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The Mouth Will Rise Again

Fresh from losing several billion dollars and his job at AOL Time Warner, Ted Turner returns to his entrepreneurial roots: "Leave your gun at the cash register and line up for work!"
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Bowed and more than a little bloodied, his trademark Clark Gable mustache graying now but his body still lean and fit, Ted Turner is on the prowl, looking for one last, good fight before packing it in.

Yesterday he was in Chicago. Today he's back home in Atlanta. The restlessness, the energy, the old, irreplaceable joie de vivre have found a new focus. No, it's not CNN, not Time Warner, certainly not AOL, nor even world peace and nuclear disarmament, dear though those two causes are to his heart. It's not even the Atlanta Braves baseball team, which he used to own "and misses like hell." No, it's something meatier than that.

Bison burgers, anyone?

Plucking at his mustache, his eyes glancing this way then that, the old lion slips inside the door of a faceless meeting room in an upscale downtown Atlanta hotel, the better to reconnoiter his latest field of battle. The chandelier-lit room brims with young people, male, female, black, white, and brown--almost all of them too young to remember what television news was like before Ted Turner and CNN arrived on the scene more than two decades ago.

On one wall is a large hand-lettered chart that purports to help entrepreneurs climb the "Continuous Improvement Ladder," and on every table there's a spiral notebook labeled "Labor Management Guide, To Help You Manage Your Labor Costs." With such reading material at hand, you might think these folks--Ted's Montana Grills restaurant managers-in-training--would be bored out of their minds. But they're not. Not when Ted Turner strides purposefully down the aisle. Heads snap. Eyes pop. Ted's fans--his troops, his legions--applaud and even whistle. Their numbers are not large--fewer than 40--but their enthusiasm is, and it comes unforced.

Turner brings with him his latest prize--a replica of the Maltese falcon, awarded him the night before by a trade publication for his exploits as co-founder of the restaurant chain. Chipped and dented--Turner dropped it at the airport this morning--the falcon could be a metaphor for its slightly worse for the wear owner. "Looks better this way, don't you think?" co-founder George McKerrow had said, laughing at Turner's bumbling. Now, as Turner holds the falcon up, the crowd goes wild. "Got me the Maltese falcon," Turner hollers. "Used to own that movie, you know. Used to own my own movie studio, too. But now I got the falcon--for being in the restaurant business. Can you beat that?

"Now, you ask: Why am I in the restaurant business?" He answers his own question: "I got outmaneuvered at a big company."

He doesn't have to utter the name of that big, bad company. Everyone, it seems, knows the answer.

"I got fired," he declares. There's pride in his voice. Pride and defiance, and the words ring bells with his audience. He doesn't ask: "How many of you have ever been laid off?" He doesn't have to. There are heads bobbing everywhere. Part prizefighter, part Holy Roller, he's on a tear: "I was over 60, and it's hard to get a job when you're over 60. People don't want to give you insurance." (He doesn't mention it, but one of the perks that makes Ted's Montana Grills all but unique in the restaurant business is that all full-time employees--from the lowliest kitchen hand to the greeters at the door--get health coverage.)

"I thought: I better get a job! Hell, I lost $8 billion!"

Never you mind that Ted Turner, even without a job, is still worth more than a billion dollars, and most of the people in this room aren't particularly wealthy. ("Proprietors," Ted's term for general managers, are paid up to $75,000, with bonus.) The troops are eating it up.

"What I wanted to do was make a comeback. I wanted to put some points up on the board one last time. I coulda bought Outback..."--his voice trails, the laughter builds--"...before my stock went down." The crowd hoots.

"We're put'n people to work! Homeless people say to me, 'Mr. Ted, could you spare me a dime, or a dollar, or 10 dollars--or 20 dollars!" Hoots, hollers, laughter. "I tell 'em, 'That's Ted's Montana Grill," Turner says, jabbing with a pointed finger. "'We're hir'n! Leave your gun at the cash register and line up for work!"

When Turner asks if anyone has any questions, a burly man raises his hand. "Ted," he says--everyone calls Turner "Ted"--"I wanta thank you for putting the World Wrestling Federation on TV." The crowd breaks up.

