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A Recipe for a Turnaround
Aired April 09, 2005 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
ALI VELSHI, HOST (voice-over): Next on THE TURNAROUND, she's known as the Breakfast Queen.
INA PINKNEY, OWNER, INA'S RESTAURANT: Good morning. I'm Ina.
VELSHI: But her problems are with the other meals.
RICH MELMAN, CHAIRMAN/FOUNDER, LETTUCE ENTERTAIN YOU: On Monday, Tuesday, Wednesday and Thursday, you basically lose money.
VELSHI: Can the reigning king of the Chicago restaurant business help?
PINKNEY: You caused me to rededicate myself to the reason I'm here in the first place.
VELSHI: THE TURNAROUND begins now.
(END VIDEOTAPE)
VELSHI: Americans love to dine out, so much so that they'll spend $1.3 billion in restaurants today alone. In fact, almost half the food we consume comes from one of the nation's 900,000 restaurants.
Despite all those potential profits, opening a restaurant remains a risky business. Almost 60 percent fail in the first three years.
(on camera): I'm Ali Velshi here at Ina's restaurant in Chicago. Around these parts, owner Ina Pinkney is known as the Breakfast Queen, but she wants to extend that rule over lunch and dinner as well. Now, Ina knows if she doesn't do that, her business could be fried. What she doesn't know is that we've booked her a surprise reservation with Chicago's top restaurateur. And we'll see if after three days with him, she can come up with a recipe for a turnaround.
(voice-over): When it comes to turning out winning restaurants, few do it like Rich Melman. His first success dates back to 1971, when he and a partner opened R.J. Grunts. It was a hip Chicago burger joint that still sizzles today. From that first success, Melman built Lettuce Entertain You, a private held company that either owns or manages over 50 restaurants, and has annual revenues in excess of $200 million. MELMAN: You want as many things in your favor as possible -- a good location, a good lease, the right concept, hiring the right people. Eighty percent of the success of a restaurant takes place before you ever open up.
VELSHI (on camera): You kind of have to get right all the time. There are few businesses where you don't get the chances over and over again.
MELMAN: You have to prove yourself every single day, every single meal, every single customer. You're not going to hit 100 percent, but you sure should try for it.
PINKNEY: How are you today? Thank you so much.
Hi. Good morning. I'm Ina.
And you made me look good.
VELSHI (voice-over): Ina Pinkney has been part of the Chicago restaurant landscape since 1991. She has had both successes and failures. Her latest venture, Ina's, opened in 2001 on Randolph Street. It's just west of Chicago's famous loop.
PINKNEY: The restaurant business is risky, because it is a business that's fraught with failure.
But considering that this is my third location, considering that I have opened up in recessionary times the first one, it just never dawned on me it wouldn't be a success.
VELSHI: Ina's positive attitude has developed over the course of a lifetime. Stricken with polio as a child, she has overcome tremendous odds to get where she is today.
PINKNEY: Nobody knew there would be late effects of polio. Nobody knew that, you know, 40, 50 years after the onset of polio that we would all be suffering in other ways. But at that time, it was if you exercise, you will be fine. And so, I think I grew up with the whole notion of can-do.
VELSHI: While Ina's restaurant is managing to stay afloat, it isn't making much money. Her gross sales in 2004 were just over $1.1 million, but after paying all her bills and her employees, Ina is left with a small surplus, just about $5,000.
Ina serves lunch and dinner, but for better or worse, around Chicago she is known as the Breakfast Queen.
PINKNEY: Breakfast Queen was sort of a magical, brilliant marketing strategy for me all those years ago. And that works for me and that works against me. When I say to people, have you been in for dinner, and they will go, "you do dinner?"
VELSHI: Ina does. She's open seven days a week, but nothing compares to weekends, when breakfast at Ina's is the place to be. But now it's Monday morning, and the staff at Ina's is winding down from the breakfast rush and getting ready for lunch.
PINKNEY: We have bodies in the seats, but we don't have enough. And I haven't been able to turn that corner.
VELSHI: Now, one of Chicago's most powerful restaurateurs, Rich Melman, and his right-hand man, Kevin Brown, are about to walk through her door.
PINKNEY: Oh, goodness. This couldn't be a better surprise. Thank you. Oh, my. Hello, Kevin. Oh, I am so excited. Talk about the best of the best. Wow! They brought in the big guns today. Thank you.
VELSHI: The first item on the mentor's menu is a top to bottom inspection.
The mentors are in time to see lunch being prepared. It's something the staff at Ina's do every day of the week, but today they are under the watchful eyes of two industry leaders, who don't miss a trick.
KEVIN BROWN, CEO, LETTUCE ENTERTAIN YOU: Mind if I walk back here?
PINKNEY: It's fine. It's fine. Just be careful.
BROWN: You have a walk-in box?
PINKNEY: Downstairs in the basement, I have a walk-in freezer and a walk-in cooler.
MELMAN: Great.
VELSHI: Rich seems impressed with Ina's restaurant, but he is concerned about how efficiently she is using her space. So, the team is going to examine everything. For example, the bar.
MELMAN: I have a lot of questions, but it's sort of interesting how much space it takes up for a small percentage of the sales.
PINKNEY: Yes.
VELSHI: The inspection is over. It's time for the turnaround process to begin.
MELMAN: We clearly have some ideas as to where we could start. And we would like to sit down and start talking.
PINKNEY: Let's do it.
MELMAN: Let's get going.
PINKNEY: Let's do it. I'm ready.
MELMAN: OK.
VELSHI: Next, the mentor brings in his experts.
PINKNEY: I couldn't believe that I was getting the Lettuce Entertain You team.
VELSHI: And some problems need immediate attention.
SEANA MONAHAN, MANAGER, INA'S RESTAURANT: This gets crazy back here, because this is such tight space.
VELSHI: Coming up on THE TURNAROUND.
(COMMERCIAL BREAK)
VELSHI: It's Monday afternoon, just west of Chicago's famous loop. One of the busiest tables at Ina Pinkney's self-named eatery is the one that she's sharing with her turnaround mentors, Lettuce Entertain You's Rich Melman and Kevin Brown, two of Chicago's most successful restaurateurs, and Melman has also brought along some of his top executives -- operations managers, accountants, public relations experts and an executive chef.
(on camera): So, Ina seemed really surprised when she saw Rich Melman walk into her restaurant. But I think what surprised her even more was the team he brought with him. She couldn't do that on her own, but let's see what she does with the information she gets from them.
PINKNEY: I couldn't believe that I was getting the Lettuce Entertain You team to sit with me and to help me learn the business of the restaurant business.
VELSHI (voice-over): The Lettuce Entertain You team is most concerned with efficiencies in Ina's restaurant. Three key areas are under the microscope: The basement, where Ina's inventory is kept; the kitchen, where the meals are prepared; and the books, Ina's finances.
PINKNEY: Of all the things that embarrassed me, not knowing enough about the accounting is probably number one.
VELSHI: Melman's top finance guys will be working with Ina's books. Rich and Kevin will oversee everything else, including the efficiency of the restaurant as a whole.
MELMAN: The single most important thing, No. 1, I want you to write down is "taste." No. 2 is "presentation." No. 3 is value for the customer. Is it priced fairly? And, No. 4, what does the food cost?
And sometimes entrepreneurs concentrate on sales, No. 1, and it probably is rightly so, but I'm going to get her to concentrate on profit.
VELSHI: For Ina, the process of running her restaurant is a seven-day-a-week proposition. But as her team prepares for the next meal, some of the problems they face daily are becoming obvious.
And it begins in the basement, where inventory, the lifeblood of the restaurant, is kept. That's where Ina's general manager, Seana Monahan, has taken Mike Ginsburg, and Art Mendoza, two of Melman's top efficiency experts. The tour isn't pretty.
ARTHUR MENDOZA, VP OPERATIONS, LETTUCE ENTERTAIN YOU: Do you prep down here?
