Five new restaurants were opened in and another five debuted in , entrenching the company's presence in Atlanta; Jackson and Memphis, Tennessee; and Brandon, Florida. By mid, O'Charley's was a unit chain with restaurants clustered in eight states, having blanketed the southeastern United States in less than a decade. Three more restaurants were slated for openings by the end of and another five units were scheduled to be developed in , as Wachtel steadily added more links to his fast-growing chain.
Part of the renewed optimism regarding the company's expansion plans was attributable to the first financial results recorded after the menu and pricing changes were made in For the first fiscal quarter of , O'Charley's reported a 30 percent jump in sales and a more encouraging 37 percent gain in profits, convincing management that the switch to a smaller menu had been the right move. On the heels of the welcomed financial news, Wachtel led O'Charley's in a new direction that promised to strengthen the company's financial clout.
In June , O'Charley's signed a letter of intent to form a partnership to purchase Logan's Roadhouse restaurant, a casual steakhouse restaurant with a grill in public view, concrete floors, muraled walls, and buckets of peanuts in a "honky-tonk" atmosphere.
Under the terms of the deal, the partnership called for the establishment of a minimum of five additional Logan's Roadhouse restaurants during the ensuing five years, with the second unit targeted for its grand opening in Nashville in August O'Charley's became a 20 percent owner in the partnership with the remaining 80 percent belonging to a small group of investors that included Wachtel and McWhorter.
Slightly less than a year after Wachtel signed the Logan's Roadhouse agreement, he began to fade from the foreground at O'Charley's. In May , Wachtel relinquished day-to-day control as president and chief executive officer to devote more time to other business projects, but continued to serve as chairman of O'Charley's. In his place, Gregory L. Burns was named president and selected to the additional post of chief financial officer, while McWhorter climbed the corporate rungs to the chief executive position.
Although the orchestrator of O'Charley's resolute expansion for the previous nine years had stepped aside, the pace of expansion did not slacken in his absence. Five new O'Charley's were opened in , giving O'Charley's a total of 45 restaurants. By the end of the year, future expansion seemed destined to be brisk. In December , Burns and McWhorter announced the formulation of a growth strategy designed to carry the unit chain into the ranks of the country's largest regional dinner-house chains.
The company also announced plans to open a minimum of two Logan's Roadhouse units to add to the three restaurants already in operation. Heading into , the company planned to open at least eight new O'Charley's restaurants, situating the new units primarily in southeastern markets such as Cookeville, Tennessee; Louisville and Paducah, Kentucky; and Palm Harbor, Florida.
It was a year expected to be filled with news of new restaurant openings, but as the calendar flipped to other headlines grabbed the attention of both those inside and outside the company. In February , Wachtel resigned as chairman of O'Charley's, citing his "pressing commitments" with other business interests, the most notable of which was the unit Western Sizzlin' budget steakhouse chain he had acquired in Burns was named chief executive and co-chairman and McWhorter was tapped as president and co-chairman.
One month after Wachtel's resignation, the company received devastating news when it was announced that four former O'Charley's employees had filed a federal lawsuit charging the restaurant chain with racial discrimination practices against African Americans in the company's hiring, assignment, and promotion procedures.
Burns flatly denied the charges, saying the lawsuit was "without merit and the company intends to defend it vigorously. Brighter news for O'Charley's management arrived in when the company's involvement in the Logan's Roadhouse partnership turned into a source of cash to fund expansion during the year. Meanwhile, to Burns's and McWhorter's consternation, the attorneys for the plaintiffs in the racial discrimination lawsuit were seeking to win class-action status, which threatened to broaden the scope and deepen the damage of the lawsuit.
The attorneys were successful in winning class-action status. With the specter of the lawsuit casting a dark cloud over corporate headquarters in Nashville, senior executives moved forward with their expansion plans, striving to open between 12 and 14 new O'Charley's restaurants in By July , there were 60 O'Charley's restaurants in operation and a new concept as well.
The company opened a more upscale restaurant called Rhea Station Grille in historic downtown Nashville that featured herb-encrusted salmon, lemon artichoke chicken, and pasta and fresh fish in a setting decidedly unlike O'Charley's.
Inside, piano entertainment was offered, as well as a room for private parties able to accommodate as many as people. The Rhea Station Grille restaurant basked in the limelight for barely more than a month, its debut occurring weeks before O'Charley's agreed to settle the racial discrimination lawsuit it had been facing since In , just under three decades after the first O'Charley's opened, the casual dining chain made it onto the Forbes ranking of Best Small Companies in America.
O'Charley's landed at number in its first appearance, according to a press release. To qualify for the ranking, businesses had to meet a variety of conditions.
The next year, O'Charley's made the list again. Only, in , the company had moved up to number Proving that the early s were a great time to be on the leadership board at O'Charley's, the company claimed a spot one more time on the Forbes Best Small Companies in America list in at number Much has changed since those heady years in the early s when O'Charley's was racking up awards and rapidly expanding.
Since , dozens of O'Charley's restaurants have been rapidly closing , with eight going under in June While management and leadership hasn't come out and directly pinned the blame on one factor for the closings, there are a number of potential reasons.
Bar and grill chains have struggled as a whole, for one, as people get tired of the concept. Janet Lowder, the president of the consulting firm Restaurant Management Services, told the Los Angeles Times that the casual bar and grill chain is a concept "that needs to have some new strategies" to remain relevant.
There are many chains in the category after all, from Ruby Tuesdays to Applebee's and everything in between — not to mention all of the other restaurant choices out there.
