It’s been said time and time again: Restaurant operators that innovate and differentiate will steal market share.
Without a rising tide to lift all restaurant brands and still facing tightened consumer spending, restaurant executives need to offer a compelling mix of craveable menu items, value-driven price points and unique branding to attract today’s customers. Commodities must be controlled and labor must be managed. New techniques to secure franchise financing or other growth capital must be mined and new strategies surrounding social media platforms must be explored.
Walking this tight rope of restaurant operations is a brand’s leadership, whether founder, chief executive or president. The man or woman on top can sometimes make or break a restaurant company.
As many predict 2011 to be a year filled with industry improvements — increased sales, improved profits and a return to unit growth — there will be much to watch throughout the foodservice industry.
And while there are many restaurant executives ready to meet the challenges and reap the rewards of 2011, here are 10 men and women Nation’s Restaurant News is watching as the year unfolds:
Sandy Beall
Ruby Tuesday Inc.
The casual-dining giant spent 2010, and much of the prior three years, refining its corporate strategy. The 650-unit Ruby Tuesday brand underwent a multi-year plan to reinvigorate its image and improve menu offerings, now highlighting a brunch program, Tuesday Steak and Lobster Night and Gimme a Mini. The Maryville, Tenn.-based company also worked diligently to clean up its balance sheet, paying off more than $300 million in debt.
Beall, Ruby Tuesday’s colorful founder and chief executive, now says the company is ready to grow again — with free cash flow to burn and a need for younger growth vehicles. Beall is exploring a new seafood concept, the details of which are slight, set to open this spring. He is continuing to grow the two-unit Wok Hay Fresh Asian Diner brand acquired about three years ago and is looking to convert underperforming Ruby Tuesday locations to other brands including Jim ‘N Nicks Bar-B-Q and Truffles Café. And in September, the company signed a master agreement to license the fast-casual Lime Fresh Mexican Grill concept, agreeing to open 200 locations.
Al Bhakta
The Chalak Group
The Dallas-based Chalak Group is making serious moves in the restaurant industry. Helmed by a group of five friends, two of which are cousins and all of which are still under or just hitting 40 years old, the Chalak Group is best known for its ownership of Genghis Grill – The Mongolian Stir Fry. The group purchased the chain’s franchisor in 2004, when it held less than a dozen locations, and under Bhakta’s leadership as president and chief executive, quickly refined the brand and expanded it to 60 units by the end of 2010. Chalak isn’t looking to stop, and has plans for 100 Genghis Grill restaurants by the end of 2011.
But the group isn’t just focused on one brand. Current investments include: Hampshire Hotels, which opened its first location in South Africa; Orange Cup, a natural frozen yogurt chain with 14 locations; and Bistro Babuson, an Asian fast-casual concept with one location in Fairview, Texas. And to top it off, Chalak purchased 33 restaurants from Yum! Brands Inc. late last year.
According to the group’s website, “chalak” is Hindi and holds a double meaning. It can mean “overflow” as well as “wise” or “intelligent.”
Steve Ells
Chipotle Mexican Grill Inc.
Chipotle seemingly can’t be stopped. It continues to book industry-leading sales trends and profit margins and maintains its darling status on Wall Street, even after four years as a public company. Its strong consumer appeal and unrelenting focus on what makes Chipotle special — from the chain’s “food with integrity” pledge to operational excellence — is often cited as the driving force behind the brand’s success.
But the Denver-based company, under founder and co-chief executive Ells, isn’t looking to rest on its laurels. As the economy takes an upswing, observers have said that Chipotle, at more than 1,000 units, still has legs for growth, both in the Unites States and overseas. A new restaurant prototype, with new design elements, a smaller kitchen and environmentally friendly materials, has been rolled out to 26 locations and can help the chain enter new, smaller footprints.
Ells also said in September that Chipotle will open a fast-casual Asian-style concept sometime near the middle of 2011. Details are scant, but the news bated the industry to expect more innovation from Chipotle.
Tilman Fertitta
Landry’s Inc.
On the executive watch list for 2010, Fertitta did not disappoint last year. Landry’s, under its founder and chief executive’s watchful eye, closed its long-sought-after leveraged buyout, valued at about $1.4 billion. The company also went on a buying spree, snatching up Oceanaire Seafood Room, Claim Jumper and Bubba Gump Shrimp Co.
Fertitta is now looking to reinvigorate those brands and place them under the now-private Landry’s wing, which can only mean change and growth. He has said both Oceanaire and Claim Jumper are consumer favorites that haven’t gotten the attention they needed or enough investment to improve their décors and menu offerings. Fertitta also may not be done with his buying spree. When asked in October what he looks forward to the most, he said, “The art of the deal. Just doing the deal and building something new.”
Don Fox
Firehouse Subs
Firehouse Subs is one of the fastest-growing restaurant chains in the industry. Founded by Chris and Robin Sorensen, who together created a sandwich brand inspired by firefighters and offering large, toasted subs, the chain now boasts more than 400 locations in 17 states. Fox, its chief executive since January 2010, and chief operating officer before that, has been one of the driving factors behind its successful expansion at a time when many chains were unable to grow.
