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RALLY'S HIT 'EM WHERE THEY USED TO BE
(FORTUNE Magazine) – YOU'RE SITTING ON a bench outside your local Rally's fast-food restaurant, inhaling a Rallyburger with cheese and batter-dipped fries, when a middle-aged man in jeans comes over and joins you. Alarmed at first, you quickly recognize the man's interest is not in you but in your burger. Is it hot? How long did you have to wait for it? Cheese okay? His eyes sparkle as he peppers you with questions. Suddenly he drops his voice to a conspiratorial whisper and leans closer. Why, he wants to know, didn't you go to McDonald's? The usual answer is that Rally's is cheaper and quicker, which is just what your interlocutor -- CEO Burt Sugarman, 53, who spends much of his time asking Rally's customers just such questions -- wants to hear. Rally's has become one of the fastest-growing restaurant chains in the country. It focuses on the basics: price, quality, and speed of service. Says Sugarman: ''If you are looking for pizza or pasta, don't come to us. But if you want a fully dressed burger, a 16-ounce Coke, and good-sized fries for $1.97, in 45 seconds, come to Rally's.'' People are doing exactly that. Since taking control of the company in late 1990, Sugarman has expanded the number of restaurants from 275 to 415, making Rally's the largest double-drive-through chain. Double-drive-through restaurants, which have limited menus, no indoor seating, and not one but two drive-through lanes, are going after the little-spare-time-or-cash crowd that McDonald's and Burger King have all but abandoned. At Rally's, Sugarman has pared the bill of fare to just 11 items. If the name Burt Sugarman conjures up Hollywood, not hamburgers, don't adjust your dial. A former TV and movie producer, Sugarman once owned The Newlywed Game and The Dating Game, and produced the movie Children of a Lesser God. Sugarman's rebirth came six years ago when a friend who knew he was a fast- food junkie suggested he check out Rally's in New Orleans. He loved the concept and bought a piece of the company. Today he owns 40%. A producer is a producer, however, and if Rally's hasn't yet come to Hollywood -- most are east of the Mississippi -- the big screen will soon come to Rally's. Sugarman plans to install interactive video so that customers and order takers can see each other. In a business in which service is becoming an increasingly important marketing tool, Sugarman sees video as adding a human touch. He says, ''The server will be able to say, 'That's a nice little black dress you have on.' '' Little black dress? At Rally's? Surely he jests. The biggest challenge facing Rally's: building awareness. Says Michael Mueller, a restaurant analyst at Montgomery Securities, which recently underwrote a Rally's stock offering: ''If what a consumer wants is a hamburger, fries, and Coke, there is no reason to go to McDonald's. The problem is most people don't know that.'' Commercials stressing service -- ''We get it right or you get it free'' -- have helped. Unfortunately for Rally's, giants like McDonald's and Burger King now want to get it right too. After battling for market share with fancy menus and pricing strategies, Nation's Restaurant News reports, the fast-food kings are ''going back to the basics and catering to the customer.'' Burger King plans to build double-drive-throughs and walk-up kiosks in such high- traffic locations as shopping malls and airports. Unfazed, Sugarman keeps doing what he does best -- chomping his way from city to city, sampling burgers and buns, stealthily clocking how long it takes competitors to serve customers, and cooking up better ways to keep customers happy. His biggest personal challenge is keeping thin. ''I'll just eat a third of a burger,'' he says. ''I can't keep eating whole burgers with the number of restaurants I go to.'' Which might explain his success: He never leaves a Rally's feeling fully satisfied. CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: RALLY'S |
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