MONAHAN: The guys will use the slicers down here, yes. There isn't any room in the kitchen for it.
MENDOZA: OK.
MONAHAN: It's not the best set-up at all.
MICHAEL GINSBURG, VP OPERATIONS, LETTUCE ENTERTAIN YOU: How often do these get serviced?
MONAHAN: When they need to. In the summer, this is my cooling system here. It's crazy.
VELSHI: Their next stop is the dishwashing area.
MONAHAN: This gets, you know, a little crazy back here, because this is such tight space.
GINSBURG: Definitely a high traffic zone.
MENDOZA: It would be nice to just take this and just go both ways.
GINSBURG: Yeah, go both sides.
MENDOZA: Put your dirty on this side and then just flip it over.
VELSHI: After a brief tour, Seana, and Ina's other general manager, Milton Cardinas (ph), are asked to join the meeting with the mentors.
MELMAN: I believe that we could make your lives easier.
MONAHAN: That would be fabulous.
MELMAN: And...
VELSHI: But before he makes Seana and Milton's lives easier, Rich has a huge challenge for them -- organizing the restaurant's cluttered storage areas. He wants Ina to implement the Lettuce Entertain You zone system.
MELMAN: It's a system where everybody knows where everything is in a clean, neat, organized way, that makes not only your inventory- taking quite simple and your ordering quite simple, but it puts a high value on everything that you have, so it's not wasted. PINKNEY: I fly by the seat of my pants most of the time. I figured a lot of things out and a lot of things worked, but I have never figured all of this out.
MELMAN: Well, we're getting you new (UNINTELLIGIBLE).
(LAUGHTER)
PINKNEY: Amen. I'll drink to new pants.
VELSHI (on camera): You build restaurants. This is a challenge, but Ina's got a -- she's got a feel. She's got something going on. Is that hard?
MELMAN: No. You're right. There are some times, when you look at restaurants, and you say there's not much to work with. I actually think she has a lot to work with.
VELSHI (voice-over): A crucial step in this turnaround will be to analyze Ina's financial situation. Melman has sent his CFO, Jay Stieber, and his controller, Tom Muno, to look at Ina's books. They will have plenty of questions.
PINKNEY: Accounting is the most difficult part of running your own business.
VELSHI: As day one draws to a close, Ina, Rich and Kevin meet to discuss Ina's homework for day two.
MELMAN: First of all, we need history. We need customer accounts, sales mix.
PINKNEY: Right.
BROWN: Check average.
MELMAN: Check average.
PINKNEY: Right.
MELMAN: And as many recipes as you've got.
Yes, we would like to get the recipes, so we can start costing them out.
Restaurants don't get in trouble overnight. It happens over a course of a year, two years, three years, four years. And you don't easily turn them around in three days or overnight.
VELSHI: Next, Ina's recipes are put to the test.
PINKNEY: I'm absolutely confident that they are going to find our food to be just delicious.
VELSHI: But her mentor isn't so sure.
MELMAN: I think it's good. Do I think it rates up there with the all-time great burgers? No.
VELSHI: Coming up on THE TURNAROUND.
(COMMERCIAL BREAK)
VELSHI (on camera): It's day two here at Ina's restaurant in Chicago. The owner, Ina Pinkney, wants to expand her busy breakfast business into lunch and dinner. Well, yesterday, our mentors, Rich Melman and his team, came in and took a close, hard look at how they run this business. And before helping her expand, they're going to help her squeeze every last bit of efficiency out of the business that she already has.
(voice-over): It's 7:00 a.m., and the morning breakfast rush has yet to begin, but Ina's general manager is already hard at work on the first major challenge of the day.
The goal: Turn this cluttered storage basement into an efficient work space.
Rich Melman's operation team is right there, sleeves rolled up and ready to help with the heavy lifting, and with a great suggestion.
GINSBURG: Art stopped off last night and got a brand new label machine. We use these in all our restaurants so that we can get some really nice labels on the shelf. They're permanent, they're nice and clean and professional looking.
VELSHI: But before they can label, there's a lot more cleaning to be done.
MONAHAN: This is garbage. This is garbage. Oh, coffee cake pans that we can never find.
GINSBURG: There you go.
MONAHAN: There's an old ice sink that is filled with coat hangers.
GINSBURG: It's gone.
MONAHAN: Well, OK.
MENDOZA: That will create a lot of space.
VELSHI: The problems aren't confined to the basement. Ina's business is good, but it is weighed down by inefficiencies. And that's part of the reason her business is suffering.
MELMAN: I just want to get a sense of what goes on Monday, Tuesday, Wednesday, Thursday. What -- 80 percent of the business is Friday, Saturday and Sunday. I don't know.
VELSHI: Melman and his team are zeroing in on a key goal.
MELMAN: I would like to know everything about breakfast that I could possibly know. What's selling, first of all?
UNIDENTIFIED MALE: OK. Hold on.
VELSHI: To make Ina's more efficient, more profitable, she may need to refocus all of her attention on the meal that made her famous.
MELMAN: We're going to start on breakfast. That's the first thing we're doing, because that's her strength. And we're going to see if we can get 20 or 30 more people a day in here.
What makes people come back here for breakfast? I want to really think about it, really think about the essence.
PINKNEY: The feedback that I get, which is quite remarkable, because they find me and they say, this was delicious. A word I hear a lot.
MELMAN: I don't doubt that. For me, I would want to see this restaurant 30 to 40 percent busier than my first year on Monday and Tuesday and Wednesday and Thursday. And if it's not, if it's staying the same, it's not enough.
VELSHI: The message here: Focus on what works, not what doesn't.
BROWN: Her biggest business right now is at breakfast. We think we can do more, make that part of the business better run, more profitable, and also focus it a little bit differently as it is today.
PINKNEY: The decision is a very large decision. So, I am going to think about it in terms of incremental changes, to really think about what it is that I want and want to have happen.
VELSHI: It's been a tough day, and it's only just begun. Rich and his corporate chef, Rita Dever, want to put Ina's food to a taste test.
MELMAN: The product is the single most important thing in a restaurant. So, going through everything and understanding why she picked the food and how she makes it. You know, we might have quicker methods of preparation, better methods of preparation, better products that she could use, lesser products that she could use. The confidence that you would have in a restaurant, for me, would start with the food. And I want to just add to what she does and try to subtract what's not important that she's doing.
PINKNEY: I'm absolutely confident that they are going to find our food to be just delicious.
VELSHI: Rich tries items from Ina's breakfast, lunch and dinner menus.
MELMAN: This is -- what kind of soup is this?
PINKNEY: That's asparagus soup, garnished with a chopped red onion.
MELMAN: Excellent.
PINKNEY: Oh, excellent. Excellent.
MELMAN: One second.
PINKNEY: Excellent.
MELMAN: What is this, about a seven-ounce hamburger?
PINKNEY: Eight.
MELMAN: I think it's good. Do I think it rates up there with the all-time great burgers? No.
PINKNEY: And there's the chicken soup if you want to try that as well.
MELMAN: OK. Good. Nice big pieces of chicken.
PINKNEY: Yeah, yeah.
MELMAN: Very nice. Very good.
VELSHI: The taste test is over, but Rich isn't done yet. The mentors once again focus on the Breakfast Queen's biggest asset.
UNIDENTIFIED MALE: We were all under the impression that pancakes were selling more. They're saying -- they're telling us they want more eggs.
VELSHI: Based on receipts, eggs are Ina's No. 1 selling item, but eggs are just the start. Rich and his team want to make sure Ina's recipes are both tasty and cost-efficient.
MELMAN: I want the zen of omelette making. I want the zen of omelette making. What is the absolute best way to make an omelette? Do we whip it on a blender, do we cook it at a certain temperature? Do we use a French omelette pan?
VELSHI: For Ina, the message is beginning to sink in.
MELMAN: I'm sure, over the years, you have experimented five, six, 10, 15 different times of making a good pound cake. Well, that same care and that same experimentation sometimes needs to go into the process of making money. I never want you to be more businessman than artist, OK? I just want you to be a little more of a business person. That's all.
