"A house divided cannot stand," declared Abraham Lincoln. But despite his respectable Jewish given name, honest Abe's advice is not carrying much weight these days with one locally famous Hebrew, Marc Katz, founder of Katz's Deli and Bar.
Marc Katz, 54, is suing his son, Barry Katz, 30, over the future of the Katz's restaurants in Austin and Houston. This, in itself, may not be that remarkable. The two restaurants promote themselves as Texas bastions of clichéd New York Jewishness. In Katz's Hebro-Disney version of New York City, voluble restaurateurs dispense giant sandwiches, egg creams and Yiddish-inflected advice from behind the pastrami slicing station, servers are uniformly sassy, and every customer can be cajoled into ordering a slice of cheesecake after their 32-ounce serving of stuffed derma. In this neo-Alan King fantasy world, lawsuits between partners are also a matter of routine. But when the partners are father and son and their television advertising campaign has stressed for years the closeness of the relationship, the cliché takes a bizarre turn.
Marc Katz came to Austin in 1977 with his Texas-born wife and two children, Barry and daughter Andrea. According to stories in the Austin American-Statesman, he became the top-producing salesman at the McMorris Ford dealership by accosting people stopped at the traffic light in front of the dealership and telling them a customer had recently come in looking for a specific used car, a vehicle that exactly matched the one the driver was sitting in. People bought the story -- this is Austin in the 1970s, after all -- and pulled into the dealership to surrender their used car for a nice new Pinto and a thick booklet of monthly payment coupons.
Two blocks away was an old brick building that had been a diner called Caruso's, then the Sixth Street Trolley and then the San Francisco Bay Club in the two years Katz worked at the Ford dealership. In 1979, Katz and a partner, Abe Zimmerman, raised the money to open Katz's there. Austin finally had a place where one could indulge in what Jason Alexander's character on Seinfeld referred to as "the most sensuous of the salted meats," pastrami.
Why not call the place Zimmerman's? Katz claims it was to save money on the signage, but it may have had something to do with the fact that Manhattan's oldest existing deli, though completely unrelated to Marc Katz, is also called Katz's. The Austin restaurant originally operated from 11 a.m. until 4 p.m., but after a few years, it became a 24-hour spot. Whether this change was in any way related to Katz's admitted decade-long drug binge is not public knowledge, but if it is, Austinites can point to at least one civic improvement inspired by substance abuse.
"I had 100 percent of the stock," Marc Katz says of the Austin deli, "and over a period of several years, I gifted my son, Barry, with 49 percent." The transfer began in 1996, when Barry returned from studies at the Culinary Institute of America and the restaurant management program at Florida International University. A television commercial that year showed Marc handing over the keys to the business to his son. In October 2000, Barry Katz opened Katz's in Houston. Katz senior's lawsuit alleges that Barry used the Austin restaurant to obtain a $1 million loan, which was then lent to the Houston enterprise at 0 percent interest for 20 years. (Barry is the sole owner of the Houston operation, despite the frequent television ads featuring Marc.) Marc Katz says he filed suit after "several years of attempting to get at the financials" of the two restaurants. The father is asking that a judge order the Austin restaurant to be sold.
Barry emphatically denies all charges, of course. "The lawsuit was a complete surprise," he says. "Marc oversaw the transition. He signed off on everything." Barry also denies that the loan to the Houston restaurant was at 0 percent interest. "The loans are not at 0 percent, they're at 11 percent," he says. "I know because I pay it every month. They will cost $2.5 million to repay over 20 years."
Why is his father asking for the sale of the Austin restaurant? "I'm not sure what the point of the lawsuit is," Barry replies. "I have offered to buy out Marc's share of the Austin restaurant for three times its market value."
But for all the he said/he said, it's clear that both men are having a hard time with the family fight. "I still have affection for my dad," says Barry. "Feelings of ambivalence are natural, first in turning over a business to someone else, then additionally to someone younger."
Marc says, "This is the most difficult thing I have ever done."
If you like this story, consider signing up for our email newsletters.
SHOW ME HOW
You have successfully signed up for your selected newsletter(s) - please keep an eye on your mailbox, we're movin' in!
When asked if some venue other than a courtroom could be used to settle the dispute, Marc says, "We had a mediation scheduled for next week, but he wouldn't return my attorney's telephone calls, so it was canceled."
Commercials are still running on Houston stations showing both Marc and Barry at the restaurant. "They're still going to run," Marc declares. "Katz's never closes!"
No trial date has been set for what Barry has dubbed "Deli-Gate."
"The story isn't over," he says. Then he echoes his father's famous slogan, "Neither [restaurant] will close."