Lone Star Steakhouse Chain Really Sizzling : Restaurants: Wichita pizza entrepreneur’s research found that while beef consumption was down at home, people still want a good steak when they go out to eat. His business is booming.

WICHITA, Kan. —  It may be known for beef, but fast-growing Lone Star Steakhouse & Saloon Inc. had its beginnings in pizza.

The steakhouse chain, which has expanded from eight restaurants to 75 in just three years, dates back to 1989, when Wichita native Jamie Coulter considered taking his 100 Pizza Hut franchises public.

But Coulter and his managers couldn’t add enough Pizza Hut franchises to expand as they wanted. And when the Steak and Ale chain of Dallas was put up for sale, Coulter and his team started thinking beef.

“Here was a 150-unit chain doing $1.7 million per restaurant and they hadn’t even reinvested to keep the concept fresh,” said John D. White, Lone Star’s chief financial officer. Steak and Ale and sister chain Bennigan’s were eventually sold to a management-led investor group.

But a little research showed Coulter and his team that a reported drop in beef consumption that had spanned several years was mostly in home cooking.

When people went to a restaurant, they still wanted a good steak.

So Coulter had a talk with a longtime friend in North Carolina who said he’d converted one of his restaurants to a Lone Star Steakhouse & Saloon, which was booming.

“It would have taken us 12 to 18 months to refine our own concept and get it to the point the founders already were with Lone Star,” said S. Douglas Glendenning, Lone Star’s chief operating officer.

Coulter joined forces with the North Carolina outfit and the new Lone Star was off and running.

With Coulter as chairman and chief executive, Lone Star grew rapidly. Last year, profits tripled to $14.9 million, or 46 cents per share, compared with $4.7 million, or 18 cents a share, a year earlier.

Sales surged to $95.8 million in 1993 from $33.9 million.

Lone Star’s steakhouse and saloon atmosphere includes a deli case full of steaks, cut by hand each day, and a mesquite-fired grill with a sign that encourages patrons to, “Take a look. Watch it cook.”

Waiters and waitresses at Lone Star restaurants wear “Don’t Mess with Texas” T-shirts. Customers are served buckets of peanuts as they wait and are encouraged to throw the shells on the floor.

“People like to do that,” said White. “You don’t get to do it at home. Maybe that’s the allure.”

Checks average $16 to $18 per person.

Most of Lone Star’s restaurants are in the upper Midwest, with some in the deep South and the mid-Atlantic states.

“They’re opening 45 more this year and another 45 next year,” said Ron Tartaro, an investment analyst at Fred Alger Management in San Diego. “In excess of 50% growth? Nobody that’s as big as Lone Star is doing that.”

The company went public on the Nasdaq stock market in 1991, raising $16.5 million in its initial stock offering and another $120 million in subsequent offerings. Lone Star has used the funds to fuel its growth.

“The management had been working as a team at least 10 years prior to that,” Tartaro said. “They had experience opening up a great many Pizza Huts in a short period of time.”

Glendenning cited various systems for measuring performance that have allowed Lone Star to keep its expansion on track. He said information is the key.

Every morning he and other top executives review a so-called flash report that contains daily meal counts, net sales, week-to-date sales, labor costs and other information on each of the 75 restaurants. Beef, which makes up 80% of each restaurant’s sales, is inventoried daily.

“We continue to tweak and tune,” White said. “We’re always looking at how to do something better.”