The grill drill: Bob Spivak's Daily Grill chain capitalized on the 'power lunch' concept. As he steps down, successor Philip Gay is seeking growth opportunities.

BOB Spivak, who leveraged the entertainment industry power lunch into a chain of Daily Grill casual dining restaurants, is stepping down from the helm of Grill Concepts Inc. after more than 20 years as chief executive.

Spivak will be replaced in June by Philip Gay, Grill Concepts' current chief financial officer, following the annual shareholders' meeting. Spivak is remaining with Grill Concepts full-time through the end of this year and will continue as a consultant under a 10-year agreement.

Spivak, the only chief executive Grill Concepts has ever known, said his career won't end, but be will shift his focus to the guest experience and the culture of the company. The 62-year-old insists he is not retiring.

"I am going to stay very active in the company," be said. Spivak's continued involvement could help smooth the management transition to Gay, 48, whose background is quite different. Gay's experience is on the financial side, while Spivak, who started Grill Concepts along with Michael Weinstock and Richard Shapiro in 1984 with the original Grill on the Alley in Beverly Hills, is known as a hands-on restaurateur.

"He is a guy who works the restaurants," Rick Rosenfield, co-founder of California Pizza Kitehen Inc. of Los Angeles, said of Spivak. "There are a lot of moving parts in the restaurant business. Bob is a guy who really understood that and feels the pulse. He is old-school in that way."

Spivak immersed himself in the decision to choose Gay, and he carefully planned the management change. About three years ago, he concluded that Grill Concepts could use new leadership to guide the company into an expansion phase.

"Founders need to stay involved, but step aside as the business grows. Founders tend to be tied to the past," he said. "I felt that it was time to bring in some fresh business acumen."

Spivak and Gay have known each since the late 1980s. Back then, Gay was chief financial officer of California Pizza Kitchen.

Although California Pizza Kitchen and Grill Concepts were competitors, Spivak and Gay cooperated on putting a CPK location and a Daily Grill location in the same Brentwood shopping center. With two strong concepts, the belief was that each would be more successful.

In 1994, Gay became chief financial officer of Wolfgang Puck Food Co. Inc., based in Beverly Hills. In 1997, Gay moved onto Lincolnwood, Ill.-based Diversified Food Group Inc., where he was chief executive of the confectionary division. He later went to Dallas as managing director of Triple Enterprises, a mergers and acquisitions firm.

In 2004, Gay and Spivak crossed paths again. Spivak was in Dallas, where a Grill on the Alley was planned, and arranged for a meeting with Gay. Spivak informed Gay of the chief financial officer position and said, if that worked out, there was a possibility Gay could assume the chief executive role.

"Philip and I have a tremendous amount of mutual respect for each other. We are going to have the ability to work together and make this company better," said Spivak.

Alley agents

Gay joined Grill Concepts in the middle of 2004 and began fine-tuning initiatives to improve the operations and financials. He spearbeaded projects to put a 1-800 number on customers' receipts to gather information on their dining experiences and add protein entree items to the Daily Grill's dinner menu, pushing the average dinner bill up to $28 from $26.50.

But Gay's major challenges are yet to come. Grill Concepts is identifying growth opportunities, of which he asserts there are many, both in areas where Grill Concepts already has restaurants and in untouched territories.

"You can't grow on unsound foundations," said Gay. "We have gone back to basics. Now we can improve."

The company has expanded fairly slowly over its history. In 2004, the company's revenues totaled $63.7 million, up from $58.3 million in 2003 and $42.3 million in 2002. It owns and manages four upscale Grill on the Alley restaurants in Beverly Hills, Hollywood, San Jose and Chicago, and 20 Daily Grills in California; Washington, D.C.; Texas; Oregon and Illinois. Eight of them are in hotels.

Grill Concept will be testing original ideas in a marketplace hungry for out-of-the-house dining options. The company, for example, is trying out a take-out programs.

In the end, Spivak said operating a successful restaurant comes down to nuts and bolts: the service and the meal. And at the Grill on the Alley in Beverly Hills, be did his best to treat all guests the same.

Spivak recalled television host Johnny Carson calling him one day to secure a booth seat. "I told him it would take at least an hour to seat him. He thought it was so delightful, be waited an hour," he said. "I did it because I didn't know any better."

With the likes of Carson coming in, the Grill on the Alley was adopted by the powerful William Morris Agency Inc. as the 'in' place to go. But Spivak didn't let the embrace of the entertainment industry go to his head. Rather than hobnob will celebrity diners, he labored in all areas of the restaurants.

"It seems that whenever you go into the Grill, somehow Bob is always there," Rosenfield said.

When he exits the chief executive position, Spivak said he'll remain in the restaurants. He expects to concentrate on ensuring that the company's eateries remain known for customer attentiveness typically associated with independent restaurants.

"Management of a chain is like the game of telephone you played as a kid. We have people who come up with the craziest solutions for problems," he said. "My goal is to get back to, 'the guest is always right.'"