VELSHI: Next, the kitchen comes under the microscope.
BROWN: Your omelettes can be terrific. The problem is, we are taking sauteed vegetables that have not been warmed enough.
VELSHI: But will it be too much for Ina to handle?
BROWN: I think right now, Ina is almost on a little bit of an overload.
VELSHI: Coming up on THE TURNAROUND.
(COMMERCIAL BREAK)
(NEWSBREAK)
VELSHI: It's day two of this three-day turnaround at Ina's restaurant in Chicago. Since meeting her mentor, Lettuce Entertain You's Rich Melman and his team of experts, the self-branded Breakfast Queen has been forced to reevaluate the way her restaurant is being run. Inefficiencies in her kitchen, her accounting, and her basement inventory are all being addressed by the Lettuce Entertain You experts. But most importantly, Rich Melman has suggested that Ina refocus on what she does best -- breakfast.
It's the middle of day two, and inside Ina's restaurant, the shift is already turning toward dinner.
For Ina, expectations for a crowd tonight are low. Dinner isn't a bit hit here, but breakfast is, at least on some days.
According to Ina's own financial analysis, her breakfast revenues range from $900 on a good day to only $300 on a off day. It turns out that good days are Friday, Saturday and Sunday. The $300 days come during the week. Ina is going to have to make a choice.
PINKNEY: I'm going to think about it, as he told me, start with a really close focus, and if breakfast is where we're doing our most business in terms of dollars, I'm going to think about how to -- how many more people do I want in this restaurant on Monday, Tuesday, Wednesday, Thursday, Friday for breakfast.
It's all about getting more bodies in the seats. More bodies in the seats will translate into more profits.
VELSHI: Ina also recognizes that she may have to make some changes in her kitchen. Lettuce Entertain You CEO, Kevin Brown, and his corporate chef, Rita Dever, are doing an on-the-spot evaluation. They're looking at ingredients, equipment, and the way work flows through the space.
VELSHI (on camera): This grill is hot, and according to Rich Melman's people, it may be 200 degrees hotter than it should be. It's an example of one of those things that's wasting money and cutting into Ina's already slim margins .
RITA DEVER, CORPORATE CHEF, LETTUCE ENTERTAIN YOU: (UNINTELLIGIBLE), and there may be opportunities in some places, but maybe not in others. But we just want to analyze everything.
We have some different options with their plates being kept up above over there. The plates aren't hot, so that's a bit of a problem.
OK. This must be what they're using for French toast. Look at that too. I'll start making a list.
The plates would come off and go in like that. And they could just turn, grab a plate, spin.
UNIDENTIFIED MALE: Actually, right here.
DEVER: Either/or. Here is the guy making the omelettes. He's done with his omelette. Boom. Up it goes.
UNIDENTIFIED MALE: Right.
DEVER: And this is a very busy station, being the pancake station. So, you know...
UNIDENTIFIED MALE: Flip-flop it?
DEVER: It would be perfect. If we could flip-flop this, it would be perfect.
VELSHI: Kevin explains some of their observations to Ina.
BROWN: Your omelettes can be terrific. The problem is, we're taking sauteed vegetables that have not been warmed enough. You take that same dish, put all the ingredients inside, pop it into Salamander, comes out, it's hot inside, it's melted, it goes out, and it's a whole different animal.
VELSHI: Naturally, Ina likes some of their suggestions more than others.
DEVER: Maybe we ought to have an Ina eggs Benedict than the traditional eggs Benedict.
(CROSSTALK)
PINKNEY: I don't know. Eggs Benedict are my least favorite foods, so you can't really ask me.
DEVER: Right.
PINKNEY: You can't really ask me. I would like a different kind of breakfast than that.
DEVER: It's a big seller.
VELSHI (on camera): Now, this is one of Ina's signature dishes, scrapple -- a bunch of things mixed up together. Well, that may work for food; not so much on the bookkeeping. So today Ina gets a review of her menu and her accounts.
(voice-over): Jay Stieber, Lettuce Entertain You CFO, has some advice along those lines.
JAY STIEBER, LETTUCE ENTERTAIN YOU CFO: Well, one of the things that we need to do to help Ina long-term is to make her a better business manager, not to turn her into an accountant, but to help her understand her financial statements and being more on top of her business.
VELSHI: Meanwhile, the transformation of Ina's basement continues. Slowly, an organized, efficient space is being carved out of the old one. The benefits are obvious to Ina's general manager, Seana Monahan.
GINSBURG: You've got two cases plus a few extra pounds, right? And you know on the busiest weekend that you had in the last three months, you've never used more than that. And all the cooks are coming to you and they're telling you, Seana, we're going to run out of butter, we're going to run out of butter. You know better, because you have got the history.
MONAHAN: Right.
MENDOZA: That is your vault. That's money that you're paying out (UNINTELLIGIBLE).
MONAHAN: Right.
MENDOZA: And the more you have, the more you use.
MONAHAN: Yeah, and it's going to improve the cash flow.
So, I see this as organizationally letting me have more time that then I can spend on other things: Finding better prices, building better relationships with our venders. Doing some analysis in terms of food cost.
VELSHI: As the day moves on, more Lettuce Entertain You executives weigh in. VP Sue Salzman is focusing on Ina's marketing, along with her associate, Jennifer.
SUSAN CHERNOFF SALZMAN, VP MARKETING, LETTUCE ENTERTAIN YOU: You opened four years ago. As part of your marketing then and now, do you have a public relations person or you're the public relations person?
PINKNEY: I'm the public relations person and the marketing person.
SALZMAN: I knew it, OK.
VELSHI: But Ina may not be making the most of a unique opportunity to bring more people into the restaurant.
SALZMAN: How many places in this city...
PINKNEY: None.
SALZMAN: ... have free parking?
PINKNEY: None.
SALZMAN: You need to put that on everything you do. Everything. Free parking. With your hours. Free parking. BROWN: I think right now, Ina is almost on a little bit of an overload. Everything we keep bringing to her, she's just like, oh, my gosh, thank you. This is great. I want to make sure it's not inundating for them to follow up on everything. I think what we have to be clear about when we leave is really what the priorities are.
VELSHI: And even though this is only day two of this three-day turnaround, it's clear the effects are being felt.
MONAHAN: We've just coming by, you know. We've taken what we had, because we didn't have a whole lot, and we've just made use of what we have. But there's so much that we haven't had. We've tried to make due.
PINKNEY: We're crying out of joy and relief. These are tears of joy.
VELSHI: Next, Rich lays it on the line.
MELMAN: We think there's a $30,000, $40,000 savings in just being smarter about a lot of the things that you do.
VELSHI: And Ina must make her choice.
PINKNEY: I thought about it and slept on it. And I really do know what it is that I want to have happen here.
VELSHI: Coming up on THE TURNAROUND.
(COMMERCIAL BREAK)
VELSHI: It's day three, the final day of this turnaround in Ina's restaurant in Chicago. The staff is serving up breakfast as restaurant mogul Rich Melman and his Lettuce Entertain You executives spend their final day helping Ina Pinkney turn things around.
(on camera): Most days, the biggest decision Ina has to make is what tomorrow's special will be. But after two days with Rich Melman and his staff, Ina faces a big decision. Will she reinvent her restaurant and her brand?
PINKNEY: Today is the day when Rich arrives and asks me really what my decision is about which way to go and how much commitment that I will make to this change.
I've thought about it and slept on it, and I really do know what it is that I want to have happen here, for me and for the staff. And I also have a plan for two years down the line. So, I am ready to reveal that to him.
VELSHI: Today is also special to Ina for a completely different reason. It's her birthday.
PINKNEY: Well, I woke up this morning on this, the beginning of my 62nd. And I'm very introspective and very reflective on birthdays. I was just marveling at where this road has led me today. VELSHI: Ina's general manager, Seana, labors to redo the cluttered storage basement, while Ina and the Lettuce Entertain You team start their final table meeting. It's time for her answer.
