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."

Melman is no M.B.A. He built Lettuce with the blood smarts of a natural manager, a Chicago kid who once peddled ice cream and peanuts on the beaches of Lake Michigan and sold eggs door-to-door. He bombed at three colleges, which used to bother him some. "You know how I knew it bugged me?" he asks. "It was always important that the women I went out with be intelligent. So I think that was like filling up a vacuum of not being intelligent enough myself.'

During the 1960s, Melman worked in his dad's delicatessens. He managed various operations and in 1967 asked his father to make him a partner. His father, and his father's partner, turned him down. "Their comment to me at the time was they didn't think I was settled enough. They wanted to see me married."

We're talking big-time rejection here. "The minute they told me that, I lost interest in working there," Melman says. He quit his father's business and started thinking about opening his own restaurant. "There was nothing else I knew how to do," he says. "It wasn't that I had any great love of restaurants."

He set out to find an investor to help him start his own restaurant. He wanted something casual and hip that would appeal to his peers, his peers being hippies and protestors: in short, the Future Investment Bankers of America. In 1969, a friend introduced Melman to Jerry Orzoff, a well-off Chicago real-estate agent. At their first meeting, Melman and Orzoff did not exactly hit it off. "A jerk" is how Melman viewed Orzoff; "a punk" was Orzoff's opinion of Melman.

The two met again, at the urging of another friend who insisted Melman had the wrong idea about Orzoff. This time, through some quirk of human relations, Melman and Orzoff clicked. They became close friends, given to vigorous competition and practical jokes, the jokes continuing even after Orzoff's death, in 1981. Orzoff, an immaculate dresser, had often chided Melman on his lack of taste. Melman picked Jerry's burial clothes: a blue suit and brown socks. "I don't know that it's over," Melman says. "He might get me back."

Orzoff was Melman's guiding spirit; their relationship was the model for Lettuce's future structure, its reliance on partnerships. "There were two men in my life who made an impact," Melman says. "My father, when I was younger, but in my adulthood, nobody had a bigger impact than Jerry.'

With Orzoff's backing, Melman founded R. J. Grunts in 1971, a restaurant that looms large in the history of Chicago eateries. Grunts marked Melman as an innovator, although now, after years of imitation by other restaurateurs, the concept hardly seems novel. Melman designed the late-night menu for the pot-smoking crowd, with funky text that made sense only in a ganja cloud. The salad bar was lush, a 40-item spread that included caviar (and still does). Some nights, an astrologer and psychic visited tables. Servers wore street clothes, unusual for those days.

Melman and Orzoff founded a series of restaurants, including The Great Gritzbe's Flying Food Show. It had about a year left on its lease when Melman, in a rare failure of instincts, changed the name to Not So Great Gritzbe's and decorated the place with art of the indigestion school -- Tums and Alka-Seltzer posters. Customers laughed, all right, but they ate elsewhere. The place folded in six months. "Boy, that was stupid," Melman says. "It would have kept making money if I hadn't done that."

Orzoff bequeathed to Melman two Mercedes-Benz sedans and his house in Beverly Hills. Melman kept the cars, but sold the house because he could not bear to live among so many memories. Now and then he wears something of Orzoff's, maybe a watch or a sports coat, to keep the man with him.

It was Orzoff who drew Melman more deeply into therapy as a means of spelunking his own soul. Orzoff was devoted to his therapist, Robert Mungerson, and encouraged Melman to see him -- not because Melman was mentally ill, but because he could learn something about himself. In August 1973, Mungerson was murdered, his killer never found. Orzoff and Melman helped each other through the shock.

Melman scouted a new therapist and, after interviewing several, chose David Roadhouse, who had been Mungerson's protégé. Roadhouse is a graduate of Princeton Theological Seminary and before becoming a Buddhist had been ordained a Presbyterian minister. He aims at developing an individual's relationship with him or herself, believing this relationship "serves as a basis for anything else you do."

Clearly, Melman was strongly influenced by Roadhouse's approach, as was Lettuce. Melman believes therapy has helped him to understand himself and to trust his instincts about restaurants -- about food, mood, atmosphere -- and about the people Lettuce hires and trains.

In 1984, Melman founded the Jerry A. Orzoff Fund, designed to help any employee get started in therapy. Each restaurant sets aside $3,000 for the fund, which will pay half the cost of each approved session, up to $50 per session. A committee reviews the employee's request, sets the reimbursement rate, and determines the number of sessions for which Lettuce will pay. Each case is unique -- the fund, for example, completely reimbursed an employee who was raped and beaten. All conversations between employees and therapists are confidential. Officially, therapy is optional. "It's absolutely not necessary," says vice-president of human resources and training Loret Carbone. "It's not the road to the top.'

