Rescuing the Automat

"Horn & Hardart is a bit of Americana, isn't it? I suppose anyone who ever visited New York City wanted to go to Horn & Hardart to put nickels, dimes and more lately quarters in the Automat windows."

--Horn & Hardart President Frederick H. Guterman Nostalgia, however, is hardly the recipe for a successful business--as no one knows better than Guterman. A year ago, he was hired to rescue the chain of 32 New York-area restaurants from a deep slump that caused it to lose $15 million in 1971 and 1972. Guterman, 52, has no background in the food business; he spent 13 years at ITT as an executive in the aerospace, electro-optical and industrial-products divisions.

But he is an expert in the hard sell who quickly realized that the company's 21 barnlike Automats and cafeterias were out of step with the times (the first was opened in 1904) and had often become a refuge for derelicts seeking a cheap, hot meal and oldsters wanting to drowse away an afternoon over coffee, cake and the newspaper. Guterman has jazzed up the operation with everything from rock concerts to waitresses on roller skates, and his approach so far has worked. The company, whose annual sales in 1972 totaled $16.9 million, last week reported a first-quarter operating profit of $73,970, its first black-ink figure in five years.

Guterman's main attempt so far has been to create a circus atmosphere. At lunch in Horn & Hardart's branch at Eighth Avenue and 58th Street in Manhattan, customers stand three deep to eat at a new "Burger in the Park" counter, complete with plastic-flower-lined paths, AstroTurf and cut-out clouds. At other outlets, rock concerts draw young late-night customers despite fear of muggings. A double-decker Horn & Hardart bus tours Manhattan free, stopping at such favorite tourist spots as the U.N. and the Empire State Building--as well as at 17 Horn & Hardarts. Meanwhile, Guterman has not neglected his older customers. At a Lexington Avenue branch, senior citizens can enjoy a five-course meal for only $1.25, topped off with an hour of bingo or Parcheesi.

At the Broadway and 46th Street Automat, an aging ex-vaudevillian named Edna Thayer belts out tunes like Don't Dunk a Doughnut Unless You Know How to Dunk.

Eagle Eye. The show-biz tricks are buying time for a more fundamental reorganization. Guterman has cut costs by keeping an eagle eye on such things as how many ounces of peas or slices of beef a cafeteria counterman doles out, though he has continued the company's policy of having its executives sample the food regularly to maintain quality.

More important, he is using the company's real estate holdings--appraised at $15 million--for diversification. Horn & Hardart recently sold a block-sized commissary for $4,000,000 and used the money to help buy Hanover House Industries, a $17 million-a-year mail-order business. Guterman also is talking joint hotel-restaurant ventures with a big motel builder. The vaudeville aura seems to have carried him away, however; he has approached Soviet authorities with the idea of opening an Automat in Moscow. "Can you imagine the excitement that would provoke?" he beams.

Especially, no doubt, with dancing bears and a borsch bar.

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