MELMAN: We gave you some homework to think about yesterday. And we've narrowed it down to talking about dollars and cents, how many more people do you want, dollars and cents wise, what do you want?
PINKNEY: That surprise and a little bit of the shock was that you wanted to focus on breakfast. And I had become so complacent in that meal that all I could see was dinner. You caused me to rededicate myself to the reason I'm here in the first place. And then, when you made me take a hard look at the numbers and realize that most of the business that we get for breakfast is on Saturday and Sunday, there was no question but that we had to rededicate ourselves to building the weekday business breakfast.
MELMAN: On Monday, Tuesday, Wednesday and Thursday, you basically lose money, and you make real good money on Friday, Saturday and Sunday.
PINKNEY: If I think to myself, 20 more customers a day, to 30 more customers a day, to 50 more customers a day, it all seems doable, incrementally. So that is definitely where I want to go to begin with. I have always felt that fortune favors the brave, and I was going to be extremely brave.
UNIDENTIFIED MALE: Well, fortunes will follow.
PINKNEY: Amen.
MONAHAN: Ina is one of the bravest people I know. She keeps saying, you fall down, you get back up. It's all about getting back up, you know. It's all about continuing.
VELSHI: Fortune may favor the brave, but it will take a lot more work before it favors Ina's paycheck. Numbers don't lie, and the mentors have uncovered significant waste in her books.
MELMAN: We think there's a $30,000, $40,000 savings in just being smarter about a lot of the things that you do.
STIEBER: (UNINTELLIGIBLE) on the food costs, there's a lot of opportunity there.
THOMAS MUNO, SR. VP, LETTUCE ENTERTAIN YOU: (UNINTELLIGIBLE) doing the recipes, so it's costing a lot?
STIEBER: I don't see any reason why, with some work, we can't get the food costs down to 4 percent, 5 percent.
VELSHI: Another part of this turnaround involves examining Ina's breakfast foods. Rich's executive chef Rita has been a fixture in the kitchen for the last three days, working to perfect the menu.
DEVER: And then you're going to take some herbs, some mixed herbs, and then just right across the top just like that. And then of course, the potatoes go back here, and we might have some vegetable there, but it will be lighter and it will be a lot quicker once you get the Salamander and use those two stations, OK?
PINKNEY: I learned a lot from chef Rita today about omelettes. It's still not my favorite dish, but I learned a lot about adding just a tablespoon of cream, I learned about cooking it at different temperatures.
MELMAN: I think what I would like to do is start naming omelettes after your customers, their favorite omelettes, and really making it -- I mean, it's the same thing for the kitchen. They write up what they want in their omelette, or they want the chico omelette.
We want you to be at the end of this next year extremely profitable and not vulnerable. And now you have a new family with which to bounce ideas off of. That will be forever.
VELSHI: The meeting wraps up, and the timing couldn't be better. Downstairs, Seana and the crew are finally ready to reveal the fruits of their labors.
(on camera): Now, you have not seen some of the changes that have gone on so far?
PINKNEY: That is true.
VELSHI: So I think you're up for a nice surprise on that, because what we saw is everybody doing things, it was a very active few days. And you're going to get to see a bit of the result of that.
PINKNEY: I am.
VELSHI: So, we're going to do that.
PINKNEY: Ready.
VELSHI: Coming up, Ina gets a major shock.
PINKNEY: I can't believe this is our basement. I can't believe that.
VELSHI: And will there be a real payoff to Ina's three-day struggle?
PINKNEY: We're going to be OK.
VELSHI: Next on THE TURNAROUND.
(COMMERCIAL BREAK)
VELSHI: Day three, Wednesday afternoon in Chicago. To its customers, Ina's restaurant might not look very different, but in the eyes of the owner and staff, big changes are brewing.
MELMAN: I would like an omelette so great that I would crave it at dinner time. What makes it signature? What makes it unique?
VELSHI: Under the supervision of Rich Melman and his Lettuce Entertain You executives, Ina's food has been scrutinized, her kitchen efficiency examined, and her accounting has been evaluated. But even Ina hasn't seen everything that's been going on.
PINKNEY: When they said they were taking me to the basement, I was very excited. It was the first time in all of this that my heart was pounding. I just couldn't imagine what they had done. I also couldn't believe the generosity of the fact that they had done this for us and made these new steps for me that are slip-proof, so I don't have problems walking down those steps.
And I got to the bottom of the steps, and there were the four hardworking men who had done it. It was overwhelming.
MONAHAN: Come on in.
PINKNEY: Oh.
PINKNEY: That was the most excited, I think, I have been this whole time.
This used to be scary. It's not scary anymore.
MONAHAN: It's going to be effective too.
PINKNEY: Oh, my. Look at the lights.
MONAHAN: There's lights!
PINKNEY: I can see everything.
MONAHAN: I know. You can see everything. You don't have to be scared anymore.
PINKNEY: Oh, my.
MONAHAN: So it's all clean. It's all organized.
PINKNEY: I can't believe this is our basement. I can't believe that. We have so much to learn.
MONAHAN: So much to learn.
PINKNEY: And I told them, it's like opening up a brand new restaurant now.
MONAHAN: That's exactly it. It feels like we're opening again. I have chills about that.
PINKNEY: Thank you, all. Thank you. This is more than I could have dreamed.
MONAHAN: And guess what? You own this basement. It's all yours. PINKNEY: Thank you. Thank you. Thank you.
We're going to be OK.
What have you been doing all day?
MONAHAN: Nothing.
VELSHI: It's the end of three overwhelming days, but for Ina, the turnaround is just beginning.
(on camera): We came into this restaurant. It was Ina's and it's still you and your name and your smile and your brand and your enthusiasm and your confidence. What's the turnaround for you?
PINKNEY: The turnaround is that somebody believed in me enough to put their muscle behind me, that they thought enough of our potential to spend the time and the money to make this happen.
VELSHI (voice-over): And she's not the only person reaping the rewards.
MELMAN: Probably because I like Ina and feel nice about her, it just made me feel good. Being charitable, I think it helped me with peace of mind. You know, it makes you feel good. That's all I can say.
GINSBURG: It's probably the best thing I've done in a long time, just come in and help somebody who really appreciated it. And then I was able to give them a part of myself and what I know and what I can do to make their lives better. So it's one of the best things that I've done in a long time.
MUNO: You know, when I go out to our restaurants, they kind of have to listen to me, but in this case, we were just trying to really help out, and they accepted it.
BROWN: I think everybody feels a little tired, but certainly, I think, gratified. We're really looking forward to the future and keeping working on this.
VELSHI: It's the best birthday present Ina could have imagined.
PINKNEY: Well, my wish is for every entrepreneur in the world to have a team like you come in like this. Thank you. Thank you. Thank you. Thank you.
Well, this is from today's paper. "If today is your birthday, this is your successful year when you will apply your many strengths, including an industrious work ethic, thoughtful planning and realistic scheduling. Seek an outstanding model to be your guide through April." Amen.
VELSHI: One item that's sure to stay on Ina's many is scrapple, a breakfast favorite that's near and dear to her heart. PINKNEY: It's a life-saving dish. When the farmers would slaughter a pig, they would take the scraps from the slaughter, which is how scrapple got its name -- scraps -- they would mix it with corn meal and a few spices, and they would make it (UNINTELLIGIBLE), freeze it at the beginning of the winter. Scrapple is definitely a dish of survival, and I have always been a survivor.
Most of it goes back to the polio. I learned how to be an OK human being from all the experiences that I had as a result of my disability. So, yeah, scrapple and me, like this.
VELSHI (on camera): After three days, Rich Melman and his team have reworked Ina's restaurant. They've helped with everything from food preparation to finance.
Now, Ina has still got some work to do, but as we leave Chicago, one thing seems clear: Ina Pinkney is cooking up a turnaround.
