Leadership - Management

CEO Leadership Profile: Morton's Allen J. Bernstein
(Originally published July 2003)

Background

Allen J. Bernstein is one of the most successful and respected leaders in the foodservice business. In a career that spans 30 years, Bernstein has been a franchisee of companies such as Godfather's Pizza, Hardee's Hamburgers and Wendy's. He currently sits on the board of directors for Dave and Buster's, Charlie Brown's Steakhouse, Luther's Bar-B-Q, Marie Callender's Restaurants and McCormick and Schmick Restaurant Group. Though notable accomplishments, these pale compared to his most singular passion, the building of Morton's The Steakhouse and Morton's Restaurant Group, which includes Bertolini's Authentic Tratorria.

Yet, true leadership is not measured by dealing with success, but rather by handling and moving forward when faced with adversity. Following 9-11, Morton's, like many other white tablecloth restaurants, endured drops in customer counts and declining revenues. As sales dropped, MRG's stock price also fell. Naturally this put added pressure on competing in a difficult market. Even more daunting was the public revolt of certain stockholders who claimed leadership was failing. Headed by Barry Florescue, this dissident group made a bid to take over the company with a stated plan to change management. When corporate raider, Carl Icahn, joined forces with Florescue, Bernstein faced formidable, well-financed opposition. How did Bernstein meet this ultimate challenge?

Survival Strategy

In the final analysis, Bernstein knew being true to himself and his shareholders was the only choice. Instinct told Allen Bernstein to basically go "Back to the Future," where he had greater control and wouldn't be subject to the fickle fates of Wall Street. Therefore, Bernstein decided to return Morton's to the private sector from whence it had emerged 10 years earlier in an initial public offering (IPO). During a contentious bidding process, Castle Harlan, which had previously owned Morton's, emerged as the top contender, eventually offering $17 a share after starting the bidding at $12.60 a share. In strategic terms, Bernstein turned to Castle Harlan as a so-called "White Knight," willing to stay the course with his management team, as opposed to selling to Barry Florescue and Carl Icahn, so-called Corporate Raiders, who sought to oust Bernstein and his associates.

Charles Bernstein (no relation to Allen),co-editor of Weekly Restaurant Connections and editor-at-large of Chain Leader magazine, has followed the rise of Morton's and Bernstein. His observation: "My spin on all this is that AJB is a determined top executive and stays the course. He simply overcomes all obstacles and keeps moving ahead. In a way, he is a survivor, and every time cynics think he will fail, he just proves them wrong. His latest challenge is to rebound from the tough economy, which is particularly difficult for upscale steak restaurants. But I surely wouldn't bet against him! His biggest asset is his complete integrity through all kinds of obstacles."

While certainly more challenges will present themselves, in the final analysis, Morton's success is inherently tied to its founder and his leadership. Allen Bernstein's dogged determination to succeed is, in my opinion, tied to the principles he has formulated and shared with members of the Morton's family.

Five Service Points for Success from AJB

The success of any leader and his or her organization is dependent upon the performance of all the people within the organization. Setting standards to motivate achievement is a key responsibility of every CEO who is charged with providing the vision to drive performance. Here are a few of Morton's key tenets:

"Guest satisfaction must be our number one objective. Nothing else comes close.

It is not sufficient to merely meet guests' expectations. We must strive to exceed their high expectations during every visit. If you assure guest satisfaction, sales and profitability will follow."

"We never lose sight of the fact that our guests can be either our greatest boosters or our harshest critics, depending entirely on their most recent dining experience."

"Our employees are the key to our success. We recognize and reward their professionalism, their dedication to serving our guests and the respect they have for each other."

"Food presentation is an art. The visual appeal of the finest food will further enhance its taste."

"Advertising can sometimes be helpful, but for a fine restaurant the most effective form of marketing and promotion has been, and will always be, word-of-mouth. There is no better way to get our message across than to have each guest leave pleased, eager to return and quick to recommend the restaurant to friends."

Conclusion

Bernstein seems right when he suggests his success is dependent upon guests who vote with their wallets, and not on Wall Street strategists, who do not have the strategic interests of his company in mind.

Thanks to Roger Drake, Vice President of Communications of Morton's Restaurant Group, and Charles Bernstein, industry guru, for contributing to this article.

Hospitably yours,

Peter

Bio:

Allen J. Bernstein

Allen J. Bernstein is one of America’s most respected, innovative and informed restaurant industry executives. His 35 years of success as a restaurateur have encompassed the spectrum from fast food to fine dining.

Known for his extraordinary knowledge of the $440 billion foodservice industry, his keen understanding of customer preferences and his ability to forecast and analyze restaurant trends, the dynamic and personable Mr. Bernstein is frequently profiled by, and quoted in the major print and broadcast media.

As founder, chairman and chief executive officer of Morton’s Restaurant Group, Mr. Bernstein is best known for building Morton’s, The Steakhouse into a niche leader, the world’s premier company-owned upscale restaurant group. In doing so, he defied the long-standing conventional wisdom that the top-of-the-line fine dining experience was impossible to replicate in multiple locations.

There are currently 65 Morton’s steakhouses throughout the continental United States, and in Singapore, San Juan, Vancouver, Toronto, Honolulu and Hong Kong; all famous for offering the finest food, exceptionally attentive service and a décor reminiscent of an exclusive private club.

Morton’s Restaurant Group also owns the Bertolini’s Authentic Trattorias, known for their fresh ingredients, fine Northern Italian cuisine and festive ambiance.

Within the restaurant industry, Mr. Bernstein is widely credited with coining the term, “The Wow effect!” and practicing it by making every dining experience a memorable one.

Prior to his founding Morton’s Restaurant Group, Mr. Bernstein had been a franchisee of many companies, including Godfather’s Pizza and Hardee’s Hamburgers. As a Wendy’s franchisee, he opened the first Wendy’s Old-Fashioned Hamburger restaurant in Manhattan, which quickly set all-time sales and volume records for the entire chain.

Mr. Bernstein is a member of Chief Executive Organization (CEO), and was previously a long-time member of the Young Presidents’ Organization. In addition to being a past president of the Solomon Schecter Day School of Nassau County, he currently serves as a member of their board of directors. He is also on the board of directors of Dave and Buster’s, Inc., Charlie Brown’s Steakhouse,

Luther’s Bar-B-Q, Marie Callender’s Restaurants, McCormick and Schmick Restaurant Group, and is a member of the corporation of the Culinary Institute of America.

He has also served on the boards of the New York University Center for Food Service Management, Long John Silver’s and the Queens Symphony Orchestra.

Most recently, Mr. Bernstein was appointed to the board of trustees of the prestigious American Film Institute.

Mr. Bernstein received a BBA in Marketing from the University of Miami.