Question: How did you meet Robert Spivak?
Answer: We met in the Daily Grill that's next door years ago. During the time when they were opening that restaurant, I was at California Pizza Kitchen and we were working with the plaza's landlord at the same time, negotiating our own lease. Bob and I worked together on many locations after that. In Encino, Studio City and Palm Desert where there was a Daily Grill and a California Pizza Kitchen in the same area. I love the guy on a personal level but there was never any business opportunity until 20 years later. It just shows you that you never know what will happen.
Q: So before you worked together, you were technically competitors for a time?
A: With restaurants there are a lot of synergies. If one does well and another comes in to the same area, you would think it would divide the business in half. But that's not true. We are friendly competition. There is a lot of sharing between restaurants concepts and ideas. We work closely together.
Q: How does that work?
A: When you go to buy a pair of shoes, if there are three shoe stores, only one is going to win and you won't come back for a long time. With restaurants, you are going to go out every night, every other night, or twice a week. On one night you'll go to the restaurant on the left, the next night you go to the restaurant on the right, and they're all going to get a shot at your business if you execute right. That synergy of restaurants wouldn't work as well if there were ten pizza places together.
Q: So are you friendly with most of the Southern California-based chain food operators?
A: We bump into one another. We don't stay in constant contact for time reasons but everyone knows each other in this industry. Russ Bendel just took over as COO of Cheesecake factory. He used to be at Mimi's Cafe. Wayne Lipschitz, the CFO at Grill Concepts, and I used to work together at Wolfgang Puck. You go to any restaurant company and you will see people who have worked together throughout their careers. We recycle ourselves.
Q: After spending years as a CEO, why did you take a CFO position when you joined the Daily Grill in 2004?
A: The reason I came to this company as a CFO was for the opportunity to take over as the chief executive. There was the understanding that Bob Spivak, the original founder who had been here for 23 years as the only chief executive, was going to leave. In 2004, he needed a CFO and it was a good way to be integrated into the company. Coming in as CFO, I could understand from a financial point of view where the company was. It also allowed me to put together strategic initiatives and see where the strengths and weaknesses of the company were, in order to take it to the next stage.
Q: You had a formal agreement coming in that you would take over as chief executive one day?
A: Bob and I knew each other so well that there was nothing in writing. It was a handshake agreement: "You come as the CFO. If it doesn't work, that's it." But I knew in my heart that this was for me.
Q: How is a CEO different than being a CFO?
A: It's about people. There are different kinds of finance guys; there are some with the old fashion "green shades" that bury their heads. There are other people who are strategic and some that like people. You can have any sort of personality and be a good financial guy. But as a CEO, you'd better like people. I've been the three Cs CFO, COO, and CEO along the way.
Q: Has it been hard filling Spivak's shoes?
A: He had big shoes. Bob is a great restaurateur and has set this company up for a lot of success. The foundations of this company were completely developed by him. One of the first things we did when I took over in June of 2006 was to get the message out that this was a planned transition of the No. 1 spot, and it was important that people know that I bought into the culture of the company.
Q: How did you do that?
A: One of the things we did was to go around to every restaurant, and at the time there were 23 or 24. We visited each restaurant morning and afternoon to get all the shifts. Bob and I talked about what our plans were, where we were going and what the future of the company was. We touched 1,800 team members, as many as we could.
Q: And people were receptive to you?
A: You witnessed it when we went next door. I know the chef's name. Nearly all the people who work there, I know their names. And to them, my name is Philip. It's not Mr. Gay. I'm not this unapproachable CEO. I am a guy who happens to be in charge of the company, but my successes or failures are determined by those guys in there cooking the meals.
Q: Is Spivak still heavily involved in the company?
A: He was at one point in his life. Now, he's set up own restaurant consulting business and that takes up a lot of his time. But this is his first true love and he is around to help whenever and however I need it.
Q: You came in with a pretty hefty growth plan.
A: I came to the company in July of 2004 and I always knew in my mind what great potential this company had. I had overseen growth: significant growth, with other companies I had been at. At the companies I've been at, I did it right and I did it wrong. I made my share of mistakes. But I saw this company as so ripe for growth.
A: As you go across the country, the brand and what it stands for is so well positioned in the upscale causal arena. But coming in as a financial person, I thought, "What were the key financial things we needed?" We needed a strong foundation. We had to make sure we put financing and infrastructure in place, and we brought in several new people along the way.
Q: What exactly do you have planned?
A: We are planning revenue growth of 20 percent to 25 percent, four to six units a year. What I'm trying to do is expand in existing markets and open one or two more markets a year and continue our East Coast expansion.
Q: What market would you most like to penetrate that you haven't yet?