I'm Ali Velshi. See you next time.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired April 9, 2005 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
ALI VELSHI, HOST (voice-over): Next on THE TURNAROUND, she's known as the Breakfast Queen.
INA PINKNEY, OWNER, INA'S RESTAURANT: Good morning. I'm Ina.
VELSHI: But her problems are with the other meals.
RICH MELMAN, CHAIRMAN/FOUNDER, LETTUCE ENTERTAIN YOU: On Monday, Tuesday, Wednesday and Thursday, you basically lose money.
VELSHI: Can the reigning king of the Chicago restaurant business help?
PINKNEY: You caused me to rededicate myself to the reason I'm here in the first place.
VELSHI: THE TURNAROUND begins now.
(END VIDEOTAPE)
VELSHI: Americans love to dine out, so much so that they'll spend $1.3 billion in restaurants today alone. In fact, almost half the food we consume comes from one of the nation's 900,000 restaurants.
Despite all those potential profits, opening a restaurant remains a risky business. Almost 60 percent fail in the first three years.
(on camera): I'm Ali Velshi here at Ina's restaurant in Chicago. Around these parts, owner Ina Pinkney is known as the Breakfast Queen, but she wants to extend that rule over lunch and dinner as well. Now, Ina knows if she doesn't do that, her business could be fried. What she doesn't know is that we've booked her a surprise reservation with Chicago's top restaurateur. And we'll see if after three days with him, she can come up with a recipe for a turnaround.
(voice-over): When it comes to turning out winning restaurants, few do it like Rich Melman. His first success dates back to 1971, when he and a partner opened R.J. Grunts. It was a hip Chicago burger joint that still sizzles today. From that first success, Melman built Lettuce Entertain You, a private held company that either owns or manages over 50 restaurants, and has annual revenues in excess of $200 million. MELMAN: You want as many things in your favor as possible -- a good location, a good lease, the right concept, hiring the right people. Eighty percent of the success of a restaurant takes place before you ever open up.
VELSHI (on camera): You kind of have to get right all the time. There are few businesses where you don't get the chances over and over again.
MELMAN: You have to prove yourself every single day, every single meal, every single customer. You're not going to hit 100 percent, but you sure should try for it.
PINKNEY: How are you today? Thank you so much.
Hi. Good morning. I'm Ina.
And you made me look good.
VELSHI (voice-over): Ina Pinkney has been part of the Chicago restaurant landscape since 1991. She has had both successes and failures. Her latest venture, Ina's, opened in 2001 on Randolph Street. It's just west of Chicago's famous loop.
PINKNEY: The restaurant business is risky, because it is a business that's fraught with failure.
But considering that this is my third location, considering that I have opened up in recessionary times the first one, it just never dawned on me it wouldn't be a success.
VELSHI: Ina's positive attitude has developed over the course of a lifetime. Stricken with polio as a child, she has overcome tremendous odds to get where she is today.
PINKNEY: Nobody knew there would be late effects of polio. Nobody knew that, you know, 40, 50 years after the onset of polio that we would all be suffering in other ways. But at that time, it was if you exercise, you will be fine. And so, I think I grew up with the whole notion of can-do.
VELSHI: While Ina's restaurant is managing to stay afloat, it isn't making much money. Her gross sales in 2004 were just over $1.1 million, but after paying all her bills and her employees, Ina is left with a small surplus, just about $5,000.
Ina serves lunch and dinner, but for better or worse, around Chicago she is known as the Breakfast Queen.
PINKNEY: Breakfast Queen was sort of a magical, brilliant marketing strategy for me all those years ago. And that works for me and that works against me. When I say to people, have you been in for dinner, and they will go, "you do dinner?"
VELSHI: Ina does. She's open seven days a week, but nothing compares to weekends, when breakfast at Ina's is the place to be. But now it's Monday morning, and the staff at Ina's is winding down from the breakfast rush and getting ready for lunch.
PINKNEY: We have bodies in the seats, but we don't have enough. And I haven't been able to turn that corner.
VELSHI: Now, one of Chicago's most powerful restaurateurs, Rich Melman, and his right-hand man, Kevin Brown, are about to walk through her door.
PINKNEY: Oh, goodness. This couldn't be a better surprise. Thank you. Oh, my. Hello, Kevin. Oh, I am so excited. Talk about the best of the best. Wow! They brought in the big guns today. Thank you.
VELSHI: The first item on the mentor's menu is a top to bottom inspection.
The mentors are in time to see lunch being prepared. It's something the staff at Ina's do every day of the week, but today they are under the watchful eyes of two industry leaders, who don't miss a trick.
KEVIN BROWN, CEO, LETTUCE ENTERTAIN YOU: Mind if I walk back here?
PINKNEY: It's fine. It's fine. Just be careful.
BROWN: You have a walk-in box?
PINKNEY: Downstairs in the basement, I have a walk-in freezer and a walk-in cooler.
MELMAN: Great.
VELSHI: Rich seems impressed with Ina's restaurant, but he is concerned about how efficiently she is using her space. So, the team is going to examine everything. For example, the bar.
MELMAN: I have a lot of questions, but it's sort of interesting how much space it takes up for a small percentage of the sales.
PINKNEY: Yes.
VELSHI: The inspection is over. It's time for the turnaround process to begin.
MELMAN: We clearly have some ideas as to where we could start. And we would like to sit down and start talking.
PINKNEY: Let's do it.
MELMAN: Let's get going.
PINKNEY: Let's do it. I'm ready.
MELMAN: OK.
VELSHI: Next, the mentor brings in his experts.
PINKNEY: I couldn't believe that I was getting the Lettuce Entertain You team.
VELSHI: And some problems need immediate attention.
SEANA MONAHAN, MANAGER, INA'S RESTAURANT: This gets crazy back here, because this is such tight space.
VELSHI: Coming up on THE TURNAROUND.
(COMMERCIAL BREAK)
VELSHI: It's Monday afternoon, just west of Chicago's famous loop. One of the busiest tables at Ina Pinkney's self-named eatery is the one that she's sharing with her turnaround mentors, Lettuce Entertain You's Rich Melman and Kevin Brown, two of Chicago's most successful restaurateurs, and Melman has also brought along some of his top executives -- operations managers, accountants, public relations experts and an executive chef.
(on camera): So, Ina seemed really surprised when she saw Rich Melman walk into her restaurant. But I think what surprised her even more was the team he brought with him. She couldn't do that on her own, but let's see what she does with the information she gets from them.
PINKNEY: I couldn't believe that I was getting the Lettuce Entertain You team to sit with me and to help me learn the business of the restaurant business.
VELSHI (voice-over): The Lettuce Entertain You team is most concerned with efficiencies in Ina's restaurant. Three key areas are under the microscope: The basement, where Ina's inventory is kept; the kitchen, where the meals are prepared; and the books, Ina's finances.
PINKNEY: Of all the things that embarrassed me, not knowing enough about the accounting is probably number one.
VELSHI: Melman's top finance guys will be working with Ina's books. Rich and Kevin will oversee everything else, including the efficiency of the restaurant as a whole.
MELMAN: The single most important thing, No. 1, I want you to write down is "taste." No. 2 is "presentation." No. 3 is value for the customer. Is it priced fairly? And, No. 4, what does the food cost?
And sometimes entrepreneurs concentrate on sales, No. 1, and it probably is rightly so, but I'm going to get her to concentrate on profit.
VELSHI: For Ina, the process of running her restaurant is a seven-day-a-week proposition. But as her team prepares for the next meal, some of the problems they face daily are becoming obvious.
And it begins in the basement, where inventory, the lifeblood of the restaurant, is kept. That's where Ina's general manager, Seana Monahan, has taken Mike Ginsburg, and Art Mendoza, two of Melman's top efficiency experts. The tour isn't pretty.
ARTHUR MENDOZA, VP OPERATIONS, LETTUCE ENTERTAIN YOU: Do you prep down here?
MONAHAN: The guys will use the slicers down here, yes. There isn't any room in the kitchen for it.
