In the Splichals' strategy, Patina was a unique restaurant that relied on the day-to-day presence of one chef -- Splichal -- who could exploit his talents and express himself in the kitchen. By design, Pinot Bistro was a concept that could be replicated easily. Just the act of opening a second restaurant represented a critical development in the Splichals' mind-set, a shift from the chef as artist to the chef as entrepreneur. It was an opportunity, but with it came a danger.
Ideally, the reputation that the Splichals had established at Patina would burnish the Pinots; the risk was that the reflection would work the other way and that Patina, once it was associated with a group of more casual restaurants, would lose some of its luster. There was also an initial confusion in the mind of some Patina customers, who unrealistically expected to find the same food at a lower price at a Pinot. "At Pinot they only pay $14 for the chicken, but they have the same expectations as at Patina," Splichal says. "You go five notches down, basically half price. You have high standards, but it's a different product." However, as the Pinot brand matured, Splichal's customers began to recognize that the two experiences were distinct, that a Pinot chicken could not be a Patina chicken -- and that that was all right.
Since he couldn't be in two kitchens at once, Splichal needed a staff he could rely on. "It was most difficult going from a single unit at Patina to a second at Pinot Bistro," says Octavio Becerra, who started with Splichal at Max in 1984, when he was 19, working as a dishwasher and prep chef. To open multiple units, an entrepreneurial chef must find talented people and keep them. In Becerra, the Splichals had discovered one such person, and he became the executive chef at Pinot Bistro and has gone on to train chefs for other restaurants. Like Puck, who has led the way in recognizing that the way to keep ambitious people is to give them a stake in the enterprise, the Splichals rewarded their key people. Becerra is Splichal's right-hand man; he was given a 0.5% share in the business. He's also now the Pinot group's corporate executive chef.
Once again demonstrating his real estate savvy, in March 1995, Splichal ventured into downtown L.A., then thought to be a sinkhole for restaurants, with Café Pinot. "Going downtown next to the library -- most people thought that was preposterous," says investor Winthrop. "Sure, you will do a lunch business, but people don't drink at lunch. You'll have lots of revenues but no profits." As it turned out, Splichal did a lively dinner business, serving the lawyers and bankers who didn't escape from their glass towers until late at night. Capitalizing on their success in downtown L.A., the Splichals went on to colonize the neighborhood with a small café, Patinette, at the Museum of Contemporary Art; a luxurious steak house, Nick & Stef's, named after their twin sons, who are now four years old; and a rustic Italian restaurant and takeout shop, Pentolino, which shares some kitchen space with Nick & Stef's. "Our company right now controls a majority of downtown," Splichal says. "We do 400,000 covers a year in downtown L.A. alone. We touch everything from a sandwich in Pentolino to a $32 New York strip steak in Nick & Stef's, everything from a takeout of water to a $3,000 bottle of wine."
The Splichals' one failure -- Pinot at the Chronicle, located near their home in Pasadena and later rechristened Pinot Restaurant and Martini Bar -- just never caught on. They made the tough decision to close it in September 1999. Splichal is rueful but pragmatic. "We tried and tried, and eventually came to the conclusion 'Let's just cut the loss,' " he says. He found jobs elsewhere in his organization for most of the employees, and the building was converted into a kitchen for the Patina Group catering operation. It was a backhanded recognition of the fact that catering, because it had the greatest growth potential, was arguably the most important part of the business.
It is ironic but typical that the catering division had been another opportunity that fell into the Splichals' laps. In 1991, two years after the opening of Patina, a loyal and extravagant customer asked them to cater his daughter's wedding, which led to other commissions from Patina regulars. The business began to take on an independent life in 1995, when the Splichals hired Stephanie Edens, who had worked for a party-planning business, as catering manager. She solicited and won the Emmy Awards dinner the next year. "That was the time that people stopped thinking of us as something that Patina did on the side," Edens says. When she started, the catering business was taking in $1 million a year. It has since doubled annually, reaching $6.2 million last year.
Competing successfully for contracts for both the Emmy dinners and the Los Angeles County Museum of Art, the Patina Group beat out a larger, New York City-based company, Restaurant Associates (RA). Intent on expanding to the West Coast, RA won a contract with the Music Center in Los Angeles five years ago and another one, with the War Memorial Opera in San Francisco, two years ago. The company viewed those contracts as beachheads into a large and lucrative market, but to the frustration of its president and chief executive officer, Nick Valenti, the RA invasion of California never took off. Valenti realized that he had two choices: develop his management structure in California or acquire someone else's. The Patina Group was the likeliest candidate. "The catering business is an integral part of our business and an integral part of theirs," Valenti says. "It may be the most important element."
The Splichals had not been thinking of selling at that time, although they were scrambling to cope with their company's growth. In July 1998 they had consolidated their catering operation with all their restaurants, rolling everything up into the Patina Group. "If you have a consolidated company, it's much easier than having five or six small companies when you're looking for money," Joachim explains. Still, he was not happy about personally guaranteeing bank notes for $1 million or more. When RA made an offer in November 1998, he took it seriously. "It was ridiculously low," Christine says of that initial bid.
The couple conferred with a "kitchen cabinet" of Patina investors who had financial backgrounds. At their suggestion, the Splichals retained an investment bank that specialized in the hospitality business. The bank found other prospective suitors, which ultimately jacked up the price. (Joachim says it almost doubled. Valenti says it increased but not by that much.) "It has been Joachim's goal that we are growing the company and we will need to sell the company," Christine says. "That was the exit strategy, but that was not the immediate goal. We saw it 5 or 10 years down the line."
