Marie Callender's Grill

The Dining Capital

A unique blend of social and Economic herbs and spices led to an 'agglomeration' of dining corporations in Orange County that has made the OC the world capital of restaurant chains. Industry growth is fueled by a climate of creativity and a habit of innovation.

What do you want for lunch? A taco? A burger? French onion soup with freshly baked muffin bread? Or Chinese food wit h distinctly non-traditional ingredients?

Wherever you go, whatever you eat, chances are you will dine at a chain wit ha powerful local connection.

From Taco Bell to Del Taco and Carl's Jr. to In-N-Out, from El Pollo Loco and Pick Up Stix to Marie Callender's, Mimi's Café and El Torito, most of the famous names in chain restaurants are headquartered right here in Orange County, or were founded here or just over the county line.

Even McDonald's: Dick and Mac McDonald opened their first restaurant, the Airdome hot stand, in Arcadia in 1937.

A stealth industry
OC is the home to a stealth industry. So many restaurant chains - of all conceivable
types - are quietly headquartered in Orange County, or nearby, that the area has to be
considered the industry's international capital, just as Hartford is considered the center of
he insurance business.

Yet, strangely, this high-impact segment lacks the recognition of other leading local industries such as high-tech, medical devices, beachwear, tourism and construction.

One reason so few Orange Countians are aware of the area's chain restaurants dominance is the decentralized nature of the business: A survey of local restaurant headquarters taken for this article reveals that sit-down restaurant chains hire roughly one headquarters staffer per two or three restaurants; fast food chains hire only about one headquarters employee fore every 10 locations. The vast majority of employees are scattered around the state, county or world.

For this reason it is doubtful that restaurant headquarters directly employ more than 2,000 people in Orange County, a third of them at Taco Bell. But wile relatively small in number, most of these jobs are well-paid professional positions in such areas as marketing, finance, real estate and product development, each on injection enough revenue into the region to generate three times as many additional jobs. And the impact exerted by this relatively small number on national, and even international, dining habits is huge.

Why here?
Why are established firms like Taco Bell, Weinerschnitzel and Del Taco located here? And why do new ones like Pick Up Stix and Wahoo's Fish Tacos join them? And why do others like El Torito move here?

The answer depends on the person asked.

Jeff Warne, president of the fast-growing Pick Up Stix restaurant chain, which has 109 restaurants, including 29 in Orange County, believes that the demographic and the "psychographics" draw restaurant companies. "The demographics are great here - people have the ability to eat out," Warne says. "Likewise the psychographics - the propensity to do something. It's a real dining out culture. People are time-starved. It is a rare individual who can say, 'I have more leisure time than I had a few years ago.'" No time to cook means restaurant meals for many OC residents.

The combination is why Pick Up Stix has stayed in Orange County and added staff despite is acquisition by Carlson o Minnesota, which resisted any temptation to merge Pick Up's staff with that of another subsidiary, TGI Fridays of Dallas.

Phil Ratner of Marie Callender's, with 150 restaurants, 16 in Orange County, attributes the conglomeration to an entrepreneurial atmosphere. "California was the land of opportunity," Ratner says. "These companies were started by individuals with a dream."

Other industry leaders attribute the hyperactive Southern California lifestyle. "People are in a hurry, weekend warriors, a sports-oriented population," says Ed Lee of Wahoo's Fish Tacos, with 30 restaurants, half in Orange County. "Orange County people are always going places or meeting people. Our place is where they meet their friends between doing other things."

No single answer
In fact, there seems to be no single answer, but a unique blend of social and economic herbs and spices that apparently exists nowhere else.

Dr. Imran Currim, Chancellor's Professor of UCI's Paul Merage School of Business, has a more prosaic answer: "It's all a matter of an industry naturally seeking a place to cluster, a place where it can discover trends, find suppliers and customers, and hire people. Business scholars call this headquarters snowball the "agglomeration effect." Once the industry was established, more chains were likely attracted by the availability of trained, experienced restaurant professionals in the area.

Lowell Petrie, vice president of marketing for Mimi's Café in Tustin, with 95 restaurants in 14 states, attributes the origin of chains to Orange County's large-scale suburban development.

"We locate new big box retailers," Petrie says. "We check local demographics and density, geographic accessibility, competition - we like to have a couple of other restaurants around - and a busy street. We always measure the number of cars going by."

The first large restaurant chains founded in Orange County appear to be Coco's, founded in 1948 by John McIntosh, and Denny's, founded in 1953 by Harold Butler and headquartered in Irvine until 1991.

But the local industry based on restaurant headquarters may have actually started when three close friends, John Galardi, Glen Bell and Ed Hackbarth, founded fast-food franchise companies in the early 60's. Galardi founded hotdog franchiser Der Weinerschnitzel in 1961 (The Der has since been dropped from the name). Bell, inventor of the taco shell, started Taco Bell in 1962 in Downey. Hackbarth begat Del Taco in 1964, adding American-style burgers and fries to the Taco Bell format.

