Worldwide Restaurant Concepts, Inc. History

Address:

15301 Ventura Boulevard, Suite 300
Sherman Oaks, California 91403
U.S.A.

Telephone: (818) 662-9800
Fax: (818) 662-9832

Public Company
Incorporated: 1991 as Sizzler International, Inc.
Employees: 8,370
Sales: $245.30 million (2001)
Stock Exchanges: New York
Ticker Symbol: SZ
NAIC: 722110 Full-Service Restaurants; 533110 Lessors of Nonfinancial Intangible Assets (Except Copyright Works); 551112 Offices of Other Holding Companies

Key Dates:

1958:: First Sizzler Family Steak House opens in Culver City, California.
1980:: Thomas Gregory is named president and chief executive officer of the Sizzler chain.
1983:: Sizzler's parent company, Collins Foods, sells 34 percent of the chain to the public.
1985:: Chain of Rustler Steak House restaurants is acquired.
1991:: Collins Foods merges with Sizzler Restaurants, forming Sizzler International.
1996:: Sizzler International files for Chapter 11 bankruptcy protection.
1997:: Sizzler International emerges from bankruptcy.
2000:: Eight-unit Oscar's restaurant chain is acquired.
2001:: Sizzler International changes its name to Worldwide Restaurant Concepts, Inc.

Company History:

Worldwide Restaurant Concepts, Inc. is the operator of the Sizzler restaurant chain, the Pat & Oscar's restaurant chain, and the franchisee of Kentucky Fried Chicken outlets in Australia. Worldwide Restaurant operates and franchises roughly 350 Sizzler steak house restaurants in the United States and abroad, maintaining a substantial presence in Australia. The company's 107 Kentucky Fried Chicken franchises are located in Queensland, Australia. The Pat & Oscar's chain, added in 2000, comprises 13 restaurants located in California and Arizona.

The Birth of Sizzler

Worldwide Restaurant, the name adopted by Sizzler International Inc. in 2001, began its corporate life in the late 1950s. Specifically, the company started business on January 27, 1958, when the first "Sizzler Family Steak House" opened in Culver City, California. The first unit of what would become a chain of budget steak houses opened with $50 in the cash register and a menu featuring four steak items. The Sizzler concept, which came under the ownership of Collins Foods International--formed during the early 1960s--fared well as a chain operating in the budget steak house segment of the restaurant industry. The company expanded throughout the western United States and into the southwestern reaches of the country, growing through the establishment of company-operated units and through the licensing of the concept to franchisees. Roughly 20 years of expansion produced a chain of 450 Sizzler restaurants, the majority of which were operated by franchisees.

Despite the impressive growth, Sizzler was failing to impress at the end of its two-decade expansion period. Industry-wide, the budget steak house segment was experiencing a downturn in business, Sizzler included. Moreover, the Sizzler chain had expanded too aggressively between 1978 and 1980, increasing its exposure to anemic market conditions. Many of the company's restaurants were performing poorly, causing overall operating profit margins to shrink considerably. Industry observers noted the company's lackluster performance, criticizing what they perceived as a stale, sprawling chain occupying a market niche that suffered from diminishing attractiveness to the dining public. Thankfully for Sizzler, executives within the company reached the same discouraging assessment, and began to make needed changes. One executive in particular, Thomas L. Gregory, was frustrated by Sizzler's prospects as a budget steak house operator. In response, he spearheaded sweeping change, transforming the market orientation of the struggling chain and fashioning a company ripe for growth.

A Detroit native, Gregory earned a hospitality management degree at Michigan State University before joining Marriott Corporation. He spent seven years at Marriott, ultimately serving as executive assistant to then Senior Vice-President Woodrow Marriott. Next, Gregory entered the U.S. Army, serving in the Quartermaster Corps, before joining the New York firm of Cresap, McCormick and Paget, where he spent five years as a management consultant. Gregory kept on the move, joining A&W Food Services of Canada as a vice-president. After a three-year stay at A&W, Gregory briefly served as president of Red Barn Systems of Canada before joining Collins Foods in 1974 as vice-president.

1980s: A Decade of Change

In 1980, Gregory was named president and chief executive officer of the Sizzler chain, assuming the responsibilities of his new leadership posts at a critical point in the history of the 22-year-old company. In an interview with Restaurant Business published on November 1, 1987, Gregory remembered the state of the company upon his promotion, noting that Sizzler "was in deep trouble and had seen better days." His reaction to the situation steered Sizzler in a new direction, the impetus for change stemming from dissatisfaction with the status quo. Gregory continued in the Restaurant Business interview: "Mike Minchin, our executive vice president, and I both knew that being a budget steak house was not a very profitable place to be, and neither of us was committed to being in a low-end business. We knew we were heading into a different world, but felt that the operational system in place was good and efficient, and that the chain could be molded into something profitable."