A force of nature, even at 65, Turner knows when to make his exit and on what note: "Alright, brothers and sisters. Good to see you here! Just remember: Only two kinds of people in the restaurant business." He pauses--a big grin suffusing his face--and delivers the punch line, "The quick and the dead! And I ain't dead!"

Heavenly days no, Ted ain't dead. Though some on the former AOL Time Warner board might wish him...gone. (He's still a director of the company--the now-disgraced AOL having been dropped from its corporate name--though no longer its vice chairman.) Mary Puissegur, Ted's Montana Grills' New Orleans-bred publicist--and a cousin of James Carville--had warned me not to ask Turner about AOL Time Warner. But I didn't have to: Turner's lengthier discourses inevitably turn to the subject of his having met his downfall at the hands of various underhanded corporate villains--who do not go unnamed. Like unrequited love, AOL Time Warner is an idé e fixe that just won't go away.

And the more you're around Turner the more you understand "how devastating the whup'n I took" was--and how it defines what he is doing today. "When we," Turner says of his old company, Turner Broadcasting, "merged with Time Warner, I said I wanted to find out what it was like to be in a big company. I found out!" The merger of Turner with Time Warner, he adds, "saved 'em. The merger with AOL sank 'em." He cups his hands around his mouth, makes a megaphone of the famous "Mouth of the South" and does his best cheerleader imitation: "Push 'em back, push 'em back. Waaaaaaay back!"

Having been pushed so far back as to be deprived of his place in the Time Warner executive suite, Turner vowed to return to his entrepreneurial roots. Just why he chose the restaurant-chain business is a story in itself. Suffice it to say that in George McKerrow, Turner found a soulmate for this somewhat improbable sortie. A decade younger than Turner, McKerrow had had his own adventures in the land of executive suites--and he didn't emerge a happy camper either.

Like Turner, McKerrow was an entrepreneur at heart. To this day, he recalls being asked by a seventh-grade civics teacher what he wanted to be in life. "I want to be an entrepreneur," he piped up, "not exactly knowing what it meant but thinking it sure sounded good." Taken aback, the teacher said to him, "That's not a job!" Later, having become an entrepreneur, McKerrow would find it "a crafty way to do what I wanted to do. I was always an adventurer."

Unlike Turner, however, the 53-year-old McKerrow had made his bones in the restaurant business. He learned the trade from the bottom up, starting at the age of 16 as a busboy and dishwasher, flipping pancakes for 90¢ an hour at an Uncle John's Pancake House in Cleveland. Soon after he graduated from Ohio State University, he was proprietor of his own Log Cabin Supper Club in West Virginia. In 1974, McKerrow joined the Victoria Station steakhouse chain. Having been sent south in 1976 to run a VS-owned steakhouse, the native midwesterner quickly fell in love with the vibrant, business-oriented city that was Atlanta in the mid-1970s. Within four years, he was the regional manager.

Eventually, McKerrow hit pay dirt with a chain of his own: LongHorn Steaks. Though he went through bankruptcy before the first LongHorn even opened in 1981, McKerrow persevered on $100,000 in borrowed money--"and worked as a bartender while getting my first restaurant up and going." In the early days, it was strictly touch-and-go. "I used to hide the payroll checks," recalls McKerrow. "I'd say, 'ADP forgot to deliver the checks." The beauty of it, he adds, was that the company's employees "actually believed it!"

The time came, of course, when McKerrow had plenty of money with which to pay his workers. The chain grew, slowly at first, then exponentially: At the end of its first 10 years, there were 31 restaurants; today RARE Hospitality International, as the company came to be known, boasts restaurants in more than 190 locations and includes the Bugaboo Creek and Capital Grille chains as well. Along the way McKerrow became a wealthy man.

And a very unhappy man. At one point, following a sudden drop in the company's stock price, he was forced aside. In his absence, a bitter McKerrow asserts, the company "pandered to the Wall Street analysts, ran up the stock price--and then [went] broke." That left the door open for McKerrow's return. He came back, fixed things up--and got shunted aside once again. "When I decided to retire," he says, "the new bosses I hired to run the company didn't want anything to do with the old guy." Hired management, he adds, "always thinks the entrepreneur only got there through luck."