MENDOZA: OK.
MONAHAN: It's not the best set-up at all.
MICHAEL GINSBURG, VP OPERATIONS, LETTUCE ENTERTAIN YOU: How often do these get serviced?
MONAHAN: When they need to. In the summer, this is my cooling system here. It's crazy.
VELSHI: Their next stop is the dishwashing area.
MONAHAN: This gets, you know, a little crazy back here, because this is such tight space.
GINSBURG: Definitely a high traffic zone.
MENDOZA: It would be nice to just take this and just go both ways.
GINSBURG: Yeah, go both sides.
MENDOZA: Put your dirty on this side and then just flip it over.
VELSHI: After a brief tour, Seana, and Ina's other general manager, Milton Cardinas (ph), are asked to join the meeting with the mentors.
MELMAN: I believe that we could make your lives easier.
MONAHAN: That would be fabulous.
MELMAN: And...
VELSHI: But before he makes Seana and Milton's lives easier, Rich has a huge challenge for them -- organizing the restaurant's cluttered storage areas. He wants Ina to implement the Lettuce Entertain You zone system.
MELMAN: It's a system where everybody knows where everything is in a clean, neat, organized way, that makes not only your inventory- taking quite simple and your ordering quite simple, but it puts a high value on everything that you have, so it's not wasted. PINKNEY: I fly by the seat of my pants most of the time. I figured a lot of things out and a lot of things worked, but I have never figured all of this out.
MELMAN: Well, we're getting you new (UNINTELLIGIBLE).
(LAUGHTER)
PINKNEY: Amen. I'll drink to new pants.
VELSHI (on camera): You build restaurants. This is a challenge, but Ina's got a -- she's got a feel. She's got something going on. Is that hard?
MELMAN: No. You're right. There are some times, when you look at restaurants, and you say there's not much to work with. I actually think she has a lot to work with.
VELSHI (voice-over): A crucial step in this turnaround will be to analyze Ina's financial situation. Melman has sent his CFO, Jay Stieber, and his controller, Tom Muno, to look at Ina's books. They will have plenty of questions.
PINKNEY: Accounting is the most difficult part of running your own business.
VELSHI: As day one draws to a close, Ina, Rich and Kevin meet to discuss Ina's homework for day two.
MELMAN: First of all, we need history. We need customer accounts, sales mix.
PINKNEY: Right.
BROWN: Check average.
MELMAN: Check average.
PINKNEY: Right.
MELMAN: And as many recipes as you've got.
Yes, we would like to get the recipes, so we can start costing them out.
Restaurants don't get in trouble overnight. It happens over a course of a year, two years, three years, four years. And you don't easily turn them around in three days or overnight.
VELSHI: Next, Ina's recipes are put to the test.
PINKNEY: I'm absolutely confident that they are going to find our food to be just delicious.
VELSHI: But her mentor isn't so sure.
MELMAN: I think it's good. Do I think it rates up there with the all-time great burgers? No.
VELSHI: Coming up on THE TURNAROUND.
(COMMERCIAL BREAK)
VELSHI (on camera): It's day two here at Ina's restaurant in Chicago. The owner, Ina Pinkney, wants to expand her busy breakfast business into lunch and dinner. Well, yesterday, our mentors, Rich Melman and his team, came in and took a close, hard look at how they run this business. And before helping her expand, they're going to help her squeeze every last bit of efficiency out of the business that she already has.
(voice-over): It's 7:00 a.m., and the morning breakfast rush has yet to begin, but Ina's general manager is already hard at work on the first major challenge of the day.
The goal: Turn this cluttered storage basement into an efficient work space.
Rich Melman's operation team is right there, sleeves rolled up and ready to help with the heavy lifting, and with a great suggestion.
GINSBURG: Art stopped off last night and got a brand new label machine. We use these in all our restaurants so that we can get some really nice labels on the shelf. They're permanent, they're nice and clean and professional looking.
VELSHI: But before they can label, there's a lot more cleaning to be done.
MONAHAN: This is garbage. This is garbage. Oh, coffee cake pans that we can never find.
GINSBURG: There you go.
MONAHAN: There's an old ice sink that is filled with coat hangers.
GINSBURG: It's gone.
MONAHAN: Well, OK.
MENDOZA: That will create a lot of space.
VELSHI: The problems aren't confined to the basement. Ina's business is good, but it is weighed down by inefficiencies. And that's part of the reason her business is suffering.
MELMAN: I just want to get a sense of what goes on Monday, Tuesday, Wednesday, Thursday. What -- 80 percent of the business is Friday, Saturday and Sunday. I don't know.
VELSHI: Melman and his team are zeroing in on a key goal.
MELMAN: I would like to know everything about breakfast that I could possibly know. What's selling, first of all?
UNIDENTIFIED MALE: OK. Hold on.
VELSHI: To make Ina's more efficient, more profitable, she may need to refocus all of her attention on the meal that made her famous.
MELMAN: We're going to start on breakfast. That's the first thing we're doing, because that's her strength. And we're going to see if we can get 20 or 30 more people a day in here.
What makes people come back here for breakfast? I want to really think about it, really think about the essence.
PINKNEY: The feedback that I get, which is quite remarkable, because they find me and they say, this was delicious. A word I hear a lot.
MELMAN: I don't doubt that. For me, I would want to see this restaurant 30 to 40 percent busier than my first year on Monday and Tuesday and Wednesday and Thursday. And if it's not, if it's staying the same, it's not enough.
VELSHI: The message here: Focus on what works, not what doesn't.
BROWN: Her biggest business right now is at breakfast. We think we can do more, make that part of the business better run, more profitable, and also focus it a little bit differently as it is today.
PINKNEY: The decision is a very large decision. So, I am going to think about it in terms of incremental changes, to really think about what it is that I want and want to have happen.
VELSHI: It's been a tough day, and it's only just begun. Rich and his corporate chef, Rita Dever, want to put Ina's food to a taste test.
MELMAN: The product is the single most important thing in a restaurant. So, going through everything and understanding why she picked the food and how she makes it. You know, we might have quicker methods of preparation, better methods of preparation, better products that she could use, lesser products that she could use. The confidence that you would have in a restaurant, for me, would start with the food. And I want to just add to what she does and try to subtract what's not important that she's doing.
PINKNEY: I'm absolutely confident that they are going to find our food to be just delicious.
VELSHI: Rich tries items from Ina's breakfast, lunch and dinner menus.
MELMAN: This is -- what kind of soup is this?
PINKNEY: That's asparagus soup, garnished with a chopped red onion.
MELMAN: Excellent.
PINKNEY: Oh, excellent. Excellent.
MELMAN: One second.
PINKNEY: Excellent.
MELMAN: What is this, about a seven-ounce hamburger?
PINKNEY: Eight.
MELMAN: I think it's good. Do I think it rates up there with the all-time great burgers? No.
PINKNEY: And there's the chicken soup if you want to try that as well.
MELMAN: OK. Good. Nice big pieces of chicken.
PINKNEY: Yeah, yeah.
MELMAN: Very nice. Very good.
VELSHI: The taste test is over, but Rich isn't done yet. The mentors once again focus on the Breakfast Queen's biggest asset.
UNIDENTIFIED MALE: We were all under the impression that pancakes were selling more. They're saying -- they're telling us they want more eggs.
VELSHI: Based on receipts, eggs are Ina's No. 1 selling item, but eggs are just the start. Rich and his team want to make sure Ina's recipes are both tasty and cost-efficient.
MELMAN: I want the zen of omelette making. I want the zen of omelette making. What is the absolute best way to make an omelette? Do we whip it on a blender, do we cook it at a certain temperature? Do we use a French omelette pan?
VELSHI: For Ina, the message is beginning to sink in.
MELMAN: I'm sure, over the years, you have experimented five, six, 10, 15 different times of making a good pound cake. Well, that same care and that same experimentation sometimes needs to go into the process of making money. I never want you to be more businessman than artist, OK? I just want you to be a little more of a business person. That's all.
