Numero Uno Joins Steakhouse Craze.

Numero Uno Pizzeria, struggling to survive in the pizza business, is diversifying into the steakhouse and coffeehouse sectors.

The Los Angeles-based company has concluded that the pizza business is oversaturated and that more growth is taking place in other areas of the restaurant business.

N.U. Pizza Holding Corp., the parent of Numero Uno pizzerias, has entered into an agreement with Bolan & Jones Inc. of Copley, Ohio, to obtain the exclusive development and franchise rights to the Red River Roadhouse steakhouse concept for nine states in the West. The first location will be somewhere in Southern California, said Daniel A. Rouse, president of N.U. Pizza Holding.

On a related front, the pizza company has signed a preliminary agreement with a small Korean investment group in Los Angeles to develop Korean coffeehouses in Southern California.

The first coffeehouse is set to open in Gardena in April, Rouse said. More are targeted to open in the Los Angeles and Orange County areas within the next year or two.

The leap from pizzas to steaks and coffee was necessitated by a change in consumer habits, Numero Uno officials said. "Growth has really slowed in the pizza segment," Rouse said. "The goal of the company is to diversify its portfolio."

Indeed, pizza sales have been getting stale. In 2000, sales at pizza places around the country fell 9 percent while business at steakhouses was up 10 percent, said Kristin Olsen, a spokeswoman for the National Restaurant Association.

"With the strong economy that we are still enjoying, people are indulging themselves more and red meat is increasing in popularity again," Olsen said. "In terms of pizzas, the competition is so high. There are just pizza places all over the place."

Statistics from the National Restaurant Association show that there are 60,000 pizza palaces across the country. And that competition has hit Numero Uno hard. Last year, N.U. Pizza Holding Corp. filed for Chapter 11 bankruptcy protection after seeing its annual revenues slide from $2.6 million in 1998 to $700,000 in 2000.

In addition, Numero Uno is in arbitration to settle an 8-year-old dispute that Rouse said would help lift the company out of Chapter 11. He would not elaborate on the arbitration case.

N.U. Pizza Holding franchises 32 Numero Uno Pizzeria restaurants, primarily in California.

Numero Uno will start opening its steakhouse franchises in Southern California -- in an area stretching from San Diego to the San Fernando Valley -- and then expand northward. It has the right to collect franchise fees and royalties as the company franchises Red River Roadhouse steakhouses in Nevada, Washington, Montana, Colorado, Arizona, Texas, Wyoming and New Mexico.

Red River Roadhouses are described as middle-class restaurants a notch or two below the Australian-themed Outback Steakhouses and along the same lines as Lone Star steakhouses. Annual unit sales for Red River Roadhouses are $2.6 million, with an operating margin of $1.6 million.

Meanwhile, Numero Uno has joined with a small Korean investment group to develop Korean coffeehouses in areas outside L.A.'s Koreatown that have high concentrations of Korean residents. (There is already a high concentration of coffee establishments in Koreatown.)

Terms of that deal were not available last week.

Numero Uno will be responsible for constructing the coffeehouses, while the investment group will be in charge of identifying which areas to build in, Rouse said.