Six-foot-two Larry Lundy has been in his share of fights.
As a teenager, he played guard on his high school football team. In 1999, he beat leukemia. In 2001, he declared bankruptcy, but emerged again in 2004. One year later, he clawed back from the ravages of Hurricane Katrina. And last year, he began a trying battle against prostate cancer.
The question now facing Lundy, south Louisiana’s Pizza Hut magnate, is this: Can the man who once was America’s richest black restaurateur win a war against the world’s largest restaurant company?
Lundy, a New Orleans native who now makes his home in Baton Rouge, is engaged in a nasty legal battle with Louisville, Ky.-based Yum! Brands, the owner of Pizza Hut, over the fate of his 44 locations stretching from New Roads to New Orleans. Nine of them are in Baton Rouge; 16 are located in the Capital Region.
Pizza Hut claims Lundy and his company, Lundy Enterprises, have failed to pay royalties and advertising and other fees, and wants to shut him down. Yum! Brands, which also owns A&W Restaurants, KFC Corporation, Long John Silver’s, Taco Bell Corp. and WingStreet, has announced plans to spend $10 million over the next 18 months to develop and build state-of-the-art Pizza Huts in the market.
But the man Franchise Times once dubbed “unsinkable” isn’t going down without a fight. He fired back last week with a countersuit, accusing the fast-food giant of reneging on an $8 million arbitration award to buy him out.
“It’s been tough for him,” says William Rouselle, who is a longtime Lundy friend and public relations representative. “But anybody who has overcome leukemia, and gone through bankruptcy and made his way out—I don’t put anything past him. I truly don’t.”
Rise to the top
Numerous efforts to interview Lundy were unsuccessful. Through a spokesman, he says his attorneys have advised him against speaking to reporters. But he did release a two-page statement, filled with a history of his business.
Lundy was born into a large family in New Orleans’ Lower Ninth Ward. It was Lundy’s father, a pastor who owned real estate and a gas station, who inspired him to become an entrepreneur.
His eight siblings, all of whom grew up working in their father’s gas station, have gone on to professional success as an elementary school teacher, an accountant, an emergency room nurse, two psychiatric counselors and two corporate executives. His brother Harold is the former president of Grambling State University.
Lundy graduated with an accounting degree from Dillard University, moved to California and worked in the audit departments of two Big Eight firms. He then worked for ARA Services in Los Angeles; during that time, he also earned an MBA from Pepperdine University.
Ronnie Burns, president and CEO of BMG Enterprises in New Orleans, which operates Quick Courier Services, Global Parking Systems and Burns Management Group, has known Lundy since college. Lundy was two years ahead of Burns.
“Larry and his brother Harold taught the accounting lab, which I thought was amazing,” Burns says. “They were very, very smart guys.”
Lundy was heavily recruited in the early 1980s by PepsiCo, which at the time owned Wichita, Kan.-based Pizza Hut. In a matter of months, he was promoted to vice president of development and became the highest-ranking black in a national restaurant chain. While there, he supervised the opening of 1,500 Pizza Hut locations. At one point, Lundy hosted several top PepsiCo executives at the Bayou Classic football game between instate Southwestern Athletic Conference rivals Southern University and Grambling to immerse them in black culture.
It was Pizza Hut that convinced Lundy to become a franchisee. At the age of 42, Lundy told Franchise Times that he was ready to retire. He thought his stock portfolio could support him, his wife Marilyn and their three children comfortably.
Then-Pizza Hut President Steven Reinemund convinced him to open a chain of the company’s restaurants in New Orleans. At the time, PepsiCo had no minority franchisees and was making a conscious effort to recruit them.
Reinemund, who now is dean of the Schools of Business at Wake Forest University in Winston-Salem, N.C., declined through his assistant to be interviewed for this story. But he told Nation’s Restaurant News in 1997 that Lundy “had great financial management skills. He knew how to motivate people, he had good common sense and he knew how to have fun. He was a class guy with real talent and a good heart and integrity.”
In 1992, according to Franchise Times, Lundy used his PepsiCo stock options as a down payment on 31 corporate-owned Pizza Hut franchises, valued at $15 million. He had an aggressive five-year plan to double the size of the business at a rate of 20% annually. At one point, he operated 67 restaurants with more than 1,200 employees.
Around that time, Rouselle was introduced to Lundy through Liberty Bank & Trust President and CEO Alden McDonald at a hotel in Metairie. Rouselle says Lundy was not only focused on being a success in business, but wanted to be a “giving, caring corporate citizen” to the New Orleans community. McDonald did not return a call seeking comment.
