Hollywood’s New Calling Card Is Gray

Forget the gold card. The hippest thing in L.A. these days is the gray card. The plastic Transmedia Network card buys restaurant meals at a discount.

The dining card has slowly built a steady following since it was first introduced in New York in 1984 and in Los Angeles eight months ago. Currently, cardholders can cash in on discount dining at 175 Southland restaurants: Jackson’s, Citrus, Babylon, Schatzi on Main, Mezzaluna, Monkey Bar, Vida, Roxbury, Tatou, to name a few. And Transmedia expects to double the amount of participating restaurants and expand into Orange County within six to nine months.

Here’s how the card works: Charge a meal at any place where the Transmedia Network card is accepted. On your next MasterCard, Visa or Discovery bill, you will be charged the full amount. On the same statement, you will also receive a credit for 25% of the food and beverage portion. You pay tax and tip on the total bill. The only catch is the $50 annual fee, which is often waived through various marketing promotions. Currently, there are 17,000 Los Angeles-area card holders.

“We designed the card so that there would be no restrictions, no coupons, no negatives,” says Transmedia executive Stuart Pellman. “People don’t have to be concerned about being embarrassed using the card when out with business guests.”

“I now take clients to places that accept the Transmedia card,” says Jackie Green, who owns a Beverly Hills public relations company. “I went to Chez Helene last week because it was on the list.”

Since the card is now accepted in many major U.S. cities (there are 370,000 card holders nationwide), Green also plans to use the card when she travels. “It encourages you to eat out more,” she says, “and the charges appear on my Mastercard, which is tied to frequent flyer miles.”

Participating restaurants get cash up front from the dining card company. The amount depends on the size and reputation of the restaurant. For every dollar received from Transmedia, the owner has to pay back two, so for a $10,000 cash advance, the payback is $20,000. That means for every meal served to a Transmedia cardholder, the restaurant actually gets only half of the total food and drink bill. The other half is divided between Transmedia and the customer. After the $20,000 is paid back, the cycle starts over again.

Although it seems a bad deal for restaurants, Pellman says otherwise. For one thing, restaurants that are strapped for money and can’t go to banks have quick access to cash. Also, it brings in new customers and fills empty tables.

“I like the program,” says Michael Eisenberg, who co-owns Thunder Roadhouse on Sunset along with “Hog” celebs Peter Fonda and Dennis Hopper. “I’m getting at least 10 to 15 new people per week, and those are $60 dinners.”

Eisenberg, who received $5,000 up front from Transmedia, used the money to buy an additional refrigerator. “My chef’s happy because now he’s got a separate meat walk-in,” Eisenberg says. “It’s like a Kosher kitchen here now, separate milk and separate meat.”

Mark Ehrli who runs Arnold Schwarzenegger’s Venice restaurant, Schatzi on Main, was one of the first to sign up with the plan. “I was a pretty tough sale,” he says, “but they’ve backed it up with some good advertising.” For Ehrli, the issue wasn’t money; it was the lure of new business for the neighborhood restaurant. “I feel they are going to be big in this city. Only last night I had someone come in and say, ‘We just got our Transmedia card and wanted to check you out.’ And they lived over in the Marina.”

But not every restaurateur is as thrilled about the Transmedia card. According to Pellman, 10% of L.A. restaurants have dropped out since the card was first introduced.

Celestino Drago would prefer his customers leave home without it. The Santa Monica restaurateur, who began accepting the card when it was first introduced in Los Angeles, has notified the company that he plans to quit the program. “It was a good way to introduce people to my restaurant,” he says, “but now there are too many card holders. A party of six using a Transmedia Card can kill you.”

Mary Atkinson, owner of Orleans in West Los Angeles, also plans to end her restaurant’s affiliation. “I’m losing quite a bit of money on it,” she says. “I thought it would bring in new customers, but instead, I’m just getting people looking for a bargain.”

Owners of other top restaurants including Patina, Campanile, Rex il Ristorante, Spago, Michael’s, Valentino and Chez Melange have declined to get involved.

“I kicked them out of my restaurant,” says the feisty Xiomara Ardolina, who owns the French restaurant Xiomara in Pasadena. “What happens if one night every customer uses a Transmedia card?”

“Our study shows that doesn’t happen,” says Pellman. “We know customers come in more often. And most importantly, when a Transmedia card holder comes in, he is bringing in other people. Many of those people don’t have a card and they come back.”