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ONE-ON-ONE - July '98
by Ed G. Lane

Warren W. Rosenthal
A long-time Lexington business leader and entrepreneur

rosenthal.jpg (7237 bytes)Warren W. Rosenthal is a long-time Lexingtonian whose business career spans 41 years in the food service and franchising industries. Rosenthal joined Jerrico, Inc. in 1948 and developed the company from three small restaurants into a publicly-owned entity that encompassed over 1,500 Long John Silver's Seafood Shoppes, more than 60 Jerry's Restaurants and 5 Fazoli's fast-food Italian restaurants. He became chief executive officer of Jerrico in 1957 and president of the company in 1963. He retired as chairman of the board of Jerrico, Inc. in 1989. Rosenthal is the owner of Renfro Valley Entertainment Center and is a major shareholder in the new First Security Bank. A graduate of the University of Kentucky, Rosenthal owns Patchen Wilkes Farm, a thoroughbred nursery in Lexington, and continues to be an active and generous contributor to the Lexington community.

 

 

The management of Long John Silver's Restaurants, lnc. (LJS) recently announced its decision to reorganize the company under Chapter 11 of the U.S. Bankruptcy Code. As a-previous CEO and major shareholder of the company, what was your reaction?

There were multiple reactions. It hurts to see the company you built fall like a house of cards because of greed by the original buyers, which goes back to the leveraged buyout in 1989. Then I wondered why the management didn't take Chapter 11 three or four years ago. Because of the leveraged buvout, LJS has had a debt and interest problem that couldn't be overcome. Instead of bankruptcy, LJS management fired and cut individuals out of their livelihoods and destroyed the viability of that company as it was. And now the management is faced with the problem of trying to resurrect the company without the operational staff to do the job. The management could have used better judgement.

 

How would you describe general business conditions in the fast food industry?

I can best describe it by saying I am the most fortunate person in the world to be out of it. Each restaurant chain is trying to sell everything that its competition sells; the food service concepts have lost their unique market identities. Restaurateurs are also dealing with a labor market that defies any thought of how bad the quality of labor could get. Because people are abused by bad service and ho-hum quality, they are cutting back on their visits to fast food operations. Fast food is where the world really ought to be. But when you don't deliver service or quality, then you can expect to lose customers.

 

The future of Blue Grass Airport has been a divisive issue. How well has Mayor Miller and the Council managed this issue?

They wasted a lot of money on the study. It is awfully hard to leave Lexington to go anywhere other than Cincinnati, Chicago, Nashville, Atlanta Charlotte, and Louisville in order to catch a connecting flight to somewhere else. I may not have vision, but I don't see why Lexington needs to think in terms of relocating Blue Grass Airport. The airport needs to be near the customer it is serving.

 

Essentially you are saying, let's keep the local airport where it is, let's try to keep it up-to-date, but let's not make it into another hub.

Amen. The idea of 'build it and they will come' was only a movie about a baseball game.

 

How important is good air service to the economy of Central Kentucky?

It is very important if Lexington and Central Kentucky are ever going to be a corporate center again. At Jerrico, we flew two corporate planes to make up for the lack of air service. I did not want to move Jerrico out of Fayette County. Had I been from Chicago or somewhere else, I don't think I would have chosen Lexington as a national headquarters because it was lacking good air transportation. After saying all that, I do not think building a new airport in Clark County is justified.

 

As a major farm owner, do you favor restricting the use of your property and other farms for only agricultural use in order to ensure that existing farms cannot, at some time in the future, be developed for residential or commercial use?

I am a bad one to ask. I have not wanted to, but have already had our farm rezoned residential. It is difficult to operate a farm when you are completely surrounded by hotels and restaurants on one side and a housing community on the other. As far as trying to be objective about other farms, and individuals who are so concerned about protecting the farms of the Lexington area, they must be prepared, if called upon, to find the dollars needed to purchase a farm from an owner who may need to rezone the property for another use. If they were willing to put up that money, then I think they would have a right to speak up with a strong voice against allowing that farm to be used for anything but agricultural purposes.

