Lion's Choice founder sells chain to growth-minded investors [St. Louis Post-Dispatch]
(St. Louis Post-Dispatch (MO) Via Acquire Media NewsEdge) Sept. 03--ST. LOUIS --Nearly a half century after he co-founded Lion's Choice, owner Marvin Gibbs is selling the St. Louis roast beef restaurant chain to local investors who see big potential in adding locations.
Gibbs sold Red Lion Beef Co., the chain's parent company, to private equity groups led by St. Louis real estate developers Bob Millstone and Mark Disper for an undisclosed amount.
Disper, Lion's Choice first franchisee and its vice president of sales and marketing, is the new president and CEO of Lion's Choice. Millstone and Fred Flegel, principals with Millstone Capital Advisors in Clayton, are serving with Disper on a board of managers for LC Corporate LLC, the new operating company.
The sale, which closed Tuesday, puts the ownership of the homegrown quick-serve chain with 23 locations out of Gibbs' hands for the first time since the company's founding in 1967.
Gibbs, who has a doctorate from Washington University, started Lion's Choice with two partners -- Art Morey and Clint Tobias -- as a side business while he worked as a chemical engineer at Monsanto. "We had an entrepreneurial spirit and we said, 'why not start something,'" said Gibbs, who lives in Clayton.
The original restaurant in Ballwin, which remains open, was called the Red Lion Beef House. A hotel chain was already using that name, so when it began expanding with a second restaurant two years after its founding, it was renamed Lion's Choice.
With Burger King and McDonald's already commanding a big presence in burgers in the late 1960s, Lion's Choice focused its sights instead on roast beef.
"We did not want to fight the burger wars; even back then, they were 900-pound gorillas," said Gibbs, who retired from Monsanto in 1991 and began working full time at the chain.
Unlike its competitors, Lion's Choice took a conservative approach to adding locations. Lion's Choice's main competitor, Atlanta-based Arby's, was founded in 1964 in Ohio and now has more than 3,400 locations. Arby's has 47 restaurants in the St. Louis region and no immediate plans to add locations, according to a company spokesman.
Another roast beef chain with its roots in Ohio, Rax, had multiple locations in the St. Louis area in the 1980s and 1990s, but all ultimately closed.
By 1991, eight Lion's Choice restaurants operated locally. Disper, a former business consultant at Anheuser-Busch, became Lion's Choice's first franchisee in 2000 when he opened a store in suburban Chicago, which has since closed. A handful of out-of-state Lion's Choice restaurants that opened over the past decade later closed.
Gibbs said it's time to pass the chain on to new owners who will continue to focus on quality and treating its 270 employees and customers right. He'll continue to serve as an adviser to Lion's Choice.
"I've reached the age when actively running the business, it's just time to retire and relax," said Gibbs, who declined to give his age. "The new owners, they have a passion for it," he said. "They understand where we've been and they will continue it."
Lion's Choice has 15 company-owned locations and eight local franchises, but its new owners want to add both company-owned and franchise locations beginning in St. Louis and extending throughout the Midwest.
"As I've traveled around the United States, there isn't anything close to Lion's Choice in terms of quality and taste," Disper said. "We want to focus on growing in the St. Louis market, and I can see 10 to 15 new stores in St. Louis. We'll look at different markets in the Midwest."
Millstone and Disper are both real estate developers adept at infusing new life in raw land and underutilized buildings.
Over the past decade, Disper, whose Black Rock Holdings LLC has a partial ownership in Lion's Choice, converted the Old Rock House building south of downtown into a concert venue and the nearby Art of Living building into office space.
Millstone has led Clayton-based real estate and private equity investment firm The Millstone Co. for more than a decade. One of the company's largest developments is the 2.5 million-square-foot Fountain Lakes Commerce Center industrial and retail complex in St. Charles County. Millstone also oversees Millstone Capital Advisors, a private equity management company, and manager of the FSM Fund I, which acquired an ownership stake in Lion's Choice.
Millstone, the grandson of the late St. Louis philanthropist and builder I.E. Millstone, said he was drawn to Lion's Choice for its healthy offerings. The chain's plain roast beef sandwich, with no butter on the bun, has under 300 calories and 5.8 grams of fat, he pointed out.
As more people gravitate toward healthier foods, Millstone said Lion's Choice will meet increasing demand.
"We think it's the right brand at the right time," he said. "We'd like to invest in and expand the nutritious elements."
But fans of the chain shouldn't fear a big change in the menu. "We're going to keep what they have and what people love and look at what else we can provide," Millstone said. "When I talk to people about Lion's Choice, they love the brand. We really think that is the core element we can build on."
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