Restructured Sizzler seeks new identity.

Emerging from a year-long bankruptcy, a leaner and meaner Sizzler International Inc. is hunting for a new identity.

But the future of the West Los Angeles-based restaurant chain, which became an icon of family dining in the 1970s and '80s, remains a subject of passionate debate among franchisees and Sizzler's corporate management.

"They need a whole new concept, maybe even to change the name," said former Sizzler franchisee Mike Lonegan. "Unless they make wholesale changes, I don't think they're going to make it."

At the peak of his 30-year career with Sizzler, Lonegan owned 12 restaurants stretching from the San Fernando Valley to Sacramento. As profits at his restaurants fell in the 1990s, he began unloading them and sold the final one last year.

Echoing sentiments of other franchisees and analysts, Lonegan said Sizzler must determine just what it wants to be, implement the necessary changes and then stick to them.

"Over a period of years they've obviously gone in different directions, from a steak house, to the whole buffet routine, then to a Western grill. They've done a lot of zigging and zagging," said Edward Kushell, president of the Franchise Consulting Group in Century City.

A short-lived campaign to convert Sizzler to a "Sizzler American Grill" concept was abandoned last year after restaurants in several test markets failed to generate enough new business to justify the cost of such a conversion.

Officially, top-level executives of the 40-year-old chain say the company is conducting an item-by-item analysis of its menu to see what should stay and what should go.

Sizzler executives declined to be interviewed for this article. But in a written statement, Chief Financial Officer Chris Thomas said nine new hamburger meals that the company introduced last week in Los Angeles and New York are the first results of the review process.

The company is spending $500,000 to promote the burgers in the L.A. market.

At between $5 and $6 apiece, the burgers are about half of what several of Sizzler's traditional steak-and-seafood meals sell for. But a company spokesman who asked that his name not be used said sweeping price changes are not in the works.

"We intend to remain at the high end of the mid-scale segment, which is a broad consumer base," he said.

Lonegan said he is unimpressed by the hamburger approach. "They're trying to sell $5 hamburgers when McDonalds can't give them away for 55 cents," he said.

Indeed, piecemeal menu changes will not be enough to ensure success, said Sharon Olson, president of restaurant consulting firm Olson Communications Inc.

"The kind of concept they had has lost its place in the mainstream market," Olson said.

Consumers today want at least the perception of healthy food from their restaurants, or high-end indulgences like prime rib. All-you-can-eat fried shrimp specials and chocolate pudding-stocked salad bars are unlikely to attract hordes of customers, she said.

Attracting customers must be the company's priority, said David Leibowitz of Burnham Securities, the only analyst in the country who still covers Sizzler.

"Too many of their customers come cleverly disguised as empty seats," Leibowitz said.

To get customers back from chains including Applebee's, Koo Koo Roo and Chili's, Sizzler must implement a "focused game plan," Leibowitz said.

But he said it's too early after the bankruptcy reorganization to tell whether the company's management has such a plan in them.

Sizzler International, which now owns 87 restaurants and has another 230 franchisees in the United States, declared bankruptcy last sum-met after posting net losses in three of the previous four years on steadily declining revenues. Sales had dropped from $504 million in 1993 to $436 million last year.

As part of its restructuring, approved June 2 by the U.S. Bankruptcy Court for the Central District of California, the company shut 140 company-owned restaurants. No franchisee contracts were canceled as part of the restructuring.

That's probably smart, Kushell said, considering franchisees were likely upset about the reduction in the number of company-owned stores. "No franchisee likes to see downsizing in the number of stores. They usually buy into a system because they expect to see growth," he said.

Getting franchisees enthusiastic about a new company image may not be easy.

The year-long bankruptcy reorganization hurt sales, said one L.A. franchisee who asked that her name not be used. To keep customer volume up during the last year "we had to keep our lights on all the time, we put balloons out front. just to let (customers) know we weren't closed."

But when your life savings are sunk into a franchise, she said, you have little choice but to go with the company line.

"We need to do something," she said. "We can't stay in business like this."