Old Spaghetti Factory International Inc.

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Old Spaghetti Factory International Inc.

0715 SW Bancroft
Portland, Oregon 97201
U.S.A.
(503) 225-0433
Fax: (503) 226-6214

Private Company
Incorporated: 1969
Employees: 4,200
Sales: $90 million (1998 est.)

SICs: 5812 Eating Places

Old Spaghetti Factory International Inc. (OSF) was founded in 1969 and has grown into an international restaurant company serving more than 10 million customers annually.

Humble Origins

January 10, 1969 marked the grand opening of the first Old Spaghetti Factory restaurant in Portland, Oregon. Founders Guss and Sally Dussin leased an old warehouse in a run-down part of his hometown of Portland and braved the rain in order to greet the few customers who wandered in that night. The night’s receipts totaled $171.80 and many of the Dussins’friends and food-industry colleagues thought their restaurant would never make it. They were wrong. A week later, one night’s receipts totaled $900 and by the end of the first year, the restaurant had served over 200,000 people and reached revenue of $400,000. The following year, the Dussins opened two more restaurants and sales jumped to $1.3 million. This promising track record has continued for decades—and in an industry where most companies rarely make it to their seventh anniversary, celebrating nearly 30 years of success is an achievement worth noticing.

The “Old Spaghetti Factory” name was originally trademarked by The Old Spaghetti Factory Cafe and Excelsior Coffee House in the North Beach area of San Francisco. The Dussins purchased the rights to the name, but there has never been a connection between their company, doing business as The Old Spaghetti Factory, and the restaurant in San Francisco, which closed in February 1983.

Prior to founding The Old Spaghetti Factory, Dussin, born in 1925, graduated from the University of Michigan in 1945 with a B.S. in Physics, was commissioned as an ensign in the U.S. Navy Reserve, and saw active duty in the latter part of World War II and in the Korean War. He retired from the Active Naval Reserve in 1965 as a Lieutenant Commander with 22 years of service. He joined his father in the family restaurant business in 1947. Between 1955 and 1970, Dussin added four more restaurants to the family’s restaurant group before founding OSF with his wife, Sally. As the OSF chain grew, Dussin sold off the original five restaurants in order to concentrate on the new restaurant company.

Formula for Success

The company’s formula for success has been the result of smart thinking, smarter operating instincts, and uncanny devotion to customer value. Dussin, who is known to roll up his sleeves and help out in the kitchen from time-to-time, has been actively involved in the restaurant chain’s growth from day one. His belief that a memorable dining experience does not need to cost a lot of money has kept the company growing. The company’s principal menu items are spaghetti dinners and other pasta-based specialty items such as spinach and cheese ravioli, spinach tortellini with alfredo sauce, fettucine alfredo, baked lasagna, macaroni and cheese, and penne with fresh vegetables. Other specialty meals include oven baked chicken, breast of chicken fettucine, chicken parmigiana, chicken marsala, shrimp primavera, and seafood fettucine. Each entree comes complete with green salad and a choice of many salad dressings (Italian, creamy pesto, blue cheese, 1,000 Island, or fat-free honey mustard) or soup (minestrone, chicken with orzo, cream of broccoli, chicken mulligatawny, or New England clam chowder), a whole loaf of bread with butter and/or garlic butter, a beverage (freshly ground coffee, hot tea, iced tea, soda, or milk) and a dessert of either spumoni or ice cream, with complimentary refills on the bread and beverages. Other specialty items include Italian cream sodas, mud pie desserts, a wine and beer list, mixed drinks from a full bar, toasted garlic bread parmigiana with three cheeses and marinara sauce. The lunch menu includes sausage sandwiches, meatball sandwiches, turkey & Swiss cheese sandwiches, eggplant parmigiana, and ham and Swiss cheese sandwiches in addition to smaller portions of the dinner menu. The average price of $7.25 per person for dinner and $5.75 for lunch has brought over ten million customers through Old Spaghetti Factory restaurant doors annually. Nearly everything on the menu is made on-site, from scratch, using fresh ingredients. By focusing on the complete meal, OSF has simplified the concept of dining value.