Therapy is so pervasive it has put off some people who otherwise might have pursued jobs with the company, according to Lee Cohn, president of Big 4 Restaurants Inc., in Phoenix, a partner in the Ed Debevic's chain. But Lettuce's managers swear by therapy. No one bristles at being asked, "Do you see a shrink?" "If you're feeling more balanced emotionally, you run the company better," says Kevin Brown.

All this nurturing behavior tends to mask Melman's fiercely competitive side. It emerges in full flower, however, on the baseball field. Among the artifacts in Melman's office are a brass jockstrap given to him by his employees, a Louisville Slugger embossed with his name, and a framed Chicago Cubs 1969 schedule. Warning: Don't ever play baseball with him, unless you run out pop flies. You'll never know when Melman, all those years of therapy suddenly cast to the wind, will be right behind you with blood in his eyes and a bat in his hands.

Melman really did chase a man to first base with a bat. "I said, 'You son of a bitch, if you don't run I'm gonna hit you.' " And the other guy did run, because Melman did mean it.

"Uh-oh, look out! The boss is here," shouts a throaty waitress, in 1950s mufti, including a button that reads, "Eat and Get Out." Fifties music beats in the background. This is the Ed Debevic's in Phoenix. Like the other Ed's diners in California and Chicago, and the one scheduled to open in November in Japan, this one faithfully evokes the feel of a '50s diner, specifically one you might have found operating in 1952. The waiters and waitresses here are by design outlandish and brash. One waitress, who uses the name Imogene, bangs among the tables wearing a beehive hairdo, awful teardrop glasses, and a small dead fox.

Melman, restaurateurs say, is adept at picking concepts that appeal to the dining public, and was among the first to sense America's longing for '50s-style dining. "Rich stays closer to the customer than anyone I've ever seen," says Dick Bermingham, CEO of Collins Foods International Inc., which owns 60% of the five Debevic restaurants. (Melman, who created the concept, and his partners own 32%; Lettuce handles the administrative work.) "He's got this uncanny ability to know what you'll want to eat six months from now, even though you may not know."

Part of this ability comes from Melman's practice of touring his, and everyone else's, restaurants. "He spends four or five hours a day in different restaurants," Bermingham says. On business trips, he is indefatigable. "It's not unusual to see 25, 30 restaurants in a day," says Brown, who has accompanied him on such journeys.

When he asks customers how they're enjoying their meals, Melman doesn't take "fine" or "OK" for an answer. He pushes for the truth. "When people really believe that I want to hear it, and that I won't take it personally, that I'm not going to be offended, they'll tell me," Melman says. Melman also guides himself by his own tastes. If he likes a new entrée or a new concept, he assumes the rest of the dining public will too. "I'm sure he's building restaurants to satisfy Rich Melman," says Larry Mindel. "The reason he's so successful at it is he gets an idea of something he would love to do, and he just does it."

Where Melman is most expert, however, is in following through on his ideas and making the concepts come alive. In this, he considers himself something of an artist. "An artist uses canvas," Melman says. "Restaurants are my canvas."

This, however, sounds a little pretentious, and Melman knows it. "Look, I don't want you to think I'm some starving artist. I'm in this for fun and to make money. Either one alone wouldn't be enough.'

Melman considers the smallest details. The team that starts a new Lettuce restaurant picks a reference point -- a date, a place, a mood. "With Ed Debevic's it was 1952, it was before Elvis," Melman says. "And we would always come back to it." Customers would have expected to see a lot of Elvis memorabilia, he says. "I wanted Ed's to be more real. Restaurants in 1952 didn't have Elvis posters." Or quiche.

To help keep the team focused, one member wrote a kind of primer on the characters who would populate the restaurant: jock, prom queen, nerd, cheerleader, greaser, and greaser's chick. It includes sketches of how each character might have behaved, and a list of likely names, clothes, and accessories. Consider the cheerleader: "No matter what the context, she ends each conversation with a roll of the eyes, a twist of the pom-poms, a slight jump in the air, and a muted 'Yeah team!' "

Ed Debevic's is theater.

Melman moves back through the restaurant. He's wearing aqua shorts, blue shirt, sneakers, and a baseball cap. He points discreetly at a long table crammed with lunchtime customers, including a bald, elderly man in a wheelchair. One of the waitresses has planted a big gooey red kiss on his gleaming scalp. She makes a second pass, stops short: "Are you cheatin' on me?" she says to the man. "Honest to God, I left you alone two minutes. You better watch it."

There are shiny vinyl booths, stainless-steel coat racks, table-side jukes. Another waitress zeroes in on Melman. "Oh boy," she says.

"I just came in to give ya a thrill," Melman cracks.

"Listen," she says, her hips dieseling. "I want you to know that I'm like the tan detective. If you're takin' too much tan home, I wanna know. So I'm gonna check those lines." She drifts off. "Tan lines," she says, turning. "Ooo!"

