Bull Market: Forrest and Kimberly Smith Think New Yorkers Will Be Kookaburra for Their Cheap Steaks
THE NEW YORK OBSERVER
August 20, 2001
By James Verini
Forrest Smith and Kimberly Farkas Smith have a grand scheme. They know that New Yorkers love steak. But they think the city is underserviced by the existing crop of snooty, expensive steakhouses. New Yorkers want beef, big heaping chunks of it, the Smiths believe, but they want it for cheap.
So here’s what the Smiths are going to do: take over the city with Outback Steakhouses, a Tampa, Fla. — based chain of Australian-themed steak joints that up until now have been content to keep their wild success — 700 restaurants have opened in slightly more than 10 years — well within suburban limits. The Smiths already have locations in Queens and Brooklyn, and estimate they will open another 20 to 25 in the coming years, many of those in Manhattan. They know New York mouths are famously fickle and averse to national trends, but they’re convinced that once we get a taste of the $18.99 Rockhampton Rib Eye and the chain’s claim to fame, a deep-fried item called the Bloomin’ Onion, we’ll never want to go back to Smith & Wollensky or Sparks.
“Prime is prime,” said Mr. Smith. “We serve prime. It’s like the gold standard; it’s either 24 karat or it’s not. And we have the same 24 karats that they do.”
By they, he was referring to New York’s more well-known steakhouses.
“They’re like Rolexes,” he went on. “That’s just a name; the watch really doesn’t work that well. I’ll take my Timex Ironman triathlete watch that I wore for years and years and cost $34. And if you’re talking about steak, when you look at Crisella’s or Ben Benson’s or Sparks or the Palm — prime is prime, and I don’t see them coming out three times and asking, ‘Are you sure it’s cooked right?'”
Mr. Smith was sitting with his wife in a booth in the Outback Steakhouse in Bayside, Queens, close to Nassau County. It felt like the kind of dark, noisy pub you might find anywhere in Queens, but with koala bears and boomerangs on the walls. A steady stream of more-obscure-than-average 1980’s music favorites — think Men Without Hats and A-ha — regaled the diners, who seemed to be enjoying themselves. It was barely 6 p.m., and already there was a squeeze for tables.
The couple was trying to convince The Observer to order a Wallaby Darned, a frozen drink the menu says consists of vodka, peaches, peach schnapps, champagne and “secret mixers.”
“You’ve got to try it — you’ll love it,” Mr. Smith said. “I’m having one.”
Mr. Smith is a powerfully built but rather languid 56-year-old man with a curved nose — “I never got into a hockey fight that I won,” he said — and a striking resemblance to John McCain. When it comes to such things as the restaurant business and jet-skiing (currently his favorite sport), he speaks with the Arizona Senator’s fervency and a slightly certifiable glint in the eye. But he speaks very slowly. Imagine Mr. McCain on barbiturates.
“We are serious about food here,” he said. “Nothing is frozen, pre-prepared or packaged.”
“Everything on that entire menu is made from scratch, except for two things,” Mrs. Smith chimed in. “We don’t make the butter and we don’t make the ice cream.”
“We have people that make the butter and ice cream for us,” Mr. Smith said.
“But there’s no need to tell anybody that,” Mr. Smith went on. “Because once they sit down and eat it, they know there’s a difference. They don’t know what the difference is, but they know. Now I’m going out on a limb a little bit, because if the Bloomin’ Onion shows up here and it’s not terrific, I’m not going to look too good.”
“But I’ve never had that experience.”
Mr. Smith’s dress was almost disconcertingly casual — khakis and an un-ironed gray polo shirt with a green T-shirt underneath. Mrs. Smith, a former model, wore a simple cream blouse and pearls.
Allison, the waitress, brought the Wallaby Darneds. They were tasty. A plastic shot glass of what tasted like chilled Southern Comfort with peach schnapps hung off the side of the mug. Mrs. Smith got a Shirley Temple, in a frozen beer mug.
