From mom-and-pop sandwich shops to billion-dollar fast-food icons, the successful family-run restaurant is the culinary embodiment of the American dream. The foodservice industry is full of businesses that began as one person’s vision and gradually evolved into a treasured way of life for family members across the years.
However, that dream doesn’t always make the generational leap for some families. According to the Family Firm Institute, more than 30 percent of all family-owned businesses survive into the second generation, but only 12 percent will still be viable in the third. By the fourth generation and beyond, a mere 3 percent of family businesses are still in operation.
But even given the multitude of challenges inherent in the restaurant industry, many family-owned restaurants have persevered and prospered.
In New Orleans many restaurants, from the coffee-stand staple Morning Call to the elegant Antoine’s, have survived into the fifth generation. David Gooch, a fourth-generation owner and manager of Galatoire’s, attributes his family’s success to tradition, consistency, and the loyalty of staff and customers.
“We have two sets of father-son waiters, and in both cases the sons have been here more than 20 years,” Gooch says.
Nearly 11 years ago, Melvin Rodriguez joined Galatoire’s as general manager and chief operating officer.
“Working for the family and being entrusted with their traditions and heritage is an important task,” he says. “I don’t feel left out [because I’m not a family member]. I get called ‘Cousin Melvin’ sometimes.”
Though he’s an “outsider,” Rodriguez appreciates what the family has to offer.
“When you’re working for a family business, the answers are at your fingertips,” he says. “You don’t have to go up the ladder like you would in a corporate structure. It’s nice to be able to make the decisions that you think are best for your business.”
As the family has expanded—30 individuals now own a share of the business—so has the restaurant. Justin Frey, fourth-generation family member and general manager of Galatoire’s site in Baton Rouge, La., admits the extension strains the family’s core asset: tradition.
“I’m worried about the lack of family members working here,” Frey says. “I think a lot of customers might not care for that. It might become too commercial and corporate.”
Other brands have found ways to maintain familial ties despite expanding to hundreds of locations. Fourth-generation White Castle family member and vice president of restaurant operations Lisa Ingram suggests it’s in the Ingram DNA.
“The biggest benefit for a family business is that you have people who are very dedicated to the business,” she says. “To us, it’s more than just a job. We have this very strong drive for the business to succeed. Sometimes people who aren’t family members have that too, but in family members it’s ingrained.”
The Ingrams gather for yearly family meetings.
“Each year we focus on making sure the business is sound, but also that the family dynamics and family units are sound,” Ingram says. “The health of the family will help with the health of the business. They’re more entwined than some people give them credit for.”
To keep younger members in the loop, the meetings usually include an activity at the corporate headquarters in Columbus, Ohio.
“We try to do something so that they can see part of the business and actually engage in being part of the family of White Castle,” she says.
But Ingram insists that working at White Castle isn’t something inherited.
“If there’s a need in the business and a family member can fill it, we want to encourage that,” she says. “But it’s not a given.”
White Castle System Inc. generated $539.4 million in food and beverage revenue for the year ended December 2006, according to Nation’s Restaurant News Top 100.
Fellow fast-food family empire Chick-fil-A has a similar mind-set. John White IV, founder S. Truett Cathy’s third grandchild to enter the operational side of the company, went through the same process as any other potential franchise-operator before opening location number 1,356.
“They’re a little harder on us than anyone else, or at least it felt that way at the time,” White says. “But that allowed me to understand where other operators are coming from and gave me credibility. I would hate to feel like I was given something without being qualified.”
Although the Atlanta-based company hasn’t undergone a full transition to “Gen-2” yet, the family has made firm plans for its future.
“‘Gen-3’ members have to work two years somewhere else after college,” says Trudy White, second-generation Cathy and board member. “We want them to have their eyes open to what it’s like to work in other businesses. We want them to build their confidence and know that they don’t have to rely on the family business.”
The Cathys also drafted a covenant stating they would commit to keeping the company private and stores closed on Sundays.
“In a publicly traded business, someone works until the shareholders get tired of them, but we’re not hindered by that,” says president and chief operating officer Dan Cathy. “We have the distinct advantage of being able to think multigenerational, and it helps us to manage the culture and consistency within the business.”
Like the Ingrams, the Cathys keep the ever-expanding family connected with meetings. Russ Crossen, president and chief executive of Ronald Blue & Co., consults with the family in its efforts to smooth the transition between generations.
“The biggest thing is managing the expectations of the succeeding generations and making sure they match with reality,” he says. “We spell them out so they know what they’re expected to do.”
Chick-fil-A reported systemwide sales of $2.27 billion for the year ended December 2006.
“Often times, members of the next generation grow up with a different or higher level of wealth, and don’t have that fire in the belly that you have to have in the restaurant business,” says Ann Dugan, assistant dean at the University of Pittsburgh Joseph M. Katz Graduate School of Business and founder and executive director of the school’s Family Enterprise Center. “It’s very important that every family member is involved to do the right thing for the business. If the right thing is done for the business, then the family will be taken care of as well.”
But even when everyone has the business’ best interests in mind, conflicts can occur.
“It usually happens when there are more people involved as you expand the generations,” Crossen says. “There are a lot more divergent opinions of what should happen and more opportunities for misunderstanding and miscommunication.”
New Orleans’ first family of fine-dining, the Brennans, experienced such an impasse in 1974, resulting in founder Owen Brennan’s wife, Maude, and three sons taking total ownership of the original restaurant after years of tension over expansion.
But the other branches of the Brennan family tree also flourished. Ella Brennan still operates Commander’s Palace, while Dickie Brennan runs his eponymous steak-house, Palace Cafe and Bourbon House. Ralph Brennan continues to add to his stable of successes: Ralph’s on the Park, Bacco and Red Fish Grill, with the Jazz Kitchen at Downtown Disney in Anaheim, Calif.
“They just had different business plans and wanted to do different things,” Ralph Brennan says. Though they no longer form one company, he admits the Brennans still have a common bond.
“We have quite a reputation to uphold, and to date, everyone’s done a fine job,” he says. “There are family operations here that tend to lose momentum as they get into later generations, and you can’t do that. You’ve got to keep pushing yourself to grow.”