Melman's range is broad. Ed Debevic's occupies the low end. At the Phoenix Ed's, only three meals top $5. From there, Lettuce's restaurants climb the scale, each restaurant having a distinctive theme. There is Shaw's Crab House, an old port-city seafood house, with red vinyl banquettes, subdued lighting, fish on the walls, and a raw bar. And Scoozi, a large, warm-hued dining room serving fancy pizzas and pastas; a big tomato protrudes over the entrance. And The Pump Room, a Chicago landmark revamped by Melman: here an attendant replenishes the ice in your water glass with silver tongs; the wine steward wears a red tunic.

His latest creation is Hat Dance, a high-brow Mexican restaurant that offers a case study of how deeply Melman involves himself in the founding of a new restaurant. The sign over the sidewalk telegraphs that the place must belong to Lettuce. Melman's idea, it reads: "She lifted the fork to her voluptuously sullen lips, allowing the adventure to loll in her mouth for a moment and then. . . . "

The idea for Hat Dance came from John Buchanan, a divisional vice-president and now managing partner of the restaurant, who spent six years trying to convince Melman that Mexican food was more than over-spiced burritos and refried beans. A taste test, done in the Lettuce test kitchen, did the trick.

Melman and Buchanan put together a nine-person team, including two chefs, three artists, an architect, a Mexico City food-writer, and themselves. Melman and four other members of the team went to Mexico for some on-the-scene research; the chefs worked shifts in real Mexican restaurants. One chef noted how similar in spirit Mexican ceviche was to Japanese sashimi, and soon Japan crept into the concept. With Hat Dance, the team was after mood. It set five parameters: everything it did had to be romantic, avant-garde, existential, ancient Mexican, and 5% Japanese.

Melman had long wanted to do a restaurant interior using only white. Hat Dance gave him the opportunity. Customers would expect serapes, donkeys, the usual gaudy reds, blues, and oranges. White would immediately identify the place as something different. The interior came together wall by wall, on the site, with Melman and the artists adding and subtracting wall coverings and props. He played his instincts. He suggested hanging some Victorian chandeliers at the front of the restaurant. Victorian chandeliers in an all-white, upscale Mexican restaurant -- Buchanan hated the idea: "I thought, oh Jesus, this looks goofy. But when Richard got here and we actually held them up to the ceiling and looked at them, we realized he was right."

Melman, too, decided the booths along the inner walls of the restaurant should have one subtle tint of color, a single tangerine napkin plunged into a glass, all the other napkins remaining arctic white. "It's there, like a little glow in the room," Melman says. "That's fine-tuning. We wanted the room to look very clean, but have some punch to it. You want to walk out of a restaurant not feeling you've been in an operating room, but feeling warm about it."

Therapy helps Melman in this work, says David Roadhouse. He argues that "therapeutic" management is particularly well suited to the restaurant business. "It has so much to do with sensation -- senses as opposed to sensational," Roadhouse explains. By putting managers in touch with their own senses, it helps them better understand the play of tastes, scents, sights, and staff interaction that produce a good time. When these are correctly orchestrated, Roadhouse says, the customers feel "that they're being cared for, that this restaurant wants to do something for them, to care for them, to give them an experience."

Hat Dance is John Buchanan's restaurant now. As managing partner, he has a stake in the operation. The remainder is split among Melman and other Lettuce partners and investors. The $1 million that Lettuce spent founding Hat Dance came from Lettuce's cash reserves, bank loans, and a syndicate of investors. Melman retains the right to buy out any managing partner, but has exercised this only once. In stepping back, he is free to pursue new ideas and help in the founding of new restaurants.

But where does Melman find the people to run his restaurants, and how does he develop them? The answer is the 49%-51% approach to recruiting.

Loret Carbone was a school psychologist in San Jose, Calif., until 1980, when, craving a change in job and climate, she fled to Chicago and landed a waitress job at The Pump Room. She later founded Lettuce's human-resources department, which Melman, with his populist leanings, had wanted to call the human-being department.

What Lettuce looks for first in a manager is psychological strength, Carbone explains, the theory being that technical skills can be taught. "We say if a circle represents 100% of what it takes to get hired, only 49% of that circle is technical ability. What tips the scale is the 51%, and that's your emotional maturity, your ability to develop the people below you."

Candidates judged capable of becoming managers -- they can be waiters or waitresses, or outside hires -- go through a detailed 12-week training program unusual in the restaurant business. The first phase lasts five weeks and covers all work done in the so-called "front of the house," the dining room. Trainees spend their first week boning up on Lettuce philosophy and culture. There is homework every night, such as reading about serving the elderly. In the second week, they wait tables in the restaurant they will help manage. "We want them to feel, not just intellectualize, the responsibilities of that position in our restaurants," Carbone says.

