Daily News from New York, New York • 76

Restaurant Firm Sheds Class to Cut Costs and Feed Masses HV 1 1 1 ning trade was shrinking. The chain's annual report for 1972 indicates that wholesale food prices that year rose about 15 above the 1971 level, a critical factor in a company where food purchases represent about a third of sales. Some of the company's difficulties may have been of its own making. In the late 1960s, RA acquired the Barricini Candy Co. and the Treadway Inn chain, both of which soon thereafter encountered unforeseen problems.

Brody now concedes that "the thrust of expansion may have been too fast." He says, however, the company subsequently sold both operations at a profit as it has all of the other acquisitions which it has disposed. Divestiture of properties has been one of Restaurant Associates' -main responses to its problems. As a result of the streamlining, the company now operates in about 100 locations, roughly half as many as a few years ago. (Besides its New York operation, which accounts for about 35-40 of revenues, the chain has restaurants and food-service activities in about a dozen other states.) Relatively Low Labor Costs Although the Four Seasons and Forum restaurants reportedly weren't in the red recently, they didn't fit into the strategy for growth that has evolved at the company in the last three years. That strategy calls for opening new restaurants like Zum Zum and Jolly Trolley, whose labor costs are relatively low as well as for retaining: moderately priced specialty dining establishments such as Mamma Leone's and Brasserie.

Other areas earmarked for growth are food concessions at stadiums, parks and tourist attractions-fields in which the company already is well-established, and management of private clubs and executive dining rooms. Although the company's recent record is unspectacular, sources familiar with the firm believe RA's financial performance should improve. They note the elevation to the presidency last January of 38-year-old Richard Blumenthal, a company employe of 13 years who is considered by observers to be extremely able. Still, the new Restaurant Associates doesn't sound as exciting as the old. Says one restaurant consultant: "The old approach was to do the very best and let the rest take care of itself.

The new philosophy is to do something which is a proved success without taking the slighttMt chances." lly JOHN HENRY It surely i.sn't like the old days. The locally based restaurant chain that in tho IO.jO and 19G0s was building it reputation by operating such fashionable New York lining spot as the Four Seasons and the Forum of tht Twelve Caesars now Is pinning its hopes for growth on, among other things, a string of suburban steak houses where the customers make tlii'i. own salads. Restaurant Associates, the proprietor of Buch well-known establishments as Mamma Leone's, Brasserie, the Promenade Cafe at Rockefeller Center, and Zum Zum, was a mastt-arui-clasis operation until last year. It was then that some of the class disappeared, 111 the opinion of gourmands.

The company disposed of the Four Seasons, famed for such culinary delights as the first grouse from the Queen's hunt, and the Forum, whoHt menu was studded with delicacies like brook trout Tiberius in herbs and Etruscan wine. Unpretentious Steak Houses These days, the only new restaurants the company plans to open in the city are more Zum Zums, the counter-service outlets where the specialty of the house Is sausages and beer. Outride New York, the firm's formula for growth calls for adding more unpretentious suburban steak-houses of the type run by the New Jersey-based Jolly Trolley rhain, which RA acquired last year. With ft limited menu of grilled items that requires less skilled help to prepare than a more comprehensive bill of fare, and with such labor-saving devices as a salad bar where customers help themselves, these units reportedly produce excellent profits. Excellent profits are something RA could use right now.

Like several other restaurant chains based here amontr them Horn Hardart, Longchamps, and Hchrafft's -this one has had a spotty earnings performance In recent years. After losing money In 1970, Restaurant Associates turned a profit the next year, only to lapse into the red again in 1972. Last year, the company showed a slender ($107,000) operating profit on net sale of $17.7 million. But losses from discontinued operations and the disposal of some assets left the company with net operating loss of $1.7 million for 197:1. The earnings performance may help to explain in part why Restaurant Associates' stock, which sold ft y- is 1 JV News phoie by Jim Garrett Mamma Leone's at luncheon: A successful mass operation.

for as. hisrh as $47 a share in 1968, recently has been trading in the vicinity of $2 a share on the American Stock Exchange. Martin Brody, the firm's chairman since 1964, has an additional explanation. "The market doesn't seem to have much enthusiasm for any stocks," the 52-year-old executive says. Some of the problems which company officials hold responsible for the chain's recent poor financial performance are the same plaguing other local restaurateurs.

For one thing, in the late 1960s there "was an almost straight drop" in nighttime patronage, recalls Sanford Bain, marketing vice president at Restaurant Associates. He adds: "A quarter of a million people don't come into Times Square that used to at night." For another, costs were skyrocketing as the eve Rising Interest Rates Depressed Market in Very Light Trading With rising Interest rates looming larger as a market depressant, stock rices moved lower tnis olidav-shortened week in throughout the week. On Monday, Bankers Trust of New York kicked off the increase, and the Dow reacted with its biggest loss of the week 7.58 points. The 10 prime began to spread among the nation's lending institutions Tuesday, but the stock market enjoyed its best day of the week. The Dow rose nearly 7 points, but there was little conviction behind the advance: gainers just barely outnumbered losers, and sales totaled about 11 million shares.

