As MUFSO nears, NRN asks restaurant operators to weigh in on the business environment
Nation’s Restaurant News is about to raise the curtain on the 2012Supershow, where operators from all segments of the industry gather to discuss the forces they can and cannot control, share best practices and network.
In anticipation of the show, NRN asked industry operators what issues are weighing heavily on their minds as they prepare their businesses for the future. Below is a breakdown of their responses, which include issues such as the upcoming elections, health care reform, the global outlook, escalating commodities costs and weak consumer sentiment.
“They’re all external [forces]. Commodities — that’s at the top of everyone’s list. And right on the heels of that is [the fact that] we’re going to implement the complex health care reform. It’s difficult to even understand how much its going to cost and how to executive it in an industry with very thin margins. And until [the economy] picks up speed, our industry is losing growth ground compared with other countries around the world. [We’re focusing on] international growth, where there are not as many barriers to entrepreneurial growth.
You also must be involved on the [domestic] policy issues that affect small business. My belief system is: You don’t complain, you get involved and try to influence outcomes. Our franchise entrepreneurs have to get involved In helping with policymaking.”
— Cheryl Bachelder; president; AFC Enterprises, parent of Popeyes Louisiana Kitchen; Atlanta
“Fear of the elections has made landlords more indecisive as to what they are going to do with their assets. Commodities are still a concern, and that we don't have much more price we can take as operators before the consumer pushes back. Health Care, if it doesn't get repealed based on the next elections: How do we finally start conforming and getting our arms around it? Margins keep getting squeezed in our industry; how we can we make up the difference? Many of the larger brands are reverting to discounting or bundling and using mass media as a vehicle to spread the word. This is in turn making it harder for smaller chains to compete.”
— Al Bhakta; chief executive; The Chalak Group of Companies and Genghis Grill Franchise Concepts LP; Dallas
“The biggest challenges are all around the uncertainty of the future — what is happening with taxes, commodity costs, health care, consumer confidence, jobs. All of these are somewhat related, and I hope that the election will at least provide some clarity one way or the other so that we can all plan accordingly.”
— Anand Gala, president and chief executive; Gala Corp.; Costa Mesa, Calif.
“Our biggest challenge, which is also our biggest opportunity, is finding people and building a team to build a culture with us as we grow quickly. It starts internally. It means spending more time finding people and investing more time and money in them, but that’s the only way to grow the way we want to grow and build the company we want to build.”
— Nicolas Jammet; partner; Sweetgreen; Washington, D.C.
“The second half of 2012 represents the most significant period of growth in the history of Quaker Steak & Lube. We are addressing this ‘good issue to have’ by carefully dividing duties and organizing support for the openings. We have assembled a strong team over the past 24 months that can support the velocity that we face and pulled in additional trainers from the field.
Rising food prices have put a strain on profitability. We have addressed this mostly through re-engineering and further diversifying our menu to remove some of the pressure from high cost items likewings. Additionally, we have taken modest price increases on our core menu, after having taken no price increases in 2011.”
— John H. Longstreet, president and CEO; Quaker Steak & Lube; Sharon, Pa.
“The biggest thing for us is the election. Everyone is kind of standing on the sidelines. We have a lot of franchisees who are waiting to commit because they want to wait to see how the election is going to turn out first….Also, commodities are still increasing over and above the other cost-cutting measures we can do. Our worry as an emerging brand is: How can we continue to maintain market share if we have to bump prices the whole time?”
— Pierre Panos, founder and chief executive, Quality Service America, Atlanta
“The two biggest issues that Tony Roma’s faces through the end of 2012 and into 2013 include ensuring we have the right people for our organization and the continued rising costs of commodities. We are developing new recruiting strategies, interviewing tools and added work previews to assist in the candidate selection process. A work preview allows a candidate to learn the system tools and standards by “shadowing” different positions inside the restaurant. We watch the attention to detail, style and discuss things that may be a challenge.
Additionally, we are working tirelessly with our partner vendors to renegotiate contracts, where needed, to achieve the best prices we can for the chain with the obvious goal to minimize the increases as much as possible.”
— Brad Smith; chief operating officer; Tony Roma’s casual-dining chain owned by Dallas-based Roma Corp. Inc.
“The biggest issue I’m always putting in the ears of managers and chefs is: ‘Let’s worry about getting the customers in the door first, and then worry about making money later. Let’s get them in the door now.’ We’re addressing that by creating fun environments, offering professional service, and keeping prices as low as we can.
I’m always preaching: ‘Don’t price the salmon in terms of the exact food costs that would be ideal for you. Price it for what the customer wants to pay.’”
— Ethan Stowell, -owner of Ethan Stowell Restaurants, Seattle
“You’ve got a weak economy, you’ve got the election coming up, you’ve got the economic factors in Europe, and because of the drought, there’s concerns that corn [prices] are going to go up, and therefore beef and chicken are going to go up. We’re going through our menu very carefully, and we’re looking what’s impacted our food cost, profitability and sales.”
— Nick Vojnovic, president; Little Greek; Brandon, Fla.
“The biggest issue for us is the potential high rise of commodities going into 2013. We’ve already started to see a spike. We’re very dependent onand beef, and as we see the price of corn rising we know that the price of turkey and beef are going to rise. We’ve been trying to work proactively with our suppliers to work on pricing as far out as we can so that we have some sense of where we’re going to be next year. The other thing we’re trying to do on that is that we’re working with our marketing team to look into the items that we should start marketing…and how we can steer customers toward lower food-cost items.”
— Patrick Walls, president, Capriotti’s Sandwich Shop Inc., Las Vegas