Michael Rhodes, 34, entered the restaurant business at age 16 as a cook. He managed his first restaurant at 19 and worked for a Los Angeles-based chain before founding Orange-based Frontier Restaurants Inc., which owns eight Russell's Famous Hamburgers locations and five Knollwood family restaurants. Another Knollwood is scheduled to open early in 1994. In May, Rhodes was elected president of the Orange County chapter of the California Restaurant Assn. He spoke recently with Times staff writer Greg Johnson.
Q: What are the major issues that the restaurant association will be lobbying for during the coming year?
A: One hot issue is business meal deductibility. Presently, 80% of the cost is deductible, but there are moves to have that reduced to 50%. That's unfair for small business. If you're a small-business man, where do you take your client for a meeting? A restaurant. Another issue is the minimum wage, where there's a move to have it increased by 25 cents. But the big one is workers' compensation and how it relates to the national health plan.
Q: Are national chains more important than they used to be?
A: In 1970, I've heard, just 20% of restaurants were affiliated with a chain. Today that figure is well over 50% and growing rapidly. Chains to a large degree have set new standards. And, if a competing restaurant is doing something extremely well, you can bet that other restaurants are going to pay attention. Because of the proliferation of chains and large companies, the life of a restaurant concept is no longer 30 or 40 years.
Q: Sociologists say that people want new food. But can you simply add new items to a menu?
A: The dilemma created by adding new food items is what do you do with your existing items. Within three or four years, unless you take something off, you have a menu the size of an encyclopedia. But if you take something off, you run the risk of alienating longtime customers.
The challenge also exists in inventing new menu items that take advantage of kitchen equipment already in place and products you already had on the shelf.
Q: It seems restaurant workers sometimes forget that each meal is a new experience for the diner. How do you keep the experience fresh?
A: If the person who serves you is friendly and lively and personable, but the french fries are slightly cool, in your mind they're fine; but if that person is unfriendly and curt, then psychologically, those fries become ice cold. One of the frustrating parts of this business is that the employee sees the store the same way day in and day out. They develop what I call store blindness. It keeps them from experiencing the meal the way a customer does.
Q: Is there room today for an independent restaurant operator, or have the chains taken all the good locations?
A: Any time an owner acts as an operator he has the opportunity to personally see that each guest enjoys all the benefits his restaurant has to offer. The owner-operator has a unique opportunity to provide personal touches that larger chains never will be able to do. I spend 60% of my day in restaurants, inspecting, evaluating and communicating.
Q: Is all the increased competition good news for consumers?
A: Having good service, a great environment and good food is no longer enough anymore. You have to be innovative and provide customers with something extra special that makes them want to come back.
The successful restaurants today are those that have incorporated a theme along with their quality food, service and value. In the Orange County casual dining niche, some of the more successful chains include Islands, Mimi's and Claim Jumper. Each has done a very nice job in promoting a feeling that goes along with the food they serve.
Q: It seems that restaurants are lucky because costs haven't been going up very quickly.
A: We've been very lucky because meat and produce prices have remained relatively stable during the past two years. That's fortunate because most restaurants are fighting to retain pricing on menus. We understand the importance of value, and we're trying to maintain price structures. If food prices were to rise, we'd inevitably have to pass it along to consumers.
Q: Why did you enter the restaurant business?
A: When I was going to high school I needed a part-time job. I found out that the restaurant business offers enormous amount of opportunity, so if someone is willing to work hard, there's tremendous room for success.
Q: How about smoking? Los Angeles has moved to ban smoking in restaurants.
A: Smoking is a very hot issue because there are good points to be made on all sides. But the (federal) Environmental Protection Agency has named secondhand smoke as a carcinogen, which puts restaurants and every other employer at risk for potential lawsuits. We'd like to see smoking outlawed in all workplaces or some statewide legislation that protects the employers from the risk of a secondhand smoke lawsuit.
Q: How come so many new restaurants keep opening, even during an economic slowdown?
A: Many national chains start in other parts of the country. They look at Orange County and see extremely attractive demographics, relatively high income levels and good population density. They also see wonderful traffic counts and many existing restaurants. But they forget to look at the number of restaurants already in the area. There are now so many choices for consumers that only the best restaurants will survive, and, in this market, location becomes extremely important. Everything else being equal, customers will go where it is most convenient. Also, people look at the industry as something that's very easy.