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Friday, May 27, 2022

Raising Stakes

An old American standby – the 52-year-old Sizzler steak house – is once again trying to reinvent itself.

This time around it’s wooden paneling, large plasma TV screens, and a promise of better and fresher ingredients for the long-suffering steak, seafood and salad chain.

The idea: turn the tired chain into a place where customers come to hang out and have fun, not just stop in for a quick $7.99 Malibu chicken sandwich.

So far the reviews are mixed, but the Culver City-based chain reports guest counts and sales are up – not a bad achievement in a lousy economy, particularly for restaurants.

“The world needs Sizzler,” said Chief Executive Kerry Kramp, a former Hometown Buffet CEO hired two years ago to turn the chain around. “I’ve seen so many other concepts go Chapter 11; I don’t want that to happen here.”

Sizzler USA was acquired in 2005 near the height of the economic boom by Pacific Equity Partners, a Sydney, Australia-based private equity group.

While the chain hasn’t flourished in decades, it really struggled when the recession began to kick in two years ago, causing Pacific Equity to look for a turnaround executive.

But this isn’t the first time that Sizzler has attempted to return to its glory days of the mid-1980s, when locally the chain practically owned the fast-casual sit-down restaurant niche before competitors chipped away at its market share.

Nothing so far has worked – including an ill-fated attempt to go buffet – hampered in part by a well-publicized bankruptcy and debilitating food-poisoning scandal.

Now the company is trying again in the midst of a recession that has already seen many fast-casual chains go belly up, including Bennigan’s and Baker’s Square, to name a few.

“The company has taken it on the chin,” said Dennis Lombardi, executive vice president for food service strategies at WD Partners, a Columbus, Ohio, design and development firm for restaurant and retail chains. “They’ve had a hard life.”

Freshening up

The current campaign began in June 2008 after Kramp, 54, took the company’s helm. With sales down about 20 percent from 2007 and the recession beginning, “the company was struggling,” he said.

The first thing he did was put an immediate halt to all franchising. Then he methodically started cleaning house, mostly by allowing leases to lapse on 36 underperforming restaurants, including 21 in California. Among those were Sizzlers in Baldwin Hills, Santa Monica, La Puente and Santa Fe Springs, all of which were recently closed.

Next, with 191 restaurants left in the U.S. and Puerto Rico – including 159 franchised and 26 owned by the company – Kramp began making changes. He and his staff, especially Chief of Strategic Development Dennis Scott, revamped the restaurant’s menu, focusing even more on “value” meals.

Menu offerings had ranged from a $9.99 steak to a steak-and-lobster dinner for $17.99. Customers also had the option of adding an unlimited number of visits to the all-you-can-eat salad bar for an additional $3.99.

Today the salad bar is included with items at the menu’s lower end, specifically the $9.99 steak, Malibu chicken or six large shrimp. Customers wishing to experience the salad bar a la carte can do so for $9.99.

The new chief executive and his team also began having the restaurants prepare more food on site. For example, the guacamole in the salad was formerly bought from a vendor; today, the new franchise guidelines call for the restaurants to prepare it fresh in-house. Servers were trained to be more customer oriented and food friendly, so as to better respond to inquiries regarding the fare. And finally, five months ago, the company rolled out its prototype of what executives expect future Sizzlers to look like.

The Inglewood restaurant, remodeled for about $250,000, features light and dark poplar wood in its tables and booths, earth tone carpeting, contemporary photographs on its walls and large plasma TV screens placed at strategic locations.

“The goal was to make it today,” Kramp said. “We wanted to give it a modern, comfortable, lighter look; we want people to come in and relax.”

So far one other restaurant – in Hesperia – has adopted the look. Kramp said he expects all other company-owned and franchised restaurants, including the more than 70 in the greater Los Angeles area, to be remodeled or in the process of remodeling by the end of the year.

In addition, this week Sizzler USA announced that it would resume franchising Feb. 1.

“My goal was to make the stores good enough so that I’d want to franchise one in Minnesota,” he said, “and I think that we’re there.”

Checkered past

Founded in 1958 in Culver City as Del’s Sizzler Family Steak House by Del and Helen Johnson, Sizzler pioneered the concept of fast-casual dining in the late 1970s and early 1980s by providing customers with the feel of a full-service restaurant at prices only slightly above those of fast-foot chains. To keep overhead low, many of the stores even employed resident meat cutters back in those days.

By the mid-1980s, however, other fast-casual restaurants had begun catching on. In order to compete, Sizzler went to a buffet concept, offering such promotions as all-you-can-eat fried shrimp and a full salad bar. But the plan backfired when patrons began using the inexpensive salad buffet as a substitute for more-expensive meals. Sizzler responded by lowering the quality of food on other parts of its menu – and the decline began. Eventually, previous ownership filed for bankruptcy in 1996, closing 130 of its 215 stores. It emerged a year later, beginning the first of many searches for a new identity.

One restaurant consultant, even then, neatly summed the problem up. The restaurant, he said, had done too much “zigging and zagging.”

Yet it survived, even though it was rocked 10 years ago by scandal when an outbreak of E. coli at two Wisconsin franchises made 50 people sick and killed a 3-year-old girl.

Keith Gellman, publisher of RestaurantChains.net, an online newsletter based in Irvington, N.Y., said that Sizzler’s recent moves make sense.

“I think they’re doing what conventional wisdom is telling them to do,” he said. “They’re tightening up, pulling more things in-house, minimizing the franchise network and maintaining more control.”

Whether it will ultimately work, he said, remains to be seen.

Reactions to the most recent changes seem mixed.

Rosendo Ramirez, co-owner of the Inglewood restaurant, said the new menu and design has increased his sales by 20 percent. While “nobody can touch the way it was in the 1980s,” he admitted, “these are the best changes I’ve seen in 33 years. Hopefully it will catch on; the feedback we’re getting is good.”

Aziza Georgian, owner of the Baldwin Park Sizzler, agreed. “Because of the value menu, we’re surviving,” she said. “I think it was a good idea.”

Yet she’s heard other franchisees complain bitterly, especially regarding the cost of retooling. At least one Inglewood customer was decidedly underwhelmed by the changes he was told he should see.

“I really didn’t notice any change in the menu,” insisted Gerald Vessel, 74, “Though I guess there’s a slight improvement in the look.”

Sizzler, however, already claims to have seen some bottom-line results. Since Kramp took over, the company, which had revenue of $311 million in 2009, has enjoyed monthly sales and guest counts averaging about 4 percent higher than the previous year’s in almost each of the last 13 months. The trend has helped compensate for a 5 percent decline in the average guest check, from $11.87 to $11.37.

All of which Kramp takes to mean that he’s on the right track.

“The company’s still here,” he said.

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