Sizzler Juicing Up Menu as It Tries to Lure Back Customers

With one foot in the buffet line and the other in the steak house world, Sizzler has earned a reputation in food circles as a “trough-brau,” a place heavy eaters go to load up on $6.95 tri-tip and all-you-can-eat tapioca.

But now it’s trying to shake that image by introducing to the budget chain such extravagances as premium wine, USDA choice steaks and a soothing dark-wood interior.

Although sales in these remodeled outlets are moving up, critics wonder if the steak house unit of Sizzler International isn’t overstepping. Will customers order a glass of cabernet that they have to tote to their table on a plastic tray? Will they be willing to fork out $15 for a rib-eye ordered at a counter?

“I think that there’s a large percentage of the population that doesn’t want to stand in line to order dinner,” says Ron Paul of restaurant consulting firm Technomic Inc. in Chicago. “‘In trying to move up, one of their key hurdles will be the self-service format.”

Sizzler USA President Thomas Metzger insists the company’s concept hasn’t fallen out of favor even though customers have been turned off in recent years by declining food quality and the 1980s-style turquoise-and-pink decor.

“When you ask people, most can recall having gone to a Sizzler five, 10, or 15 years ago,” says Metzger. Problem is, most of those same people haven’t gone back since.

Over the next six months, Sizzler will spend millions of dollars to try to lure those customers back, replacing the buffet look in its 64 company-owned restaurants in Southern California, San Francisco, New Jersey and New York with a club room atmosphere.

The menu is also getting a make-over. Although some of the fare, such as Malibu chicken, will remain on the menu, many of the steaks will look and taste different.

Gone is the pre-cut, pre-marinated tri-tip meat that Sizzler would defrost and grill; replacing it is USDA select grade or better meat that is cut at the restaurants, seasoned and cooked on a charbroiler to seal in the flavor.

Instead of knit polo shirts, servers now wear dress shirts, and bring drink refills and mints after dinner.

The new Sizzlers have already posted “double digit” sales increases, says Metzger, although he declined to be more specific. However, the chain has a long way to go to catch up to pricier steak houses, which have seen sales surge amid a red meat renaissance.

Sizzler will continue working the kinks out of the new concept at company-owned outlets this year before pushing it over to the 200 franchised locations next year.

Some franchisees may be less than enthusiastic about having another change forced upon them. In the last decade Sizzler has tinkered with three different formats. Its last attempt--the American Grill concept which amounted to little more than fresh paint and signage--died when the company lurched into Chapter 11 bankruptcy in 1996 and shuttered 130 poorly performing stores.

Before that, the company had tried unsuccessfully to cater to the health-conscious set by building up its salad bar, adding pastas, soup and other low-fat fare. However, that business began losing steam when giant food bars such as Souplantation and Fresh Choice moved in early in the 1990s. Then, when Sizzler raised its prices, it began losing business from more price-sensitive customers to fast food chains.

“The lesson learned was that you can’t be all things to all people,” Metzger says.

Its biggest problem now, analysts say, is how consumers perceive the chain. After years of seeing the quality of Sizzler’s food slip, many see the chain as a place people go to feed, rather than dine.

“They need to get back some credibility for doing good steaks,” says Irvine-based restaurant consultant Randall Hiatt.

Since the chain emerged from Chapter 11 in 1998, the company has cleaned house, hiring a new management team with more restaurant experience, including Metzger, who had previously served in management positions with Kenny Rogers Roasters and Wrapsters, an Atlanta-based fast food chain, and Chief Financial Officer Steve Selcer, who had headed the operations for the La Salsa chain.

Thanks to a little belt-tightening and America’s rekindled interest in beef, Culver City-based Sizzler now appears to be back on track. Sizzler International reported net income for the fourth quarter of $2.7 million, or 10 cents a share, an 8% increase over the previous year. Same store sales also edged up 5.7% during that period and customer counts are up.

Sizzler International’s stock, mired in a narrow trading range under $4 for the last few years, closed Friday at $2.31 on the New York Stock Exchange.

Sizzler International has also begun making investments in its future growth. In late May, it agreed to fork out $21 million in cash and stock for control of San Diego-based Oscar’s Restaurant, a hot casual dining concept with big shareable portions and an even bigger takeout business. Sales from this chain are expected to grow 30% a year as the chain expands across California.

Sizzler’s growth, meanwhile, will be more restrained, as the company focuses on tweaking the new concept, leaving expansion to its franchisees.

However, convincing franchisees to spend the more than $200,000 necessary to convert each store will be difficult, analysts say.

With Americans eating out more often and eating more than ever before, most Sizzler owners are already seeing a pick up in business.

“Business has been steadily increasing year by year so I don’t know if they’ll want to renovate,” says Song Kim, who manages a franchised location in Sunland. “That’s a lot of money.”

Sizzler franchisee Gary Myers, whose San Diego store helped inspire the new look, says the expense is worth it. Business at the shuttered Sizzler locations he’s reopened are double what they were before, and he’s getting more customers in the door than he has in years past.

Metzger hopes to tap into a somewhat freer spending crowd by turning Sizzler into a chop house, with bacon-wrapped filets and other new items such as pork chops. He’s even considering doing away with counter service altogether.

It may take time to convince Sizzler’s hard-core customers to trade up from Pepsi to wine and from $5 Hibachi chicken to $10 grilled salmon. Indeed, on a recent visit to one of the newly remodeled stores, employees seemed unused to dishing out such luxury, struggling to find a corkscrew for wine, or the register key to upgrade a customer to USDA choice meat.

At some point, analysts say, the chain will have to decide which it is, a steak house or a buffet.

Franchisee Myers believes the days of tapioca and tacos are over.

“I think the buffet customer probably isn’t there anymore. It’s all about steaks.”