Mrs. Smith ordered Aussie-Tizers, as they’re called on the menu (that’s copyrighted): “The Bloomin’ Onion, of course … the Gold Coast Coconut Shrimp and Shrimp on the Barbie. And the Kookaburra Wings.” (“Kookaburra Wings” is copyrighted, too.)
What is it about New Yorkers that makes them like steak so much?
“I think it’s a power food,” Mrs. Smith said. “We [New Yorkers] are known for being good, solid eaters. We like to express our power in all kinds of ways, and food is one of them.”
Mr. Smith disagreed.
“I don’t think there’s anything about steak that’s special to New York,” he said.
So what makes them think that Outback is going to take off here?
“We have a far greater younger population than we’ve ever had in Manhattan,” Mrs. Smith said. “Most young people now are running from their business to the gym and to other activities, and they eat on a more casual basis … People already have very complicated lives; they don’t want their food to be complicated, too.”
And what about the continent of Australia? Does it hold any special meaning for them?
“I personally am enormously fond of Australia and Australians,” said Mrs. Smith. “Australians are fairly straightforward people who love good food and love to be happy. It’s a very happy and up kind of place, and our restaurants are happy, up places.”
Mr. Smith feels differently.
“Now that I’ve been there, I’ve lost half of my fascination,” he said. “Australia has the top 10 most poisonous snakes in the world. There are plants that can do it, there are spiders that can do it. I don’t want those problems. And I’m also a little uncomfortable with the treatment of the Aborigines, which is no better than what we did with the Native Americans. I’d always thought of it as super-American, but everyone’s unionized. Even the limousine drivers are unionized there. Not that I have anything against unions … But I love all the animals.”
Allison brought the Aussie-Tizers. The portions were enormous, and greasy. The Bloomin’ Onion and Gold Coast Coconut Shrimp were tasty. The wings were bland.
Mr. and Mrs. Smith know the names of almost all 120 or so of their employees. One gets the feeling that if they had 20 restaurants, they’d know the names of all 800 employees.
That day, Allison had gone with a bunch of the waiters and managers to Splish and Splash, a water park in Riverhead, N.Y. Such group activities are common. The Smiths sometimes have the “kids,” as he refers to the Outback staff, up to their summer home on the Finger Lakes, where he teaches them how to jet-ski.
He pulled out a little album of photographs from the trip. Most of them were of his jet-skis, sitting in a garage. He points to a photograph of one of the jet-ski’s motors.
“You see how clean that is?” he asks. “That’s what I want my kitchen staff to see: I keep my jet-skis like you should keep your kitchen equipment.”
While picking at the shrimp, Mr. Smith said that he grew up in Ithaca, N.Y. His father, a colonel in the Air Force who’d served in World War II and Korea and later became a commercial pilot, went to work at the Ithaca Gun Company started by his grandfather. Forrest Smith never went to college. At 17, he joined a band — variously called the Emotions, the Fascinations and, finally, the Agency — in which he played the Hammond B-3 organ. Valerie Simpson of Ashford and Simpson wrote some of their songs, he said, and Herbie Hancock did their A&R.
“The nicest guy you’d ever want to meet.”
Mr. Smith stayed in the band for seven years, and then became disenchanted with the industry and looked for a day job. He was attracted to the fast-food restaurant business. He started as a fry cook at a Kentucky Fried Chicken in Ithaca and worked his way up to regional vice president. Then he left to join McDonald’s and eventually, with a partner, owned seven franchises in Manhattan. When the partnership broke up, he held onto four of the Manhattan franchises, which he’s since sold — including one at 1560 Broadway that Mr. Smith claims became, under his watch, the most lucrative McDonald’s in the world. He also claims that the Bayside, Queens, Outback has broken sales records for a new location in its first year in business.
Mr. Smith was in the news once: In 1994, he mounted a giant, glowing inflatable chicken on the roof of his McDonald’s at 56th Street and Eighth Avenue to announce that it would be serving fried chicken.
