Changes are exerting powerful pressure on the restaurant industry, and executives must brace for and embrace the effects of everything from robots to artificial intelligence, leading operators said this week.
“We’re going to see more change in our industry in the next 10 years than we’ve seen in the last 30,” said Gene Lee, Darden Restaurants Inc. president and CEO. “If we’re not ready to lead through that, we’re going to be in trouble.”
Lee joined other top restaurant executives on the CEO Panel Tuesday at the conclusion of the three-day MUFSO conference in Dallas.
Younger, innovative brands put pressure on older, larger brands, Lee told attendees.
“The competitive nature today, it’s making us all get better,” he said. “There’s going to be some creative destruction.”
The panel was moderated by Sarah Lockyer, Nation’s Restaurant News editor in chief, and included: Paul Brown, Arby’s Restaurant Group Inc. CEO; Greg Flynn, Flynn Restaurant Group founder, chairman and CEO; Kevin Miles, Zoe’s Kitchen Inc. president and CEO; Guillermo Perales, Sun Holdings Inc. president and CEO; and Sally Smith, Buffalo Wild Wings Inc. president and CEO.
Here are some other highlights:
Restaurant maintenance: When the Flynn Restaurant Group, which franchises about a quarter of the Applebee’s system, among other holdings, buys restaurants, the first thing it does is cure all the maintenance issues and then keep them there, Flynn said. “For decades, we’ve had a policy that we call ‘Zero Tolerance,’” he said. “It’s about the physical condition of the assets. … We have no tolerance for deferred maintenance or cleanliness issues or sanitation issues. The standard is: It has to be as perfect as can be, given that things break.”
Flynn said that while customers notice the cleaner, better-maintained environment, the policy also affects team members.
“This is obviously a war for people, and we’re trying to attract and train and retain the best people,” Flynn said of staffing. “And the best people don’t want to work in a dump.”
Hiring managers: When looking to fill key leadership positions, Brown of Arby’s said, “I think it’s important for the leadership team to have a mixture of skills and diverse backgrounds but also complementary personality types.” He added that he likes to hire for a push-pull relationship among his management leaders, “where they are not afraid to challenge each other.”
Turnover: “It’s really important to understand why people leave you,” said Smith of Buffalo Wild Wings, “so have a good process for understanding that. Some turnover you want. But for the turnover you don’t want, you really need to find out why they are leaving.” She said Buffalo Wild Wings looks at its restaurants with low turnover and tries to emulate what they do right.
Growth challenges: “It can get squirrelly really quickly,” said Miles of Zoe’s Kitchen, which went public in 2014. “We tried to put in some processes early on, specifically around the manpower piece.” He said he worked with the pre-IPO investors to hire and develop managers to allow growth in the system. Zoe’s Kitchen has also become “laser-focused” on its female consumers and seeks real estate based on that.
Real estate: “It seems everybody is back into opening stores,” said Perales of Sun Holdings, which has quick-service units in Florida and Texas. “Every time we are looking for sites, if you don’t move fast, somebody will get that site. It’s a balance between getting there first and trying not to overpay.”
Social media: Brown said Arby’s “stumbled” its way into a leadership role in social media, such as with a highly popular Pharrell Williams hat tweet at the 2014 Grammy Awards, by empowering its team and giving them the tools they need. “We have found certain subcultures that we have gone after, such as gamers or hunters,” Brown said. “We try to start conversations about events that are going on within that particular subculture. It’s not directly related to Arby’s, but it injects our brand into the conversation in a really fun way. … I have no idea what half of our tweets mean.”
Meetings: In the past two years, Darden Restaurants has reduced meetings by 90 percent, Lee said. “Unless there is a rare reason to meet,” he explained, “we don’t meet. My group gets together once a week for 45 minutes. We go around the room. If you don’t have anything to add, you don’t say anything. Boom, boom, boom, you are out. … The [individual] brands probably meet a little bit more at the enterprise level, but I can’t consume their time. They have to drive these businesses.”
Advice for smaller chains: “Speed kills,” Lee said. “If you’ve got a small chain and you want to grow it, grow it responsibly.” He added that decisions have to be based on how it will affect the customers. “Every decision that you make, you have to be able to tell yourself how the guest wins in that decision. If the guest doesn’t win, don’t do it,” he said.
Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless
Read more about MUFSO CEO panelists discussing their company cultures
This is part of Nation’s Restaurant News' special coverage of the 2016 MUFSO conference, taking place Oct. 23-25 at the Hyatt Regency at Reunion Tower in Dallas. Follow coverage of the event on NRN.com and tweet with us using #MUFSO. Stay connected on the go by downloading the MUFSO app.
The MUFSO Premier sponsor is The Coca Cola Company
Presenting sponsors are: LoyaltyPlant, S&D Coffee, Thanx, The Coca-Cola Company
Keynotes/general sessions are presented by: Avocados from Mexico and Potatoes USA, La Tartine FoodService, Steritech
Pillar sponsors include: Boylan Bottling, GrubHub, JAVI A/V; McCain Foodservice; Smithfield-Farmland; Sweet Street Desserts; Texas Capital Bank; Tyson Foodservice; Univision; Ventura Foods; Whirley-DrinkWorks!
The Monday night awards reception and awards presentation are sponsored by: Avocados from Mexico
Coca Cola presents the Shake, Sparkle & Stir event, and Texas Pete® are sponsoring the MUFSO Kitchen Hero Cook Off, benefiting Share Our Strength’s No Kid Hungry Campaign
Hot Concepts Celebration is sponsored by Nestle Foodservice; TABASCO®; Young Guns Produce
MUFSO Breakfast sponsors are Community Coffee and Cholula
MUFSO Lunch sponsors are Cholula and Moore's Food Resources
MUFSO Room Key is sponsored by Arby’s
Refreshment breaks are sponsored by Cholula, Royal Cup Coffee and Wrigley
VIP Dinner sponsored by GrubHub for Restaurants, HAVI, Slade Gorton and Whirley-DrinkWorks!
