Smith & Wollensky Takes It in the Chops

How’s the shampoo?” asked Patrick, the chatty, bespectacled 54-year-old bartender at Wollensky’s Grill on East 49th Street.

He meant the champagne, two big flute fills that he’d just served up to a smartly dressed middle-aged couple snacking on a plate of French fries at the bar.

“It sucked,” answered the male of the duo, who promptly requested a glass of Pinot Gris instead.

The rather crude talk and mere pub fare might not exactly reflect the intended high-end image of such a traditionally refined outfit as the Smith & Wollensky Restaurant Group.

But the more relaxed vibe may represent the future of the now-beleaguered Manhattan-based brand.

At a time when the wholly for-sale company is scrapping other, more upscale eatery concepts, founder and current C.E.O. Alan Stillman’s more down-scale, bar-room-style prototype is about the only segment of the existing S&W portfolio showing growth potential.

According to an annual report released this month, Mr. Stillman & Co. were still planning to open three to four new Wollensky’s Grill locations beginning in 2008.

This, despite the nearly 30-year-old steakhouse chain’s apparent financial woes, which recently amounted to a reported fourth-quarter net loss of $3.46 million—not to mention the current uncertainties about future ownership. Two rival restaurant operators are presently bidding to acquire Mr. Stillman’s company, a process that would decide what control, if any, Mr. Stillman retains over the steakhouse chain.

Just last week, the restaurant group, which operates more than a dozen eateries under the Smith & Wollensky moniker and various other names in Manhattan and abroad, shuttered Cité, its nearly 18-year-old Parisian grand-café-style restaurant at Rockefeller Center.

The venue had been at the center of a legal dispute with the landlord over alleged unpaid percentage rent dating back to 2001—a matter that has since been settled out of court. According to the company’s report, the location was “unable to achieve a level of income from operations that was in line with our expectations.”

Back on Dec. 31, Smith & Wollensky also shut down a similarly underperforming Dallas location, with reported plans to sell off that building for $3.9 million.

Earlier that month, the company barely hung onto its Park Avenue Cafe location on the Upper East Side, which had been scheduled to close at the end of 2006. The renewal of its lease came at increased expense, however: Its annual minimum rent now starts at $500,000, after the landlord upped the ante by marketing the site to deep-pocketed plastic surgeons and other potential high-end tenants.

In the coming year, Smith & Wollensky also plans to unload a townhouse directly adjacent to the restaurant at Park Avenue and 63rd Street, and to rent the space instead.

Amid all the shutterings and sell-offs, however, Mr. Stillman & Co. continue to talk about expansion, albeit based almost exclusively on the less classy Wollensky’s Grill model.

The stripped-down approach to meat-mongering would seem an ironic savior for the high-end brand, which Mr. Stillman founded in 1977 shortly after selling off his earlier and far less exclusive eatery chain, T.G.I. Friday’s.

Wollensky’s Grill in midtown, opened in 1980, is a sort of second-tier space, located behind the original Smith & Wollensky flagship at the corner of Third Avenue and 49th Street, where far less dapper types enter through a separate side door. The segregation from the main dining room comes with a cost benefit, potentially saving carnivores nearly $10 on the otherwise $42 filet mignon—albeit likely not the house’s prime cuts. Less-pricey menu items include a $14.75 burger and a $7 bowl of split-pea soup.

The service at the Wollensky’s Grill behind the flagship is also more laid-back. During a recent Counter Espionage scouting mission, one waiter quickly rattled off the scores to the day’s Yankees and Mets games, yet openly joked about his inability to recall exactly how the customers wanted their meat cooked.

Despite the comparatively low-key vibe, the staff still seemed busy. Even at midnight on a Monday night in midtown, every barstool was taken and several nearby tables were occupied by couples chatting over drinks and late-night snacks.

Though it might seem like a lowering of standards, the Wollensky’s Grill model—envisioned in spaces between 7,000 to 9,000 square feet—would allow the typically city-centric brand to expand its horizons somewhat.

“In general, we prefer to open our Smith & Wollensky restaurants on sites near central business districts within larger metropolitan areas,” according to the company’s report. “For our Grill concept, we plan on evaluating sites not only within larger metropolitan areas, but also within midsize communities.”

Whether the company actually moves forward with its less-frills-more-grills expansion plan will undoubtedly depend on the outcome of its ongoing sales talks.

Under a merger plan formalized with the Manhattan-based Patina Restaurant Group, Mr. Stillman would retain at least some managerial control over several existing restaurants, including the Manhattan flagship and its back-door bar.

But a higher, unsolicited buyout bid by Houston-based Landry’s Restaurants would wrest those reins away from the founding restaurateur.

Even if the Texas company succeeds in stripping Mr. Stillman of operational control, however, he would still wield some influence. Under an altogether different corporate entity, Mr. Stillman still co-owns the midtown flagship building. Smith & Wollensky Takes It in the Chops