Total Entertainment Restaurant Corporation

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Total Entertainment Restaurant Corporation

9300 East Central Suite 100
Wichita, Kansas 67206
Telephone: (316) 634-0505
Fax: (316) 634-6060
Web site:

Public Company
Employees: 1,850
Sales: $56 million (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: TENT
NAIC: 72211 Full-Service Restaurants

Total Entertainment Restaurant Corporation is a Wichita, Kansas-based company consisting of three restaurant chains: Fox and Hound, Baileys Sports Grille, and Baileys Pub and Grille. The Fox and Hound chain is the companys largest, containing approximately 25 restaurants located in more than a dozen states. TECs Baileys Sports Grille chain consists of approximately nine locations in five states, and its Baileys Pub & Grille is a four-unit chain with locations in three states. All three chains combine dining and entertainment in the form of both televised sporting events and onsite games of skill like billiards, darts, and shuffleboard. Total Entertainments restaurants are located in both major urban areas and in smaller regional marketsin most cases in shopping centers. The average unit is 9,000 to 10,0000 square feet in size and contains between 175 and 200 seats. Total check amounts average between $10 and $12.

Early 1990s: Two Separate Chains

The company that was ultimately to become Total Entertainment Restaurant Corp. started as two small restaurant chains developed separately. The oldest of the two, Baileys Sports Grille, began in a strip mall in Charlotte, North Carolina, in November 1989. Its founder, Dennis Thompson, was a veteran restaurateur, who had previously been a Godfathers Pizza franchisee and had gone on to found the Lone Star Steakhouse chain. In 1989, Thompson owned and operated Creative Culinary Concepts, a parent company for his small chain of Lone Stars.

Reportedly, Thompsons decision to open a new sports bar stemmed in part from a question he put to his Lone Star employees: What did they like to do for fun after work? Their answergo to bars to play pool or watch sportsindicated a market for a combination drinking-dining-entertainment establishment. So Thompson designed Baileys as a casual sports bar and restaurant with decent but simple food, numerous televisions carrying satellite and cable coverage of sporting events, and games of skill like pool and darts.

After operating Baileys for four years, Thompson decided to expand. In 1994, he opened two additional Baileys, one in Little Rock, Arkansas, and another in Greenville, South Carolina. The new locations were modeled after the original onewith a central dining area, a gaming area around the perimeter, and dozens of TVs.

While Thompson was getting his second and third restaurants up and running, two TexansSteve Hartnett and Mark Leewere in the process of launching the other chain that would eventually be part of Total Entertainment: the Fox and Hound. Like Thompson, Hartnett and Lee had backgrounds in restaurant management. The 44-year-old Hartnett had originally run pubs geared to college students. Then, in the 1980s, working as a stock trader and money manager, he had developed an intense interest in billiards. It was through pursuit of this hobby that he met Mark Lee, a 29-year-old former restaurant manager who shared Hartnetts passion for the game. Together, the two men decided to open an upscale pool hall and pub. They styled their new bar/restaurant to resemble an English pub, naming it Fox and Hound English Pub and Grille. The first Fox and Hound opened in August 1994 in a shopping mall in Arlington, Texas, and almost immediately Hartnett and Lee added two more locations to their small venture. In September, the duo opened a Fox and Hound in College Station, Texas, the home of Texas A&M University. Just a few months later, in December 1995, a third Fox and Hound was opened, in Dallas.

Through the remainder of 1995 and 1996, Hartnett and Lees venture stalled at three units. Meanwhile, Thompson was expanding his chain aggressively, more than doubling its size In April 1995, Baileys moved into Tennessee, establishing a location in Nashville. Two more Tennessee locationsKnoxville and Johnson Cityfollowed in December 1995 and May 1996. In October, Thompson opened his seventh Baileys, in Columbia, South Carolina. For that year, Baileys posted $9.3 million in sales and $1.5 million income.

