Ted N. Holmes, the force behind the Chicken George restaurant chain, recently talked to Washington Post reporter Courtland Milloy.

Q: How did you break out of the old pattern of working for someone else?

A: One of the advantages that I had was I was a ballplayer and I was extremely competitive. I just wanted to win.

Q: What was your game?

A: Basketball. The funny thing about that is that one day I just didn't want to play ball anymore. Most of the black guys on campus at that time were ballplayers. They wanted to switch into courses like recreation or Phys. Ed. I didn't want to do that. I wanted an education. And I did some reading.

Q: What kind of things?

A: Well, things like "The Autobiography of Malcolm X" had a tremendous effect on me. The talk of economic development which he was into after his prison years. The need to attempt to do for self.

Q: What can you tell a person who sees racism, in a time where people say race is not a factor anymore -- "It doesn't matter now. This is the 1980s"?

A: I turned it around to a positive. I began to think of it as a definite advantage.

Q: How?

A: Well, if I knew black consumers, I know what taste bud he's looking for. If I knew how to advertise in that community, what it is that turns them on, then I knew that I could get them to buy the product. You're talking about a market, goods and services, of $7 billion a year -- and some estimates run higher than that. That's a heck of a lot of money. And certainly enough for me!

When I was doing government contracts I knew how government contractors saw you. So I never went in to see them with a ring or even a watch on. I never drove up in a late- model automobile. I always appeared not to be too bright, to ask for their help so that they would teach me. And I was not competitive with them. I used that to my benefit.

Q: Did you wake up one morning and just decide that chicken was gonna be an item?

A: I had served in some executive positions: inventory control, computer-center work. Some personnel work. But I realized for those companies where I worked I was not gonna make it to vice president. This was in the early- to mid-'60s. So I quit.

Q: Are we talking race?

A: Race was definitely a factor. Back at that time, it was just after the riots. Companies as well as government were into just hiring blacks as tokens.

Q: I went into the temporary-help business. Lost my shirt. Later I got a government contract to provide cooks and people to clean up around military facilities. After doing that for a couple of years, somehow I looked and knew that 8-A (the Small Business Administration program that sets aside a portion of contracts for minority firms) was going to dry up some day. So I decided to do some research.

I took three guys out of operations and I told them, "I want you to spend six months to find out what we should go into." We did all kinds of research. Initially, we set a budget of $100,000. That budget ran out. When it was all over -- almost half a million dollars.

When we looked at food service, chicken just happened to pop up. One, the cost was very stable. And two, in the early days we found that there was a high proportion of consumers who were minority who purchased fried chicken. But we also noticed that there really wasn't any food you could get specifically designed for that end of the business.

Q: How do you mean that?

A: No one who had collard greens in the fast-food concept. There was one chain in the South, Popeye's, that had biscuits and rice. But that was out of the Louisiana experience. Their chicken product is extremely hot. New Orleans has probably the spiciest taste buds in the country. They were having problems in other areas of the country.

We took that and we put a different spice level. We put greens on the market. We did something different with the biscuits than they did. Lemonade specifically prepared for that market. We designed iced tea specifically for that market. It took off like gangbusters. Today Kentucky Fried Chicken -- the largest fried-chicken fast-food chain in the country -- now has biscuits. They have rice. Because of our success at grabbing such a large share of the market.

Q: Was there any initial concern that this would be pandering to the racial stereotype? Or that people would reject it because it was black -- even in the black community?

A: Well, sure, there was a lot of that concern. Just recently did I allow my picture to appear in the newspaper. We never said whether the company was black, white, yellow, green or whatever. We did a number of focus groups around the country to test the product, the concept, the logo, everything. Name. We must have spent $125,000. When all the tests came back, we changed our logo. We had a picture of a black man holding a chicken in his hand. Very good picture, we thought. The test market came back that it was offensive to whites. Blacks were afraid that whites would be turned off by it. I still to this day don't see why, but we took it off.

Q: Was this a characterization of Chicken George himself? Or just any black guy?

A: Very friendly face. His derby cocked to the side. He looked more Spanish than he looked black. But the focus groups picked it up immediately. It was not long after the "Roots" programs, so it was fresh in everybody's mind. Well, we had some of the people tell us that they thought blacks would be offended by it.

Q: Blacks were afraid that whites wouldn't like it?