Mrs. Smith grew up in Honolulu, Hong Kong, Switzerland and Southern California, where her father was an owner in Don the Beachcombers, a chain of restaurants that was popular for a while. She moved to New York and became a model, landing on the cover of Town and Country and New York and doing a lot of work for the designer Arnold Scaasi. She married Jonathan Farkas, a Broadway producer and heir to the Alexanders department-store fortune (Liz Smith called that match “unhappy” and “tumultuous” in an item about her subsequent marriage to Mr. Smith), and became a fixture in the society pages. She hung around with late-80’s boldface names like Ivana Trump and Mai Hallingby.
Mr. and Mrs. Smith, who have four children between them and live in Greenwich, Conn., were set up on a blind date in September 1991. They married the next year.
Allison brought the meat, and it was tender, cooked well — no Peter Luger, but what do you want for $20? Mrs. Smith ordered the rack of lamb, which was huge. She dug in with gusto. Mr. Smith had his wrapped up before touching it.
“I can’t talk and eat,” he said.
In the mid-1990’s, after more then 10 years as a McDonald’s owner, Mr. Smith decided it was time to move on to another level of the “hospitality industry.” But what?
“I was at a loss,” he said, his face suddenly forlorn.
He went to meet with Norman Brinker, who’s now an old friend and guru of sorts. He is known among people who know about such things as “the father of American casual dining,” having founded Steak & Ale, Bennigan’s and Chili’s, among other chains. Mr. Smith alludes to him often, in reverent and slightly hushed tones, as though he’s speaking of some religious figure. (The only other name he regards with as much awe is Peter Luger, which he thinks has “taken steak to another level.” By his own estimate, he’s eaten there about 140 times.)
“Norman is one of the foremost, prolific people in the feeding of masses of people, but doing it well. He’s right there with Colonel Sanders — whom I worked with — and Ray Kroc [the late founder of McDonald’s]. Norman Brinker was third in lineage, but he was as good as it gets.
“I asked Norman, ‘What is the future of food in America?'” Mr. Smith continued. “And Norman said, ‘People want to sit down and relax. They want to be casual, but not dirty.'”
Mr. Brinker helped put him in contact with Chris Sullivan, the chief executive of Outback, whom Mr. Smith refers to as “maybe the fourth person” in the Sanders-Kroc-Brinker lineage. After investigating chain after chain, Mr. Smith decided on Outback.
Allison came back to ask how the steak was. Everybody responded “Great.”
The chain was conceived in 1987, in Tampa, Fla. Mr. Sullivan and his partners, who had worked for Mr. Brinker for years, were wealthy but looking for ways to augment their incomes — as Mr. Smith tells it, so they could play at better golf courses. They knew they wanted to stay in steak. They just needed a new twist.
Before going to a jazz club that night, Mr. Smith said, the two men and their wives had gone to see Crocodile Dundee, the smash hit that introduced a young Paul Hogan to America. They decided that Australia was the next big thing. Ten years later, Outback had nearly 400 restaurants.
“Who knows what the place would have looked like if they’d been to see a Stanley Kubrick movie,” Mr. Smith said.
Mr. Smith wanted in, and he wanted New York. None of Mr. Brinker’s “concepts,” however, had been tried here — for good reason. Rents are high, and tastes change quickly. Outback had made its name in suburban strip malls, serving cheap wine and not that much liquor — the real bread-and-butter of New York restaurants — and was closed during lunch. But Mr. Smith was convinced he could do it.
The first interview he had at Outback headquarters in Tampa, he recalled, he showed up in a jacket and tie, and Mr. Sullivan’s secretary told him to take it off. Things were casual there. “And she said if it happened again, they’d cut if off!” he said. That’s when Mr. and Mrs. Smith knew they’d come to the right place.
Once in Mr. Sullivan’s office, he produced his “good-guy list” — a resume of his philanthropic efforts — as requested by the Outback brass, he said. Mr. Smith had been chairman of the Ronald McDonald House and the Ronald McDonald Children’s Charity of New York.
“That’s about as impressive a good-guy list as I’ve seen,” Mr. Sullivan said to him. But then, Mr. Smith recalled, Mr. Sullivan pulled out Mrs. Smith’s good-guy list, which she’d sent earlier. He hit the table with his Filofax. “Except for this one!” Mr. Sullivan said. So, said Mr. Smith, “I went to the first meeting as the spouse of the new Outback franchisee.”
