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Elmer's serves up a lunch strategy

A year after leaving the public company ranks for the comfort of private status, Elmer's is hoping to leave behind its breakfast-only image and forge an identity as a three-meal destination. But there are plenty of other restaurants cooking up similar strategies.
/ Source: The Business Journal of Portland

A year after leaving the public company ranks for the comfort of private status, Elmer's is hoping to leave behind its breakfast-only image and forge an identity as a three-meal destination. But there are plenty of other restaurants cooking up similar strategies.

Elmer's, which ceased trading on the Nasdaq exchange in 2005 citing high compliance costs, has a new president and chief executive officer and a new vision to make itself competitive with the successful Applebee's chain.

Dennis Waldron, a longtime industry executive who founded Cinnabon International, took the helm in January. He succeeded Bruce Davis, who led the management buyout and who remains chairman of the Elmer's board.

Waldron's task: Build Elmer's lunch and dinner business with new menu items and a fresher decor. Some of Oregon's best-known restaurant brands are moving toward the three-meal end of the IHOP-Applebee's spectrum.

Beaverton-based Shari's Restaurants, which changed hands in December, made a similar move several years ago by adding entree salads and gourmet sandwiches to its menu. Similarly, the new owners of the Rose's Restaurant and Bakery chain are well on their way to reinvigorating the venerable Portland brand, having just opened a new restaurant at The Streets of Tanasbourne.

The National Restaurant Association estimates the full-service industry, which includes Elmer's and its peers, will post more than $173 billion in sales this year, up 5.2 percent over 2005. An improving economy and aging demographics account for the increase in demand for restaurant dining.

At Shari's, which was acquired by New York-based Circle Peak Capital in late December, the investment is paying off. The chain is opening its first new location in five years, said David Archer, communications director.

Expanding lunch and dinner offerings is an obvious growth strategy for breakfast-oriented restaurants, but Archer noted that the casual dining field is extremely crowded.

"It's just a hard way to go. There's so much competition out there," he said.

Rose's, which turns 50 this year, is another relatively new entrant in the three-meal arena. After nearly foundering a decade ago when the original location on Northwest 23rd Avenue had to be closed, Rose's is staging a comeback under owners Dick Werth and Jeff Jetton.

It opened its fourth restaurant, at the Streets of Tanasbourne in March, and is readying for another opening, at Vancouver's Fisher's Landing, in May.

Werth differentiates Rose's from the "breakfast brands" but acknowledges they share a spot in the fast-growing casual dining category.

"You can only have so many $60-a-plate steakhouses in a city," he observed.

Elmer's got its start in 1960 as a coffee-and-pancake house on Southeast 82nd Avenue and quickly grew into a franchise-based network before being sold to investors who took it public.

Waldron said its franchisees embrace the new mission.

Elmer's customers are incredibly loyal, but the crowd that fills its restaurants, especially on weekend mornings, tends to be older. The new menu items, which rotate every few months, along with new decor, is designed to appeal to younger diners, he said.

"We need a fresher and more current Elmer's. Everyone understands that," Waldron said. Elmer's committed to testing its new recipes and decor before it requires its franchisees to sign on.

"We'll test it on our dime. If it works, they'll want to do it," he said.

Even the Elmer's name may be retooled, though Waldron said there are limits. The restaurants could become "Walt Elmer's" in honor of its founder, but it's unlikely the name will disappear.

Still, Waldron acknowledged that "Elmer's" presents a bit of a challenge. The last time "Elmer" was among the 50 most popular names for baby boys was 1921 -- eight years before the stock market crash that launched the Great Depression. By 2004, "Elmer" was essentially retired, coming it at an obscure No. 869, according to Social Security statistics.

But it does illustrate the delicate challenge ahead. Elmer's must attract new customers without alienating its loyal (read "older") regulars. Waldron is confident the new tables, decor, uniforms and a rotating menu of special features will nudge Elmer's in the right direction without crossing any lines.

"We think we know how to do it," he said.

Waldron certainly has the experience to lead Elmer's into its next phase.

Before joining the Elmer's board a few years ago, he helped launch some of the most successful businesses created by Seattle's Restaurants Unlimited, including Cinnabon, which it subsequently sold.

Today's Elmer's operates a network of 37 company- and franchise-owned restaurants in five states. Twenty one are in Oregon; the rest are scattered across Washington, Idaho, California and Montana.

Waldron said Elmer's is repositioning itself to add additional locations. The last new franchise opened over a year ago, in Walla Walla.

And he does not expect Elmer's to become a target for acquisition. Successful restaurant operators such as Applebee's and Darden Restaurants, which operates Olive Garden and others, like to create their own brands, not acquire others, he said.

Having begun his restaurant career in 1974 -- a heyday for theme restaurants -- Waldron said he's mindful of the evolution of the industry. It's no longer about how the restaurant feels, but how the patron feels when they visit a restaurant.

At Elmer's, he said, the feel is supposed to be warm and comfortable and fun.