Richard Melman is considered a genius in the restaurant industry. The founder and chairman of Chicago-based Lettuce Entertain You Enterprises Inc. (LEYE) seems incapable of opening a restaurant that fails–despite the fact that 60 percent of all restaurants fold within their first three years. Melman has bucked the odds time after time, opening such Chicago landmarks as R.J. Grunts, Shaw's Crab House, Everest and Tru. He also was the mastermind behind the Corner Bakery Caf?? 1/2 and Maggiano's restaurant chains.

There are a number of reasons for Melman's success. One of the main ones, though, is that he surrounds himself with smart and experienced people. He then elevates the cream of the crop to partnership status and gives them a cut of the profits. One such partner is Bronx-born Jay Stieber, LEYE's general counsel.

It's Stieber's responsibility to handle all of the company's legal issues, negotiate the deals and secure financing for Melman's projects. Stieber, who joined LEYE in 1995, is pretty comfortable with that role, having started out his career as an accountant.

Although Stieber graduated from Northwestern University School of Law in 1972, he spent much of the early part of his career working as CFO for various manufacturing companies in Chicago. Around 1988 he transitioned to the service industry, taking the job of CFO of the Baja Beach Co., a Chicago nightclub business. It was here that he met Melman, who was working on a deal with the club. Melman was so impressed with Stieber that he asked him to join his team as CFO. Within a few week of Stieber joining, Melman realized his new CFO had talents that went far beyond finance. “Besides being a terrific lawyer and CFO, the thing I appreciate most is that Jay is a great strategic thinker,” Melman says.

Q.Richard Melman brought you in as CFO but quickly made you the GC. How did that come about?

A.Soon after I joined, we sold the Maggiano's Group to Brinker International. The person who was heading up the group had been doing a lot of the lease negotiations and working on a lot of deals. He also was working with outside counsel. That lawyer left with the Maggiano's Group, and there was a void in the organization. So I stepped into that void.

Q.How does your financial background help you as a lawyer?

A.It gives me a broader perspective on what I'm doing, and it makes me better able to understand the financial implications of a deal that I'm negotiating. It also enables me to do my job more effectively.

Q.Was it difficult to make the transition into the restaurant business?

A.When I joined I went through the restaurant management-training program. I worked at one of the restaurants for about 14 weeks. I basically worked every position in the restaurant–from busing tables to working in the kitchen. I learned a lot about the Lettuce culture and philosophy.

Q.Which position did you enjoy most?

A.I enjoyed being a server and interacting with the guests.

Q.What is the most complicated deal you've worked on since joining LEYE?

A.The most challenging was putting together a private offering–which involved seven restaurants, all of which were separate legal entities–and creating a structure that worked for the outside investors and our operating people who have ownership in them. So marrying that with seven restaurants was a challenge.

Q.What legal issues are involved in opening a new restaurant?

A.Well, you have to set up the restaurant as a separate legal entity. Then you have to negotiate the lease. We also have licensing and permit issues. Those are the three key parts. If it's a new name or it's a new concept then you've got IP issues.

Q.What is the most challenging part of

your job?

A.It's the sheer volume of work. Some of that has to do with being a small legal department [the department consists of Stieber and his assistant]. All of the issues and legal questions end up on my desk. And there are only so many hours in the day.

Q.What kind of litigation issues do you have to deal with?

A.Not much. Almost all of the litigation issues that we have are slip-and-

fall cases.

Q.Chicago recently banned the sale of foie gras. What's your take on that?

A.We're very opposed to it. Our view is that's really unwarranted government interference in our business. Our guests should be the ones who tell us what to serve and not to serve. I think the city has much bigger issues to deal with than the sale of foie gras. It also is an embarrassment. Chicago is the only world-class city that has such a ban. We're the laughing stock of the world because of it.

Q.What about New York City's ban on trans-fat?

A.That's a little different issue. There's at least a reasonable potential health issue there. As far as I know there is no health issue with foie gras.

Q.I read that LEYE supported a full ban on smoking in Chicago restaurants. Is that true?

A.Not exactly. Our position immediately prior to the resolution was that we didn't care whether there was a smoking ban or not. What we cared about was that the rules were the same for everybody. We didn't want carve outs. Chicago was going to allow smoking in restaurants that had enclosures around the bar space. That proposal would have benefited a select few restaurants. We opposed that sort of legislation.

Q.Are smoking bans hurting the restaurant business?

A.They haven't hurt us at all.

Q.Why is LEYE so successful?

A.We view the dining experience as the sum of the entire experience, so we're very focused on giving value to our customers. And we're always striving to keep the restaurants fresh and to keep changing things and updating them. We talk about trying to change something in each restaurant every week. It can be something as small as the salt and pepper shakers.

Q.You've sold off some of your restaurants in the past. How do you decide what to sell and what to keep?

A.We never start a restaurant with the sole idea of selling it. That's not our mindset. But we have created things that have had appeal to large companies that want to take something national in a big way. That's not what we do. For us, doing eight of one thing is a lot of one thing.

Q.Will LEYE ever go public?

A.I don't think so. We like the freedom and flexibility that being a private company affords us so we can really focus on what's right for the guests. I don't have to worry about standing up in front of analysts every quarter. I don't have to worry how a restaurant that gets delayed by three months is going to hurt my earnings. I don't have to worry about being criticized by Wall Street for doing something that is good for our customers and good for the company in the long term, but is not good for our bottom line.

Q.What is the most important lesson Melman has taught you about business?

A.It's the importance of taking care of the customer. He often will tell us that if you have a decision to make and there's a way to make it more favorable for the guest, then you can't go wrong.

Q.Which LEYE restaurant is your ?? 1/2 favorite?

A.It depends. If I am interested in seafood, I will go to Shaw's. But I think by and large my favorite is Wildfire [a 1940s style dinner club]. There is always something on the menu I like.

Q.Do you eat at LEYE restaurants a lot?

A: I do.

Q.Do you eat for free?

A.I can't tell you.