Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, January 17, 1995                   TAG: 9501170131
SECTION: BUSINESS                    PAGE: B-6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: NASHVILLE, TENN.                                LENGTH: Medium

PARGO'S AMONG 310 EATERIES BEING SOLD OFF BY SHONEY'S

Money from the sale will be used to reduce company debt and to improve the Shoney's restaurants that make up the company's core business, a company statement said.

Company spokesman Hank Dye said the plan will allow Shoney's to refocus on family dining, the business that made it successful.

Family dining, Dye said, ``is a segment we expect to grow. It's a segment where Shoney's is really strong. On top of that, Shoney's has loyal customers.''

Three top executives were or will be replaced, including chairman and chief executive Taylor Henry, who will retire by the end of 1995. A search for a successor is under way.

Charles E. Porter, who led the growth of Captain D's, was named president. He replaces Jim Arnett, who resigned. Jim Grout, president of the Shoney's restaurant division, also resigned.

Shoney's will sell 310 restaurants this year. These include all Pargo's, Fifth Quarter and Lee's Famous Recipe eateries, and the institutional supplier Mike Rose Foods.

Shoney's will keep 922 Shoney's and 643 Captain D's in 36 states, plus three BarbWires steak houses in Tennessee. It also keeps Commissary, an institutional supplier.

Analyst Mark Miller said returning to the core business is an issue for much of the restaurant industry.

``The question is whether diversifying your portfolio will give you economies of scale in advertising and management,'' said Miller, who follows the industry for First Boston.

``The other question is whether diversifying causes you to lose focus and diminishes your efforts.''

In Shoney's case, too much diversity didn't help, said analyst Greg Salchow, who watches the restaurant industry for Wiley Brothers in Nashville.

``I doubt many customers knew Shoney's also owned [the more upscale] Pargo's or Fifth Quarter,'' he said.

``When you get too diverse, you don't get those economies of scale.''

Also, Salchow said, Shoney's owed too much money. The capital raised by the sale will enable Shoney's to remodel and otherwise improve the restaurants it keeps, the company statement said.

Part of the cash-flow problem stems from Shoney's setting aside $132 million in January 1993 to settle a discrimination lawsuit brought by nine black former employees in northern Florida.