Mr. Smith admitted that he bought into the Outback corporate ideology immediately.
“The first thing they asked me is, ‘Do you want to have fun?’ Nobody had ever asked me that before. You must have fun. And, ‘Are you learning? Do you know something you didn’t know before?’
“I was part of Brinker’s cult, but now I’m even more a part of the cult of Sullivan and [Sullivan’s partner].”
Allison came back to ask how the steak was, again.
“Are you sure?” she asked.
To explain the cult further, Mr. Smith made her stay for a moment. “Do you have your cards?” he asked her. She handed him four plastic, wallet-sized cards.
“Many companies have letters,” he said. “The Army has — what is it called? — AWOL. Well, we have letters here, too.”
He produced a card with the letters H, S, Q, F and C listed vertically. He asked Allison to list the five principles.
“Hospitality, Service, Quality, Fun and Courage,” she said, without batting an eye.
Mr. Smith wouldn’t allow The Observer to write down the contents of the other cards. He did allow Allison to explain the 15 or so pins and brooches that hung from her red Outback polo shirt. Among others, there was the Aboriginal Medal — with a picture of a kangaroo on it — awarded for working there for more than a year. She also had a Boomerang Pin with “1500” printed on it, which meant that she’s sold more than $1,500 worth of food in one night.
Aside from its success, Outback and Chris Sullivan have also made news in Florida because of the chain’s political activities. Outback has a powerful, right-leaning political-action committee to which managers, and sometimes employees, are encouraged to give. The P.A.C. was investigated, then reprimanded by the Federal Election Commission in 2000 for its excessive involvement in the 1994 Congressional campaign of Republican Mark Sharpe. It is also one of the sponsors of a think tank called the Employment Policies Institute, which has lobbied against raising the minimum wage and improving worker-safety standards in the restaurant industry. During the Clinton administration, Mr. Sullivan told a reporter from the St. Petersburg Times that he had “a passion for one thing — getting Bill Clinton out of office.”
Mr. Smith said that he and his wife donate to the P.A.C., but claimed to know nothing about the Employment Policies Institute. “That’s corporate policy,” he said. “I can only speak about our policy.”
He bristled at what seemed to be a disparagement of Mr. Sullivan.
“Chris Sullivan is one of the most people-oriented people around,” he said. “He’s the last person who would do anything to prevent anyone from making more money. He’s — ”
Mr. Smith paused, considering his next statement carefully. He lowered his voice.
“He hates it when I say this, but I’d say he may be the next Norman Brinker. And you’ve never heard anybody say anything about Norman Brinker except, ‘I wish I could live up to the standards he lives up to.'”
The Bayside Outback has been open for nearly two years. Mr. Smith said that he’s in final negotiations on several locations in Manhattan, including at 180 Riverside Boulevard in Donald Trump’s Riverside South development; at the former Michael’s Pub spot at 919 Third Avenue; at a new apartment building at 700 Sixth Avenue at 23rd Street; and in the Virgin Megastore building at Union Square. The Trump location, which was to have led the way, was supposed to have opened months ago.
“Kimberly’s known Donald and Ivana for years; she introduced us,” Mr. Smith said. “Donald didn’t get where he is today by not making deals that are good for him. He’s looking out for him, and we’re looking out for us … We’re in the final stages of negotiations.”
Paul Davis, chief executive of Hudson Waterfront Associates (the company that runs Trump Place at Riverside South) confirmed that they’re in final negotiations and said the restaurant should open “sometime in the near future.”
Mr. Smith said that protracted negotiations and his own meticulous approach — not the current economic climate, or any reluctance on New Yorkers’ part towards $18 Australian-themed steak — has caused the delays.
“The current economy is going to help us,” he said.
“Originally,” he continued, “the landlords didn’t understand the type of meal you’re eating tonight. They didn’t understand the caliber of the restaurant. Now they’re coming to us, asking us to open Outbacks in their buildings.”
“I think we fill a certain niche in everybody’s life,” Mrs. Smith said.