Soon, says McKerrow, "I was history--in my own company." But, like Turner, he now had money in his pocket--and something to prove. The two men met at a time when Turner was still flying high. "Ted," McKerrow explains, "used to be a customer at one of my restaurants." Gradually, they got to know one another. Turner's son-in-law Rutherford Seydel became McKerrow's lawyer. Occasionally, Turner would have McKerrow over for a visit to his 14th-floor suite of offices in the CNN Center. The first time he set foot in those palatial offices, says McKerrow, "I got real nervous." After all, "Ted was my hero." By then McKerrow was well aware of Turner's "on-time fetish." Turner, says McKerrow, "schedules you for 15 minutes--and that's it." What's more, "he expects you to be not just on time, but 30 minutes ahead of time!"

"Why am I in the restaurant business?" asks Turner. "I got outmaneuvered at a big company.

Turner, meanwhile, had taken up a new interest. America's Cup racing was getting old--been there, won that--and Turner was getting older himself. As a child, growing up in Savannah, Ga., the young Ted had always had interests: Naturalism was one. History another. Collecting coins was yet another. His favorite coin: the buffalo nickel with its evocative, historical images of Native Americans and wild bison. As a man of early middle age with the wherewithal to do just about anything, Turner had begun to buy land out west and breed bison.

At first it was simply another hobby. Soon, it became a passion--and one that was related to his ever more intensely felt devotion to environmental causes. By the turn of the new century, it was also a business: From three bison in 1978 to 37,000 in 2003, Turner had become the owner of more than 10% of North America's 350,000-strong herd. By now too, he had become the largest individual landowner in America, with 14 bison ranches stretching from South Dakota to Oklahoma. The question, increasingly, was what to do with all those bison.

Some, Turner sold for meat--"And, oh, how I cringed when that first bison went to the slaughter." Since half of all bison calves are male, "and since for breeding purposes you only need so many males, well, ..." Turner's voice trails off. "... we slaughtered the poor old surplus males. That's the food chain for you!" He pretends to shudder. "Poor fellers," he says. The market, however, just wasn't there for bison burgers and steaks--at least not at your local grocer. A bison ranchers' cooperative in which Turner was the leading figure, McKerrow explains, "had no marketing plan and had overbuilt the herd. The result was a disaster. There was supply but no demand."

At about the same time bison prices were dropping precipitously, Turner began to intuit that, "I was being squeezed out of my job at Time Warner." Heartbroken by what he perceived to be happening to him at Time Warner, Turner took off out west to try to find serenity amid the turmoil. It was May 2001, recalls McKerrow, "and we were at Ted's Big Sur ranch in California's north coast country for [Ted's daughter] Laura and Rutherford's 10th wedding anniversary." Rutherford, McKerrow says, had been urging him to approach Turner about starting a chain of restaurants. "I already had a concept in my pocket," McKerrow recalls, "which was an upscale chain offering classic American burgers made with fresh ingredients."

With Seydel's backing, McKerrow now "custom-fitted" his concept to appeal to Turner. "I knew Ted wouldn't go in without the bison angle," says McKerrow. And while he believed that his concept would work "with the bison or without," McKerrow feared that "maybe, at most 20% of our customers would choose bison burgers. Maybe." During his LongHorn days, McKerrow had tested bison in his restaurants, "but the execs I put in place overrode me and thought it was folly. They thought I was nuts."

Ted Turner thought otherwise. Within 10 minutes, the two friends had begun to map out plans for a restaurant chain that they "could be extra super proud of," in the words of Turner. "I said, 'This has gotta work. This is gonna work. I've got wives to take care of, kids to take care of, and I don't have time to monkey around. Hell, I've gotta save the world!"

Back on planet earth, McKerrow explains that he wanted to call the chain "Ted's Grills," but, needless to say, "there are dozens of Ted's Grills. And, you know, there are litigious folks in this world. Some would surely have sued."

Thus was born Ted's Montana Grills. Naturally, they needed a logo. "The marketing guy is showing all these logos to Ted," says McKerrow. "And Ted says, 'No, no, no.' And then, he picks up a pen, and he draws it himself!"

