Gladstone's oceanfront restaurant just south of Malibu -- noted for its killer location, long waits for a table, big portions and foil doggy bags sculpted into swans and mermaids -- is getting a recession-era makeover.
Owner Richard Riordan, the former Los Angeles mayor, has hired nightclub impresario Sam Nazarian to help give the restaurant a younger, hipper and fresher feel. In fact, Riordan said he plans to sell him a part interest in the sprawling restaurant that can seat as many as 792 diners.
The Pacific Coast Highway location is Southern California's highest-grossing independent restaurant, with annual revenue topping $14 million, according to Restaurants & Institutions, an industry trade journal. But sales and profits have slid in recent years as the restaurant has fallen victim to the recession and changing consumer tastes, Riordan said.
It also has been hurt by a series of less-than-stellar reviews that have saddled the eatery with a reputation of being expensive and unimaginative.
"Cutely fashioned tinfoil-wrapped leftovers can't excuse the subpar eats, not to mention the high prices," Zagat, the restaurant rating service, said in the review of Gladstone's it published this week. "It's an old-school restaurant" hurt by the ongoing tourism slump and the recession, which has been especially tough on traditional, large and high-volume eateries, said Allison Perlik, senior editor of Restaurants & Institutions.
Market research firm NPD Group said low consumer confidence had prompted people to trade down to less-expensive restaurants and eat more meals at home. It is the worst industry slump in nearly three decades, with most segments of the food service -- from fast food to luxury dining -- seeing declines, NPD said.
Riordan -- who owns several restaurants, including the Original Pantry and Riordan's Tavern in downtown Los Angeles, and the Oak Room and Village Pantry in Pacific Palisades -- said Gladstone's still makes a profit, but barely.
The restaurant goes by several names, including Gladstone's 4 Fish and Gladstone's of Malibu (even though it is in Pacific Palisades). The official name is Gladstone's World Class Seafood.
Nazarian's company started operating the restaurant in July on a short-term management contract. Riordan said he liked the early results. Riordan describes himself as an entrepreneur and venture capitalist who likes to own restaurants.
Nazarian, by comparison, is known as a flamboyant nightclub creator. He has created paparazzi-patrolled clubs such as Hyde Lounge and Area in Los Angeles, and earlier this month launched the West Hollywood club Mi-6 -- named after the British secret intelligence service MI6.
Founder and chief executive of SBE Entertainment Group, Nazarian has been adding hotels and restaurants to his portfolio. The firm's properties include the Sahara Hotel & Casino in Las Vegas.
"It will be interesting to see what happens" as SBE takes over, Perlik said. The type of properties SBE runs "are on the opposite end of the spectrum" from Gladstone's "and tend to operate very chic and trendy establishments."
Already, Nazarian has "made a lot of changes in the restaurant. They are now using every inch of the restaurant to cut down on waiting time," Riordan said.
Nazarian, who declined to talk about Gladstone's, has laid off some of the staff and brought in a new chef, according to Riordan.
Riordan said there's a new drinks menu, and the restaurant has upgraded the fish offerings. Nazarian has brought in a new wine selection and added umbrellas to shelter daytime patrons dining on the sun-drenched deck.
"It is amazing in less than two months what they have done," Riordan said.
Revenue is starting to go up, with the average per-person check climbing to about $35 -- a rise of about $5, he said.
Nazarian "would like to make it a long-term partnership," Riordan said. "We have until the end of January to work something out. The current management contract is up in mid-October but can be extended until the end of January."
Riordan did not provide any details about how big an interest in the restaurant Nazarian might purchase or what the price might be.
There are several other Gladstone's locations, including establishments in Long Beach and at Los Angeles International Airport that are owned and operated separately under license agreements and are not part of the management contract.
Riordan said that in this type of economic environment, he's glad to have the help of a company that focuses on nightclubs and restaurants.
"They have ideas that I wished I had thought of," he said. "I am over my head at the nitty-gritty of running a restaurant."