1997: Jamie Coulter and Total Entertainment

In late 1996, Steve Hartnett was approached by Jamie Coulter, a well-known restaurateur based in Wichita, Kansas. Coulter headed up his own company, Coulter Enterprises, a restaurant-management group that operated a string of Pizza Hut franchises. But he was best known as the CEO and Chairman of the highly successful Lone Star Steakhouse chain, which had been founded in the 1980s by Dennis Thompson.

Coulter had a long and impressive history in the restaurant business. He had become a Pizza Hut franchisee in 1965, going on to open more than 170 Pizza Hut locations in the course of fifteen years. In 1980, he dissolved his original franchise operation and opened Coulter Enterprises, which managed a smaller number of Pizza Huts. In 1991, he had become involved with the Lone Star brand, and expanded it exponentially.

Coulter offered $5 million in cash and $20 million in IPO stock for Hartnetts three-unit Fox and Hound chain, which had annual sales of around $5.5 million. Hartnett, who had been looking for a way to expand the concept, saw the offer as just the opportunity he needed. Coulters next move was to acquire the Baileys chain, which he did in February 1997. Coulter already had a working relationship with Thompson. In 1991, he had teamed with Lone Star founder to grow the chain and ultimately to take it public. Thompson had remained involved with the company, serving as a director and vice-president.

When Coulter acquired the two chains, he created a new entity, Total Entertainment Restaurant Corp., to serve as a parent company them, and arranged for his other company, Coulter Enterprises, to handle their accounting and administrative duties. Total Entertainment was headquartered in Dallas and had a seasoned management team that included some of Coulters longtime colleagues. While Coulter held the chairmans position, the new companys CEO and president was Gary Judd, formerly vice president of special projects for Coulter Enterprises. Dennis Thompson served as a member of the board of directors.

Although developed independently of one another, Total Entertainments two chains had much in common. Both marketed themselves as social gathering places rather than just restaurantslocations that joined dining and entertainment, in the form of games and televised events. Both were considered to be upscale casual, which meant dress codes, stylish decor, and better-than-average pub food.

The two chains also shared an important feature that distinguished them from much of their competition: a kitchen that stayed open until 3:00 a.m. The restaurants late-night hours proved to have quite an appeal for patrons. In a May 1999 interview with Restaurant Hospitality, Gary Judd explained, Its a great part of our business because when the malls, retail outlets, and other restaurants shut down, were the place people go. The 11 p.m. to 3 a.m. period is lucrative.

No sooner had Coulter formed Total Entertainment than he began preparing to take it public. In spring 1997, the company filed a prospectus, and in July made an initial public offering (IPO) of two million shares. The IPO generated approximately $19.5 million. The remainder of 1997 was a characterized by expansion for Total Entertainment. In September, the company opened a fourth Fox and Hound, in Memphis, Tennessee, the first of that chain to be located outside Texas. In October, a Baileys opened in Nashville, and in December 1997, two more Fox and Hounds were launched, in Chicago and Omaha.

199899: Expansion and Leadership Changes

At the beginning of 1998, Total Entertainment consisted of six Fox and Hounds and nine Baileys Sports Bars. Together, the chains had locations in eight states. The company spent the new year in a whirlwind of growth, opening 12 new Fox and Hounds. The expansion dramatically broadened the chains geographic presence, adding locations in Alabama, Ohio, Missouri, Pennsylvania, Kansas, Louisiana, and North Carolina. The company also opened three additional Baileys locations, in Atlanta, Detroit, and Chapel Hill, North Carolina. These new restaurants were named Baileys Pub & Grille, rather than Baileys Sports Grille, and were styled more along the lines of the Fox and Hound units.

By the end of 1998, Total Entertainment operated 32 restaurants, twice as many as it had just 12 months earlier. The growth spurt had increased the companys sales significantlyfrom $18.56 million in 1997 to $34.11 million in 1998. In addition, income almost doubled, growing from $1.08 million in 1997 to $2.08 million in 1998.

