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All-you-can-eat investment.

Little Rock Diners Will Soon Dig In to a $3.2 Million Restaurant Venture

LITTLE ROCK HAS AN outside chance at becoming home for the first restaurant in a planned chain of all-you-can-eat locations.

That is if the start-up venture doesn't open Lovett's Buffet No. 1 in its home base of Memphis, Tenn.

Lovett's has entered the final month of raising more than $2.5 million through a private placement offering to finance the first two restaurants.

Three eateries will be developed if enough well-heeled investors are attracted to pony up enough cash to hit the $3.2 million mark.

With minimum offerings of $100,000, individuals or couples need not apply unless they have a personal net worth of $1 million or an annual income of $200,000-$300,000 for the three most consecutive years.

Most of the players in this venture are from Tennessee, but there is a familiar name who is no stranger to dollar signs, zeros and menus.

"If the first Lovett's isn't opened here, I'm hoping our second restaurant will be in Little Rock," says Jim Keet, Little Rock businessman and newly elected state senator.

Keet, a 20-year veteran of restaurant wars, is serving on Lovett's executive committee and corporate board of directors. The same goes for J. Michael Bodnar of Birmingham, Ala., and Steve Prentiss and Richard A. "Dick" Wilson, both of Memphis.

Among other things, this four-member group is in charge of developing short-term and long-term strategic planning and direction, a comprehensive business and financial plan, a menu and the interior/physical layout and decor.

The executive committee also will give final approval for all site recommendations and assist in marketing strategy development.

In addition to Little Rock and Memphis, Lovett's is looking at Jackson, Miss.; Louisville, Ky.; Birmingham; and Nashville, Tenn.

No Model to Draw From

Keet, who set up new restaurants serving everything from gourmet fare to fast food for outfits like Holiday Inn and Wendy's, is no stranger to new start-up ventures or even new concepts. But this endeavor has a twist.

"It's the first time I've been involved in the initial stages of a brand-new concept without it being part of a bigger company," Keet says. "We're doing something that's extraordinary in the restaurant business, let alone the private-venture capital market.

"We're approaching investors without a model to draw from."

The venture was initially formed on May 18 as Southern Buffet Inc., and the name was changed to Lovett's Buffet in September.

Don't look for a Dave Lovett or a Ronald McLovett in the background of this venture, though. The name doesn't refer to a person at all. It's merely a play off of the phrase "love it."

"We were simply looking for a proper name that had a ring to it and would go with 'buffet' and not conflict with any other names in the market," says James Powers Jr., president of Lovett's.

The group is banking that customers will love the low fixed price designed to attract diners by the score. The price for an adult lunch is about $4.90 and adult dinners will go for around $6.20.

On a per-restaurant basis, the private placement memorandum forecasts annual sales of $2.2 million and a net profit of $132,672.

Plans call for leasing 9,000-SF to 12,000-SF locations in existing shopping centers. Each Lovett's will seat 300-400 diners. About 100 full- and part-time employees will serve up lunch and dinner seven days a week.

Shoney's and Quincy's Family Steakhouse offer inexpensive, family-style buffets in addition to their regular service. KFC, Pizza Hut and others in the fastfood segment have added self-service food bars, too.

The closest thing to a Lovett's "scatter bar" concept in central Arkansas is Western Sizzlin', which also has regular menu offerings. Instead of a single cafeteria-style line, selections are set up on several different food bars scattered around the restaurant.

Other direct competitors focusing on the "scatter bar" concept are Old Country Buffet of Norfolk, Neb.; International King's Table of Eugene, Ore. (which once had a location in southwest Little Rock); Chuck-A-Rama of Salt Lake City; Homestyle Buffets of Oldsmar, Fla.; and Royal Fork Restaurants, of Boise, Idaho.

No Free Lunches

Keet became involved with the Lovett's venture through his 15-year friendship with Michael Bodnar.

Bodnar served as treasurer and controller for Shoney's South Inc. and chairman and chief executive officer for Restaurant Systems Inc., which owned or managed 54 Wendy's Old Fashioned Hamburger restaurants primarily in Georgia and Alabama.

Bodnar was also co-founder of Maxie's of America, a 19-unit chain of double drive-thru hamburger restaurants based in Tallahassee, Fla.

Keet, who served as Maxie's chairman, pocketed a tidy paper profit when Rally's Inc. bought the company in June 1991. That stock swap was worth more than $2 million for Keet.

Keet and Bodnar each will receive warrants to purchase 100,000 shares of Lovett's Buffet stock at $2 per share for their service on the executive committee.

The other two committee members (Steve Prentiss, corporate vice-chairman, and Dick Wilson, executive vice president and chief operating officer) each will receive warrants for 60,000 shares.

A third of these warrants are vested when escrow is broken (the point at which the $2.5 million private placement offering is reached and the project proceeds), when two stores are open and when the executive committee members have served two years.

The options must be exercised within five years of vestment or when the company makes its initial public stock offering, whichever is earliest.

The company has also adopted a similar format of stock option vestment for three executives: James Powers Jr., 130,000 shares; Roy Shainberg, director, 100,000 shares; and James Brown, vice president of operations, 10,000 shares.

Powers has a dual career as a dentist and head of Powers Investments. Shainberg is president and CEO of Shainberg & Associates Inc. of Nashville, Tenn., a real estate brokerage firm founded in 1963. Brown was a regional director of operations for Homestyle Buffet before joining Lovett's.

The Belz group of Memphis and Prentiss and affiliates each will receive options to purchase 160,000 shares at $2 per share later this month.

There are no free lunches for anyone when it comes to Lovett's stock options. But the question remains, do the players involved have their sights set on selling to a larger enterprise down the road and gorging on a quick profit?

"The people in this group are all long-term players, and our vision is being more of a long-haul player in the market," Keet says.

Getting your money's worth is certainly the proper attitude for an all-you-can-eat investment.
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Title Annotation:establishment of Lovett's Buffet Inc. restaurant chain
Author:Waldon, George
Publication:Arkansas Business
Date:Dec 7, 1992
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