Gregory, by his own admission, did not have a detailed plan for the alterations to come when he set out in 1980. He decided to retain three of the fundamental characteristics that described Sizzler before 1980, opting for "an evolutionary development, rather than a revolutionary one," according to his interview with Restaurant Business. As they had before 1980, Sizzler units would continue to offer limited table service, thereby realizing savings in labor costs. The menu selection, as well, would continue to be limited, giving Gregory the third characteristic that would remain unchanged during his reign: the method of short-order cooking and food preparation only possible with a limited menu.

Having decided which aspects of the past to take into the future, Gregory next tried to determine what Sizzler's future might be. He had no clear idea, but the general feeling among executives at corporate headquarters was a need to move Sizzler slightly up-market, a few notches above the traditional budget steak house yet below the more expensive dining experience prevalent at full-service, white-tablecloth restaurants. Gregory and his management team took their cue from extensive customer surveys and came up with a concept that, once actualized, was trend setting. Gregory added fresh seafood, poultry, salads, tostadas, and new pasta bars, helping give birth to the "seafood-and-steak" restaurant concept that took root during the 1980s. Gregory's version of the concept, on display as the "new" Sizzler of the 1980s, featured the new additions to the menu in a buffet-style setting, enabling patrons to serve themselves.

The repositioning initiated by Gregory touched off an era of strident and profitable growth for the Sizzler's chain, much to the delight of James Collins, founder and chairman of Collins Foods, and his team of executives. Backed by its parent company, Sizzler expanded internationally as the company's new format scored success domestically. At roughly the same time Gregory began repositioning Sizzler in the United States, the chain debuted, in its original budget steak house format, in Japan. The overseas expansion program began with a five-year plan promising the establishment of 55 Sizzler franchised restaurants in Tokyo. The foray into Japan proved unprofitable, ending in 1989 with only three units in operation. Far more encouraging results were registered in Australia, where the company carved out a substantial and lasting presence.

Against the backdrop of strategic change and physical growth, Sizzler made strident progress throughout the 1980s, blossoming into a vibrant enterprise during the "Gregory Decade." Investors were able to share in the company's success after Collins Foods sold 34 percent of Sizzler to the public in 1983, a transaction that made Sizzler a majority-owned subsidiary of Collins Foods and forced Gregory to pay heed to the expectations of Wall Street. As the number of Sizzler units increased, both through franchising and the establishment of company-operated units, the chain bolstered its stature through acquisitions. The most significant purchase during the decade occurred in 1985, when Sizzler acquired Rockville, Maryland-based Tenly Enterprises, operator of roughly 100 Rustler Steak House restaurants and a six-unit auto-memorabilia theme concept called Curly's Garage. The Rustler Steak House restaurants, located primarily along the East Coast, stretching from Washington, D.C., to Long Island, New Jersey, added substantially to the company's presence in the Northeast. The Curly's Garage units, featuring a full-service, full-bar format specializing in barbecued ribs, were located in Virginia, Maryland, and New Jersey.

Although internal and external means of growth added appreciably to Sizzler's stature during the 1980s, Gregory's greatest gains were to be measured by the financial health of the chain and its popularity among the dining public. Between 1980 and 1987, the Sizzler chain expanded from 128 company-operated and 324 franchised units to 170 company-operated and 373 franchised units. The growth was substantial, to be sure, but more impressive was the 24 consecutive quarters of year-to-year growth in sales and earnings recorded during the seven-year period. By the end of the decade, the chain exuded a formidable presence, both domestically and abroad. There were 26 restaurants in Australia, one in Guam, and three in the Persian Gulf region, with units slated for development in Taiwan, Singapore, Thailand, and Malaysia. In the United States, the chain comprised 650 units, half of which were located on the West Coast, with the Northeast home to 30 percent of the chain's units. Systemwide, the company generated nearly $1 billion in annual sales by the beginning of the 1990s, marking an exponential leap from the $250 million in sales the company recorded at the beginning of the Gregory era.

1990s: Failure and Revival

As Gregory's tenure wound to a close, Sizzler prepared for a major restructuring, one intended to provide the company with additional strength. In September 1990, Sizzler announced it was merging into its parent company, Collins Foods. To complete the transaction, Collins Foods sold its largest wholly owned business, a chain of 209 Kentucky Fried Chicken (KFC) outlets to PepsiCo for approximately five million shares of PepsiCo stock. Concurrent with the PepsiCo deal, Collins Foods purchased the 34 percent of Sizzler that was publicly held. The reorganization, completed in January 1991, created Sizzler International, Inc., parent company of Sizzler Restaurants International, Inc., a company, excluding the sales generated by franchised units, with an annual revenue base of $492 million. As part of the reorganization, changes were made in the company's leadership. James Collins, chairman of the former Collins Foods, became chairman of Sizzler International. Dick Bermingham, who was president and chief executive officer of Collins Foods, became chief executive officer of Sizzler International. Gregory served as president, delaying his planned retirement until April 1992. The newly reorganized Sizzler planned to focus on the international expansion of its signature buffet-and-grill concept in the coming years, intending to develop 100 units in the Pacific Rim during the ensuing five years.

