The Man With the Golden Touch

Restaurateur accounts for his success through attention to detail and psychological therapy.

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Richard Melman has created one of the hottest restaurant organizations in the country by getting all the details right

Most of us fantasize about opening a restaurant. Some of us actually do it -- and live to regret it. Judging by the failure rates, the restaurant business has got to be one of the toughest around. So how do you account for Richard Melman, who has opened one successful restaurant after another -- using different concepts, targeting different markets, working with different partners in different parts of the country? Is it pure intuition, or is there more? -- E.L.

When Richard Melman was in his twenties, he got involved in a most dangerous affair: he dated a woman whose father was a shrink. The father would do remote, armchair analyses of Melman and pass his findings on to his daughter, who then used them to chip at Melman's personal facades. "It used to blow my mind that he could see through me so well," Melman says. On the day the relationship ended, the woman flayed Melman; psychologically mugged him, she and that shadowy gang of hers, Freud, Jung, her dad -- and stripped bare his bachelor's soul.

Another man might have been crushed. Melman was impressed, so much so he found his own therapist and embarked on a two-decade journey into his own psyche. To hear him tell it, his company, Lettuce Entertain You Enterprises Inc., in Chicago, was a prime beneficiary. As Melman studied Melman, Lettuce has grown into one of the most influential restaurant organizations in the country, its 27 restaurants expected to yield revenues this year of up to $90 million -- double the 1984 total.

Restaurateurs from around the country come to Chicago to visit Melman's restaurants, and often to borrow his ideas. "Rich today is probably one of the most copied guys in the industry," says Kenneth D. Hill, a founder of the Houlihan's group of restaurants, and now president and chief executive officer of T. J. Cinnamon's Ltd., a chain of specialty bakeries. Other restaurateurs hire Melman's architect or Melman's designer, says Jim Errant, a Lettuce alumnus who owns four restaurants in the Chicago area. "They think they're gonna have what Rich has, but what they need is Rich."

Or maybe they need Rich's therapist. Melman credits what he calls the "therapeutic" culture of Lettuce for its success, and credits his therapist with helping him grow that culture by giving him confidence in his own instincts, and heightening his awareness of people -- of what makes customers love a restaurant, what managers need in order to prosper. Most of Lettuce's managers are now in therapy. Lettuce even maintains a fund to help other employees, from busboys on up, embark on the long road to self-revelation. The company's elaborate management-training program emphasizes psychology above all else.

"That's what makes us different," Melman says. "I don't think there's any other restaurant organization that develops its people better than we do, personally and professionally. We work on it. You almost have to grow if you're with us, or you can't be with us.'

Nearly all Lettuce's restaurants are one-of-a-kind creations. For Melman, 46, coming up with a fresh concept each time is what keeps the business fun. It is also a risky strategy in an industry known for the frequency of its failures -- in the first nine months of last year, approximately one restaurant folded for every four that opened. Opening a different restaurant each time compounds the dangers.

Lettuce, however, has produced nothing but hits. What's more, Lettuce does it without focus groups, without testing ideas to death. Instead, the company relies most on the instincts of Richard Melman -- instincts that seem to arise from a combination of natural gift, experience, and the heightened awareness of himself and of human motivation. He's more Zen master than businessman; a gastronomic Yoda. "He has an uncanny instinct for what the dining-out public wants at any particular time," says Larry Mindel, a San Francisco restaurateur. "He couples that with a terrific sense of design in terms of how the place is going to look and feel."

To create new restaurants, he puts together teams of chefs, architects, designers, and artists who concoct scripts and invent histories for his restaurants, to keep the teams tightly focused. In recruiting waiters and waitresses for the Ed Debevic's in Beverly Hills, Calif., Melman hired the casting director from the TV series "Alice" to help find the right kinds of people, and held auditions in which promising candidates played typical 1950s diner habitués.

None of this has been lost on the dining public. One of Melman's restaurants, Ed Debevic's Short Orders/Deluxe, is so well known that Illinois Bell operators will correct your pronunciation if you get it wrong ("that's Ed De-BEH-vics').

A stickler for detail, Melman gets deeply involved in the creation of each restaurant, from tasting food to picking the right funky old chandelier. A recent Melman creation is a Chicago restaurant called Hat Dance, which is iconoclastic Melman through and through. It serves Mexican food with Japanese accents in a dining room decorated in many shades of white. It is also successful.

For all this attention to detail, however, Melman delegates real power to his managers. Lettuce runs six restaurants under management contracts with their owners. The rest are run as partnerships between Melman, his three most senior partners, other investors, and the managing partner who operates the restaurant.

Once a restaurant is running smoothly, Melman stands aside and lets the managing partner run it as he sees fit. The only way for this partner to make substantially more money is to start a new restaurant, Melman says. But before he does that, he has to have groomed a protégé to take his place at the already-running establishment. Melman steps back in only when something goes wrong. "He'll help you create it, but it's yours," says Kevin Brown, considered by some to be Melman's own protégé. "It's yours if it's successful, it's your butt if it's not."

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