As McKerrow talks, Turner whips out a pen, takes up a cocktail napkin, and draws the logo again. "I know what my strengths are," he says. "I used to be a graphic designer as a kid." He laughs in delight at his handicraft.

"He's always right," says McKerrow, as Turner stands up, towering over the smaller man.

"What we've got," says Turner, "is synergy. We're two old guys who think alike--and trust one another. And," he says, pausing, "just enjoy the hell out of each other's company. George, are we crazy or what?"

"Well, we are a little crazy, Ted."

"Crazy like a fox, smarter than a tree full of owls," Turner hollers, as he pulls McKerrow up onto his feet and slaps him with a high-five.

Within six months of that first discussion back in May 2001, "the boys," as Mary Puissegur calls them, had hired their top management team and opened their first restaurant.

Turner and McKerrow--Turner is chairman, McKerrow the CEO--agreed early on that what they wanted to run was a chain with a difference. The restaurants would be upscale (for a chain), with an average individual tab of $15. To justify that, the space had to be special too: "We spent $200 a square foot," says McKerrow. "The average chain spends $100."

In their quest to re-create the Old West flavor that Turner insisted on, "the boys" made pilgrimages to famous western dining spots--"every one of them at least a hundred years old," says Turner. As a result, Ted's Montana Grills all feature old-fashioned shiny mahogany bars, reproductions of western art by Bierstadt and Moran (much of it based on paintings in Turner's own collection), black-and-white photographs of the West (some by Rhett Turner, Ted's second son), and, adds Turner with glee, "the fanciest-ass restrooms you've ever seen." They are, too: fancy and spotless.

The first Ted's went up in Columbus, Ohio. "I wanted a midwestern market to test this thing," says McKerrow. "Classic middle-class America. Good jobs, good students." It also helped that a broker had the real estate ready and available. "We would have preferred launching in Atlanta," adds McKerrow, "but we were ready to go in Columbus." After that came restaurants in Georgia--there are now nine in Atlanta alone--along with locations in Denver and Nashville. The busiest has been one of the three Denver restaurants--in the very heart of bison country--which did $2.5 million in business last year. (The target is $2 million per location; the average McDonald's, by contrast, does $1.6 million annually.)

McKerrow's plan called for opening six restaurants the first year, 12 the next, and 20 in the third. Today, there are 15 and counting, says McKerrow, who is negotiating a lease in Manhattan at 57th and Avenue of the Americas (a short walk from the Time Warner headquarters) and is also shopping for a second Manhattan lease in the Times Square area. The demographics the partners seek: customers aged 24 to 65, families, upper middle class.

Problems?

"Sure," says McKerrow. "A couple of restaurants have underperformed"--he won't say which--"and a couple were too small." McKerrow also worries about "human acquisitions. We need disciplined people who can get on board quickly."

Then there's the competition: "We're breaking into a highly competitive industry against well-entrenched multi-unit operators who know how to market efficiently and have found the use of TV to their advantage." Of the competition, McKerrow counts Outback Steakhouse as being the best: "They've gone the longest, gone the fastest." But he's not scared of Outback, says McKerrow, "and they're not scared of us either. But they are aware of us. They know I'm a veteran. I've been in these wars before." They also know that McKerrow has a not-so-secret weapon. "Believe me," he says, "everyone's heard of Ted Turner." Turner, he adds, "is a celebrity, but he's also a businessman, a very shrewd"--and very wealthy--"businessman."

Well, who wouldn't be concerned with a rival who has committed some $40 million--$15 million for real estate acquisition and another $25 million to build and operate restaurants--of his personal money for 2004 alone? That will bring Turner's total investment in the chain to $60 million. Turner, says McKerrow, who has invested $5 million of his money, "has committed whatever resources we need."

"This has gotta work," says Turner. "This is gonna work. I've got wives to take care of!"

Including his time. "Ted doesn't get into the day-to-day operations of the company," says McKerrow. "That's my job." Still, the two partners "talk on the phone pretty much every day." Turner's job, McKerrow says, "is to be the creative genius in this firm--and the public face of Ted's Montana Grills."

