If it’s not Roger, is it Legal?
That’s the question as Roger Berkowitz, the chief executive and public face of Legal Sea Foods, is poised to sign off as soon as Monday on the the sale of the restaurant business his family started in 1968 to PPX Hospitality Group, owner of Smith & Wollensky steakhouses and three Boston-area Strega restaurants.
The pending deal is the latest chapter in Legal’s local lore: Roger’s family opening the first Legal Sea Foods restaurant in Cambridge, next to the fish market of the same name his father had opened in 1950. The expansion into Boston, the suburbs, and down the Eastern Seaboard to Florida. The feud between Roger and his brother Marc, after Roger took over as CEO. And the comical ads — some groan-inducing, some not-quite suitable for a family restaurant — with the tagline, “If it isn’t fresh, it isn’t Legal!”
It’s a plot twist that Berkowitz had tried hard to avoid but couldn’t, his hand forced by a pandemic that crushed the restaurant industry.
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Financial terms of the sale won’t be disclosed, but PPX isn’t paying much upfront because . . . well, a restaurant business, even New England’s fish ambassador to the world, isn’t worth a premium these days. Instead, Legal will get payouts based on how well the restaurants perform down the road, Berkowitz said in an interview.
PPX will own the rights to the Legal Sea Foods name for the restaurants, including any new ones it may open. But Berkowitz, 68, has no intention of retiring. He’s retaining control of the Legal name for his online business, which sells lobster, shrimp, chowder, and other dishes, as well as for other retail channels. He’s eager to expand what is essentially a startup operation, in a way returning to his first job working at his old man’s Inman Square fish store.
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“I started on the fish counter, cutting fish, going down to the pier, buying fish,” Berkowitz said. “Reconnecting to the fish business is very appealing to me.”
A spokesman for Medford-based PPX declined to comment before the deal was officially wrapped up.
We all know what the coronavirus has done to the restaurant industry. More than 110,000 restaurants — from purveyors of fast food to haute cuisine and everything in-between — have closed since March, according to a survey by the National Restaurant Association. The trade group expects another 10,000 to close over the next three months.
And the restaurant business had been getting tougher for years before COVID-19 entered our vocabulary. Many markets were oversaturated, and labor and rent costs had been climbing for years.
“All restaurateurs were under pressure,” Berkowitz said.
But Berkowitz, who took over from his father, George Berkowitz, in 1992, made clear he wouldn’t be selling if it wasn’t for COVID. Before Massachusetts and other states started shutting down indoor dining in March, Legal was navigating through the rough restaurant waters better than most. It had 33 locations, 3,500 employees, and more than $200 million in annual revenue.
In the early stages of the shutdown, Berkowitz considered finding an investment partner whose money could help him hang on until customers were allowed to come back — and felt safe coming back. But the more he and his investment bankers at Duff & Phelps explored the option, the more questions it raised: How much equity in Legal should Berkowitz give up? Would he be able to buy out his partner once the virus was neutralized and he no longer wanted or needed outside money?
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As the COVID crisis eased, Legal was able to gradually reopen 18 larger restaurants, including on the South Boston and Boston waterfronts, and in Copley Place, Logan Airport, Burlington, and Chestnut Hill. It closed six locations permanently, and was weighing the future of the rest. But with revenue at a fraction of pre-pandemic levels, Berkowitz didn’t know how long he could survive, especially after August, when the $10 million in federal Paycheck Protection Program money he took would run out.
He returned to an idea he had rejected early on: merging with another restaurant operator.
Enter PPX. The company, backed by Irish investment firm Danu Partners, was in expansion mode and saw Legal as a real catch.
Legal Sea Foods is a valuable brand, popular not only with tourists in Boston, but also with families and business customers across its regional footprint. It has a well-deserved reputation for high-quality seafood and a sophisticated wine list. For a chain — Berkowitz bristles at that description and the mass-market mediocrity it implies — Legal punches well above its weight.
“It’s one of those restaurants that everyone has been to, and everyone has something good to say about,” said Gordon Hamersley, a longtime Berkowitz friend whose Hamersley’s Bistro on Tremont Street had been a Boston fixture for years.
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Talks with PPX got serious in October, and news of a possible deal leaked out. Final details were being hashed out last week. The sale includes Legal’s fish processing plant/quality control center/headquarters in South Boston. Berkowitz would receive most of the proceeds from any settlement of the lawsuit he filed in May against Strathmore Insurance Co., which rejected Legal’s business interruption claims stemming from COVID-19.
As Berkowitz came to grips with the necessity of selling the company, he grew excited about ramping up the e-commerce division that he would continue to own. The company has been testing complete meals — beyond the current online lineup of chowder, fish fillets, and crab cakes — that can be shipped to customers using a nitrogen-based flash-freezing process he discovered on a business trip to Tasmania.
“It has been a boutique piece of what we do,” Berkowitz said. “I’ve regretted not focusing more on it. . . . I’m going to do this full time and build this business.”
There’s precedent for such a spinoff in the Berkowitz family.
Seventy years ago, George Berkowitz opened the Legal Sea Foods fish store in Inman Square, where his father, Harry Berkowitz, had started a grocery store in 1904. (Harry Berkowitz named his store Legal Cash Market to signal to customers that he accepted what were called legal cash stamps, precursors to S&H Green Stamps and other so-called trading stamps that were popular from the Great Depression through the 1970s.)
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Near the end of the 1960s, the family diversified again, launching its first restaurant next door to the fish market. There were picnic tables and paper plates. You paid for your order in advance. The fish was either boiled or baked — no blackened swordfish yet.
“It was simple seafood done well. That was the roots,” said Jasper White, who worked as a consultant and then executive chef at Legal after closing his Boston restaurant Jasper’s and before opening Jasper White’s Summer Shack in Alewife.
Asked why Legal has been so successful, chefs White and Hamersley, both James Beard Award winners, cited the company’s dedication to quality and consistency. Legal also trains is employees well and fosters team work and creativity, and is willing to experiment with new menu items and restaurant concepts such as the fast-casual Legal Fish Bowl.
“It’s a serious fish restaurant, but it’s a fun place,” said Ellis Verdi, who has handled Legal’s advertising for the past 15 years.
The fun inspired the work he and his firm, DeVito/Verdi in New York, did for Legal, though sometimes, like Berkowitz himself, the ads may have gone over the top. ”Bite me,” says a spokesfish in a 2008 ad that the T took down from subways and buses, claiming it was objectionable. “We have a term for cold fish,” stated a 2016 ad in the Globe, below a picture of presidential candidate Hillary Clinton. “Sushi.” Berkowitz rejected criticism that the ad was sexist.
In 2011, Berkowitz staged a dinner at the Park Plaza Legal featuring varieties of fish that some environmentalists said had been overfished. His point, he told the Globe that year, was that fisheries needed to be protected but that some regulations went too far, and that Legal used fish only from catches permitted by federal regulators.
PPX’s challenge is to preserve the mix of culinary ambition, quality, consistency, and light-heartedness that made Legal so successful. It will have to do so without Berkowitz and some of his key former lieutenants.
Berkowitz’s challenge? Will enough consumers warm to the idea of buying frozen fish and other meals to heat up in their own kitchens? And will Berkowitz bring the same restless creativity to e-commerce that he did to brick-and-mortar eateries?
In the mid-1980s, Berkowitz attended Harvard Business School’s famed education program for company owners and top executives. He says the program, led by the late HBS professor Martin Marshall, brought him to an important epiphany: Legal isn’t a restaurant company, it’s a fish company.
With the sale to PPX, “The restaurants are leaving the family,” he said. “I don’t look at the fish business leaving the family.”