Suddenly, there were three fast-growing restaurant companies in Orange County, along with Denny's and Coco's, as well as other chains that disappeared or merged away over time. Enough of these companies succeeded in the marketplace that the agglomeration effect took hold, and Orange County now contains more restaurant companies than any other region in the county.

Buyouts not a factor
Many of the local firms, such as Taco Bell, Pick Up Stix and Mimi's Café are now owned by larger, out-of-state holding companies, most of them apparently determined not to repeat Coco's unfortunate experience when it became part of Denny's and lost its entrepreneurial sense of direction.

All of OC's bought-out chains have remained separately managed entities, preserving or expanding headquarters staff in Orange County. None are required to adjust to other formats: none are required to absorb a vast inventory of other firms' restaurants in building or locations that may not fit their needs. The new owners of these dining gems don't want to spoil a good thing. Even if every store in a chain is identical, few chains are so similar that can be easily merged. Menus, décor and demographics are unique. As a result when companies are purchased outright, the chains remain separate entities, with branches often competing on the same street.

Since July of last year, Mimi's Café has been owned by Bob Evans Farms, a publicly- traded operator of coffee shops specializing in the bacon and sausage breakfast trade. "We are a casual-dinner hour restaurant - ethnic and regional cuisines, broader menu, more seasoned," Mimi's Petrie says. "They wanted a proven entry into out segment of the market Multi-concept companies may merge insurance, benefits and some suppliers, but typically leave operations - marketing and even real estate and construction - to the separate entities."

Other Trends
At the same time, even as the hold fast to key characteristics, OC-based restaurants continue to innovate. While merging two diverse concepts hasn't worked for coffee shops or dinner houses - few remember jojo's or Reuben's -fast food companies find they can increase sales by placing two separate concepts under the same rood.

El Pollo Loco locations offer Foster's Freeze ice cream items, with Taco Bell hosts KFC, Pizza Hut and even A&W hamburgers - brands belonging to Taco Bell's parent company, Yum! Brands with 6,500 stores nationwide, 80 of them in OC.

"The first is economy of scale - we can have two restaurants for the price of one," Schalow says. "The second is more efficient use of what we call 'day parts' - Taco Bell menu is stronger for lunch and late night, while KFB and Pizza Hut are more focused on the dinner crowd.

"The third reason," Schalow says, "is a larger menu that can satisfy larger groups and families."

Adjusting the melting pot
Aside from the addition of Foster's ice cream, El Pollo Loco's very simple menu of grilled marinated chicken and side dishes has changed very little over the years. It doesn't have to - the company believes that marinated chicken is as popular in the African-Americans neighborhoods of South Central Los Angeles and the Asian- American neighborhoods of Monterrey Park as it is in the barrios of East Los Angeles.

But for most restaurant companies, success in business requires a constant effort to keep abreast of the public's tastes.

Pick Up Stix served a nominally Chinese menu that was filled with deliberately and uniquely eclectic items - such as signature dish, wontons stuffed with cream cheese, that was created by the company's founder Charlie Zhang.

A menu of that kind requires constant addition and tinkering.

"We know that people will always want our hero products to attract new customers and to please our current customers who can't be expected to order their favorite items every time."

"There's a lot of science behind the art of creating food," Warne says. "Every idea is on the table, but every on has to be justified. We start with online concepts and let people rate ideas, in terms of personal interests and expectation. We test consumer interest, then make samples in our test kitchen, which we like to cal our 'Rat Lab" - the test rats are being our corporate staff. The give us a barometer before we try new items on the public."

Recent dishes that scored well with online customers include two Thai dishes - grilled satay and coconut curry. "Both scored very well online and are under development," Warne says.

The problem - one that all restaurant chains have in varying degrees - is that dishes created by an executive chef that work well in a test kitchen may be difficult to serve to thousands of customers. "We have to ask ourselves, can we replicate the execution in a hundred kitchens? It's an easy trap to get into - creating something with an executive chef, a graduate of the Culinary Institute of America, that can't be duplicated in a luncheon or dinner rush. It took many iterations before we were able to roll out our Fiery Dan Dan and Pad Thai noodles."

Marie's new place
Marie Callender's, the well-known traditional dinner house and pie shop founded in Orange in 1964, is another chain in transition to meet changing tastes. Responding to more sophisticated dining sensibilities, the company has implemented and an entirely new format for its larger restaurants called Marie Callender's Grill, which features an extensive wine list and a more contemporary "flavor profile" with mesquite-grilled Angus Steaks and slow roasted tri-tip. Some old favorites such as chicken pot pie remain.

"The Marie Callender's Grill represents a higher end of casual dining than our traditional Marie Callender's restaurants, which are known more for comfort food," says company CEO Phil Ratner. "The Grill appeals to a broader range of guests with a younger demographic of customers."

As Warne of Pick Up Stix said over lunch at a newly redesigned concept store, "We can't stop developing."