The Elbert Files: Levitt's Long John Silver's story
Friday, June 20, 2014 6:00 AM
Richard Levitt became an early franchisee of Long John Silver’s in 1973 after a guy who worked at a local restaurant that Levitt and his brother-in-law Ed Glazer owned during the 1960s went to work for the then-new seafood restaurant chain in Kentucky.
Levitt, 84, recalls that the former employee dropped by later and said: “You guys ought to look at this. This is a red-hot brand.”
“Ed and I flew down to Lexington, spent a day and immediately decided to go for it,” Levitt said. “We opened a store on Southeast 14th Street in Des Moines, and it did well. So we opened another one and it did well. Every one we opened did well.”
Altogether the family ended up owning 31 Long John Silver’s eateries in Iowa, Illinois, Arizona and South Dakota, before they had to begin the painful task a couple of weeks ago of closing 16 of them.
More about that in a minute, but first you need to know a little more about Levitt. During the 1970s and ‘80s, he was one of the city’s most successful bankers, and his advice was widely sought by community leaders.
His immigrant grandfather, Jacob Levitt, had started a consumer lending business in 1897, which later became Dial Finance and was acquired in 1982 by the company that is now Wells Fargo & Co. Dial’s lending platform
became the foundation for what is now one of the world’s largest consumer and mortgage lending operations.
High ethical standards were among the reasons the Levitts were so successful in an industry fraught with predatory practices. But that’s a story for another day.
Today’s story is about Long John Silver’s and the Levitt family’s 31 restaurants.
One reason the chain did so well was that its menu appealed to older customers whose incomes are less dependent on the ups and downs of the economy.
In the early years, Levitt said, “we did phenomenally well, getting an annual return on our cash investment of about 30 percent.”
There were ups and downs, but no serious problems until the owner, Yum Brands Inc., which also owns such popular chains as KFC, Taco Bell and Pizza Hut, decided to divest and sell the Long John Silver’s franchise operation to a private equity group in 2011.
Under the new owners, mistakes were made that alienated longtime customers, including changing the tartar sauce, a move that was eventually reversed. There was also a problem with the coleslaw when the drought resulted in some of the ingredients being unavailable for a time.
An even bigger problem began a year ago, when the Center for Science in the Public Interest called out Long John Silver’s for cooking with trans fat oils. The CSPI labeled the chain’s “Big Catch” menu item “the most powerful promoter of heart disease in the food supply.”
The management in Kentucky responded and replaced the trans fat oils with a non-trans fat substitute. But the substitute had taste and other consistency issues, resulting in huge drops in business, Levitt said.
A second iteration of the oil was introduced recently and is receiving better reviews, but the damage had already been done, resulting in a difficult decision by Levitt to close 16 of his family’s 31 stores.
A postscript to the story is that the brand managers in Kentucky last week launched efforts to make amends, including this unusual offer: On June 28, between 11 a.m. and 3 p.m., customers can visit any Long John Silver’s and receive a piece of classic battered fish and fries for free. No purchase necessary.
“They don’t say anything about the problem,” Levitt said. “They just say what we are going to do.”
Hopefully, it will move things forward; although it’s too late to help the 200 people Levitt had to lay off.
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