Another struggle is that malls have been on the decline over the past decade, and some O'Charley's locations in the South relied on the foot traffic the malls drew. Another issue O'Charley's has had to deal with over the years: food critics and online reviewers who are, well, less than generous. A story in Nashville Scene said "sorry Charley," and that even after a massive remodeling and menu revamp, "it's the same old O'Charley's" and not in a good way. The reviewer found the chicken fingers just fine, but his wife's "Louisiana sirloin" only edible for a couple of bites while the sides were too salty to eat.
The final verdict: "Anyone who ordered stand-alone chicken got a decent meal, while everybody else left copious amounts uneaten. A year earlier, Serious Eats had a similarly less-than-stellar review.
It started out with the acknowledgment that the "most popular dish is the basket of free rolls," with "cuisine that never promises to be anything more than serviceable.
It's not just professional reviewers who have gripes, either. On YouTube, you don't have to search too hard to find critiques on everything from the fish to the tough meats. In an effort to make O'Charley's known for its wine pairings just as much as the rest of its menu, the chain rolled out an app that put a little bit of sommelier knowledge in every waiter's hand in The Wine Finder was a piece of cardboard that matched entrees and appetizers with a wine recommendation based on brand and tasting notes.
At the time, wine was only 1 percent of alcohol sales, which needed a boost. It wasn't the only time leadership looked to innovate the bar side of the business, either. In , O'Charley's created a bartender certification program and a cocktail competition to increase what their bartenders could do. Craig Barber, the president of O'Charley's and CEO of American Blue Ribbon Holdings, told Cheers at the time that "liquor, beer, and wine for us has not been as prominent as it should be" after alcohol sales dropped from 9.
It took 13 years for O'Charley's to become a chain Facebook. O'Charley's was once known for its expansive, all-encompassing menu Facebook. O'Charley's has a history of racial discrimination Facebook. O'Charley's yeast rolls have a cult following Facebook. Just a few years later, the chain was still grappling with underperforming restaurants with the restaurant's parent company still looking for what they called the "right monetization path. So what's this have to do with your local O'Charley's restaurant?
If Fidelity's spin-off company, Cannae, can get O'Charley's back to being a growing money maker, they might be able to sell it as a profitable business. A profitable business would, of course, increase the chances of your local O'Charley's not shutting down. Then again, if O'Charley's isn't able to show signs of overall sales growth, more locations will continue to close. The restaurant industry is full of stories of chain restaurants that were traded by larger companies and later floundered into the abyss.
This business shakeup could ultimately be what gets O'Charley's on the right track, but on the other hand, it could be the hammer that drives the final nail into their coffin. Any large company is likely going to have the occasional lawsuit come their way. Sometimes they get dismissed, but other times they can cost the business millions and erode customer confidence.
O'Charley's has dealt with its fair share of lawsuits regarding everything from customer safety to unfair employee pay. The one thing nobody ever wants baked into their chicken pot pie is a shard of glass. In , Robert Farroll and his wife were eating at a Mobile, Alabama O'Charley's when he swallowed a small shard of glass that was in his pot pie. Farroll required surgery to remove it from his small intestine. O'Charley's has also found itself wrapped up in a lawsuit with other chain restaurants regarding unfair pay to servers for their labor.
O'Charley's parent company, American Blue Ribbon Holdings, found itself lumped in with six other defendants in who were being sued by 14 plaintiffs who argued they were not paid a federal minimum wage while doing tasks that didn't allow for gratuity.
Not only does this sort of lawsuit give the public the impression that O'Charley's doesn't fairly pay its staff, but a ruling in the employee's favor impacts the business' bottom line.
A restaurant that's already treading water to stay afloat could easily find itself underwater by the damages of employee back wages. It's not uncommon for a restaurant chain to expand outside their home turf and find that success eludes them in a new territory. Just ask Pollo Tropical or Chi-Chi's how expanding into new regions worked out for them. Hint, it wasn't a grand slam. It's a sure sign that trouble is really on the horizon with a restaurant chain though when it's closing locations on its own home turf.
After all, if you can't win the local folks over, what hope is there for potential customers on the other side of the country? O'Charley's is still based today , in Nashville, Tennessee, however, it seems to be losing locations right under its nose.
In late , the chain closed locations in Spring Hill and Brentwood, Tennessee, and while no reason was given for the closures, more were destined to follow. Just two months later, O'Charley's closed another Middle Tennessee location in the Nashville suburb of Hendersonville. That closure was chalked up to a failure to keep up with the competition. And finally, O'Charley's pulled the plug on its location in Murfreesboro , Tennessee in March of after 33 years of business because of a geographical shift in the city's dining business.
In case you're counting, that's four locations in O'Charley's own backyard that have bit the dust in less than a year. In today's tech-dominated society, cyber crime is becoming more common than ever. The last thing people want from a casual dining chain they're familiar with is an unwanted surprise in the form of a data breach. O'Charley's first learned of the data breach on April 8, but patrons didn't learn of it until over a month later.
Uh oh. Out of the company's restaurants, a mere three escaped unscathed by the cyber criminals. O'Charley's cautioned customers on their website to take steps to monitor their financial situation, but nonetheless, some customers were still bothered they didn't learn about it sooner. It's not the kind of thing that makes people want to rush back — no matter how good the rolls are. Above all else, when people choose to dine in a restaurant, they expect a meal that has been prepared safely in sanitary conditions.
When a restaurant drops the ball in that department, people tend to notice and are likely not to go back. Several O'Charley's restaurants in recent years have had serious health violations and it's undoubtedly had a negative impact on their business.
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