Another factor in the company’s success is real estate. Dussin was the pioneer of the concept of developing restaurant properties in places other companies considered unworkable. Old Spaghetti Factory restaurants are usually located in 12,000-to 14,000-square-foot structures which are either historic buildings or unique and distinctive, usually found in older warehouse districts where rent is low. The buildings usually have brick walls and extensive woodwork. One of the Riverside, California restaurants, for example, is located in an old orange packing and loading building situated next to a railroad track. The company did extensive research in the “Citrus Collection” at the University of California, Riverside’s Library in the Special Collections Department, studying pictures of the building, reading its history, and consulting with Clifford Wurfel, the collection’s curator at that time, prior to beginning restoration on the building to return it to its former glory. One of the San Diego, California restaurants is a restored building in that city’s historic gas lamp district. The Phoenix, Arizona-based restaurant was opened in 1971 in the Roosevelt Historic District, which was developed between 1875 to 1930.

In addition to the uniqueness of Old Spaghetti Factory restaurant locations, the restaurants are known for their unusual decor. Each restaurant, which seats approximately 350 to 400 patrons, is filled with antiques from around the world. These antiques surround the centerpiece, a vintage trolley car, which has been refitted for meal seating. The first Old Spaghetti Factory restaurant was furnished by Dussin’s wife, Sally, from garage sales and whatever she could find that was inexpensive. In 1997, the company was investing close to $1 million per restaurant in antiques and brass headboards and maintaining a 25,000-square-foot warehouse and crew of craftspeople who restored antiques and created reproductions for the restaurants.

The company is also known for sound financial management and solid cost controls in all of its operations, especially food. The company trains its employees to be very efficient in the kitchen, wasting as little food as possible. The less waste, the less overhead, the lower the price of a meal for its customers. The Old Spaghetti Factory management team has remained steady as well. Most of the core management team has been with the company since its inception, adding to the company’s continuity and consistency. The company does actively recruit on college campuses for new managers and puts recruits through an intensive 14-week training program. Each restaurant employs between 90 and 180 employees and three to six managers.

Franchise Expansion During the 1990s

Dussin has acted as an advisor to some of his in-laws in opening Old Spaghetti Factories in Canada, but there is no business connection between Dussin’s Old Spaghetti Factory International Inc. and the Canadian restaurants. However, knowing that a company’s consistency must be mixed with dynamics to stay afloat, the company allowed franchises to be opened up. Franchises were granted to Guss Dussin’s sister Georgia Dariotis, who, with her husband Mike, owns the California restaurants located in Sacramento, Rancho Cordova, Concord, and Roseville; to another Dussin family member, Alice Pulos, who owns the Phoenix, Arizona restaurant and to son Chris Dussin, who owns the Fullerton, California restaurant. Alice Pulos and her ex-husband Mike opened a second restaurant near Arizona State University in Tempe, Arizona, and a third in Scottsdale, Arizona, but after their divorce in the late 1990s, they split the difference: she kept the Phoenix unit and remained part of the OSF International company, the Tempe unit was given to her ex-husband and the name was changed to The Spaghetti Company, and the Scottsdale restaurant was closed. Chitaka Foods International was granted a franchise in 1980 to open and operate an Old Spaghetti Factory restaurant in Nagoya, Japan, the first of ten total to be opened in that country. The other nine are from a similar agreement in force with OSF Japan Ltd., which by 1997 owned and operated seven OSF restaurants and sub-franchised two more and which would be OSF International’s primary franchisee in Japan in the future. OSF International was studying other countries for possible expansion. The U.S. portion of the restaurant chain, meanwhile, grew to 35 restaurants by 1997, located in Washington, Oregon, California, Hawaii, Arizona, Utah, Colorado, Missouri, Indiana, Ohio, Kentucky, Tennessee, Virginia, and Georgia.

Company Perspectives

For more than a generation, families and friends have been going to The Old Spaghetti Factory to enjoy its delicious food, charming atmosphere and friendly service. The company invites patrons to dine amidst old world antiques collected from around the world, while savoring perfectly cooked pasta and spaghetti sauces, freshly made using only the finest ingredients. The company is dedicated to providing a relaxing, enjoyable, memorable and satisfying dining experience in warm surroundings that will not cost a lot of money.

In 1997, Dussin turned over day-to-day operations to his son Chris Dussin and son-in-law David Cook, both of whom have been active in management for many years. True to OSF’s beginnings, new menu items were carefully being added and food preparation was always being studied for ways to improve the speed of service without compromising quality. New locations continued to be developed in suburban markets, with a distinctive building design that reflected the company’s penchant for downtown warehouse restaurants.