Providing such amenities as front-of-the-house hand-washing stations for customers and team-building resources for employees led K&N Management to become only the second restaurant company to earn the Malcolm Baldrige National Quality Award in the 23-year history of the honor.
K&N, which franchises four Rudy’s “Country Store” & Bar-B-Q units and created the three-unit Mighty Fine Burgers, Fries and Shakes concept in 2007, was one of seven organizations to receive the 2010 presidential award, overseen by the Department of Commerce, for innovation, excellence and leadership.
The only other restaurant company to be so honored was Pal’s Sudden Service of Kingsport, Tenn., which received the award in 2002.
“This recognition establishes us as a role-model business, but it would not have been possible without our team members’ commitment to guaranteeing that every guest is not only pleased, but delighted,” said Ken Schiller, co-owner of K&N.
Schiller and Brian Nolen started K&N in Austin, Texas, in 1993 and purchased the rights to the Rudy’s Country Store franchise from Phil Romano, founder of Romano’s Macaroni Grill and Fuddruckers. The Rudy’s Austin restaurants also sell gas and convenience-store items.
K&N employs 470 people, and its Rudy’s in North Austin ranks No. 1 in food sales per square foot out of about 67,000 restaurants in Texas.
“Part of the Baldrige award is your financial results,” Schiller said. “At our four Rudy’s franchises, we average about $7.5 million in annual sales for just food. That doesn’t include the fuel that we sell. And in our Mighty Fine concept, which is a fast-casual concept that operates out of end caps and strip centers, we are running about $3.5 million a year in average sales.”
A fourth Mighty Fine unit is scheduled to open in the Austin area in 2011.
Schiller said he credits the company’s focus on both the customer and the employee for setting its operations apart.
“Our team members are the face that our guests see every day,” Schiller said. “If we don’t do the job there, we really can’t execute and get the results we need on everything else, like leadership and strategic planning.”
He said the biggest challenge is attracting and employing “A-players,” the top 10 percent of people working at the wage being paid.
To attract “A-players,” K&N provides extensive benefits, Schiller added. Employees are considered full time at 30 hours per week and are offered health insurance, where K&N picks up 90 percent of the cost. K&N also offers a 401(k) with company matching, as well as internal programs, such as one encouraging fitness.
“We think very long term,” Schiller said. “That sets us apart. We don’t focus on how we are going to make the money this quarter or necessarily even this year. We focus on delighting guests, and we believe that if we keep that focus, that the profits take care of themselves.”
K&N also drives “guest delight” with an eye on speed of service, hospitality, food quality and cleanliness, Schiller said.
“We have an in-house maintenance team to assure our facilities are always in first-class condition,” he said. “If something needs repair, we repair it right then.”
Automated hand-wash machines in both the front and back of the house reinforce the commitment to hygiene, Schiller said, and line speed is measured throughout the day.
“We’re a very measured company, which is part of Baldrige,” Schiller said. “We believe that if you can’t measure it, you really need to ask yourself if you should be doing it.
K&N’s replay analyst, a corporate position, measures specified metrics by watching film from the stores.
“We’re not doing it to catch people doing things wrong or to be Big Brother,” Schiller said. “We use it as a coaching tool and really to reinforce behavior that we are looking for.”
The company also maintains an in-house library of resource books and videos for employees. Most managers are promoted from within, and all new hires spend 10 hours in a “Foundations Class,” Schiller said.
The company recently deployed interactive display technology for customers who approach the windows fronting Mighty Fine’s burger preparation areas. Patrons are greeted by moving images, like scattering cheeseburgers, on the glass. Nolen said the technology is “a way for our guests to have fun and talk about the brand, other than just the food.” The images provide information about the chain’s community and environmental projects.
The Baldrige Award is named for Malcolm Baldrige, who served as U.S. secretary of Commerce from 1981 to 1987. It is managed by the Commerce Department’s National Institute of Standards and Technology in conjunction with the private sector. The program evaluates recipients in leadership, strategic planning, customer focus, measurement, analysis and knowledge management, workforce focus, process management and results.
This year’s competition drew 83 applications. Winners will be honored in a ceremony with President Obama at the White House next year.
Contact Ron Ruggless at rruggles@nrn.com.