Fox holds more than 30 years of franchising and restaurant management and seems to have found an equal partner at Firehouse Subs. Working through the economic downturn to garner franchise financing to help the chain expand, Fox developed unique partnerships with banks, helped the franchisor create a lending entity and restructured certain franchise agreements to better attract financing. See him at any restaurant conference and he will be surrounded by eager executives looking to tap his knowledge of franchising strategies. As the sandwich segment continues to grow, Firehouse Subs seems poised to secure additional market share. Its Firehouse Subs Public Safety foundation and efforts across social media platforms also have helped it gain traction with customers.
Bernardo Hees
Burger King Holdings Inc.
3G Capital acquired Burger King in the fourth quarter of 2010 for about $4 billion, and quickly appointed Bernardo Hees as chief executive. He will be tasked with running the nation's No. 2 burger brand, currently rife with franchisee dissent and, according to some observers, in need of refreshed menu and marketing tactics.
Hees most recently was chief executive of America Latina Logistica, Latin America's largest railroad and logistics company, and is a partner in the Brazilian-backed 3G Capital. He replaced John Chidsey, who is now co-chairman at Burger King. Last year was filled with ups and down for Miami-based Burger King, including a successful debut of bone-in Fire-Grilled Ribs but also a sales slow down and certain franchisee failures. Duke & King, an operator of about 90 Burger Kings, filed for Chapter 11 bankruptcy protection, and Carrols Restaurant Group spent much of 2010 discussing a failed pricing strategy at BK, mostly surrounding the chain's $1 menu.
Burger King, which operates or franchises more than 12,150 restaurants worldwide, has already initiated some franchisee-friendly changes, including a pullback on once-required late-night operating hours. As McDonald’s continues its dominance and Wendy’s continues a massive menu makeover, Burger King will no doubt have some new moves in 2011 under new ownership and management.
Alan Hixon
Mooyah Burgers & Fries
The “better burger” segment isn’t going anywhere. Five Guys Burgers & Fries has been on an unrivaled growth spurt and numerous smaller brands are popping up each day. Smack in the middle of the crowded field is Mooyah Burgers & Fries, led by Freebirds World Burrito veteran Alan Hixon.
Mooyah has grown to 18 locations in the past few years, and the company said in September it has signed six multi-unit development agreements for a total of 221 new locations. Hixon said the deals are not “franchising for franchising’s sake.” Mooyah’s strategic growth plan is to drive company growth by 1,600 percent over the next 10 years and become a national player.
Hixon, who came to Mooyah in 2009, spent that year refining what the brand means to customers, and working to build differentiated points from other better burger players. He has cited Mooyah's fun atmosphere as a major factor helping to drive its success, as the in-store experience only adds to the burger, fries and shake menu.
Kevin Reddy
Noodles & Company
With a late December buyout by private-equity firm Catterton Partners, Noodles & Company should be primed for additional growth in 2011. One of the fast-casual originators, Noodles & Company has grown to 250 restaurants in 18 states, and, under chief executive Reddy, posted double-digit annual unit growth and positive annual same-store sales each year for the past five years.
Deep pockets like those of Catterton, a firm that has invested in such restaurant brands as P.F. Chang’s, Baja Fresh, Cheddar’s and Outback Steakhouse, typically means growth and support. Reddy will continue as chief executive and said this deal is a win for all parties, helping set up the chain for its next phase.
A McDonald’s and Chipotle veteran, Reddy marries branding, finance and operations experience to steer chains toward sustainable growth and success. As fast-casual brands continue to dominate, and noodle-based brands are expected to flourish, Noodles & Company is poised for a powerful 2011.
Howard Schultz
Starbucks Coffee Co.
Another repeat from the 2010 list, Starbucks' chairman and chief executive could have an interesting 2011 as well. The chain, which hit a low point in 2008 and was forced to close hundreds of locations, rework its food offerings and refocus its in-store branding, may be best positioned in 2011 to fully regain its stride.
Schultz continues to mastermind the brand’s new corporate strategies after returning as chief executive in 2008, and it is hard to find a more interesting figure in foodservice. He has driven Starbucks back on track, helping it to regain pricing power, launch new products like VIA instant coffee, and regain confidence that unit growth, both in the United States and in international markets, is possible.
The company has returned to many securities analysts’ top stock pick lists for 2011, and is expected to benefit most when consumers grow more comfortable with spending throughout 2011.
Sally Smith
Buffalo Wild Wings Inc.
Can Buffalo Wild Wings continue its dominance? The industry is watching as chief executive Sally Smith drives this casual-dining chain — focused on wings, beer and sports — to new heights. Unit growth, sales increases and continued management of commodity pricing is expected in 2011, according to industry watchers.
The Minneapolis-based company plans to open 100 more locations this year, on top of its current 700-plus units. But a dip in early fourth-quarter same-store sales results has led to some caution on whether this brand can maintain a perfect record. Buffalo Wild Wings also noted that higher labor costs may be incurred in the fourth quarter as it rolls out Happy Hour promotions and other service initiatives.
Smith, an industry heavyweight, has yet to blink. She continues to helm the chain, earning industry respect and looking to build growth initiatives so that Buffalo Wild Wings can continue to climb. On her list: more marketing spending; restaurant remodels; and additional menu items. The chain also plans to dip into non-domestic markets for unit growth, expecting to open 50 locations in Canada over the next five years.
Contact Sarah E. Lockyer at [email protected].