Already there are plans for 20 to 24 new restaurants in 2004, "backfilling" out of Denver, Nashville, and Columbus, plus Washington, D.C., Jacksonville, Wichita, Kansas City, Omaha, Richmond, and Raleigh-Durham, along with the two in Manhattan. In 2005, says McKerrow, the chain expects to open an additional 30 to 36 units, including locations in Texas, California, Florida, and Alabama. Every one will be company-owned--no franchising.

So far, all of the restaurants are making money, says McKerrow. Asked when the chain as a whole will achieve profitability, he says: "We need 18 to cover our margins." The goal post, though, adds Turner, "stands a mite higher than that."

Just how high?

Five hundred restaurants, and, says Turner, "$1 billion in revenue." It's a goal the two partners think they can achieve in nine to 10 years. But to get there will require ever deeper pockets. Not surprisingly, says McKerrow, the investment bankers "have all come to us. Wachovia, Bank of America, you name it. But we're not ready for them." Why not? "We worry about losing our 100% entrepreneurial spirit," McKerrow explains. "We figure we can get as high as 100 restaurants without financing and with Ted's own bison herd to supply all our needs. After that, it's a different story." We're sitting at a big table in the back of the flagship Ted's on Luckie Street in downtown Atlanta. The headquarters of Turner's personal company, Ted Turner Enterprises, occupies two floors of the building; his penthouse sits atop it. From his spacious office on the eighth floor, he can even look out upon his old fiefdom at the nearby CNN Center--if he wants to, that is.

I'd spent the morning at the Ted's Montana Grills University--the state-of-the-art training ground for Ted's chefs. David Wood, a "proprietor-in-training" for a soon-to-open unit in Lexington, Ky., had shown me around. Here, heavy-duty professional stoves, there video cameras and TV monitors the better to watch the preparations. A former chef, Wood told me how impressed he was with the fresh ingredients used at Ted's. Looking around I could see why: huge bottles of extra virgin Italian olive oil, cans of imported tomatoes, fancy and expensive ingredients by the standards of most chains.

Now, over lunch, I was getting my chance to taste the product--and take in the ambience. Though Turner had told me that, in sympathy with the world's poor and hungry, he was going on a diet--Could it be that there is an ounce of body fat left on that body?--he orders what he calls a "Naked Burger," a bison burger with no fixings. "There are people starv'n in Rwanda," he says, picking at his medium rare Naked Burger, "and folks in this country throwing good food away. Wasting it! Makes me sick."

Utterly undeterred by Turner's latest soliloquy, McKerrow insists that we try some of just about everything, from the homemade French fries--a bit bland, alas--to the hot and steamy bison pot roast, labeled "comfort food for the 21st century." Rather good it is too. The old-fashioned southern lemonade arrives just right, not too sweet, not too, well, southern. The straws, as Turner is quick to point out, are made of recyclable paper. The customers, he adds, "like to feel good about the environment. We know they do."

From the beginning, McKerrow did customer-satisfaction surveys: not least to find out how Americans would feel about eating bison. To his considerable surprise, he found that they wanted it. Today, says McKerrow, 55% of the orders at Ted's are bison-related: burgers, stew, and steaks, among them. (Other entrees include fish, chicken, hamburgers and beef steaks derived from cattle.) It's all made the same day from fresh ingredients, too--the meat is never frozen. "And you don't think that don't cost something extra?" Turner says, thumping the table. "Why we have to have real chefs," says McKerrow.

But it's when my own, personal Naked Burger arrives that Turner's face brightens. There's a little American flag sticking up in the middle of it. "What do you think about that?" he asks, eyeing me a bit suspiciously. When I say something to the effect that I think it's just fine, that no one party has a monopoly on the American flag, he practically turns over the table. Half up on his feet, half hollering, Turner announces in a voice that can be heard several tables away: "You see! You can be for the American flag and hate war. I hate this war in Iraq! And I am a patriot!"

"And an entrepreneur, Ted," says George McKerrow, smiling.

"Darned toot'n, I am," says Ted, resuming his place. "Darned toot'n."

John Anderson wrote about selling to Wal-Mart in Inc.'s November 2003 issue.

Last updated: Feb 1, 2004




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