised all of the company's contract food service accounts, which were further divided into health care, business/industry, and education divisions. As the company planned for its future, an emphasis was placed on its Casual Dining Group, which contributed 29 percent of 1991's $970 million in total revenue, a percentage of gross sales eclipsed by its other two groups but a business segment that contributed significantly higher profits.

Morrison's strategy to distance itself from its cafeteria image and identify itself as a specialty restaurant and contract-feeding operator led to a name change in 1992, when the former Morrison Incorporated became Morrison Restaurants Inc. To bolster its presence in the specialty restaurant market, the core of its Casual Dining Group, Morrison attempted to acquire Uno Restaurants Corporation, an operator of a 110-unit Italian restaurant chain. Uno Restaurants agreed to the acquisition and signed a letter of intent in late 1992 but pulled out of the deal in early 1993 over a disagreement on the proposed purchase price. Left without an interest in the rapidly growing Italian restaurant market, a market Beall strongly believed Morrison should enter, the company began converting its Silver Spoon Cafe units into specialty Italian restaurants, which the company named Mozzarella's Cafe.

As the conversion of Silver Spoon units took place, the company opened a new type of cafeteria, called Morrison's Fresh Cooking, to bolster its Family Dining Group, which was phasing out the company's disappointing Sadie's Buffet & Grill units. Also added in 1993 were two new units of a Southern-theme specialty restaurant called Sweetpea's to further increase Morrison's investment in its Casual Dining Group. The company restructured its operations again in 1994, combining its Hospitality Group with its Family Dining Group to create the Morrison Group, and renaming its Casual Dining Group the Ruby Tuesday Group, providing a clear indication of the company's strategic priorities as it entered the mid-1990s.

Several months after reorganizing the company into two operating groups, Morrison sold all of its education and business/industry food service accounts to Gardner Merchant Ltd., an international contract food services company, leaving Morrison with only its health care food service contracts. Concurrent with its decision to lessen its interests in food service contracts, Morrison announced plans to phase out the company's L&N Seafood Grills and convert them to Ruby Tuesday Restaurants and Mozzarella's Cafes, two of its restaurant concepts that had proven to be more profitable and successful than the family dining restaurants. With 288 restaurants within its Ruby Tuesday Group and 163 family-dining units and food service contracts controlled by the company's Morrison Group, Morrison entered the mid-1990s poised to strengthen its presence in the specialty restaurant market at the national level.

Principal Subsidiaries: Morrison International, Inc.; Custom Management Corp.; John C. Metz & Associates, Inc.; Manask Food Service, Inc.; Custom Management Corp. of Pennsylvania; Morrison Custom Management Corp. of Pennsylvania; Ruby Tuesday, Inc.