Reuben E. Lee Changing Course to Hike Profits : Helm Set for a Showboat Motif

Struggling for new business in a market rife with competition, the Reuben E. Lee, one of Orange County’s landmark restaurants, will soon change course in a bid to become more of an entertainment attraction.

W.R. Grace & Co.’s restaurant group, which owns the Newport Beach-based restaurant-on-ship, is spending $250,000 to revive waning local interest in the waterfront eatery.

But costly structural improvements are not on tap for the 22-year-old facility. Although some cosmetic changes will be made to make the floating restaurant look more like a showboat, the key changes will be additional amusements.

If added entertainment--such as strolling magicians, musicians and palm readers--helps bolster business, Irvine-based W.R. Grace’s restaurant division may begin to test similar gimmicks at its 29 other specialty restaurants. These include two other boat restaurants: another Reuben E. Lee in San Diego and the Robert E. Lee near the Gateway Arch in St. Louis. W.R. Grace has about 800 restaurants nationwide.

Industry analysts and executives say these types of actions are not just ways to sidestep improved menus or costly structural improvements. In many cases, these kinds of moves are direct reactions to budget-conscious diners who are demanding more than good meals for their money.

More and more diners expect the dining experience to be an entertainment experience also, analysts say. This is especially true in Orange County, where competition for the diner’s dollar comes from such attractions as Disneyland and Knott’s Berry Farm. Many Newport Beach waterfront restaurants are more popular for their harbor views than for their food, said Barbara Dawson, West Coast editor of Restaurants & Institutions, a Chicago-based trade publication.

“We cannot ‘out-seafood’ some of the other seafood restaurants,” said Randy Hiatt, vice president of specialty restaurant operations for W.R. Grace. “But maybe we can offer the consumer something else,” he said.

In an unusual move, W.R. Grace went to an amusement industry consulting firm to discuss changes for the 563-seat Reuben E. Lee. That company, Management Resources Inc. of Tustin, recommended a greater concentration on entertainment.

Currently, the boat’s live entertainment is limited to the lounge area. Consultants suggested that owners spread the entertainment from bow to stern. They have also suggested structural changes--such as themed rooms--to make the facility look more like a showboat.

The suggestions sounded good to Hiatt, who knows something about mixing entertainment with dining. He spent 12 years with Disney Co., and helped to develop Disney restaurants in Orlando, Fla., and Tokyo.

But Hiatt, who recently joined W.R. Grace, has his work cut out for him at the Reuben E. Lee. The restaurant has seen three consecutive years of flat sales at around $4 million annually, said Patrick Dudley, manager of the facility. He said that the restaurant--which is profitable--should be posting annual sales of $5 million or $6 million.

Competitors, meanwhile, are watching closely.

“People don’t go to a restaurant to just sit down and eat anymore,” said Annerose Beech, general manager of The Cannery, a waterfront restaurant in Newport Beach. “They want something different.”

In a bid to improve business, The Cannery started chartering champagne supper cruises a few years ago, Beech said, “And those are booked solid three or four months in advance.”

At the Capistrano Depot in San Juan Capistrano, many lunch and dinner customers carefully book reservations to coincide with train arrivals and departures. Customers simply like to watch trains come and go as they eat, said Peter Tyson, general manager of the 140-seat restaurant.

But Tyson is skeptical of entertainment overkill.

“Just about anything a restaurant can do to enhance the dining experience is good,” Tyson said, “but I can’t accept the notion that the restaurant with best close-up magician in town will have customers standing in line to get in.”