Today’s big news turns a spotlight on two longtime industry figures who aren’t often center-stage, despite strong claims to stardom.
Bill Foley is the more familiar of the two, a carry-over more from his days as the kingpin behind Carl’s Jr., Hardee’s and several other regional chains, from Taco Bueno to Rally’s. At one point he ran a veritable restaurant empire, but more remarkable was how he got started.
Carl Karcher, the Carl in Carl’s Jr., ran into trouble because of some real estate deals. Because the parent of Carl’s Jr. was a public company, a rescue of the concern’s founder was a dicey business for the home office. The company’s CEO and Karcher had a very visible struggle for control of what Carl, a textbook entrepreneur who started with a hotdog cart, had built through the sweat of himself and his family.
The very public battle was waged on radio stations and in newspapers within Carl’s stronghold of southern California. Public sympathy was clearly aligned behind Karcher, but that didn’t bail him out of a mountain of debt.
Enter Foley, who headed what at the time was believed to be the nation’s largest title insurance company. Like a white knight on noble steed, Foley provided the money to rescue Karcher from serious financial difficulties. But, in the process, he slickly ended up controlling Carl’s Jr. and the concepts it later amassed, including Hardee’s, Green Burrito and a host of other smaller brands. Karcher was gradually phased out, and Foley became the burger king.
The purchase of the Hardee’s regional burger chain and the subsequent acquisition of its largest franchisee, Advantica, mired Foley’s restaurant diversification in trouble, and, after a 12-year run, he stepped out.
From the standpoint of the industry, he virtually disappeared. Indeed, if he was known at all, it was as a supplier to high-end eateries. He bought a bunch of wineries in Napa and Walla Walla, Wash., and was reported to be in Montana, enjoying his wealth and wine.
Then he popped up again in 2007 through the purchase of several small, Montana-based restaurant chains. We’re talking about such powerhouses as MacKenzie River Pizza Co., Mambo’s, Craggy Range Bar and Grill, and Corner House Grille. With not much more than a dozen or so units, Foley seemed as if he was buying a diversion, if not a place where he could have some food with his wines.
Obscurity briefly returned, with the notable exception of Foley’s emergence as one of the bidders for Wendy’s.
Now he’s back in remarkable force. Taking advantage of the industry’s downturn, he snorked up Village Inn, Bakers Square and Max & Erma’s, all of which had gone bankrupt.
O’Charley’s and its little sisters, the Stony River Legendary Steaks and Ninety Nine casual chains, followed.
Then, on Friday, his Fidelity National inked a $72-million deal to buy J. Alexander’s, a polished-casual concept that many have likened to a lower-ticket Houston’s.
If the deal goes through, according to Fidelity, Foley will have a portfolio consisting of 674 restaurants and six concepts.
Which brings us to the other figure involved in the J.Alexander’s deal. With the pending retirement of Ruby Tuesday’s Sandy Beall, Lonnie Stout II may be the longest serving CEO in casual dining.
He’s definitely been one of the more distinctive. Long before Warren Buffett made the CEO’s annual letter to shareholders something that investors actually read, Stout was using that podium to go far beyond the usual pap.
In one of the more memorable installments, Stout laid out the travel policies he’d set for himself and the rest of J. Alexander’s team. This was at a time when CEOs' self-pampering and perks worthy of kings were prompting investors to yelp about too much indulgence.
J. Alexander’s investors needn’t worry, Stout convincingly argued. When it comes to travel, for instance, budget hotels like Red Roof Inns were just fine for him and the executive team. And if the company’s leaders should ever drift away from that frugality, the shareholders were to call him and snap them back, loud and pointedly.
Stout's post-acquisition fate was not disclosed in the announcement of the purchase. Other strong executives who've been brought into Foley's fold, like O'Charley's CEO David Head and concept chief Marc Buehler, were smartly kept in their posts.
In any case, it'll be fascinating theater, watching these two characters while they uncharacteristically wear the limelight.