The Palm Restaurant Group has been run as a partnership between the founding Bozzi and Ganzi families for 86 years. As the third-generation leaders contemplate retirement, they must grapple with succession questions.

In Manhattan's Turtle Bay neighborhood, at Second Avenue and East 45th Street, proudly stands Palm, the flagship restaurant of an iconic chain that has become synonymous with expense-account dinners and bread breaking by local power brokers. Its logo features a tropical font, with the "L" in Palm shaped like a tree trunk and sprouting leaves at the top.

Of course, palm trees aren't indigenous to New York City. But Palm wasn't supposed to be called Palm.

In 1926, Italian immigrants John Ganzi and Pio Bozzi opened the place and chose to name it after their hometown, Parma. According to family lore, when they went to register the name at a city office, their accents confused the clerk; instead of La Parma, he issued a license for the Palm.

Though its name may have sprung from a misunderstanding, the Palm Restaurant Group is an unequivocal success. Now 86 years old, the enterprise includes 28 restaurants in three countries and is in its third generation of co-ownership by the Ganzi and Bozzi families. The founders' grandsons, Wally Ganzi and Bruce Bozzi Sr., credit their predecessors' uncommon understanding and tight-knit relationships as the models for trust and respect that they follow to this day.

"Bruce and I have known each other our whole lives. Our grandfathers set the stage for this thing," Ganzi says. "They were friends before they went in business. There's no guarantee that you'll remain friends in business. But what Bruce and I saw was an incredibly mutual respect."

"The reason most companies don't last past the first generation is that husbands and wives get involved," offers Bozzi. "Little petty things become major things, and before you know it two people who had been good friends are now fighting with each other. That never happened with our company. We've never allowed somebody else to influence our relationship and how we go about running our business. That's proved to be very effective for us."

While the partners' easygoing and trustworthy rapport has allowed for effective decision making and a sharp focus on what's best for the business, it has had one drawback. Despite their ages-Ganzi is 69, Bozzi 72-they have begun discussing succession only recently. Only one fourth-generation member is currently involved in the business: Bruce Bozzi Jr., 46, the company's executive vice president.

The younger Bozzi says his father and Ganzi are "at that moment in life when they know [succession planning] is what needs to be done.... I think they're trying to figure that out, to be honest with you."

Palm's second generation-Walter Ganzi and Bruno Bozzi-took the reins in the 1940s. Their sons, Wally Ganzi and Bruce Bozzi Sr., began working at the restaurant in the '60s; by the end of the decade, Walter and Bruno would be retired.

Wally and Bruce Sr. began Palm's geographic expansion in 1972, when they opened a restaurant in Washington, D.C. A year later, they debuted Palm Too just across Second Avenue from the original location to handle the overflow Manhattan crowd. A West Hollywood store followed two years after that, adding celebrity luster to the company's growing reputation.

Each man is a co-chairman of the Palm Restaurant Group, and each owns an equal 45% stake in the business; the remaining 10% is owned by a London-based silent investor whom Palm declined to identify. Wally Ganzi is considered Palm's visionary; Bozzi is the more analytical partner, company insiders say.

In addition to Ganzi and Bozzi, the seven-member board includes Victor Ganzi, Wally's brother and a former CEO of Hearst; Jim Longo, Palm's chief financial officer; Jeff Phillips, the chief operating officer; John T. Bettin, the president and chief executive officer; and Bruce Bozzi Jr.

While the non-owning board members provide input, it is Wally Ganzi and Bozzi Sr. who have the final say. They handpicked the other board members, Ganzi says, and a condition of their membership was the submission of a signed letter of resignation that the co-owners can use at any time. Keeping the decision making in his and Bozzi's hands, he adds, has been beneficial.

"We respect each other, and if we're really at the opposite ends of things, there's no tiebreaker," Ganzi says. "If I really don't want to do something, Bruce can't force me, I can't force him. But that hasn't happened in 50 years."

Palm's tightly controlled decision-making process has paid handsome dividends for 86 years, but current challenges facing the company are numerous and substantial. With succession far from settled, Palm faces a very interesting and open future.

For one thing, the last couple of decades have seen an increase in the number of high-end steakhouses with a national presence. While the Palm once stood almost alone, it now competes with a bevy of relative newcomers-the 46-location Capital Grille, the 70-location Morton's, the nine-location Smith & Wollensky and others-as well as such longstanding chains as Ruth's Chris (130 restaurants).

For another, the global financial crisis compelled corporate America to cut back on business travel and to examine expense reports more closely. Restaurants like Palm, where people often eat on the company dime, have had to adjust.

"The margins have just shrunk," says Ganzi. "It's become a more sophisticated, more different business than it used to be. You only used to care about serving really good food and making customers happy. Now there are so many dimensions to the business."