A: That's right. If it was in their neighborhood, they wanted it to be something that blacks would like. And they were concerned about how whites would perceive it.

Q: So now you use a derby. What was the reason for wanting to stay in the background as the owner of this?

A: Well, there are a number of psychological studies that tell you that blacks still have a problem about successful blacks. What we want to do is to sell chicken and make money. That was an obstacle that we didn't feel necessary to buck up against.

Q: Our own survey shows that you have the best-tasting chicken in the Washington area. Our restaurant critic checked it out. Then we had a survey in the office and it ranked No. 1. Of all the chickens out there, on whose taste buds did you come up with the secret ingredient for your chicken?

A: Basically our staff of about six people.

Q: Are they Southerners?

A: We consider all blacks to be Southerners! No. We used our native taste buds. After that, we took it to test groups around the country and then adjusted the product to what the majority of them said that they would like. The product today is less spicy than the product we came up with initially.

Q: Do you personally like chicken?

A: Not anymore! We figured we cooked about 10,000 chickens before we came up with the final recipe. And probably about 20,000 total before we sold the first piece of chicken -- that was in the research. In that first 10,000 pieces of chicken I must have eaten half of that myself. So I try to stay away from it the best I can.

Q: Now that you have become successful on your own, how do you look at that reality?

A: The best move I ever made. One, I learned that I wasn't as sharp as I thought I was. I learned a lot about business in a short time. Cash flows -- I didn't understand that. As fas as being a decision-maker, I'd read the stuff in books. That really doesn't tell you how to get the guts to do it.

Q: Does race still matter now that you are independent?

A: Of course. For instance, there are a number of malls and shopping centers in the Baltimore and Washington area that we tried to get into and can't, even though we know there are vacancies there. It's just that our target of market doesn't mix with the market that they want. They want customers, but they don't want to run off -- as they perceive it -- the high end of that market. Because 95 percent of our customers are basically black. That scares the hell out of them. Even though our volumes are high.

Q: What was motivating you to do all this stuff? I mean, was it just bucks?

A: Well, funny thing. Initially it was money. After that, a sense of pride came out.

We couldn't figure out why -- we did surveys and the most successful fried-chicken restaurants were in black areas that tended to be the worst rundown. So then it became a need to provide a service. That's where it really took the turn for us, I believe. In all markets where we are, and that's Baltimore, Washington, Philadelphia and Norfolk -- soon Chicago -- our products are more expensive and our sales are higher. It's basically because we looked for a level of excellence to provide a community that never had that. The building was new, sanitation was kept up, the equipment was the best, the whole bit. We provided a level of excellence and therefore met a need within the marketplace that had not been met.

Q: How did your failure with the temporary help business affect your motivation?

A: Determination. In 1968 I had been making close to $30,000 a year. I was 27, 28 years old. When the temporary help business went under, I went bankrupt, but I didn't close the doors. It was a determination not to admit failure. Have to go back to a lot of people who'd told me, "Boy, you're crazy for going out there. You won't make any money and you're giving up this lucrative position." It was more pride than anything. And with that pride the determination to stick it out.

Q: The people around you saying to not take the chance -- you're going to bomb. Why is it that so many people don't think that the black businessman will make it?

A: Let's go to my case. My father never made more than minimum wage. He washed cars. Worked in foundries most of his life. Really hard labor. My father had basically a third grade education, from South Carolina.

We moved to Pennsylvania. We lived for the most part in a ghetto. In the black community, success is some guy who is a foreman. Low-risk kinds of things. The position in corporate America I reached was the pinnacle at that time for blacks -- to get the job, office, telephone, benefits -- things we've never had before. That's one of the main reasons.

The other reason is that blacks ever since slavery have always had tendencies to go up and come down. From 1880 to 1910 there were more black businesses in this country than ever before in history, even today. There were something like 72 black banks in this country. There were more retail establishments than today. Well, in 1910, 1912 the cotton depression hit. Then in the '30s, the other Depression just knocked all that out. It didn't get started heavy again until the '60s. I guess it started with Kennedy but really pushed during the Nixon years under that so-called black capitalism.

In the Baltimore area you may be talking three or four black millionaires and really not the super-millionaires. Atlanta may have 18, I think. Chicago has something like 22. But you will find that where the black millionaires are, are those areas which are still very much where segregation exists. Case in point, more black millionaires in Chicago -- and I'm not talking about baseball players, I'm talking about black businessmen. Chicago -- very segregated city. With very clear lines of demarcation. Blacks tend to shop in one area and they don't go across the street. Whites tend to do the same. It's an unwritten law.