 

Central Kentucky is the state's fastest growing region, do you feel our local leaders are planning adequately for that growth (roads, utilities, expansion of urban service areas, zoning, etc.)?

No. Not now, not ten years ago, not twenty years ago, not thirty years ago. Lexington has no east-west or north-south corridors. And every year that we wait makes the need that much greater and that much harder to overcome. We should have, at whatever inconvenience and cost, built an expressway over the railroad lines from downtown to past the Fayette Mall. Whatever the cost, it is still not too late. Otherwise, we will have to contend with more and more traffic out Nicholasville, Harrodsburg, Richmond, Newtown, and Tates Creek Roads. And Winchester Road is getting to look like Richmond Road. I knew the traffic had to be generated by the development at the Madden Farm with all that commercialization. So I followed the traffic one evening to see, and sure enough, the cars went on to the interstate and headed south. But do you know what? They did not turn into Hamburg Pavilion. I followed them all the way to Andover. Lexington does not have a major thoroughfare to Andover, and we are not doing one damn thing about it. Another access road must be developed. Liberty Road should have been a four-lane road yesterday and probably a six-lane road tomorrow. But the politicians are allowing housing to build right up to the current right-of-way. When the area is developed it will be ten times more expensive to acquire the right-of-way for additional lanes. There is no vision and there are no guts.

 

Over the past few years, local opinion surveys indicate that respondents think Lexington is suffering from a lack of leadership. As a long term resident, what is your perception?

You don't have to have consultants to tell you this either. When a city loses its corporate and business base, you lose the people who are regarded as movers and shakers. These are the people who have a real power base and as a result, can provide the leadership for the community.

 

Do you have any thoughts about what Lexington can do about that?

Anybody who tries to climb the leadership ladder becomes a target for negative journalism. How will a community get responsible people to be involved in politics or setting the pattern for the future? When IBM was a force here, it wanted its executives to get involved in the community, and we had some good leadership contributions. When we had independently owned banks, you had leadership people. Now we have ownership by mega-banks headquartered somewhere else, who have very fine local management who are expected to get involved in the community to the degree that it helps their institution, but not necessarily the degree needed to lead the community. When these bankers need to go beyond the guidelines established by their headquarters, they become frustrated knowing they can't do what the independent entrepreneurial banker could do.


Was helping to build new local leadership one of the reasons you are a major shareholder in the new First Security Bank?

Not really, I was just happy to be a part of the resurrecting of the name First Security, and knowing it was going to be friendly -- like the First Security of the old days.

 

Were you surprised about the large vote council member Chuck Ellinger received in the primary with Mayor Pam Miller and three other candidates?

Absolutely not. There was a ground swell of discontentment that finally rose and expressed itself at the polls. And that was predictable.

 

Why do you feel Pam Miller didn't receive more support in the primary?Pam has not provided the kind of leadership that the community demanded. The community may not make overt demands, but they voted their position.

 

You are currently actively involved in the management and ownership of Renfro Valley. What exciting events are happening in Mt. Vernon and Rockcastle County? Renfro Valley is the second largest employer in the county and involved with the economic welfare of the community. From the standpoint of tourism it is exciting to see some very special things about to happen. The Kentucky Country Music Hall of Fame has been established and the state is funding it. The Rockcastle County Tourism Council is working to acquire a collection of historical log cabins of the 1860 era to be relocated in Renfro Valley. Both endeavors, controlled by an independent non-profit board for the benefit of tourism, will help draw people to our Renfro Valley Entertainment Center.

 

What advice would you give to the future leaders of Central Kentucky?

Be involved and be informed. Know that there is always more than one side to the story. Put service above self, do not attempt to build your own personal empire from service to the community. It is great to be a leader, but you have to be a lieutenant before you can be a general. We are in a "now" society. It is hard to get across to young people that they have to serve their stewardship -- to learn before they can do. And then, they have to be altruistic in what they do. An honest to goodness Iove of the community and respect for their fellow man is essential.

 

Ed G. Lane is chief executive of Lane Consultants, Inc., and publisher of The Lane Report.


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