Stone starts work on Shakey's for the '90s
Referring to Shakey's offshore parent and its president, Apker remarked, "It became apparent that their goals and plans for growth were much in accord with what I wanted for the company and that those things could best and more easily be accomplished by someone with their finances and expertise."Though he says he considers Stone a "real capable guy and very experienced," Bergren says he believes the new Shakey's president has "a tough road to hoe."What's more, Stone said, by acquiring Monarch, a company that clearly dominates a large part of a growing market, Shakey's Inc. can expand its restaurant holdings without fear of "overlapping" and angering a great many individual franchise restaurant owners.According to Stone, most of Monarch Interstate Foods' undisclosed revenues come from doing business with its sister restaurants and other franchised Shakey's units.Stone resigned from fried-fish specialist Skipper's after 17 years in late 1987 at a time when the board was growing anxious about the chain's mediocre financial performance; during his years at Skipper's, Stone expanded the chain from 12 units to more than 200. He said recently that he resigned because it was "time to do something else."Stone said the acquisition of competing regional chains is another strategy Shakey's Inc. will use to add company units."When a concept has taken 35 years to evolve, I don't think you can change it with a revolution," he says.Stone, 51, was hired to head up Shakey's by officials of Inno-Pacific Holdings, the Singapore company that bought the pizza chain earlier this year. He will assume the presidency and additional title of chief operating officer this week and said he looked forward to helping revitalize the chain, America's oldest franchised pizzeria concept.According to Stone, ensuring "consistency in execution" and "just staying alive in a competitive market" are two of his most immediate challenges at Shakey's. He says he believes that his ability to "create an environment that people [employees] want to stay in" can only help him reach his goals for the company.Under the agreement Gordon Apker, Monarch owner and chief executive officer, sold his 17 Washington pizzerias, three Alaskan restaurants and Monarch Interstate Foods distribution arm to Shakey's Inc., Inno-Pacific's 211-unit U.S. division."We're looking at Los Angeles for company stores because there is already a large [store] base there," Stone says."Marketing the Shakey's brand in other [non-restaurant] creative distribution systems has to be looked at," Smith says of a new revenue sources Stone might consider.Apker, an avid car collector, said he decided to sell his Monarch foodservice holdings because they could be developed at a faster pace by Stone and Inno-Pacific.Among his first duties will be organization of the movement of the chain's domestic headquarters from the Dallas area to somewhere in the San Francisco Bay Area, where the international branch is located, he indicated. He also will move to develop company restaurants, he said. There are currently no corporate-owned Shakey's."Our goal is to lead by example and to own and operate company restaurants," Stone said, explaining why Shakey's acquired Apker's holdings.Addressing the pace of new company-store development, he says, "We'd certainly like to open five or six in 1990 and then see that number grow over a three-year period to 40 or 50, though I couldn't tell you where all those restaurants will be."Gene Stone, Shakey's Inc. president, said the company also bought back the master franchising agreement for Washington and Alaska that Monarch had purchased in 1984 from one of the chain's previous owners.Stone said that Shakey's, besides purchasing the Washington and Alaska restaurants from Monarch, has completed or is in the process of finalizing the acquisition and conversion of restaurants in the San Francisco Bay Area and Los Angeles. He said the chain is also building a new prototype restaurant in Southern California.Chains that were going to expand significantly or effectively penetrate major markets, he says, "should have done it by now.""With 70 percent of the pizza eaten at the evening meal [segmentwide] being take-out or delivery, we're not prepared to ignore one or the other," Stone replies when asked if he planned to increase the chain's emphasis on those areas of sales or possibly even develop delivery-only units.Before joining Skipper's, Stone did stints in executive positions with Long John Silver's and Lum's.Stone says he does not know if Shakey's has the stuff or whether the market will ever afford the opportunity to become a national chain -- "It could go either way."Smith, now a Westin Distinguished Professor at Washington State University, says take-out sales amounted to about 20 percent of total sales during his tenure from 1978 to 1980. A typical Pizza Hut, he notes, was then doing a take-out business equal to about 40 percent of sales.Shakey's does in fact have relatively large restaurants with many in the 3,500- to 4,000-square-foot range. In comparison, Pizza Hut is building new-generation units of 2,200 square feet to 2,400 square feet, and Round Table has developed a prototype of about 2,800 square feet.While he expects to be working on the new Shakey's master plan for some time, Stone did give some hints as to what form, or forms the revised concept might take.Gene Stone, former chairman of Seattle-based Skipper's Inc., was named president of 220-unit Shakey's Pizza Restaurants, returning to a chain he once helped expand from less than 10 restaurants to several hundred.Because Shakey's began as a family-oriented food-and-fun concept, complete with banjo pickers in straw hats, and because it has also become an aftergame hangout for many amateur athletic league teams, the chain's restaurants are perceived by many as a "destination." For that reason and some others, Shakey's units have never done a large volume of take-out or delivery business."How can you sell franchises if you can't convince someone that you know how to successfully operate the concept yourself?" he asked shortly after taking over at Shakey's.Inno-Pacific appointed Stone president just months after acquiring Shakey's Inc. from a group of shareholders that included president Gary Brown and vice president Jay Halverson. The Singapore holding company, which purchased 139-unit Shakey's International from a different owner in the fall of 1988, also operates about 100 franchised Kentucky Fried Chicken restaurants in Pacific Rim markets.Some of the segment's most successful operators, including Pizza Hut, have shied away from the low-margin buffet approach at lunch. They favor lightly discounted combinations or quick-service guarantees wrapped around traditional a la carte items, such as mini pizzas, slices and sandwiches."Immediate plans" for the newly acquired Monarch group of restaurants call for "taking an inventory" and "making physical improvements as necessary," Stone explained. "We plan to put money into it [Monarch].... We plan to make it a showplace."PHOTO : A typical Shakey's Pizza restaurant unit.Stone, who is proud of having overseen the expansion of the Skipper's fried-seafood chain from 12 units to nearly 220 during 17 years with that Northwestern chain, has said that rebuilding Shakey's company-store base is a priority.Stone said one of the things that made Monarch an "attractive" acquisition target was its "fine cadre" of employees."The important thing is that we are strong in the markets where we do have restaurants," he says. "We plan to grow within the market areas we are already in, so we can take advantage of economies of scale in advertising and better utilize people [management]."
Asked why he left Skipper's, Stone replied, "I was ready for a change. I said to myself, `I'm turning 50,' so I set out to find the ultimate company to buy."
Author: Alan Liddle
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