Ivar's Inc. -- Seafood Bar Keeps `Clam' As It Looks To Big-Scale Status
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IVAR'S INC.
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- Headquarters: Pier 54.
- Employees: 867.
- Businesses: 28 Ivar's Seafood Bars in Washington and Oregon,
three full-service restaurants in Seattle, three full-service
fish bars in downtown Seattle, two Exclusively Washington
stores, seven Kidd Valley Hamburgers locations. Ivar's also
sells tartar and cocktail sauce to local supermarkets.
- President and CEO: Scott Kingdon
- 1989 sales: $11 million
- Major competitors: Skipper's, Steamers, family restaurants
such as Red Lobster, and fast-food operators.
- Strategy: To build a seafood-restaurant chain emphasizing mall
locations while diversifying into other areas such as retail
stores, condiment sales and hamburger-chain locations.
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n the past five years, Ivar's Inc. has doubled its fast-food locations to 28, increased its number of employees from 400 to 867, begun mass marketing its tartar sauce, opened two retail stores and, this summer, bought Kidd Valley Hamburgers.
So what's happening to the 50-year-old Seattle institution that started with a restaurant named Acres of Clams and the legendary Ivar Haglund at its helm?
The chain's owners are positioning the company to take advantage of future markets through growth and the economies of scale that come with it, although so far the payoff is yet to come in terms of sales growth.
Sales have remained at $11 million for the past two years, based on information from the Chain Restaurant Operators Guide, a division of Lebhar-Friedman Publishing Co. Ivar's declines to disclose sales or profits. The guide, which researches private and public companies, gets information from state and local corporations and tax filings.
Despite the flat sales, Don Morgan of Bellevue-based GMA Research said the company is positioned well for the future.
``I think they are doing extremely well, despite their sales. When you see customers walk up to a food court, make a decision from 15 fast-food places and then choose a seafood bar like Ivar's, I think they are in a growth area.''
Scott Kingdon, Ivar's president and chief executive officer, plans to open three more Ivar's Seafood Bars this year. The company will enter the Eastern Washington market for the first time with two mall locations in Spokane planned for this year. Another location is planned for Portland.
Ivar's has chosen to emphasize mall locations because they produce high-volume sales that translate into profits, and because stand-alone stores are more expensive to build.
Although sales have not risen since 1987 - when they went from $10.5 million to $11 million - Kingdon increased Ivar's debt in 1990 with the purchase of Kidd Valley Hamburgers, a chain of seven fast-food locations.
John Morris, former owner of Kidd Valley Hamburgers, asked Ivar's partners to consider buying the Seattle-based chain. The decision to purchase was based on a friendship between Ivar's partner Jim Seaver and Morris.
``Kidd Valley wasn't an intentional move. They liked Ivar's feeling and how we operated,'' Kingdon said.
``While it might seem a little strange to bring on Kidd Valley, I believe some shrewd thinking is going on in the company. It fits into the patchwork of businesses they are involved in and it increases their economies of scale,'' said Morgan of GMA Research.
Growth in different regions and in areas outside the traditional seafood market has put pressure on Ivar's to perform without the strong foundation of Haglund's reputation, which had kept business brisk since 1938.
``We've opened these stores and now it's hard to live up to the expectations,'' said Kingdon. ``But even if the name isn't well-known, we hope to build on the quality of our product.''
Kingdon, 40, started working at Ivar's 20 years ago. He knows what it is like living up to a reputation. After Haglund's death in 1985, much of Seattle wondered if Ivar's, the company, soon would follow.
Ivar's Inc. has flourished, but Kingdon said it's time for the company to get its feet back on the ground and survey the growth, which occurred as the national fast-food market reached the saturation point.
Although most of Ivar's growth came after Haglund's death, he was a major force behind it. In 1980, Haglund bought 14 Arthur Treacher Seafood Stores in the Seattle area. Although Haglund turned them into Ivar's Seafood Bars, Kingdon said, during the five years before Haglund's death, there was no growth in those stores.
Kingdon and partners James Moon, who once bused tables at Ivar's, and Jim Seaver bought Ivar's in September 1986 from Haglund's estate that was held by the University of Washington for an undisclosed price. At the time, Ivar's consisted of three full-service restaurants, the idle Arthur Treacher locations, two fish bars and a drive-in restaurant on Denny Way.
Under Kingdon and his partners, Ivar's was transformed into a seafood chain with the carbon-copy standards of the fast-food industry. Food and cooking preparation is standardized, down to an automated chowder maker and a computerized smoking machine for salmon and oysters.
To set it apart, Ivar's has tried to find a niche that combines higher quality with maintaining some of Haglund's eccentricities.
Ivar's continues to use Alaskan true cod instead of pollock, which many seafood restaurants use in fish and chips. The company increased the size of its servings of fish and chips by 30 percent because a marketing study showed that people were disappointed by the smaller serving.
New Ivar's employees learn how to do ``boat'' ordering from a policies and procedures manual. A group of orders is taken at one time. The orders are logged using paper food containers called ``boats'' because of their shape. The container's position denotes what kind of order it will be. For example, a No. 50 boat sitting face up and pointing vertically denotes a ``diet special.'' If it is turned diagonally, it's a chicken dinner.
Sherly Alexander-Majeau, Ivar's human-resources manager, said everyone assumes it was Haglund who came up with the ordering idea but it has been used so long that no one remembers when it started.
Employee turnover also has increased as the number of Ivar's locations has grown. But Ivar's continues to have one of the best records in the industry for keeping employees. Some have worked in seafood bars for more than five years. The average stay at most fast-food chains is often less than 18 months.
Still, Kingdon said little time is available for the extensive personal contact that Ivar's once had with its workers.
And some parts of Ivar's don't look anything like a Seattle seafood concern. The inclusion of the Kidd Valley chain is just one of them.
Two years ago, the partners started the Exclusively Washington stores. The stores, at Pier 54 and in the Bellingham Mall, carry all Washington products. Kingdon said a third store is being planned.
Ivar's also began marketing Ivar's cocktail sauce and tartar sauce to stores. The products are now in Safeway stores and the company is hoping to expand those sales in the next year.
Kingdon also said if the opportunity arose, Ivar's would be willing to open another full-service restaurant like those in Seattle - the Salmon House, Acres of Clams and the Captain's Table.
``Owning 35 to 40 units is going to change the way we do business,'' Kingdon said. ``But we are also carrying a man's name that is very dear to us.''
Strategies appears weekly in the Business Monday section of The Seattle Times.