Jerry’s Deli Sees Chance for More and More Outlets

The way Isaac Starkman figures, if his Jerry’s Famous Deli restaurants can make it in L.A., they can make it anywhere.

Starkman has doubled the number of restaurants in the chain to eight since the Studio City-based company went public with an offering of stock last fall, netting about $9.2 million.

Now, the 58-year-old Starkman is gambling that the Jerry’s theme--”More and more food,” as he puts it--will prove as popular across the country as it has in L.A.

With new restaurants in Westwood and Pasadena already matching the performance of existing outlets, two newly acquired Solley’s Deli locations in the San Fernando Valley and a ninth restaurant soon to open in Orange County, Starkman is ready to talk in earnest about nationwide expansion.

Las Vegas is Jerry’s next stop, he said. And after that, maybe San Francisco, Miami, Chicago--even New York. “We will hit the spot almost anywhere we go,” he said.

Starkman, originally from Israel, opened the first Jerry’s location with a partner in Studio City in 1978. It took years for the deli to earn is current local renown as a nightspot and hangout, he said.

Through early years of losses, Starkman just kept adding more items to the menu, hoping to find the right formula. “The problem was, we have never taken anything off,” he said.

The result is a sprawling menu of 700 items. The restaurants’ vast offerings make kitchen logistics complex--it takes at least three months to train a Jerry’s prep cook--but Starkman now considers it the chain’s ticket to success.

His ambitious goal is to open two or three new restaurants per year, either by building from scratch or acquiring other eateries.

“They’re doing well in a difficult restaurant environment,” said Ethel Hill, an analyst with Jerry’s little-known underwriter, the Boston Group, a recently formed New York entity. Especially if Jerry’s sticks to acquisitions of entrenched restaurants, there are few limits to the chain’s potential, she said.

But other analysts are skeptical. Jerry’s stock performance has hardly been spectacular since it went up for sale. The price has remained at about $8 since shortly after the chain put almost 2 million shares up for sale at $6 apiece. It closed Monday at $8.125 a share.

The offering “was a joke,” said analyst Stephen D. Weinress of Irvine-based L. H. Friend, Weinress, Frankson & Presson. He dismissed the effort as “a way to capitalize on the public’s gullibility.”

Weinress contends that Jerry’s bold, public-company aspirations are at odds with the chain’s small size.

As the new restaurants have come on line, the picture has improved. For the three months that ended March 31, the company more than doubled its profits to $320,000 on an 8% gain in revenues to $7.73 million.

But Jerry’s is still a bit player in the intensely competitive restaurant market, Weinress said.

Recent bankruptcies of chains such as Sizzler International and Hamburger Hamlet show the hazards of complacency in an industry where trendiness rules.

It takes a hip gimmick to stand out in a such a market. “Jerry’s is just a comprehensive deli that serves big portions. It’s nothing unique,” Weinress said.

Starkman disagrees. Big portions, and the big, big menu, are a buffer against changing times, he said.

Although the red-and-white-decked restaurants have a nominal Broadway theme, really “food is our theme,” Starkman said. “We do not have props. We have food.”