VELSHI: Next, the kitchen comes under the microscope.
BROWN: Your omelettes can be terrific. The problem is, we are taking sauteed vegetables that have not been warmed enough.
VELSHI: But will it be too much for Ina to handle?
BROWN: I think right now, Ina is almost on a little bit of an overload.
VELSHI: Coming up on THE TURNAROUND.
(COMMERCIAL BREAK)
(NEWSBREAK)
VELSHI: It's day two of this three-day turnaround at Ina's restaurant in Chicago. Since meeting her mentor, Lettuce Entertain You's Rich Melman and his team of experts, the self-branded Breakfast Queen has been forced to reevaluate the way her restaurant is being run. Inefficiencies in her kitchen, her accounting, and her basement inventory are all being addressed by the Lettuce Entertain You experts. But most importantly, Rich Melman has suggested that Ina refocus on what she does best -- breakfast.
It's the middle of day two, and inside Ina's restaurant, the shift is already turning toward dinner.
For Ina, expectations for a crowd tonight are low. Dinner isn't a bit hit here, but breakfast is, at least on some days.
According to Ina's own financial analysis, her breakfast revenues range from $900 on a good day to only $300 on a off day. It turns out that good days are Friday, Saturday and Sunday. The $300 days come during the week. Ina is going to have to make a choice.
PINKNEY: I'm going to think about it, as he told me, start with a really close focus, and if breakfast is where we're doing our most business in terms of dollars, I'm going to think about how to -- how many more people do I want in this restaurant on Monday, Tuesday, Wednesday, Thursday, Friday for breakfast.
It's all about getting more bodies in the seats. More bodies in the seats will translate into more profits.
VELSHI: Ina also recognizes that she may have to make some changes in her kitchen. Lettuce Entertain You CEO, Kevin Brown, and his corporate chef, Rita Dever, are doing an on-the-spot evaluation. They're looking at ingredients, equipment, and the way work flows through the space.
VELSHI (on camera): This grill is hot, and according to Rich Melman's people, it may be 200 degrees hotter than it should be. It's an example of one of those things that's wasting money and cutting into Ina's already slim margins .
RITA DEVER, CORPORATE CHEF, LETTUCE ENTERTAIN YOU: (UNINTELLIGIBLE), and there may be opportunities in some places, but maybe not in others. But we just want to analyze everything.
We have some different options with their plates being kept up above over there. The plates aren't hot, so that's a bit of a problem.
OK. This must be what they're using for French toast. Look at that too. I'll start making a list.
The plates would come off and go in like that. And they could just turn, grab a plate, spin.
UNIDENTIFIED MALE: Actually, right here.
DEVER: Either/or. Here is the guy making the omelettes. He's done with his omelette. Boom. Up it goes.
UNIDENTIFIED MALE: Right.
DEVER: And this is a very busy station, being the pancake station. So, you know...
UNIDENTIFIED MALE: Flip-flop it?
DEVER: It would be perfect. If we could flip-flop this, it would be perfect.
VELSHI: Kevin explains some of their observations to Ina.
BROWN: Your omelettes can be terrific. The problem is, we're taking sauteed vegetables that have not been warmed enough. You take that same dish, put all the ingredients inside, pop it into Salamander, comes out, it's hot inside, it's melted, it goes out, and it's a whole different animal.
VELSHI: Naturally, Ina likes some of their suggestions more than others.
DEVER: Maybe we ought to have an Ina eggs Benedict than the traditional eggs Benedict.
(CROSSTALK)
PINKNEY: I don't know. Eggs Benedict are my least favorite foods, so you can't really ask me.
DEVER: Right.
PINKNEY: You can't really ask me. I would like a different kind of breakfast than that.
DEVER: It's a big seller.
VELSHI (on camera): Now, this is one of Ina's signature dishes, scrapple -- a bunch of things mixed up together. Well, that may work for food; not so much on the bookkeeping. So today Ina gets a review of her menu and her accounts.
(voice-over): Jay Stieber, Lettuce Entertain You CFO, has some advice along those lines.
JAY STIEBER, LETTUCE ENTERTAIN YOU CFO: Well, one of the things that we need to do to help Ina long-term is to make her a better business manager, not to turn her into an accountant, but to help her understand her financial statements and being more on top of her business.
VELSHI: Meanwhile, the transformation of Ina's basement continues. Slowly, an organized, efficient space is being carved out of the old one. The benefits are obvious to Ina's general manager, Seana Monahan.
GINSBURG: You've got two cases plus a few extra pounds, right? And you know on the busiest weekend that you had in the last three months, you've never used more than that. And all the cooks are coming to you and they're telling you, Seana, we're going to run out of butter, we're going to run out of butter. You know better, because you have got the history.
MONAHAN: Right.
MENDOZA: That is your vault. That's money that you're paying out (UNINTELLIGIBLE).
MONAHAN: Right.
MENDOZA: And the more you have, the more you use.
MONAHAN: Yeah, and it's going to improve the cash flow.
So, I see this as organizationally letting me have more time that then I can spend on other things: Finding better prices, building better relationships with our venders. Doing some analysis in terms of food cost.
VELSHI: As the day moves on, more Lettuce Entertain You executives weigh in. VP Sue Salzman is focusing on Ina's marketing, along with her associate, Jennifer.
SUSAN CHERNOFF SALZMAN, VP MARKETING, LETTUCE ENTERTAIN YOU: You opened four years ago. As part of your marketing then and now, do you have a public relations person or you're the public relations person?
PINKNEY: I'm the public relations person and the marketing person.
SALZMAN: I knew it, OK.
VELSHI: But Ina may not be making the most of a unique opportunity to bring more people into the restaurant.
SALZMAN: How many places in this city...
PINKNEY: None.
SALZMAN: ... have free parking?
PINKNEY: None.
SALZMAN: You need to put that on everything you do. Everything. Free parking. With your hours. Free parking. BROWN: I think right now, Ina is almost on a little bit of an overload. Everything we keep bringing to her, she's just like, oh, my gosh, thank you. This is great. I want to make sure it's not inundating for them to follow up on everything. I think what we have to be clear about when we leave is really what the priorities are.
VELSHI: And even though this is only day two of this three-day turnaround, it's clear the effects are being felt.
MONAHAN: We've just coming by, you know. We've taken what we had, because we didn't have a whole lot, and we've just made use of what we have. But there's so much that we haven't had. We've tried to make due.
PINKNEY: We're crying out of joy and relief. These are tears of joy.
VELSHI: Next, Rich lays it on the line.
MELMAN: We think there's a $30,000, $40,000 savings in just being smarter about a lot of the things that you do.
VELSHI: And Ina must make her choice.
PINKNEY: I thought about it and slept on it. And I really do know what it is that I want to have happen here.
VELSHI: Coming up on THE TURNAROUND.
(COMMERCIAL BREAK)
VELSHI: It's day three, the final day of this turnaround in Ina's restaurant in Chicago. The staff is serving up breakfast as restaurant mogul Rich Melman and his Lettuce Entertain You executives spend their final day helping Ina Pinkney turn things around.
(on camera): Most days, the biggest decision Ina has to make is what tomorrow's special will be. But after two days with Rich Melman and his staff, Ina faces a big decision. Will she reinvent her restaurant and her brand?
PINKNEY: Today is the day when Rich arrives and asks me really what my decision is about which way to go and how much commitment that I will make to this change.
I've thought about it and slept on it, and I really do know what it is that I want to have happen here, for me and for the staff. And I also have a plan for two years down the line. So, I am ready to reveal that to him.
VELSHI: Today is also special to Ina for a completely different reason. It's her birthday.
PINKNEY: Well, I woke up this morning on this, the beginning of my 62nd. And I'm very introspective and very reflective on birthdays. I was just marveling at where this road has led me today. VELSHI: Ina's general manager, Seana, labors to redo the cluttered storage basement, while Ina and the Lettuce Entertain You team start their final table meeting. It's time for her answer.
