Levy Restaurants' Making Concessions

Still a specialist at accommodating the VIP seats, Levy Restaurants sees opportunity in feeding the masses.

By David Farkas, Senior Editor -- Chain Leader, 12/1/2003

On a rainy afternoon this fall, in a skybox at U.S. Cellular Field in Chicago, Levy Restaurants CEO-elect Andy Lansing recalls his voracious eating habits on game days at the old Comiskey Park. Those standing around him groan at the vivid descriptions of the sandwiches, hot dogs, chips and beers he and his pals consumed. When the story finally seems over, his listeners laugh, relieved. But Lansing is merely pausing for effect. “No, wait,” he cries impatiently. “On the way home, we stopped at Al’s Italian Beef again.”

Years later, the 43-year-old executive is still trekking to stadiums for the food—and still preoccupied by its consumption. Only Lansing, who becomes CEO next month, isn’t doing the eating; affluent spectators are. In the process they have made closely held Levy Restaurants the largest premium concession operator in the country and, arguably, the most influential.

The company’s Sports & Entertainment division currently does business in 35 markets, operating in 55 sports stadiums, convention centers and motor speedways. The list includes such notable venues as Lambeau Field, Churchill Downs and Staples Center. The company is so well known among professional teams for servicing skyboxes, club seats and stadium restaurants that co-founder and Chairman Larry Levy can boast that “we don’t have to establish credibility any more” without sounding swell-headed.

This year, the Sports & Entertainment group is expected to ring up $348 million in sales, an 11 percent gain. A portion of that sum comes from acquisitions. But Lansing insists much of it is “organic growth.” The company’s 20 restaurants are expected to post sales of $72 million in 2003, a 4 percent gain, according to the company. The grand total: $420 million, 10 percent more than last year. Officials won’t report operating income or sales at individual venues or restaurants.

Restaurant Roots
The Sports & Entertainment division springs from the company’s first business: fine dining. Twenty years ago, Levy opened Spiaggia in a skyscraper he developed on Chicago’s tony Magnificent Mile. The dramatic Italian restaurant, with a spectacular view of Lake Michigan, remains a hit, earning ninth place this year on Chicago magazine’s list of the city’s 20 finest restaurants. The company operates another 19 full-service restaurants, including Fulton’s Crab House in Lake Buena Vista, Fla.’s Downtown Disney, which is among the highest-grossing restaurants in the United States.

The restaurants have long been the selling point for Levy’s premium concession business, which was launched in 1982 after Levy agreed to cater White Sox games. Levy Restaurants, the pitch went, was no mere concessionaire; it’s a company of restaurateurs and chefs who operate some of the finest eateries in the country. “We might be serving a large crowd at Staples Center, but we’re there with the same passion as we’d have at Spiaggia,” Levy maintains.

For teams charging high prices for luxury suites in new venues, carving stations, fancy wines and rich desserts made a great deal of sense. Today, Levy operates premium concessions in 17 of 26 stadiums and arenas. It’s the market leader in arena premium catering and a close second to Aramark in stadium premium-seat catering, according to Sports Business Journal.

Lansing’s plan now is to grow the company’s general food-and-beverage concession business—popcorn, hot dogs, suds and the like. It makes sense, considering the numbers involved. Detroit’s Ford Field, where Levy is sole concessionaire, seats a mere 8,600 people in the premium “club” section; 56,400 people watch games from less expensive seats. The company currently operates general and premium concessions at Lambeau Field in Green Bay, Wis., and America West Arena in Phoenix. It has for years managed general concessions in Chicago at the historic Lincoln Park Zoo and the city’s vast McCormick Place. “Before we started talking [publicly] about doing general concessions, it was going on behind the scenes,” Lansing says.

“Levy has brought our own contract-feeding standards up. They are the best at what they do, and they will upgrade general concessions,” declares Compass North America CEO Gary Green. He may be biased. Three years ago, the $5 billion foodservice concern, an arm of London-based Compass Group PLC, “paid a premium for a [49 percent] stake” in the private Chicago-based company, he says. The price was not announced.

Reinventing Concessions
Levy often shares the concession business with other companies who run the more lucrative though less prestigious general concessions. But in recent years, Lansing claims, sports teams have asked Levy to become the single-service concessionaire, citing fewer complications. “They wanted us to do for the general what we had done in premium, and that’s to reinvent it. We feel it’s a very big growth area,” he says. Technomic, a Chicago-based food industry consulting firm, estimates the overall concession market to be $17 billion.

The business won’t come without a fight. “I’m not sure it needed to be reinvented,” says Karen Wittig, vice president of premium services at archrival Aramark, the largest U.S.-based concessionaire. Aramark’s share of the total premium-seat business—stadiums, arenas, catering—is larger than Levy’s, Sports Business Journal reports. “We are constantly evaluating what to do to keep current,” she says. “Sometimes we’re ahead of the curve.” The Philadelphia-based concern dominates the market for general concessions.

Lansing nonetheless wants to spruce up existing stands with new graphics, uniforms and displays, and improve service and food. The Lincoln Park Zoo is a good example of the style Levy brings to general concessions. Cooks in chef’s coats prepare orders in front of customers, and colorful graphics feature menu items that range from flatbreads and burritos to burgers and banana splits.

“You’re not going to be treated as if this is the only place to buy food,” Lansing claims. “It’s still going to be about hot dogs and nachos, but we’ll introduce signature items.” For example, smoked pork butt is among the 45 menu items offered at Lambeau Field.

