Royal Delight

Royal Delight

CEO Q&A by Jean Gruss | Editor/Lee-Collier

Roy Yamaguchi built a successful chain of high-end restaurants called Roy's. Entrepreneurs can learn from his success.

Roy Yamaguchi's youthful looks don't reveal his age. The 50-year-old entrepreneur doesn't have a single gray hair, even after building the successful chain of 34 restaurants that bear his first name for the past 18 years.

Chef Roy was in Bonita Springs recently to celebrate the 8th anniversary of his restaurant there. The five-course menu was classic Roy's Hawaiian fusion, including soft-shell crab spring rolls, tuna sashimi on taro chips, seared Hawaiian sea bass and scallops with edamame puree and truffled lobster drizzle.

The Review caught up with Chef Roy recently to get his advice for entrepreneurs, what it's like to partner with a publicly traded company and how he plans to add restaurants in Florida. Here's an edited version of the conversation:

Q: Many of our readers are young entrepreneurs. What advice do you have to give them?

A: I think the most important thing is to understand who you are and where you are in your life and how committed you are to where you're going in the future. The bottom line is there are many roles an individual can take in a restaurant. The route that I took has been the most advantageous to me. I went to cooking school, so I learned how to cook. I learned everything about a kitchen and learned what it takes to run a kitchen. Then I learned about service and other things that are important to business. But I never went to business school. So I was fortunate enough early on to have made a mistake that didn't really cost me my life, meaning that I was able to rebound. I was in a business venture and the venture went south. So it didn't do as well as I thought it would and we ended up selling the restaurant and I moved on. When I moved on I opened the first Roy's. That the restaurant didn't work out was like a stepping-stone, it was a lesson learned.

Q: What was the most valuable lesson you learned from that first restaurant failure?

A: From that one restaurant I learned everything from service, decor and everything people think of lightly. I didn't really understand the restaurant business at all. I just knew how to cook.

Q: If you had to do it over, would you attend business school?

A: I would probably go to cooking school, go to business school, get hands-on training under a successful chef and hands-on training under a successful manager. But as far as the route that I took, I went to the best cooking school in the nation, the Culinary Institute of America. With this failure I had with this restaurant called 385 North in Los Angeles, it really made me think a lot before I opened the first Roy's. All the things I did wrong I actually thought about and corrected them. I think that was the biggest part of the success of Roy's.

Q: Back in 1999, you partnered with Tampa-based OSI Restaurant Partners (owner of Outback Restaurants) to open new Roy's restaurants. Looking back, was it a good idea to partner with a publicly traded company?

A: It was definitely a positive thing that we got together. We're very people-oriented company and we really thrive on trying to do what's the best for our people who work for us. In that sense, OSI was a great match. We're a 50-50 joint venture company. As far as the future, we're continually building restaurants - three a year.

Q: The founders of Outback Steakhouse - Chris Sullivan, Bob Basham and Tim Gannon - have teamed up with private equity firms to take OSI private. How does that affect Roy's?

A: That scenario doesn't really affect us because we're still a private company. Roy's joint venture with OSI is still a private entity. But it's always nice to see the founders partake in the success of what they do.

Q: How many restaurants do you have in partnership with OSI?

A: There's a total of 34 Roy's, but out of that, there are 21 in joint venture with Outback.

Q: Managers and chefs at OSI restaurants are required to buy an ownership stake in the restaurants they run. Is that an advantage?

A: To me, it's always an advantage in having your staff participate in the success of the restaurant. Whether it's a small piece or a large piece, I think people always want to be connected and belong and when they receive an ownership with us it's a great advantage.

Q: How many more Roy's restaurants are you planning to open?

A: Currently we have two under construction for '07. We have another couple more leases signed which hopefully we'll be able to open in '07 and if not in '08. You have to understand I started this process 18 years ago, so we built a great pool of chefs and management that's ready to partake in any kind of expansion we do. So we have sous-chefs who could be chefs, we have assistant managers who are ready to step up and be proprietors of stores. So we can undoubtedly open more restaurants if we had to. But I like to always make sure that what we do is first-rate, world class. That's very important to me. Do we want to do more? Yes, we can do more, but it's not necessary. Ideally, three to four a year works very well for us because we have a great training staff.

Q: What about new Roy's restaurants in Florida?

A: I think Florida has always been a great place to be. Just like Hawaii, the climate's nice. People are very, very enthusiastic about what we do. It's a beach community, whether it's inland or on the coast itself. There's a lot more we can do. Exactly how many I'm not sure. Idealistically, we could do two, three, four more. We're not in Miami or its suburbs. West Palm Beach, maybe. There are some other places that I'm sure are available up north.

Q: Looking over OSI's latest quarterly earnings reports, the Roy's restaurants show a slight decrease in same-store sales. How do you account for that

A: For Roy's, our same-store sales were up for the year. So quarterly it might have been down, but for the year we're up. For us, we're not concerned about what happens in one month. We're concerned about what happens with the overall growth in our company. We're very fortunate that since 1988 our sales have gone up every year. So we're in good shape as far as year-to-year over the past 18 years.

Q: What are the growing competitive threats in your niche of the restaurant business today?

A: To me there is really no big threat. Virtually anybody can be a threat in this environment today. A lot more people are going out to dinner, but there's a lot more restaurants that are opening. I don't really look at what people are doing out there because if you do, you'll be looking every second for the rest of your life because that's just how busy it is and how crazy it is. What I do is concentrate on our people, our restaurants, making sure that our staff really understands where we have to go, where we need to go, how they do it. We always hire the best people possible to do the job. We're always educating our staff about where we need to go. We have meetings with our chefs, we talk to our guests. It's a day-to-day thing where we have to concentrate and be on our toes. Every dish that we serve is crucially important to the success of our restaurant year after year.

Q: On a personal level, how do you handle the growth of your company?

A: It's very simple. It goes back 18 years ago when I opened the first Roy's. When I opened the first Roy's, I brought together four unique individuals. The same process still stands today with our chef partners, our managing partners and our joint venture partners. If you meet our staff, you'll know how solid our culture is and how solid our team is. So if you ask me how can we open restaurants or what makes our restaurants better, it's our team. So I don't really worry about what's going on because our staff is so dedicated and so in tune to every little detail of the restaurant that everything clicks. That bond really pays off.

Q: How old are you now?

A: 50. It's not like I started this thing yesterday and got lucky or something. It's been trial and error. The greatest thing is that you can build a personal relationship that really blossoms. Because we've been at this for so long with pretty much a lot of the same people, you actually build such a great friendship with the people who work with you that it creates ohana, which means "family." They become stronger than your real family. They become stronger than your siblings.

REVIEW SUMMARY

Entrepreneur. Roy Yamaguchi

Company. Founding chef and owner, Roy's restaurants

Key. Building the right team will ensure business success.