The beginning of 1999 brought with it major shifts in leadership for Total Entertainment. Jamie Coulter, who had headed up the company for less than two years, resigned from his position as chairman of the board to focus his attention on his Lone Star Steakhouse chain. At the same time, Gary Judd stepped down as CEO, although continuing to serve as the companys president. Steve Hartnett and Dennis Thompson became co-chairs of Total Entertainment, and the CEOs office was filled by Steven Johnson, who had previously been the chief operating officer of Coulter Enterprises. With the changes in leadership, the companys headquarters moved from Dallas to Wichita, Kansas.

Company Perspectives:

The company is committed to providing a superior experience that includes high quality menu items, a wide variety of domestic, imported, and premium beers, state-of-the-art audio and video systems and tournament-quality pocket billiard tables. These features, combined with the Companys focus on high level of customer service, help build a loyal clientele and attract new guests.

Under Hartnett and Thompsons guidance, Total Entertainment suspended its focus on new unit development. A handful of new locationsthose that were already in developmentopened for business during the first quarter of 1999. In January, two new Fox and Hounds opened in Pittsburgh and in Winston-Salem, North Carolina; in February, two more opened, in Indianapolis and Houston; and in March, one began operations in Baton Rouge, Louisiana. With the end of the first quarter, however, came the end of new store openings for the year. In an August 2001 interview with the Wall Street Transcript, Total Entertainments president, Steven Johnson explained the rationale for this self-imposed growth expansion hiatus. We had grown very rapidly since going public and at the expense of some of our existing operations, he said. We felt like we needed to step back, take a look at our operations, and get our ducks in a row before we started growing again.

Total Entertainment spent 1999 and 2000 implementing a range of measures to make their operation run more efficiently and more profitably. They increased the number of district managers from four to six, reducing the number of locations each manager was responsible for and thereby allowing for more hands-on and time-intensive management. They also attempted to reduce turnover in their unit-level managementa problem notorious in the restaurant industryby introducing a new compensation and rewards plan. Finally, they reworked the menus, adding 19 new selections designed, in part, to appeal to lunch patrons. The companys efforts were rewarded almost immediately by same-store sales growth throughout the remainder of 1999 and all of 2000.

Future Expansion

By the end of 2000, the company once again began to growalbeit at a much more conservative pace than it previously hadopening new units in Parma, Ohio, Dearborn, Michigan, and Lewisville, Texas. In 2001, it moved into two new states, developing two restaurants in Denver, Colorado, and one in Phoenix, Arizona. It managed to maintain the positive sales trend begun in early 1999, posting higher than 5 percent growth in same-store sales for the first half of 2001.

Going forward, it appeared as though Total Entertainment would continue to grow at a measured pace. In an August 2001 interview with the Wall Street Transcript, Total Entertainments president, Steven Johnson, said that the company planned to open at least seven new locations per year for the next few years. This manageable rate of expansion, he said, would allow for selectivity in site location. Since we have limited growth plans were not just putting sites on so that we can meet our development quota, he explained.

Principal Operating Units

Baileys Sports Grille; Baileys Pub and Grille; Fox and Hound English Pub and Grille.

Principal Competitors

Champps Entertainment, Inc.; Dave & Busters, Inc.; Hooters of America, Inc.

Key Dates:

Dennis Thompson opens the first Baileys Sports Grille.
Steven Hartnett and Mark Lee open the first Fox and Hound.
Well-known restaurateur Jamie Coulter purchases the Fox and Hound chain.
Coulter acquires the Baileys Chain, forms Total Entertainment Restaurant Corporation as parent company for the two chains, and takes the new company public.
Jamie Coulter resigns as CEO of Total Entertainment; Dennis Thompson and Steve Hartnett become co-chairs.

Further Reading

CEO Interview, Total Entertainment Restaurant Corp. The Wall Street Transcript, August 20, 2001.

Hayes, Jack, Coulter Cues Up New Entertainment Chain, Nations Restaurant News, May 26, 1997, p. 3.

Total Challenges, The IPO Aftermarket, August 18, 1997.

Shawna Brynildssen