DOES SCOTT BECK HAVE ANOTHER WINNING RECIPE?
It has been said that one good idea is all it takes to make a fortune. Well, Scott A. Beck has had two. In the mid-1980s, the precocious, press-shy entrepreneur spotted a small movie-rental company called Blockbuster Video and helped turn it into a national chain. Then came Boston Chicken Inc., the hottest initial public offering to hit Wall Street in recent memory. The result is a personal windfall that probably tops an estimated $200 million on paper. Beck's age: 35.
As Boston Chicken's chairman, Beck was the main beneficiary of the chain's mind-blowing IPO in early November. The shares shot to 481 2 from an asking price of 20 on the first day of trading. And though they settled back down to about 391 2 by Dec. 1, Beck's 15.9% stake in the common stock still commanded a princely $122 million in market value. Why all the interest? Investors are counting on Beck and his team of former Blockbuster executives to use rapid expansion and sophisticated information technology to do for chicken what they did for home video.
EARLY START. Beck, who splits his time between a home near Boulder, Colo., and Boston Chicken headquarters in Naperville, Ill., doesn't like to talk about his wealth. He won't reveal his total stake in Blockbuster-he only says it has changed since March, when the company last disclosed it (he won't say by how much). Then, his shares were valued at $75 million. "I'm not interested in publicity," he says. "I'm interested in creating value for shareholders."
The Beck clan has certainly created plenty of value. Scott's father, Lawrence Beck, was one of several tough Chicago and Florida trash haulers who banded together in the 1960s to found Waste Management Inc., now WMX Technologies Inc. Growing up on the Windy City's far South Side, Scott worked summers at the company and spent hours talking business with his father's scrappy partners. While taking a break from Southern Methodist University, Beck moved to London and stayed with then senior Waste Management executive John J. Melk. Melk recalls Beck's inclination toward risk-taking: In London, his young house guest dabbled in silver futures.
Beck graduated from SMU, but not until 1989. Meantime, he became an independent investment adviser selling real estate limited partnerships and a Merrill Lynch & Co. leveraged-buyout fund. While hunting for deals, he came across Blockbuster, a nascent video-store outfit. In 1985, he persuaded his father to invest and, with a client named Jeffry J. Shearer, he launched franchises in Detroit, Chicago, Minneapolis, and Atlanta. By 1987, a Waste Management group led by current Blockbuster Chairman H. Wayne Huizenga bought out the parent. National expansion followed.
In 1989, Blockbuster purchased the Beck group's 104 units for $120 million in stock, and Beck became Blockbuster's vice-chairman and COO. Two years later, former franchise partner and fellow Blockbuster executive Saad J. Nadhir spotted Boston Chicken and enticed Beck with the idea. Beck was cool at first, but over the next year, a partnership including Beck, Nadhir, and Shearer pumped in $27 million to gain control. Former Boston Chicken consultant George D. Rice, who now works for PepsiCo. Inc. unit KFC (Kentucky Fried Chicken), says the talks were like an interrogation: "[Beck] was an arrogant SOB, but he was smart and had money."
Beck hasn't lightened up much, but he doesn't let Boston Chicken impinge on his personal life, either. When Merrill Lynch investment banker Charles A. Lewis was setting up the public offering, he often found calls to Beck rerouted to hiking trails in Colorado, where Beck answered on his cellular phone. Beck emphasizes the company's teamwork approach--Nadhir develops new franchises, and Shearer handles operations. But Lewis says Beck is "the real glue" holding the team together.
Can the new squad meet investor expectations? Boston Chicken roasts its chickens whole on a rotisserie instead of frying separate pieces as traditional chains do. It's a hot niche, but Beck's company is supporting $770 million in market value with just $44 million in estimated 1993 sales. While profits this year should shoot to $2 million from a 1992 loss of $5 million, that still adds up to a lofty price-earnings ratio of 219. Although Wall Street clearly expects heady growth, KFC has launched its own rotisserie product nationwide and already claims to sell more grilled birds than Boston Chicken.
Beck is sanguine. But the day before the offering, he warned his staff against hubris. "I told them this is the starting line, not the finish," he says. Short-sellers on Wall Street would probably agree.Richard A. Melcher in Naperville, with Gail DeGeorge in Miami