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SBJ/February 6-12, 2017/Champions
The Levy difference
Larry Levy mixes the perfect ingredients to create food-service empire
Published February 6, 2017, Page 1
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|Larry Levy credits his mother, “Company Mom” Eadie Levy (right), with helping cultivate the culture and success of Levy Restaurants.
Something’s missing from Levy Restaurants’ home office in downtown Chicago. Larry Levy, the company’s co-founder and a real estate developer, built One Magnificent Mile in 1983, the skyscraper where visitors touring the firm’s renovated digs can see the next generation of its signature dessert cart and a display of boutique Cubs apparel tied to Levy Retail, the company’s newest sports venture.
But you won’t find any photos of Levy, the self-described serial entrepreneur responsible for growing Levy Restaurants into a market leader in sports food and hospitality, one that today generates $1.5 billion in annual revenue as a Compass Group subsidiary.
That’s by design, said Levy, 72, who serves as chairman emeritus and no longer plays an active role in the business.
The real face of the company is his late mother, Edith “Eadie” Levy, whose matzo ball soup, carrot cake, blintzes and other family recipes rescued the firm’s first restaurant in the 1970s, D.B. Kaplan’s, at the time a failing delicatessen down the street from One Mag Mile. Fondly known as the “Company Mom,” Eadie jumped in the kitchen and helped resurrect the business with her savory home cooking and Jewish dishes.
After those shaky first few months, D.B. Kaplan’s turned out to be a huge success, and her son’s decision to bring mom on board preserved the future of Levy Restaurants. Eadie’s passion for cooking and family also helped mold the company’s culture, whether she was making her voice heard during boardroom presentations or even playing matchmaker for employees.
That’s why it’s her image, not her son’s, gracing the hallway on the building’s fifth floor. The message with the photo is simple: “You have the cake, I’ll have the guilt.”
“She was like our Colonel Sanders,” Levy said. “We would walk down Michigan Avenue together. I owned the company and people would say, ‘Hi, Mrs. Levy,’ and nobody would say anything to me. She really was quite famous in Chicago.”
Larry and his brother Mark opened the deli in 1976, the year Water Tower Place debuted as a shiny high-end shopping center on Michigan Avenue. The turnaround, fueled by Eadie’s magic touch in the kitchen and Larry’s acute business sense and love of good food and drink, led the company down a path to opening several more restaurants in Chicago, including four more destinations in Water Tower Place and Mrs. Levy’s Delicatessen in the Sears Tower (now Willis Tower), as well as on the Las Vegas Strip and Walt Disney World in Florida.
But Levy Restaurants made its biggest splash in sports, starting with the 1983 baseball season at old Comiskey Park with the Chicago White Sox. During the next 15 years, its growth exploded nationally, as the company won deals to serve the food in suites at stadiums and arenas before making the move to general concessions in the late 1990s.
It’s been an impressive 34-year run, done in a short time compared with competitors Delaware North Sportservice, Aramark and Centerplate, three big league concessions firms that have been in business for as long as 100 years.
“It’s a great American success story in a lot of ways,” said Howard Pizer, senior executive vice president of the White Sox.
“It’s amazing what Larry has accomplished,” said Tim Leiweke, CEO of Oak View Group, who signed Levy Restaurants as a long-term partner at multiple facilities during his tenure as AEG’s president and CEO. “He went up against the giants of the industry and found a way. It’s one thing finding a niche; it’s another thing becoming the primary competitor. He became the primary competitor. It was shocking.”
Eadie Levy was instrumental in defining the culture of Levy Restaurants, but it was Paul Levy, Larry’s father and himself an entrepreneur in St. Louis, who set the table for establishing the family hallmark in hospitality. As a result, he left an indelible imprint on his son’s future enterprises.
Paul never got past the ninth grade but he became a pioneer in the music business in the 1950s working with Chicago blues artists and early rock ’n’ roll performers such as Howlin’ Wolf, Muddy Waters, Fats Domino and Bobby Darin.
“My dad had an uncle who had a pinball business and he went to work for him when was 15 or 16,” Larry said. “But he didn’t like the people in that industry. They were ‘bad guys.’ An adjoining business was record distribution. You’d buy a record from the label and then sell it to record stores. So my dad started his own record distribution business.
“One day, he drove Chuck Berry to Chicago to meet [famed record producers] the Chess brothers. Like a lot of entrepreneurs, you live your life in real time and he brought a lot of these people over to the house. I played basketball in the backyard with Paul Anka.”