According to Ganzi, the company has taken several steps to respond to the changing marketplace. Despite rising beef prices, it has held the line on its steaks; the highest steak price is just under $50. It instituted a loyalty program, known as the 837 Club, named after the original location's New York address (837 Second Avenue), that has gone on to represent more than 40% of business. It halted expansion; no new Palms have opened in the last four years.

The chain has turned to Bruce Bozzi Jr. to serve as Palm's public face in an effort to remind customers of Palm's roots as a family-owned and -operated business. The charismatic Bozzi Jr. is a former actor (according to the entertainment website IMDB.com, he played an F-18 pilot in the 1992 film Under Siege) who cooks shrimp for Al Roker on the Today show, tweets up a storm as @PalmStkMan, and hangs out with best pal Andy Cohen of the Bravo cable network.

"We have an opportunity to tell our story by positioning me as the face to get out there so people go, Yeah, it's a cool story," the younger Bozzi says. "We're really trying to stay in touch with what's relevant to new customers to keep growing." He also directs the company's marketing, culinary and human resources staff and visits various Palm locations to ensure quality control.

Sales in 2011 rose 10%, says Ganzi, but despite that success during tough times, significant changes could still happen.

"We have been exploring the possibility of maybe merging with another company, an up-and-coming company, where the fit would be really good," he says. Additionally, "we have been approached by equity people who would like to buy a chunk.... I'm looking at all kinds of options, just listening. We don't want to sell; we still love our business. But Bruce and I thought it might be nice to put a few dollars in the bank."

Bozzi Sr. asserts that that a firm commitment to consistency has helped Palm weather the storm of the last few years.

"Every time the competition has gotten keen, we've just tried to stay true to ourselves," he says. "Improve things that can be improved and don't lose our identity and our brand. We are who we are, and people, I think, respect that.... It's a very honest restaurant. When you come in and you put down your dollar, when you walk out I like to think you've gotten a dollar's worth of value. By and large, most of our customers feel that way. I think that's important to our success."

Perhaps the biggest threat to Palm's consistency is the question of who will take over-and when. "There's nobody I really think in the company that wants to do it," Ganzi says. "It's just something we take day by day. If one of our children comes in and is good and expresses the desire, and wants to work 80 hours a week, hopefully the business will still be there for him. There's nothing in writing, nothing in stone. ... There's nobody we've picked out as the heir-apparent."

It was only within the last year or so that Bozzi Sr. and Ganzi began discussing a succession plan, though Bozzi characterizes the unhurried process as typical of how they handle matters.

"Like many things between Wally and I, we're discussing it, and it doesn't happen tomorrow," the elder Bozzi says. "We take our time, and eventually it gets done."

Bruce Bozzi Jr. reportedly prefers to continue as a representative of both families rather than stepping up to become CEO. But plans call for him to have a seat at the table. As his father says, "Bruce will be a very vital, important part."

Other fourth-generation family members worked at the company in the past. Bozzi Sr.'s son-in-law Alfred Thimm Jr. was chief operating officer from 1990 until 2006, when he resigned from the company to take another position in the food and beverage industry. (Thimm and Andrea Bozzi-Thimm are currently in divorce proceedings.) Ganzi's son Mark worked briefly as a manager at the Philadelphia Palm while a University of Pennsylvania student in the early 1990s.

Today, however, Bozzi Jr. says he's being patient while his elders debate the future of the company. "It's been a difficult thing for them to wrap their hands around," the younger Bozzi observes. "Because the conversation is about their mortality, we have to push through the idea that one day, you're going to die. Let's just own it and say it. We have to do it, and it sucks. We got through that recently.

"My understanding," he continues, "is that we're moving forward, and it's still going to be a family-owned business. It still will have representatives of both families, even though there might not be any of Wally's children sitting at the table. I'll sit in the chair for my family. There will be a board of directors."

Bozzi Jr. seems to envision the business being run as a partnership in the future, though the arrangement won't necessarily emulate the current two-headed structure. What's important, he says, is that the leaders adhere to practices that ensure the continuation of Palm's legacy as well as the protection of the Ganzi and Bozzi families.

"My question is, Who am I going to be sitting with?" he says. "If I walk in and I want to do something, who is my partner? Is it the CEO of the business? Is Victor Ganzi sitting there? ... I try to sit there very respectfully because it's one of those things where I feel it's such a sensitive subject. I try to put my two cents in to the best of my ability."

For Palm, perhaps the way forward is to look back. A recent update of the company's visual identity was meant "to move away from the corporatization of the restaurant that developed in the 1990s and rekindle the magic of the 1960s," according to publicity materials. And Bruce Bozzi Jr. says his father and Wally Ganzi inspire him as he looks toward the future.

"What kills partnerships are egos and resentment, and both men are just very fair men," Bruce Bozzi Jr. says of his father and Wally Ganzi. "They embody what their grandfathers started. There was a lot of tradition they were responsible for, and they kept that."

Not bad for an enterprise whose name arose from a misunderstanding.

Thomas W. Durso is a freelance writer based in Glenside, Pa.

Copyright 2012 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.