Boston Chicken Leaders More Retail Than Restaurant : Fast food: Investors, lured by company executives’ proven business acumen, snapped up stock. Karcher Enterprises grabbed the local franchise.

He ain’t the Colonel.

Scott A. Beck, chairman of Boston Chicken Inc., is 35, small, wiry and curt, with piercing hazel eyes. He talks of product, not poultry. He calls his restaurants stores.

“We’re in the multiunit retail business,” Beck said. “We consider it far more specialty retail than we do restaurant.”

Boston Chicken’s plump, rotisserie-roasted birds and home-style side dishes may be the most comforting fast food around. But in an industry long on warm, fuzzy characters like KFC’s bearded gentleman and Wendy’s Dave Thomas, Beck is a fowl of another feather: a businessman in the purest, prickliest sense.

That’s fine with the investors who snapped up Boston Chicken stock in a wildly successful initial public offering in November. They weren’t buying folksy charm.

They were betting on Beck and his two main partners, vice chairmen Saad J. Nadhir and Jeffry J. Shearer, to repeat the spectacular success they had as franchisees and later executives of Blockbuster Entertainment Inc., the ubiquitous video store chain.

“In all my years in the business, I’ve never seen any (initial public offering) that came close to the frenzy created by this one,” said Merrill Lynch & Co. investment banker Charles Lewis, who set up the stock offering and invested in the company.

Its appeal, he said, “was a combination of a very strong concept that was easy to understand . . . and the unbelievably strong pedigree of the management.”

On the day it went public, Boston Chicken’s over-the-counter stock, initially offered at $20 a share, rocketed to more than $50. It has since ranged from about $37 to $45.

The stock price reflects investors’ faith in Beck, his partners and their Midas touch. Boston Chicken had just 175 franchised and company-owned stores when it went public, concentrated mainly in Boston, New York, Chicago and Detroit. It had yet to earn an annual profit.

That lack of a track record didn’t bother Carl Karcher Enterprises, which in January paid an undisclosed price to acquire the franchise to build as many as 300 Boston Chicken stores in Southern California and Sacramento. Boston Chicken said it was attracted to Karcher Enterprises by the Anaheim-based company’s prime real estate.

Karcher Enterprises on Monday said it would create a holding company to house its Boston Chicken and Carl’s Jr. restaurant locations. Karcher Enterprises previously said it would convert some of its 649 Carl’s Jr. restaurants to the Boston Chicken concept.

The chain has since grown to about 250 stores. It sold $154 million worth of food last year and earned $1.6 million, compared with a loss of $8.3 million in 1992.

It envisions 450 outlets by the end of this year and at least 1,500 by the year 2000. Executives ultimately foresee a chain of 3,000 U.S. stores reaching for the same broad market as Blockbuster.

KFC, formerly known as Kentucky Fried Chicken, a Pepsico Inc. subsidiary with 5,000 U.S. outlets, has responded to the Boston Chicken threat by adding and heavily promoting its own rotisserie chicken and home-style side dishes like corn bread, baked beans, and macaroni and cheese.

Rotisserie chicken’s appeal is obvious: It tastes good, it’s relatively cheap and it’s perceived to be lower in fat than other fast foods, although nutritionists warn that if you eat the skin, a half-chicken meal at Boston Chicken is as fatty as a Big Mac, large fries and a chocolate shake.

“Chicken is in a growth mode as a primary protein,” Beck said in an interview at Boston Chicken’s leased headquarters in the Chicago suburb of Naperville. The company will move its offices this summer to Denver, closer to Beck’s home in Boulder, Colo.

He sees the same potential for roasted chicken that he saw in video rental in 1985, when he and his father, Lawrence, made a large investment in Blockbuster Entertainment, then called Blockbuster Video, shortly after it opened its first store. Lawrence Beck had grown wealthy as a co-founder of the large waste-handling firm WMX Technologies Inc., formerly Waste Management Inc., based in suburban Chicago.

Beck and Shearer, a 14-year veteran of the restaurant industry, established the first Blockbuster franchise in 1986. Nadhir, a lawyer, joined the group in 1988 when the franchise bought his family’s Detroit video chain, MovieMax Video.

All became corporate officers of Miami-based Blockbuster Entertainment when it bought their $100-million business in 1989.

Nadhir encountered Boston Chicken in 1991 when his brother was considering buying a franchise in what was then a chain of fewer than 20 stores based in Newton, Mass. Nadhir was asked to evaluate the company and was struck by the number of customers buying large orders to go.

“When we asked customers, ‘What would you have done if you hadn’t come here?’ we found a lot of them telling us they would have cooked at home--much more so than you would typically have found in the food service industry,” Nadhir said. “That indicated that possibly there was a new category here, a new market segment that was untapped.”

He realized Boston Chicken attracted dollars that would otherwise be spent at grocery stores, a much bigger pie than the fast-food market alone.

That was the idea Arthur Cores and Steven Kolow had when they co-founded Boston Chicken in 1985. They still own the original store in Newton and are investors in Boston Chicken Inc.

“In the beginning, people would come to our store, purchase the food, take it home, put it on their china, and wouldn’t even tell their guests,” Cores said.

Beck said he initially didn’t share Nadhir’s enthusiasm for Boston Chicken because the chain lacked a uniform approach to store operations. “I’m very systems-oriented,” he said.

Shearer recoiled from the thought of re-entering the restaurant business: “The 2 a.m. closings, the throwing drunks out the front door.” He reconsidered when he saw Boston Chicken’s deli-like stores.

So they and some associates formed a partnership that acquired control of Boston Chicken in the spring of 1992 through a series of investments.

Beck, Nadhir, Shearer and other managers have put $38 million to $40 million of their own money into Boston Chicken. Together they own more than 30% of its stock, with Beck holding the most at 16.2%.

Associates say Beck, with his financial acumen and talent for analyzing and refining business systems, is the group’s natural leader. But Beck insists they’re a team, constantly trading duties to meet changing needs.

His nickname for the disarming Nadhir, a skillful negotiator, is Stealth. “He’s able to zoom in below the radar,” Beck said. “He’s just so darned effective and he makes such a little fuss coming and going.”

Shearer, tall and garrulous, brings a deep knowledge of restaurant operations. He recruited several of the early franchisees, whom he knew from his years with S&A; Restaurant Corp., builder of the Bennigan’s and Steak & Ale chains.

Boston Chicken has done everything right so far but it will be tested by the increasing competition from other chains and supermarkets offering rotisserie chicken, said Ron Paul, president of Technomic Inc., a Chicago-based food service consulting firm.

“I don’t see where they’ve made any fundamental error at this point in time,” he said. “I think they’re well-positioned to succeed.”