Brock Hotel Corp. grows steadily with few foot shootings
By BRUCE B. BAKKE, UPI Business Writer
Every fast-moving company makes a few mistakes along the way.
Robert L. Brock concedes that a big mistake made by his ShowBiz Pizza Place Inc. was to chase away teenagers without parents.
From the company's start in 1980, every ShowBiz Pizza place had a sign near the entrance banning youngsters under 21 unless they were accompanied by a parent. The purpose was to help get the establishments licensed to do business in communities that often had trouble accepting the idea of teenagers hanging around video game arcades. Among the attractions of the ShowBiz Pizza restaurants is a large number of video games.
But for the first year or more, the ShowBiz employees winked at the sign.
"In some places, it was the IN place for junior high school and high school kids to meet, “ Brock said."Then we made what proved to be a very foolish policy in March to strictly enforce it. We succeeded in running off most of our junior high school and high school people."
Brock has two teenage children himself and only had to go home to find out that the new policy was wrong.
"My own kids were telling me how dumb the policy was, “ he said."They said kids were not persuading their parents to bring them to Show Bit. We alienated some of those kids. We won't get them all back."
Now the signs are down. ShowBiz Pizza is expanding so fast that soon the number of places in which the controversial policy was in effect will make up less than half the units. ShowBiz is in 18 states with 125 company-owned stores. Eighteen franchise operations are open and 320 have been sold.
"We will not be shooting ourselves in the foot in subsequent openings, " Brock vowed.
Brock Hotel Corp., which owns ShowBiz Pizza, has had few foot-shootings since Bob Brock opened his first Holiday Inn in 1954. The corporation now is the world's largest operator of Holiday Inns with 53 franchises.
It has also has a three-unit group of luxury hotels, its Park Suite Hotel group located in Nashville, Oklahoma City and Denver. And Brock Hotel Corp. is rapidly developing a chain of Brock Residence Inns, hotels with apartment-like living accommodations geared toward the long-stay customer.
Brock has two company-owned Residence Inns and six franchises in operation. It has sold 63 franchise locations.
Brock Hotel went public in 1980 and its stock was listed on the New York Stock Exchange late in 1981. Early in 1982 it was drawing raves as one of the three biggest gainers on the NYSE, with its stock value increasing 130 percent after the startup of its ShowBiz Pizza places.
For 1981, the company reported net income of $7 million on sales of $165 million, a substantial gain over 1980 when the income was $4. 3 million on sales of $110. 8 million.
But recent months have not been as rosy. Bob Brock, the chairman of the corporation, announced in late December that operating losses in October and November caused the company to lay off 80 people and withdraw a proposed public offering of 1. 19 million shares of common stock.
The announcement also said one factor involved in the decision to withdraw the stock offering was lower interest rates. The company said withdrawal of the stock offer would not disrupt development plans because additional credit arrangements were made to provide funds for expansion.
It was that same announcement that said company policy would be changed to allow teenagers to come to ShowBiz Pizza without parents. The announcement also said prices in the ShowBiz establishments would be cut and that steps would be taken to reduce the food costs without sacrificing the quality.
The slow fourth quarter for Brook Hotels was not unexpected. The problems, Bob Brock said, came from declining sales -- both at the hotels and at ShowBiz Pizza -- and excessive central overhead at Showbiz.
"Fourth quarters are lousy normally, “ he said."Every year it is by far the worst quarter in the hotel division. We usually don't make any money in the fourth quarter. In October and November we dropped about four occupancy (percentage) points, which will cause the hotel division to lose money.
"But we will make money in December in ShowBiz. The last two weeks of December are the best periods of the year at ShowBiz. That's when the kids are out of school and they have all that Christmas money in their pockets."
It was the excessive central overhead that led to the layoffs.
"We had an ambitious, explosive growth plan, “ he said."In order to assume this growth, we allowed excessive personnel and excessive expenses, which we will no longer tolerate. From this point on we will run ShowBiz lean and mean, within the established cost parameters that one should have in the restaurant business. ”
One of the costs to be written off largely in the fourth quarter is the transfer of the corporate headquarters from Topeka, Kan., to Dallas. It was a step Brook felt was necessary when the company's expanding franchise operations led to a tremendous increase in travel. The new headquarters is in an attractive new building only about a mile from the entrance to Dallas-Fort Worth Regional Airport.
Brock estimates the move of 300 people from Topeka to Dallas cost about $2 million.
The layoffs came only a few months after most of the transfers, but Brock said all except three or four of the employees laid off were people hired in Dallas.
Brock himself has close ties to his native Kansas. A graduate of the University of Kansas, he was active on the Kansas political scene for years and served as state Democratic Party chairman for a time.
The success of ShowBiz Pizza is based on its heavy attraction to youngsters. In addition to the most popular electronic games, the establishments offer rides and amusements for the toddler set. Pizza-munching patrons also can watch shows presented on a real stage by animated but larger-than-life animal figures, singing and playing musical instruments.
It's big business for Brock. The company budgeted $1. 6 million for animation research and development in 1982, and in 1983 that budget will be $3 million.
Thirteen percent of the revenue at ShowBiz Pizza is from video games. The company constantly changes its offerings, keeping only the most modern and popular games.
Now ShowBiz Pizza is placing coin-operated computer games alongside the video arcade games. Custom-made Apple computers are being installed, each one offering a selection of 10 games although the assortment will be updated constantly.
All except one of the games have been created exclusively for ShowBiz Pizza. The computer games offer more of an intellectual challenge to youngsters than the video games.
"If, in fact, Pac Man is dead -- as one magazine article said recently – we don't care. Perhaps we are helping to bring about its demise with the introduction of computer games." Brock said."There is a considerable evolution, maybe a revolution, in electronic games. The faster it evolves the better. We need to keep them exciting."
Brock looks for computer games that are mind-expanding, challenging and fun."We don't want to say educational."
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