Levy Restaurants

Abstract

Growing from a passive investment in a Chicago delicatessen in 1978, into a national foodservice company by 2007, Levy Restaurants (Levy) served approximately 63 million customers a year at more than 85 different restaurants and sporting and entertainment venues. Then Levy expanded its fine-dining restaurant business into sports and entertainment venues and such unexpected places as Disney World. Levy grew at greater than 20% compounded growth rates between 1999 and 2007 because of a plethora of newly constructed baseball, football, basketball, and hockey arenas and stadiums. When construction growth leveled off, Levy responded by expanding into entertainment venues. How could Levy maintain its stellar growth rate? Levy's answer to this question depended, in part, on how it defined its core competencies; it needed to decide whether it was a fine-dining company or a foodservice company and how its customer-value proposition differed from its competitors. Levy had to determine which new customer segments to expand and whether to grow, maintain, or shrink its restaurant business. Excerpt UVA-S-0155 March 6, 2009 LEVY RESTAURANTS Levy Restaurants (Levy) was an accidental entrepreneurial success story. Growing from a passive investment in a Chicago delicatessen in 1978 into a national foodservice company by 2007, it served approximately 63 million customers a year at more than 85 different restaurants and sporting and entertainment venues, employed approximately 20,000 employees, and generated more than $ 800 million in revenue. Levy's business model had evolved iteratively and serendipitously over the years from 1978 to 2007. From its restaurant roots, Levy branched into the sporting world after agreeing to a good friend's repeated requests to cater the luxury boxes at the baseball games of his team, the Chicago White Sox. This led to a similar request from the Chicago Cubs. Then Levy expanded its fine-dining restaurant business in Chicago into sports and entertainment venues and such unexpected places as Disney World, Churchill Downs, and local zoos. Levy subsequently took a big risk when it expanded into general concessions at the ballpark—a move from filet mignons to hot dogs. This move had the potential of diluting Levy's reputation as fine dining company and what differentiated it from its competition. Levy had grown at greater than 20% compounded growth rates between 1999 and 2007 (Exhibit 1) because of a plethora of newly constructed baseball, football, basketball, and hockey arenas and stadiums. When construction growth leveled off, Levy responded by expanding into entertainment venues. Another major change occurred in 2006 when Levy became a wholly owned subsidiary of the London-based public company, Compass Group (Compass). . . .