Q: Is segregation a good thing, then, for black business?

A: I would say yes. But I would qualify that by saying that the word "segregation" may be a little harsh. I think "community-minded" might be a better term. There were, all across this country, flourishing black shopping areas prior to desegregation laws in the '50s and '60s. Once we started shopping everywhere, those businesses just melted away.

Q: You broke out of this thing -- how old were you?

A: For most of my life I lived in an alley -- Park Alley. I didn't move away from there until I was about 14. Then I moved to another alley. I lived there until the time I went to college. Always lived in alleys.

Q: How did you get to college?

A: Basketball scholarship. The only way I could have gotten there. I got involved in the civil rights movement after the riots of '67

Q: Were you in the riots?

A: Uh, yes, but that's not something I'd like to talk about.

I got some jobs just because I was black. Of course, I had the advantage of an education that my father did not have. I had exposure that my father did not have. And I didn't have anything. I therefore didn't have that much to lose.

Q: Many of the more successful blacks have started from the bottom. Is that an asset?

A: Oh, yes. The guy who starts on the bottom knows what it's like at the bottom and he knows it's not that bad. The guy who starts up at the top or in the middle, you know, that's the worst thing in the world -- failure -- to him. But if you know what it's like, you say, jeez, if all of this crumbled tomorrow for some reason, I could start driving a cab or I could drive a truck or sweep streets. I know I'd find another job, and it would probably be with some small guy who has a company. I could help him grow.

Q: How did you get your resources? You mentioned that you had saved.

A: Yeah, I did about five years, I guess, of government contracts. It was a multimilllion- dollar operation for those years, and I paid myself basically around $18,000 a year, when I could have paid myself much more.

Q: Was that hard to do?

A: Extremely hard -- and that's why I went through a divorce! (Laughter.) Just had to do without. Because I devoted so much time to work, there was no time to go out and buy new clothes and do anything you normally do with your friends.

A: The current political climate has it that what you're doing now is the most important thing for blacks to be about. What is the importance of a black economic base?

I sincerely believe in independence as much as possible. We just don't have the economic resources to make a real impact on that political system. No community can grow without an economic base.

Now, how do you do that? You do it through not so much looking at today, but the future. We are moving into an information society. In the next 10 years it's been predicted that there are going to be more main millionaires made in this country than ever before -- and that's going to be in automation, in software, in programs we dream up. It's not going to require the tremendous amounts of money. The imagination is going to be very important for those of us who are able to keep our heads clear and unfogged with drugs.

Q: Why do you mention keeping drugs out of it? Is that a problem?

A: It's a problem with society as a whole. I expect within that 10 years for drugs to be legalized, such as marijuana. So for those of us who are able to keep that mind-in-a-fog from happening, we'll have a greater chance of economic success.

Q: You look like a conservative, solid guy. Nothing flashy. Still, you've taken risks worth hundreds of thousands of dollars. Is there anything in your background that says you were going to go for it?

Q: Yeah. Most of the schools that I attended were integrated schools. When I say integrated, I mean maybe 30 or 40 blacks out of 2,000 or 3,000. So the things that appeared to mean success to me were those who lived in white areas and those who dressed a certain way -- Ivy League. So I tried to emulate those things.

And fortunately or unfortunately, it tends to rub off. It became a competitive thing. The guys I went to school with, I became jealous of them. For a long time I said, "You made it because you're white," and "His uncle did this for him." In some cases that was true and in some cases it was not true. But I believed that in many cases I was just as good as those guys and could do just as well.

So a lot of it was competitive -- as well as a little bit of personal greed! (Laughter).

Q: You have a good sense of humor. Is that a necessary ingredient for survival?

A: Yeah. I think you get to the point that you're willing to admit that you have made mistakes and laugh about them. And to learn from 'em. You go through a period when you go from independence to responsibility to maturity and then on to wisdom. Which hopefully we get to -- some of us never get there -- but hopefully somewhere between the ages of 45 and 65. At the stage of wisdom, that's where true happiness comes in, because you can look back at it all and laugh about it.

Q: How old are you now?

A: 43.

Q: 43. Two years away from wisdom.