Inside their “little box house” in the St. Louis suburbs, Eadie provided home-cooked meals for those music legends while Paul held court at the dinner table.
“I don’t ever remember her sitting down at the table,” Larry said. “My dad was always ordering more food, more whatever. He was kind of a type-A personality.”
Outside of the home, every two weeks Larry’s parents would go out to eat dinner on “The Hill,” a historic neighborhood in St. Louis featuring some of the best Italian restaurants in the country. Sometimes, they would take Paul’s clients. Maybe once a month, Larry would tag along and listen to them rave about local restaurateurs such as Vince Bommarito, who at 95 years old remains active running Tony’s restaurant and was once a partner with Levy Restaurants at the Edward Jones Dome and Scottrade Center.
All of those rich Italian meals probably did more harm than good. Paul loved food, but he was an excessive eater. He died in 1980 at age 57. His early death is one reason why Larry eats healthy, works out every day and stays fit in his 70s.
“My dad never had a good day after 42,” Larry said. “He had a stroke and a heart attack [due to] terrible eating habits, like a lot of us. He would eat a salami for snack. I mean a [whole] salami.”
Despite Paul’s passing at a relatively young age, his influence is not lost on his son. Those authentic dinners on The Hill inspired Larry to open Spiaggia at One Mag Mile in 1983, a four-star Italian restaurant overlooking Oak Street Beach in Chicago.
|Inspired by his upbringing, Levy opened Spiaggia, a four-star Italian restaurant, in 1983.
Thirty-four years after it opened, Spiaggia, home of the original wood-fired pizza oven Larry later adapted to sports venues, is still going strong.
Levy doesn’t shy away from talking about the psychological bond with his father. The Larry and Carol Levy Institute for Entrepreneurial Practice at Northwestern University’s Kellogg School of Management did a study that found an “almost perfect correlation” between the need for a father’s approval and entrepreneurial success, he said.
Larry believes there’s some truth to those findings within the Kellogg program that he and his wife endowed, including the love of restaurants and food he shared with his father.
“I think a lot of my unbridled ambition started by trying to prove something to my father,” he said. “My dad would brag about [almost] everything I did. He didn’t just compliment me, he would call his friends. ‘Larry scored the winning basket.’ But if I scored 10 points in an ordinary game … nothing. It was like I had to go higher and higher to achieve things to get him to be proud of me.
“Ironically, when he passed away, and even before that when he became less relevant, it was like, ‘I did it for me.’”
As an undergraduate at Northwestern, Levy wasted no time applying his entrepreneurial skills. He started a laundry service on the Evanston campus after working out a deal with an Armenian-owned cleaner, and had fellow students working for him in every dormitory and fraternity house.
He sold airline flights to Europe for the summer in the days when college kids first started spending time overseas, and had an offshoot business where “you could pick up a Mercedes for your parents for $10,000 cheaper than the U.S. and ship it back here,” Levy said.
Taking a cue from his father, Levy also represented and booked bands at frat parties in the early days of rock ’n’ roll.
After graduating in 1966, Levy earned an MBA from Kellogg one year later. The Vietnam War was going full bore and Levy volunteered for the Army Reserve as a Green Beret. He completed boot camp at Fort Lee and went to airborne school at Fort Bragg in North Carolina, but never jumped out of an airplane.
“Unless you were going straight to Vietnam, they were too busy, and they sent me home,” he said. “I worked in Chicago in real estate and went to the reserves for two weeks every summer over the next six years.”
He got into real estate by accident. While attending Mark’s wedding in St. Louis, Larry promised a groomsman who wanted to get into real estate that he would make some calls when he got back to Chicago. On one call, Levy heard about a guy starting a new real estate firm and took the job himself.
Two years later, Levy started his own real estate company (see related story). Mark was in the insurance business, and during a down period in the real estate market in the mid-70s, they decided to make a run at the restaurant business. Soon after, D.B. Kaplan’s was born.
But the deli was poorly run at first and the food wasn’t good enough, Levy said. Larry and Mark had control of the business and bought out their partner, Don Kaplan, for whom the eatery was named. At that point, their father was in poor health, forcing Eadie, a traditional housewife, to start working at a relative’s dress shop in St. Louis. She accepted her sons’ invitation to move to Chicago, and Eadie started working at the deli.