Lundy’s philanthropy became legendary. When the city of New Orleans asked him to adopt a playground, he adopted six, paying for renovations, lawn maintenance, scoreboards and equipment.
He bought 13 lawn mowers for the New Orleans Recreation Department and a computer system for the planetarium. He bought uniforms for countless children’s sports teams and regularly sponsored youth events. He purchased uniforms, nametags and bulletproof vests for several police departments, including that of New Orleans.
Even as he struggled to get his own businesses up and running after Hurricane Katrina, he paid to have his New Orleans East office building renovated and remodeled for use as the NOPD’s 7th District headquarters. The department remains there today.
“Lundy Enterprises was a big player,” Burns says. “His company donated a lot of money to a lot of different causes. I think Larry lived by the adage, ‘To whom much is given, much is expected.’ Larry came from a big family, he grew up in the inner city, he saw the needs of the city and he just fundamentally believed in giving back.”
The problems begin
Lundy’s financial difficulties date to 1999, when he was diagnosed with chronic myelogenous leukemia and began years of treatment at M.D. Anderson Cancer Center in Houston.
A medication called Gleevec helped keep the disease at bay. But without Lundy at the helm, his business was ailing. Franchise Times reports that four of Lundy’s brothers left their positions to help him out. In 2001, Lundy Enterprises declared Chapter 11 bankruptcy.
Lundy was emerging from debt and was again becoming profitable when Hurricane Katrina struck southeast Louisiana. Lundy’s corporate headquarters and 38 stores were damaged. Nine stores remain closed today, and a battle with the insurance company wasn’t resolved until last March.
Lundy’s home was severely damaged as well, so the couple moved to Baton Rouge but put the insurance settlement into the business. The restaurateur was set on reopening.
With the help of MarshallMorgan, a Dallas financial firm, Lundy continued to restructure the company. By most public appearances, it seemed Lundy Enterprises was again on its way to recovery. In February 2008, Franchise Times hailed him as “The unsinkable Larry Lundy,” profiling his climb back to the top. MarshallMorgan President Larry Simmons declined to comment for this story, citing a confidentiality agreement with Lundy.
But Rouselle says Lundy has experienced “a real difficult period since the storm. He’s had to battle through having lost potential income, maintain his employee base and continue to operate.”
Then last year, Lundy’s health took another turn. He was diagnosed with prostate cancer, for which he is also now being treated at M.D. Anderson.
In July, signs emerged that Lundy Enterprises again was in trouble. Pizza Hut and Lundy Enterprises began mediation over what Pizza Hut terms a breach of contract. The company says Lundy has failed to pay timely royalties, advertising fees and other expenses. At the time, they agreed to negotiate Pizza Hut’s buyback of the franchise.
In December, the two sides appeared to have reached an agreement in which Pizza Hut would spend $8 million to purchase Lundy’s assets. But in January, Pizza Hut terminated the arrangement, saying the liens and claims against Lundy’s franchise were more than the properties were worth. Instead, the company filed a lawsuit, insisting the restaurateur stop operating as Pizza Hut.
In a prepared statement, Lundy says he was devastated by the news. “Given the long history I have with this company going all the way back to the early 1980s,” he says, “my family and I felt like we were blindsided by a Mack truck.”
In his own lawsuit filed last week, Lundy alleges Pizza Hut’s move to force him out was “premeditated” and “timed to hit when he was most vulnerable.” According to the allegations in his complaint, Pizza Hut purposely hampered Lundy’s comeback and delayed the buyout and arbitration process so it could force him out and formalize its plan to redevelop the market without him.
WVUE-TV, New Orleans’ Fox affiliate, also has reported that some employees now out of work were unable to cash their final paychecks because of insufficient funds in the Lundy Enterprises account. But in his statement, Lundy says he personally paid his employees their full and final paychecks on time at a cost of several hundred thousand dollars.
“We didn’t make any money for the two weeks my people were owed for, but it didn’t matter,” Lundy says. “I owed them this.”
Those who know Lundy best say they aren’t counting him out. Burns says Dillard University plans to honor him in March with a Champion of the American Dream Award for his success in business and his corporate citizenship.
“I don’t know all the details of what’s going on, but the Larry I know is a fighter; he’s a survivor,” Burns says. “He is a very smart man. I think he’s the same guy he was at Dillard University, and the same CEO he’s always been. He’s a good man.”