In the wake of the reorganization, the steps that Sizzler took were faltering steps. As during the late 1970s, Sizzler suffered from a number of unprofitable restaurants, and the company began to reel. By the mid-1990s, the company's domestic operations were losing an estimated $1 million per month, draining Sizzler of its former vitality. Its debts soared toward $100 million, forcing the company to take evasive action. On June 2, 1996, Sizzler International Inc. and its U.S. subsidiary, Sizzler Restaurant International, Inc., filed for bankruptcy-court protection, citing its debilitating leasehold obligations at many of its underperforming stores. Chapter 11 bankruptcy reorganization immediately followed, forcing Sizzler to scramble to find a way toward survival. During the year-long reorganization process, Sizzler shed 130 of its domestic, company-operated restaurants, sold six of its upscale Buffalo Ranch Steakhouses, and laid off more than 4,000 employees. The bankruptcy reorganization also engendered several significant changes in the company's leadership. Christopher Thomas, formerly the chief financial officer and chief operating officer, was promoted to president and chief executive officer of Sizzler Restaurants International, Inc. Chairman James Collins assumed the additional role of chief executive officer of Sizzler International, Inc. Kevin Perkins, formerly the president and chief executive officer of Sizzler International Inc., was named president and chief executive officer of the parent company's international restaurant division.

Under two separate plans approved by the bankruptcy court, Sizzler International paid an estimated $70 million in creditors claims, deriving the bulk of its payment from revenue generated by its international operations. The company emerged from bankruptcy in June 1997, possessing 69 company-operated units in the United States, 39 company-operated units overseas, 199 franchised units operating domestically, and 97 units operating overseas. Out from the gates, the restructured Sizzler enterprise pinned its recovery on an aggressive marketing campaign for a new nine-item line of hamburgers. Supported by a $1 million advertising strategy, the new hamburger line was introduced immediately after the company received bankruptcy-court approval. The campaign represented one of several programs that were implemented by the company to help fuel sales and to regain lost customers. The emphasis was on menu changes and their support by new marketing programs. Said CEO Christopher Thomas, in a June 16, 1997 interview with Nation's Restaurant News, "We've increased the number of hamburger products from four to nine. ... We've tried to modernize and contemporize the line, and we are still targeting the upper end of the midscale niche."

By the end of the 1990s, Sizzler had resolved the difficulties that plunged the company into bankruptcy. Smaller and leaner, the company entered the 21st century, marking the arrival of the new era with the completion of an acquisition. In August 2000, Sizzler acquired an eight-unit chain of restaurants operating under the name Oscar's, which was renamed Pat & Oscar's in April 2001. The chain of Pat & Oscar's, representing a third line of business for Sizzler, grew to 13 restaurants by the end of 2001, when company executives decided to acknowledge the diversity of their business by changing the company's corporate banner. In September 2001, Sizzler International changed its name to Worldwide Restaurant Concepts, Inc., the corporate umbrella under which Sizzler, Pat & Oscar's, and the Kentucky Fried Chicken franchises operated independently, each contributing to the success of their parent company.

Principal Subsidiaries: Collins Food Group Pty, Ltd. (Australia); CFI Insurers, Ltd.; Bermuda Collins Finance and Management Pty, Ltd. (Australia); Collins Foods Australia Pty, Ltd.; Collins Foods International, Pty, Ltd.; Collins International, Inc.; Collins Properties, Inc.; Collins Property Development Pty, Ltd. (Australia); Curly's of Springfield, P.A., Inc.; Affiliated Restaurant Corp.; Furnace Concepts Australia Corp.; Furnace Concepts International, Inc.; Collins Restaurants Queensland Pty, Ltd. (Australia); Josephina's, Inc.; Restaurant Concepts International, Inc. Nevada Restaurant Concepts of Australia Pty, Ltd.; Scott's & Sizzler Ltd. (Canada); Sizzler Australia Pty, Ltd.; Sizzler Family Steak Houses, Inc.; Sizzler Franchise Development, Ltd. (Bermuda); Sizzler Holdings of Canada, Inc.; Sizzler International Marks, Inc.; Sizzler New Zealand Limited; Sizzler of N.Y., Inc.; New York Sizzler Restaurants Group Pty, Ltd.; Australia Sizzler Restaurant Services, Inc.; Sizzler South Pacific Pty, Ltd.; Sizzler Southeast Asia, Inc.; Sizzler Steak Seafood Salad (S) Pte. Ltd. (Singapore); Sizzler USA Franchise, Inc.; Sizzler USA Real Property, Inc.; Sizzler USA Restaurants, Inc.; Delaware Sizzler USA, Inc.; Collins Restaurants Management Pty, Ltd. (Australia); Collins Restaurants NSW Pty, Ltd. (Australia); Sizzler Asia Holdings, Inc.

Principal Competitors: Investors Management Corp.; Metromedia Company; Ryan's Family Steak Houses, Inc.

Worldwide Restaurant Concepts, Inc. History

Key Dates:

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