As the youngest of eight children, Eadie had plenty of family recipes to test out for customers stopping for lunch while shopping at Water Tower Place. “It’s like she blossomed into a superstar,” Larry said.
D.B. Kaplan’s enjoyed a successful 20-year run before closing in 1995. By that point, the deli had run its course at what had become just another shopping center, Levy said.
Eadie died in 2013 at age 92. She lived in a 21st-floor apartment at One Mag Mile and worked until she was 91. As Levy Restaurants expanded nationally, she cooked for the Super Bowl and the NBA All-Star Game, Larry said.
“She turned [D.B. Kaplan’s] into a home run,” said Andy Lansing, Levy Restaurants’ president and CEO. “It’s a crazy story that you couldn’t make up. And then accidentally getting into sports and entertainment. That was nuts, too.”
The critical moment in the history of Levy Restaurants occurred soon after Jerry Reinsdorf bought the White Sox in 1981 and decided to build the first suites at old Comiskey Park.
The project involved constructing a total of 34 suites down the foul lines during the course of two years at MLB’s oldest stadium, a decrepit building by that time that had opened in 1910. (It would be replaced by new Comiskey Park in 1991 with Levy operating its 100 suites.)
At the old park, the first 17 suites opened for the 1983 season and the White Sox had trouble selling them. The suites were reserved for the team’s five ownership partners, among others. But it wasn’t a great seat to watch the game, and potential buyers were struggling to understand the concept, Levy said.
|The White Sox and Comiskey Park (shown in the 1990s) remain the origins of Levy’s work in sports.
Larry and Mark questioned whether they should do it. Like Melman, their specialty was building and running restaurants, and they didn’t consider themselves institutional feeders. But they listened to the team’s pitch, and after Reinsdorf weighed in, the answer was yes (see related story).
“We told them we had kind of a vision for making the catering a real amenity, something that would have the suite holder feel like they were getting increased value and atmosphere,” Pizer said. “Our goal was to have something special.”
The Sox deal was a generous one for the food vendor. It may seem unlikely now, but initially the team gave Levy 100 percent of the profit from feeding suite patrons, although the terms changed over time to split revenue with the team, Pizer said.
“It was pretty naive of us, and me particularly,” he said. “We did not look at catering as our profit center. What we were looking for our food and beverage provider to do was give extraordinary service and food quality beyond what the patrons might expect. And Levy delivered, they really did.”
“Over time, I must admit we realized there’s enough [revenue] there that we could make a little money and they could, too, and our customers would still be well served.”
Catering an antiquated ballpark with a small kitchen was a big challenge. Levy officials would cook the food overnight at their Water Tower Place restaurants and truck it over the next day before the game. Little did they know the rudimentary procedure would be a hit.
“We heated it up and the people went crazy, they thought it was fantastic,” said Levy, a fan of all Chicago sports who’s held courtside Bulls season tickets for more than 30 years. “We said, ‘Wait a minute, if we served that food at Water Tower Place, people would send it back. People really have low expectations and it’s easy to exceed them.’”
The key, though, was figuring out suites were a corporate entertainment buy. For unoccupied suites, Levy would rent them for single games and create food and drink packages, a common occurrence in the modern suite marketplace.
“The first year, I think we made $150,000 from those 17 suites,” Levy said. “Our investment was a paneling truck. We just thought we were a Chicago company and this was a one-off.”
Levy Restaurants’ catering business kept growing locally. In 1985, the company took over the small stadium club at Wrigley Field, a cramped space tucked in the right-field corner at the venerable ballpark. The Cubs had been losing “huge amounts of money” on the club, according to Levy.
The stadium club deal led to Levy getting the Cubs’ suite business a few years later, when the Cubs built suites at Wrigley in a project tied to the installation of lights in 1988.
Outside of sports, Levy Restaurants took over local food deals at Ravinia Festival, an outdoor music venue in the northern Chicago suburbs; Lincoln Park Zoo; and McCormick Place, one of the country’s biggest convention centers.
Meanwhile, a new building boom in sports was on the horizon, and Levy officials saw an opportunity to pursue business outside of Chicago as dozens of teams opened new facilities in the 1990s.
Kansas City’s Arrowhead Stadium, built in 1972, was actually the first building outside of Levy Restaurants’ home base to have the company run its suites, followed by newly built Jacobs Field (now Progressive Field) in Cleveland and Kiel Center (Scottrade Center) in St. Louis, plus new NBA arenas in Portland and Washington, D.C.
|The company’s four-tiered focus and push for ideas helped lead to such innovative concepts as Levy’s signature dessert cart at sporting events.