A: I would love to be in Las Vegas. That's my No. 1 priority.
Q: Restaurants have a high failure rate. What are some of the challenges for growing a chain of restaurants?
A: I am in the business of running a restaurant company, not running a restaurant. I cover site evaluations, where we are going to put it, how much we are going to pay, design construction, permits. And then once the restaurant opens: marketing, manufacturing and retailing. Few industries cover what we go through. And then push that against competition, rising costs, increasing labor rates, everything you can look at goes against the grain that says you can be successful at this. But the good news is you can be, and you just have to watch it. It is a fascinating business. You deal with all kinds of people from different walks of life.
Q: Like whom?
A: One of our largest shareholders is Michael Milken. I never thought I would be dealing with Michael Milken. In fact, though, that's how my day started at 7:30 this morning. I had a meeting with him. And this afternoon I can be talking to the line cook who might have made a bad pasta meal for someone. I mean the variety of my days is phenomenal.
Q: How do you overcome all the challenges to a successful restaurant chain that you laid out?
A: Your basic model has to work, from your footprints to what you include in the footprints. We went to Brentwood, that's one of our older locations, opened back in 1988. It has a small bar, no private dining rooms. It's a pretty cramped and confined space. We've expanded from a 4,000-square-foot layout to a 6,500-square-foot layout plus a patio in our newer restaurants. You want to make sure your real estate is right and that the economics are right in the real estate. You don't want to overpay for the real estate and you want to make sure it is a triple-A location. It's an art and a science.
Q: I can tell by your accent that you're not originally from Los Angeles.
A: I'm from the U.K. Many, many moons ago I was educated in the London School of Economics. I graduated in 1979. I became a chartered accountant there, which is the equivalent of a CPA. In the early '80s I decided I wanted to leave London and explore the U.S. and got my firm to transfer me for a year to Southern California, where I worked as a CPA. I re-qualified as a CPA specializing in leisure time industries, restaurants and hotels.
Q: Why Southern California?
A: As a teenager I traveled extensively. One summer I would go to Europe and the Middle East. I spent one summer at a kibbutz in Israel picking apples, and I went across Europe. And then another summer people look at me like I'm nuts, but I really did this I flew to New York with a colleague and we took a Greyhound bus on a circle of the United States. We went up to Montreal, across to Vancouver, down to San Diego, around the southern states, all the way back around for about two months. From that trip, I realized I loved Southern California.
Q: What specifically did you love?
A: I just loved the lifestyle and the weather. We backpacked, did the tourist sites, went to the beach. Back then Westwood was a big attraction. I always dreamed I would come back. I decided that this was the place I wanted to stay and I never left.
Q: Was your career path in the restaurant industry calculated or did it just happen that way?
A: The accounting firm I was with in London was very strong in the hotel and restaurant business, so I just naturally veered toward them. In 1987 I left that company and joined what was then a startup company called California Pizza Kitchen as their CFO.
Q: What was it like being with CPK when it was at its very beginnings?
A: What it was back then, it was a jockey and horse, a good concept with good management, and I could really see where it was going to grow. I was very fortunate to grow it from a handful of restaurants to almost 100. I was there when we sold half the company to PepsiCo in 1992 and spent almost three years under PepsiCo before I took off and went to Wolfgang Puck as the as CEO and CFO of his food company.
Q: How often do you eat at the Daily Grill?
A: I eat lunch there every day. I like to get out and talk to the customers. If they have a problem I like to hear about it.
Q: What was one of the most interesting complaints you've heard?
A: We serve 40,000 to 50,000 meals a week. If I sat here and told you we are going to execute flawlessly on all of them, I would be smoking something that was illegal. We are going to make mistakes. The important thing is not that we made a mistake, but how we are going to fix it.
Q: When you don't eat at the Daily Grill, what's your favorite restaurant?
A: I have 27 favorite restaurants right now. Twenty-two Daily Grills, and five Grill on the Alleys. But really, my wife is a great cook. If we aren't going to visit our restaurants, she usually cooks a great meal at home.
Q: Is she from the area?
A: She's a Valley girl, born and raised in Encino.
Company: Grill Concepts Inc.
Born: London, 1957
Education: B.S. in economics, London School of Economics
Career Turning Point: Sale of 50 percent of California Pizza Kitchen, where he was CFO, to PepsiCo
Most Influential People: Jim Collins, author of "Good to Great"; Bob Spivak, founder and former chief executive of Grill Concepts; his wife Traci; Wolfgang Puck
Hobbies: Snow skiing, traveling to Hawaii, and watching soccer
Personal: Lives in Agoura with wife Traci and daughters Ilysse, 16, and Lauren, 14
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