MELMAN: We gave you some homework to think about yesterday. And we've narrowed it down to talking about dollars and cents, how many more people do you want, dollars and cents wise, what do you want?
PINKNEY: That surprise and a little bit of the shock was that you wanted to focus on breakfast. And I had become so complacent in that meal that all I could see was dinner. You caused me to rededicate myself to the reason I'm here in the first place. And then, when you made me take a hard look at the numbers and realize that most of the business that we get for breakfast is on Saturday and Sunday, there was no question but that we had to rededicate ourselves to building the weekday business breakfast.
MELMAN: On Monday, Tuesday, Wednesday and Thursday, you basically lose money, and you make real good money on Friday, Saturday and Sunday.
PINKNEY: If I think to myself, 20 more customers a day, to 30 more customers a day, to 50 more customers a day, it all seems doable, incrementally. So that is definitely where I want to go to begin with. I have always felt that fortune favors the brave, and I was going to be extremely brave.
UNIDENTIFIED MALE: Well, fortunes will follow.
PINKNEY: Amen.
MONAHAN: Ina is one of the bravest people I know. She keeps saying, you fall down, you get back up. It's all about getting back up, you know. It's all about continuing.
VELSHI: Fortune may favor the brave, but it will take a lot more work before it favors Ina's paycheck. Numbers don't lie, and the mentors have uncovered significant waste in her books.
MELMAN: We think there's a $30,000, $40,000 savings in just being smarter about a lot of the things that you do.
STIEBER: (UNINTELLIGIBLE) on the food costs, there's a lot of opportunity there.
THOMAS MUNO, SR. VP, LETTUCE ENTERTAIN YOU: (UNINTELLIGIBLE) doing the recipes, so it's costing a lot?
STIEBER: I don't see any reason why, with some work, we can't get the food costs down to 4 percent, 5 percent.
VELSHI: Another part of this turnaround involves examining Ina's breakfast foods. Rich's executive chef Rita has been a fixture in the kitchen for the last three days, working to perfect the menu.
DEVER: And then you're going to take some herbs, some mixed herbs, and then just right across the top just like that. And then of course, the potatoes go back here, and we might have some vegetable there, but it will be lighter and it will be a lot quicker once you get the Salamander and use those two stations, OK?
PINKNEY: I learned a lot from chef Rita today about omelettes. It's still not my favorite dish, but I learned a lot about adding just a tablespoon of cream, I learned about cooking it at different temperatures.
MELMAN: I think what I would like to do is start naming omelettes after your customers, their favorite omelettes, and really making it -- I mean, it's the same thing for the kitchen. They write up what they want in their omelette, or they want the chico omelette.
We want you to be at the end of this next year extremely profitable and not vulnerable. And now you have a new family with which to bounce ideas off of. That will be forever.
VELSHI: The meeting wraps up, and the timing couldn't be better. Downstairs, Seana and the crew are finally ready to reveal the fruits of their labors.
(on camera): Now, you have not seen some of the changes that have gone on so far?
PINKNEY: That is true.
VELSHI: So I think you're up for a nice surprise on that, because what we saw is everybody doing things, it was a very active few days. And you're going to get to see a bit of the result of that.
PINKNEY: I am.
VELSHI: So, we're going to do that.
PINKNEY: Ready.
VELSHI: Coming up, Ina gets a major shock.
PINKNEY: I can't believe this is our basement. I can't believe that.
VELSHI: And will there be a real payoff to Ina's three-day struggle?
PINKNEY: We're going to be OK.
VELSHI: Next on THE TURNAROUND.
(COMMERCIAL BREAK)
VELSHI: Day three, Wednesday afternoon in Chicago. To its customers, Ina's restaurant might not look very different, but in the eyes of the owner and staff, big changes are brewing.
MELMAN: I would like an omelette so great that I would crave it at dinner time. What makes it signature? What makes it unique?
VELSHI: Under the supervision of Rich Melman and his Lettuce Entertain You executives, Ina's food has been scrutinized, her kitchen efficiency examined, and her accounting has been evaluated. But even Ina hasn't seen everything that's been going on.
PINKNEY: When they said they were taking me to the basement, I was very excited. It was the first time in all of this that my heart was pounding. I just couldn't imagine what they had done. I also couldn't believe the generosity of the fact that they had done this for us and made these new steps for me that are slip-proof, so I don't have problems walking down those steps.
And I got to the bottom of the steps, and there were the four hardworking men who had done it. It was overwhelming.
MONAHAN: Come on in.
PINKNEY: Oh.
PINKNEY: That was the most excited, I think, I have been this whole time.
This used to be scary. It's not scary anymore.
MONAHAN: It's going to be effective too.
PINKNEY: Oh, my. Look at the lights.
MONAHAN: There's lights!
PINKNEY: I can see everything.
MONAHAN: I know. You can see everything. You don't have to be scared anymore.
PINKNEY: Oh, my.
MONAHAN: So it's all clean. It's all organized.
PINKNEY: I can't believe this is our basement. I can't believe that. We have so much to learn.
MONAHAN: So much to learn.
PINKNEY: And I told them, it's like opening up a brand new restaurant now.
MONAHAN: That's exactly it. It feels like we're opening again. I have chills about that.
PINKNEY: Thank you, all. Thank you. This is more than I could have dreamed.
MONAHAN: And guess what? You own this basement. It's all yours. PINKNEY: Thank you. Thank you. Thank you.
We're going to be OK.
What have you been doing all day?
MONAHAN: Nothing.
VELSHI: It's the end of three overwhelming days, but for Ina, the turnaround is just beginning.
(on camera): We came into this restaurant. It was Ina's and it's still you and your name and your smile and your brand and your enthusiasm and your confidence. What's the turnaround for you?
PINKNEY: The turnaround is that somebody believed in me enough to put their muscle behind me, that they thought enough of our potential to spend the time and the money to make this happen.
VELSHI (voice-over): And she's not the only person reaping the rewards.
MELMAN: Probably because I like Ina and feel nice about her, it just made me feel good. Being charitable, I think it helped me with peace of mind. You know, it makes you feel good. That's all I can say.
GINSBURG: It's probably the best thing I've done in a long time, just come in and help somebody who really appreciated it. And then I was able to give them a part of myself and what I know and what I can do to make their lives better. So it's one of the best things that I've done in a long time.
MUNO: You know, when I go out to our restaurants, they kind of have to listen to me, but in this case, we were just trying to really help out, and they accepted it.
BROWN: I think everybody feels a little tired, but certainly, I think, gratified. We're really looking forward to the future and keeping working on this.
VELSHI: It's the best birthday present Ina could have imagined.
PINKNEY: Well, my wish is for every entrepreneur in the world to have a team like you come in like this. Thank you. Thank you. Thank you. Thank you.
Well, this is from today's paper. "If today is your birthday, this is your successful year when you will apply your many strengths, including an industrious work ethic, thoughtful planning and realistic scheduling. Seek an outstanding model to be your guide through April." Amen.
VELSHI: One item that's sure to stay on Ina's many is scrapple, a breakfast favorite that's near and dear to her heart. PINKNEY: It's a life-saving dish. When the farmers would slaughter a pig, they would take the scraps from the slaughter, which is how scrapple got its name -- scraps -- they would mix it with corn meal and a few spices, and they would make it (UNINTELLIGIBLE), freeze it at the beginning of the winter. Scrapple is definitely a dish of survival, and I have always been a survivor.
Most of it goes back to the polio. I learned how to be an OK human being from all the experiences that I had as a result of my disability. So, yeah, scrapple and me, like this.
VELSHI (on camera): After three days, Rich Melman and his team have reworked Ina's restaurant. They've helped with everything from food preparation to finance.
Now, Ina has still got some work to do, but as we leave Chicago, one thing seems clear: Ina Pinkney is cooking up a turnaround.
I'm Ali Velshi. See you next time.
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