Morton's Bringing The Big Beef East


SHANGHAI - Starting from chopping onions and making salads in the kitchen 16 years ago, Christopher Artinian knows Morton's like the back of his own hand.

Now, Artinian, 41, who is the president and chief executive officer of Morton's Restaurant Group Inc, is leading the company in an attempt to escape the economic downturn and go for further expansion in Asia.

Morton's, the world's largest owner and operator of a company-owned fine dining restaurant, opened its first steakhouse in 1978 in downtown Chicago, where Morton's corporate office is still located. Since then, the company has grown to 77 steakhouses and one Trevi restaurant. Morton's has 71 domestic steakhouses and six in international locations: Toronto, Hong Kong, Shanghai, Macao, Mexico City and Singapore.

The restaurant industry, especially fine dining, largely relies on general economic conditions. Morton's, where the average per-person check is more than $99, is one of the high-end restaurants that have been affected by the global economic recession.

"There is no secret that the US economy has been difficult. It was incredibly difficult in our business in 2008 and 2009. But things started to really pick up again in 2010. Morton's has reported seven quarters of positive comparable sales, which is very exciting," said Artinian.

The company suffered a loss of $77.5 million net of tax from continuing operations in 2009 and $61.8 million in 2008. The restaurant revenues decreased when compared with the previous year by 19.5 percent for 2009 and 4.9 percent for 2008 .

In fiscal year 2010, the company reported net income from continuing operations, net of tax of $4.6 million.

"What was really great for Morton's is that luxury hotel, luxury retail and business entertaining have been on the rise for the last seven or eight quarters and continue to forecast positive," he said.

Artinian has recently completed his tour of Asian cities including Seoul, Tokyo, Taipei, Beijing and Shanghai to look for possible locations for new restaurants. Sitting in Morton's The Steakhouse in Shanghai, which has just celebrated its first anniversary, Artinian said that he is leading the group in an aggressive expansion in Asia.

"Our plan is to open two locations in Asia a year for the foreseeable future. We have nothing to announce definitively, but we are incredibly close on several locations," he said.

"We are already actively looking in two other locations for Shanghai and at least two locations in Beijing. I would not be surprised if we have at least one, if not two, open in 2012," he said, adding that the company is also looking for a second location in Hong Kong.

While the United States is Morton's No 1 for business, because that is where the company originated, Artinian said he believes the company's operations in China can easily come a very close second.

"China is our No 1 area for growth," he said.

The company has moved its regional director of operations from Honolulu to Hong Kong and the vice-president of construction and development is now based in Shanghai.

"We are excited about the growth. We want to make decisions faster," Artinian said.

In November 2010 when the Morton's restaurant opened in Shanghai IFC Mall in the Lujiazui area, a commercial center of the city, Artinian said that it might be the most important one among all Morton's restaurants.

"Hong Kong and Singapore were well-traveled international cities. They have more Western influence than Shanghai does today. We were a little unsure if we would really grow on the Chinese mainland. And we knew that if we could be successful here, it would open up the doors for other cities such as Beijing, Guangzhou, so on and so forth," he said.

He added that so far they are off to a terrific start because the restaurant's performance in the first year was beyond their expectations.

"Our four restaurants in Asia are all in the top core tile of all of Morton's. They are some of our fiscal year's most profitable restaurants," he said.

The company's financial report for the third quarter in 2011 showed that the company's six restaurants overseas realized more than $3.91 million in income before tax in the first nine months, while its domestic restaurants suffered a $2.86 million loss.

A large portion of the fine dining revenues comes from business customers on expense accounts. There is concern that companies might cut such expenses to reduce costs.

"It is always a concern but we have learned over the last 33 years that when people are going to spend money to entertain, they want to get the most value for that money.

"When they are going to take that client out, they don't have to worry about the food, the quality and the service that's going to be there. We've always been that place even when the economy in the US was as tough as it was," he said.

Morton's is well known for its consistency. The restaurants are not only similar in terms of style, concept and dcor but also share almost the same menu.

The Morton's steakhouses offer premium quality steak, featuring United States Department of Agriculture prime aged beef in the US, which is the highest in quality and intramuscular fat yet of limited supply, fresh fish, lobster and chicken, complemented by a full selection of premium drinks.

Due to restrictions imposed on the import of US beef, Morton's steakhouses in Asia use comparable high-quality aged beef where US beef is not permitted. China is the only place where they use 100 percent Australian beef, which, according to Artinian, is the best available to them that money can buy.

In addition to the quality of food, Artinian said he believes that training is a crucial factor that keeps the brand strong.

The company has a training team specially developed in Asia with the help of instructors in the US to make sure that everyone understands Morton's culture.

"Here in Shanghai, they don't understand how we execute in Chicago before they start with Morton's. We train everyone step by step, whether you are a dish washer, a server or the general manager. Everyone clearly understands the history of Morton's, how to select the best products and even how to anticipate the guest's needs in the same way," he said.

But Morton's has noticed the unique preferences of Chinese customers and made some changes.

In most of Morton's restaurants, there are only two or three private dining rooms. However, they have 11 in Shanghai "because when we were doing our research, we realized that a lot of Chinese businessmen do business over a meal and like to meet in a room that is very comfortable. It honors their guest," Artinian said.

He said that over the last several months, the restaurant is seeing a growing number of local Chinese customers. Usually around 60 percent, sometimes 70 percent, of customers are Chinese.

For Artinian, Morton's culture is about running a family business.

He began his career in the pantry kitchen at Morton's New York City, and was quickly promoted to assistant manager and then general manager. In 2004, he was promoted to vice-president of East Coast Operations and was appointed as the CEO in 2010.

But he said that in the big company with more than 4,000 employees, he is just one example of so many who have been with the company for a long time.

"What Morton's has taught me is if you treat people well inside your company, they are going to treat people well that are coming to choose Morton's. I believe very deeply in the brand because we've always kept the integrity of the brand together," he said.

He said that if there was a terrible economy, they would never say: "Maybe our beef is too expensive. Let's try something else" or: "We don't need that many staff to serve people. Let's do with fewer."

He added: "I always appreciate that commitment to excellence. It really helps to drive me to continue to be successful as the company has grown.

"Our biggest fear that drives us is that we don't ever want to become second best."

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