New Beginnings
Lansing hadn’t planned on selling pork butt sandwiches or even a foodservice career when he met Levy for lunch at Chicago’s fancy Bistro 110 in 1988. Lansing, 27 at the time, was an attorney who had almost by accident become the agent for All-Pro receiver Mark Clayton of the Miami Dolphins. Levy and his brother, co-founder Mark Levy (later bought out by Larry Levy), wanted a new general counsel for their 10-year-old company. Lansing’s name came up because Lansing’s sister, then a Levy employee, thought he might know someone.

“We brainstormed a little,” Lansing recalls. “I had no interest in the job. I was a lawyer and a sports agent. It was a dream come true.” Lansing remembers sitting in a sports law class at Loyola Law School in Chicago and learning that the chances of a glamorous life representing pro athletes were roughly the same as being appointed a U.S. Supreme Court Justice. “After I became an agent,” he says, chuckling, “my professor invited me back to his class and introduced me as ‘Justice Lansing.’”

As the lunch meeting at Bistro 110 wound down, Lansing says Levy offered him the legal slot. “I said to myself, ‘There are successful people and really successful people. Really successful people take advantage of an opportunity they are never going to see again,’” Lansing recalls. Surely that had happened when a handyman named Richard introduced him to his cousin, Clayton. Then again, Levy Restaurants was a $100 million company, and, he adds quickly, “Larry is an incredibly persuasive individual.”

Nevermind that the young lawyer knew little about intellectual property rights, trademark law, labor disputes or allegations from the Equal Employment Opportunity Commission. “I wasn’t going to tell people I didn’t know about labor law or how to defend a company against [an EEOC] charge,” he says. “I came in with the attitude that because I had no business being there, I’d work my tail off to prove Larry had made the right decision.”

Rising Through the Ranks
Lansing swiftly ascended through management. He was named executive vice president in 1991 and president and chief operating officer four years later—an unusual climb for a legal professional, particularly in a restaurant company. “Andy is phenomenally well-organized, and he surrounded himself with very good people,” Levy says.

Lansing hired former Hilton Hotels executive Hans Williamson. “Hans drove our costs down dramatically,” Levy says.

Art Frigo, a private investor and Levy advisory board member for 13 years, recalls worrying about Lansing’s rising star at first. “I’ve run companies and been on many boards,” he explains, “and, generally speaking, it’s the wrong decision to give CFOs and lawyers the top job. Lawyers don’t meet the managerial task very well.” Frigo changed his mind when he realized Lansing dealt easily with people yet wasn’t afraid to address problems quickly. “Andy has that good combination of looking soft and listening carefully, and yet knowing when he has to act firmly,” he says.

Today, the soon-to-be CEO is in “soft” mode, clad in a plush black coat, dark wool pants and a phosphorescent green shirt. At the moment he’s being chauffeured to the Lincoln Park Zoo to show a visitor the concession operations. He talks up the organizational studies major at his alma mater, University of Michigan. Lansing chairs the interdisciplinary program’s business development committee. “It’s an absolutely phenomenal major, because you study different disciplines, which produces better-rounded thinkers,” he declares.

Lansing himself has interdisciplinary interests. Besides work, he’s a talented amateur magician. “I’ve played the Bellagio,” he boasts before mentioning he entertained 200 Compass North America foodservice managers who’d won a trip to Sin City. “But it was still the Bellagio.”

A Compass to Acquisitions
Lansing is also a big hit with Compass top brass. “Andy is one of the brightest guys in the industry,” Green says. “We’re lucky to be associated with him.” It was the aftermath of the Compass deal that allowed Lansing to exert greater influence on company strategy. He helped negotiate it, which earned him a seat on Compass North America’s board.

Both officials claim the three-year-old relationship is going well so far. “Compass is a great strategic partner. They don’t say to us, ‘Thou shalt do this,’” Lansing says. Instead it has presented him with a number of opportunities. Levy Racing, for example, was created two years ago when Levy Restaurants acquired the assets of Finish Line, the concession division of Charlotte, N.C.-based Speedway Motor Sports. Compass N.A. is also headquartered there.

In one fell swoop, Levy was annually feeding 3.5 million people at six NASCAR racetracks and four minor league baseball parks. Compass N.A. also brought Levy contracts for Montreal’s Bell Centre and the Sky Dome in Toronto. Its United Kingdom connection landed Levy a consulting contract to help fix food offerings at Old Trafford in Manchester, England, the storied home of soccer giants Manchester United.

The company’s own relationships have resulted in recent acquisitions. In September Wolfgang Puck, a joint-venture partner at Dodger Stadium since 2000, sold Levy his six-year-old cafe in Downtown Disney for an undisclosed sum. Lansing says he wants to buy more businesses that complement Levy’s. “There are a whole lot of companies out there,” he says, “restaurant companies, sports and entertainment companies, all in our area of the industry.”

Money hasn’t been a factor lately. Lansing says Compass provides access to capital at favorable rates. Green adds that Compass also passes on savings on cleaning products and paper. Lansing, meanwhile, doesn’t think a buying spree will affect his company’s ability to absorb new businesses. “I think we can grow exponentially, and we can always add strategic positions in operations and at corporate. No one here looks at acquisitions with fear. They look on them as the next step in the Levy story,” he maintains.

“Andy is capable of executing the aggressive expansion plans that Compass will bring, and he’ll do it with great skill,” says Frigo, the investor. “That, I think, will be Andy’s stamp as CEO.”