Over the next few weeks, they rotate through other front-room jobs, serving as hosts and captains and maîtres d'hôtel. They learn the subtleties of dealing with the public. Melman's guiding maxim for service is "Recognize and Reassure." Every customer, he believes, should be greeted on arrival and given reassurance that he or she will be served promptly and well. Lettuce also instructs management trainees in the Three A's of responding to complaints: Acknowledge, Apologize, Act.

Trainees spend part of the fourth week as busboys, gaining, among other things, a glimpse into what life is like for foreign workers who have little grasp of English. Lettuce keeps copies of El Norte, a wrenching film about the northward progress of two young illegals. The company doesn't require its trainees to watch the film, but most of them do.

After a brief stint behind the bar, and a shift with the restaurant's general manager, each trainee takes an oral final exam, which he must pass before moving on to the next phase of training. During the exam, which can last five hours, a panel of Lettuce partners asks trainees to act out their responses to an array of crises. What do you do if a customer finds a staple in his hamburger? How do you handle an unruly drunk? Carbone and other partners on the panel play outraged customers and employees and try hard to make a trainee sweat. "I can bring tears on demand," Carbone says, grinning. "That throws some of them."

The second five-week phase covers the "back of the house' -- the kitchen. Trainees learn how to cook and order food, and such tasks as organizing a walk-in refrigerator. This too is followed by a final exam. A third phase of the program, still being developed, will add two weeks to the program and cover the various administrative duties of a manager.

Periodically, Lettuce checks up on how its managing partners and their restaurant staffs are getting along. Each partner holds a meeting in which his or her staff has a chance to air any complaints about the restaurant's manager, without the manager being present. Sometimes Melman sits in on these meetings. Sometimes he's the one being reviewed. Once, for example, he learned that the Lettuce staff was unhappy about his habit of asking people to do tasks without his realizing that they would instantly drop whatever they were doing.

To catch flaws in the restaurants themselves, Lettuce dispatches trained rating teams into each one at least once a week. The raters are customers knowledgeable about food and trained by Lettuce to watch critical areas of service. At the end of each month the restaurants receive a report card with the results of the weekly reviews.

Lettuce's best quality-control detector, however, may be Melman himself. "It's an instinct," says Bill Frost, a former Lettuce partner and minor-league baseball player who owns a Nevada restaurant overlooking Lake Tahoe. "I've seen so many excellent athletes who have an instinct about where to throw the ball. Melman has that same quality. The guy just has the ability to know what's right about a restaurant. He knows how it's supposed to feel."

Melman is a stickler for cleanliness and discipline, Frost says. At The Pump Room, which Frost helped manage, Melman taught two tricks to help the staff get the restaurant as clean as possible -- turn the lights up as bright as possible, and play rock music on the sound system for motivation. Melman also instructed the staff in correct diction and body language. "Rich doesn't want to see anyone addressing a customer while leaning on a chair," Frost says.

Melman focuses on a single aspect of a restaurant's performance and uses it to measure how the rest of the place is doing. "When you have a lot of restaurants, you put small areas under a microscope and look carefully," he says. "If something's wrong, you look deeper. If one thing's wrong, you'll see more things wrong.'

Here's Melman at the Chicago Ed's, for lunch. "I'm concerned that it's taking more than 8 to 10 minutes to get the order on the table," he says. Overall, though, Ed's seems to be running smoothly. The noise level is right -- too much noise means people are talking, not eating, and could indicate lagging service. There's no evident backlog of orders at the kitchen. And he likes the malted that's been delivered to his table. "I can know in two seconds if it's not made in the right proportions," he says. "I know the food so well now in our restaurants, I know when they're a fraction off."

Here's Melman at Don & Charlie's, another Lettuce restaurant in Phoenix: Melman wants the table no customer would ever request. It's a couple of yards due west of the kitchen door. Every few moments, the door opens and a server appears. Melman likes this table because it puts him at the restaurant's heart, lets him see how the place performs.

Melman looks a little put out, but not because he sees any problems. Rather, there's a brand-new dish, pecan chicken, that the chef wants Melman to try. Melman, however, has dropped 10 pounds since fleeing to Scottsdale for a month of vacation mixed with work. The last thing he wants tonight is to be a guinea pig. "I don't want to try something that might not be good," he mutters, a bit petulant.

But the dish is now on the table. Melman relents, gives it a try. "This is good," he says, still chewing. He tastes the pecan sauce, points his knife at it: "This sauce is not so good." He carves another hunk of chicken. Soon he's got the chicken in his hands. He's gnawing at the bones. Twenty years of therapy, and he still can't resist a good meal. n

"The Man with the Golden Touch" by Erik Larson. Published by Inc. Magazine, October 1988 issue. © 1988 by Erik Larson. All rights reserved.