In the last two sessions, investors sat on their hands and the market showed little movement as Wall Street wondered whether a continued rise in short-term money rates would force the nation's banks to boost the interest rate charged to best business customers past the record 10 level. Many analysts, including Larry Wachtel of Bache expressed the fear, if the prime moves beyond the current 10, "the stock market will crack." index declined 0.89 to 92.12. There were 1,126 losers, 592 gainers among the 1,956 stocks traded. Sales for the four sessions totaled 43,190,040 shares, compared with 58,298,010 a week earlier, and with 76,173,505 shares the year before. On Thursday, trading dwindled to its lowest level since last August, totaling only 9,970,000 shares.

The nation's securities exchanges were closed for the Good Friday holiday yesterday. The move by major banks raising their prime lending rates to the record-equalling 10 level held the spotlight very light trading on the New York Stock Exchange. The Dow Jones industrial average fell 2.73 to 841.81, indicative of the noncommittal attitude most investors have taken, faced with a 10 prime lending rate, rising short-term money market rates, inflation, ami the growing possibility President Nixon may face impeachment, Standurd Poor's 500-stock THE 2 NEWS of basineao U.S. meASutr FIGURES fish Balance S405S.09i.7V4 Internal Revenue Make Your Money Work "v11 The Ntw Financial Editor All that glittori im't gold, you know. Thtro arm alto tueh thingt at tilvtr, platinum and tvmn nice tti of dtnturot.

But lor invtttmtnt pur pott mttalglitttry metal it all tho rag at tht momtnt. Q. Is silver the way to Invest for 1974? I know it's had a good history for the last couple of years and the "spot" price of silver is rising steadily. It's said that some of the top economists predict silver will go as high as $8 to $12 an ounce in the next two to three years. 1 am interested in silver for its Intrinsic value only, Many people are buyig limited edition, nne-ounce silver coins and ingots for their aes Inflation also helped to keep investors sidelined.

On Tuesday, budget director Roy Ash said to no one's surprise that the first quarter inflation rate will be "considerably higher" than 1973's 5 overall rate. IBM reported its net income grew by 26.8 in the first quarter but, in the market's current mood, the Big Board premier glamor fell 4. IN First National City Bank and Morgan Guaranty Trust, following the action of other major banking institutions, hiked their prime rates yesterday to 10 from 974. Tenneco forecasting 1974 record performance, told stockholders at the annual meeting in Houston that the energy situation "has become a measuring rod for business and industrial potential" and that Tenneco "is in a most favorable and unique position" in this regard. At the meeting Wilton E.

Scott, 61, was elected president and chief executive officer of the multi industry company. Treasury Chief Due Washington, April 12 (UPI) President Nixon will probably announce a successor to Treasury Secretary George P. Shultz next a White House spokesman said today. Federal Energy Administrator William E. Simon is expected to get the post.

Gerald Warren, deputy White House press secretary, told reporters there was "no problem" with respect to the appointment. He did not mention Simon's name. An adminisrtation source predicted that Simon will be replaced as federal energy administrator by his deputy, John Sawhill. The White House announced March 14 that Shultz would resign some time early in 0 tographs) that their ingots (or silver coins) are safely stored in a bank's vault, but neglecting to mention that the dealer has borrowed from the bank, up to the hilt, using the silver as collateral. The "anti-silver" position is pretty well spelled out in the March issue of Dun's Magazine Out for One of the magazine's principal arguments hinges on the fact that no one really knows how much silver is above ground, and a sudden cooling-off in investor fascination could lead to a massive dumping that could drive the price into a nosedive.

Other objections: silver bullion, itself, Is relatively illiquid and if you have to sell it back to some other dealer, rather than your original seller, you could be sharply penalized. Advocates of hoarding the silver coins, rather than bullion, point to this illiquidity as proof of the desirability of bagged coins you can always liquidate them at face value because, after all, they are money. Countering this, though, is the reminder that you normally pay a higher premium (over silver content) for coins than for bullion. In defense of bullion we also have Robert Lyle, head of Los Angeles-based United States Bullion, who regards silver as a long-term investment, rather than a trading vehicle, and who contends that no amount of "dumping" could drive silver down more than temporarily. Here's Lyle's advice on buying silver bullion: Use only disposable funds that you're not going to need for awhile; either confine yourself to ingots that carry a hallmark attesting to the silver content (or be very sure of the smelter's reputation), check the dealer's bank references, and never, never, buy bullion on margin, or in the form of futures contracts the two areas of greatest abuse.

So far, Lyle points out, California is the only state that has passed legislation covering silver dealers and significantly the number of dealers immediately shrank from about 80 to six or seven, Lyle said. thetic value, but these cost way over the "spot" price, I don't believe this is the way to invest. The only drawback 1 can foresee is where to sell the silver if the necessity for capital arises. What Is your outlook? A. The big boom In silver (the price has gone from a low of $1.20 an ounce in 1971 to about $0 recently) has its roots in the same uncertainty over inflation, and the eroding value of paper currency that has also put a fire under the demand for gold coins, antiques, original art works and virtually everything else that is both tangible and limited in supply.

There's really no middle ground among investment advisors on the subject of silver they're either gung ho on it, and insist that there Is really no upside limit on its price as long as worldwide consumption exceeds production by nearly 2-to-l (as has been the case for the past 20 years), or it scares them to death. Principally, the thing that scares them to death (and I'd tend to put myself in this category) Is the number of fly-by-night dealers who have flocked into the silver market and the abuses that have already surfaced. These abuses Include selling future contracts on silver far In exr of the silver the dealers could actually produce if the Investor decided to t.ike delivery, and assuring investors (usually via pho- Campbell welcomes reader mail, but can give detailed answers only in his column. He can't accept telephone inquiries..