“I spent lots of time on
Levy’s mother joined them on many of those trips competing for new business, and they often closed deals due in part to Mrs. Levy providing that extra personal touch in their pitch to teams.
Wineman said, “It really allowed Larry to communicate to team owners and presidents that this was a family business and this was important to him, and it was the kind of culture that he wanted and how he was going to treat other people, and how he wanted his people to be treated.”
Levy tips his hat to Wineman, the company’s “secret weapon” to winning accounts; Curiology Chief Creative Officer Alison Weber, “who’s as brilliant as it gets;” and president and CEO Andy Lansing, “a great operator,” for generating the firm’s enormous growth. All three have been with Levy for 20-plus years.
“The business I created is a team sport, it’s not singles tennis,” Levy said. “We formed a military-like campaign for the big play.”
Around the major leagues, word spread quickly about “the Levy difference” in its approach to suite catering. Team owners attending All-Star Games at venues where Levy had the premium contract got to experience its operation firsthand. In 1999 alone, Levy Restaurants won deals at five of the eight big league arenas that opened that year — in Los Angeles, Miami, Indianapolis, Denver and Atlanta.
As part of competing for business, Larry would use Spiaggia, among his chief assets, to entertain owners in Chicago, such as Herb Simon (the Pacers), Dick Jacobs (Indians) and Arthur Blank (Falcons).
Some, like Simon, a mall developer, shared common business interests with Levy, and when clients were in town, Eadie made sure they got a slice of her tasty carrot cake for dessert. It’s become a top seller on Levy’s signature dessert cart at arenas and stadiums across the country, Wineman said.
In some markets, Levy Restaurants’ premium numbers were staggering. At Staples Center, for example, the vendor captured 60 percent of the total food business in the arena from a disproportionately small number of seats, driven in large part by a sushi bar and multiple clubs.
“We were doing twice the per capita business as the competition for premium, and what it taught us is we could guarantee [teams] more rent,” Levy said. “It worked out great.”
Levy took over general concessions at Staples Center a few years later, leading to a partnership with AEG at several of its venues. As Leiweke puts it, “From the suites came great things.”
At first, Levy’s expansion into concessions came largely under the radar. Levy perfected its premium business before making the move to general concessions, which, due to high volume and quick product turnover, presents an operation vastly different from suite catering.
The firm had been quietly winning some accounts to run both premium and concessions, including at AmericanAirlines Arena, where the Miami Heat became the first team to have Levy Restaurants operate all aspects of food service.
But it wasn’t until a few years later that Levy made a full commitment to competing for both parts of the business at the same time. It happened when Levy lost the then-California Angels’ premium business to Aramark, which ran the Angels’ general concessions and persuaded team owner Disney that it made better sense to let one company run everything at the Anaheim ballpark.
In taking over both pieces of the food business, Aramark’s bold move blindsided Levy officials. Larry vowed payback.
It became another defining moment for the company, similar to when Levy first broke into sports with the White Sox.
In short order, Levy Restaurants picked up a flurry of new concessions accounts, including Dodger Stadium, Raymond James Stadium and Wrigley Field, where it already had the suites. The commitment resulted in $200 million in new business over the course of about three months, Levy said.
During a 12-month period spanning 2004-05, Levy Restaurants replaced Aramark at six big league facilities.
“Then we hired some Aramark people to run it, with the knowledge that we might be 100 percent better in the suites than they were, but we could only be 5 to 10 percent better in the concessions business,” Levy said. “But we had the credibility of the owners, and we got good at it very quickly.”
Eric Woolworth, president of the Heat and AmericanAirlines Arena, agreed. In the late ’90s, when the Heat were building their facility, they were trying to figure out what to do with food and drink. At the time, Levy was running premium only in the big leagues.
“They had a commitment to quality that we didn’t see elsewhere,” Woolworth said. “Part of our strategy was to become the premium building in the market, and they have not let us down. We’ve been in business with them for 17 years now and Larry was the one that got it going. He is a visionary. Our general concessions are at the quality level where our premium used to be. To a large part, it’s due to Larry and the company he founded.”
Rick Welts, president of the Golden State Warriors, summed it up best.
“The story goes that the best restaurant operator in Chicago and biggest Bulls fan woke up one day and said, ‘Why can’t arena food taste like what I serve in my restaurants?’ And the rest is history.”