Can Tom Garrett guide GPS Hospitality to $1 billion?
Tom Garrett in his lofty Atlanta-area office where he takes on some equally lofty goals as CEO of GPS Hospitality.
The refrain from the GPS Hospitality management team is, “When Tom calls, you answer.”
Much of that leadership team—now looking down on the Atlanta area treetops from the GPS office—worked with Tom Garrett before. When he started the company in 2012, with the acquisition of 42 restaurants, they hoped to get a call.
Gary Thomas is one such executive at GPS. At one time, Garrett was his “boss’s boss’s boss” back at Arby’s and he spent years at foodservice giant Compass Group and then Honey Baked Ham when he got the call—or email as it were.
“I heard that Tom bought 42 Burger Kings. I was thinking, what is he doing? He’s a glutton for punishment. But I was kind of hoping he called,” said Thomas, the vice president overseeing operations support. “So he sent an email saying he might have an opportunity. My wife asked, what is it and what would I be doing. I said, I don’t know, but I’m taking it. I want to be a part of whatever Tom is creating.”
Thomas now oversees more than 400 Burger King and Popeyes restaurants pumping out $567 million in sales as seen in this year’s Restaurant 200, putting the company at No. 12, up from No. 13 last year.
And he wasn’t the only one who made a big bet on working for Garrett. CFO Scott Jasinski pulled up fresh roots to move his family to Cleveland to work for him while Garrett was becoming the largest Arby’s operator at RTM Restaurant Group.
“I got a call one day out of the blue, it was funny, my wife and I had three small kids, just bought a house in Detroit,” said Jasinski. “It was in the neighborhood my wife always wanted to live. The day we were moving in, I got a call from RTM to come in and interview. I wasn’t that into it but I hadn’t done an interview in a while so I decided to check it out. And that’s when I met Tom. I was blown away by Tom and RTM and the value. I told my wife about it and she thought I was crazy.”
Uprooting their new life was a hard sell for Jasinski, but Garrett helped out there.
“I talked my wife into going to Cleveland to talk with the guys from RTM,” said Jasinski. “After meeting them and on the way back, she said, ‘There’s no way we can’t do this.’”
Now, 20 years later, Jasinski said the GPS team feels a lot like family. And Garrett is still making those real human connections at every single restaurant.
“We’ve gone to every restaurant we own before we bought it. When you see Tom in a restaurant, he has that same impact on the restaurant management team and crew members—he just makes people feel good. And people want to come work for us and they want to be part of something bigger than just serving hamburgers,” said Jasinski.
From left: Scott Jasinski and Brian Arnold, two GPS founding members. Kent Dawdy is the newest leader, overseeing the 75-unit Pizza Hut acquisition.
Brian Arnold, another longtime partner of Garrett’s, said the same. He was one of three founding members of GPS who sat in Garrett’s basement outlining what the group calls its “Journey to a Billion,” the goal to hit $1 billion in revenue in 10 years. That kind of vision is what gets competitive, goal-oriented folks like Arnold and Jasinski excited—and Garrett charts the course.
“Tom is a pretty unique guy, so when Tom calls, you answer. When he asked, I didn’t even have a second thought and I haven’t since,” said Arnold. “He wants your input, he has the vision of where he wants to go but he wants your input. He’s a delegator and a visionary. I think the biggest thing is just our value system aligns; it’s very easy to work for him because of that.”
Herbert “Bud” Scruggs, managing director at the private equity firm Cynosure Group that’s known for long-term partnerships, said that alignment and enduring working relationships were a big part of the thesis to back GPS.
“You can tell a lot about a leader by whether people who have worked with them before are working with them again,” said Scruggs. “We were impressed by Tom, but just as important to us is as we became more acquainted with the team, the more we were impressed by the quality of leaders we were dealing with.”
Goals meet motivation
So who is this visionary leader and how does he garner such loyalty and enthusiasm? Sit down with him in an office overlooking the lush canopy north of Atlanta and he might not immediately inspire a big move. He’s easy to talk with; he’s clearly smart and has a great sport jacket. But you could say that about most of the Restaurant 200 CEOs.
According to Garrett, a big reason the leaders at GPS think like he does is they’re goal oriented and aim high. It’s something he learned during the first days of his nearly 30 years at Arby’s. He started there as an assistant manager.
“I went to work for an Arby’s, my parents didn’t teach me to set goals. My teachers didn’t, but I worked for a man who helped me set goals and I realized the potential in the industry, and I bought in hook, line and sinker. And today, that’s how I operate,” said Garrett. “Then follow that up with what their goals are and helping them achieve their goals, that’s why I believe people are here.”
Apart from goals—the “G” in GPS—the next focus is people. And Garrett takes care of his people. One of the first things seen in the GPS lobby is a big collection of bobbleheads. Each bobble represents (in eerily accurate detail) one of the partners in the business. There are 34 partners plugged into a deferred compensation plan that gives them the ability to earn deferred income or contribute a portion of their salary tax-free. When partners leave, they cash out with an additional growth bonus on top of that.
The GPS Hospitality leadership team, from finance to legal to operations, sit near the “partner wall” and a shelf packed with honors.
“So they have a big incentive to drive our EBITDA because they directly benefit,” said Garrett of the cash flow emphasis. “If you have a notion that you’ll share in the rewards you create, and you’ll do that with a very select group of people, that’s very motivating. You want to be part of that elite team. Secondly, you see those bobble heads on the wall out there and they’re all top performers. Who doesn’t want to play on a team of people like that?”
Garrett said it’s a cultural and status win for those select high performers invited to the partner program, and secondarily it’s a nice financial reward for hard work. For a company that aims to grow to $1 billion in revenue, that’s a big incentive to sign on and to work hard.
“We just don’t lose partners. And the longer you’re in that program, the harder it is to leave because your balance grows,” said Garrett.
Between a strong alignment of goal-oriented values and the potential to reap what you sow, the magnetism of working for Garrett starts to make a lot of sense. He said he doesn’t actually have to fight too hard for top talent, certainly a perk in this competitive environment.
Now, “I don’t usually call, I usually get a call,” said Garrett. “We have a lot of people that, we once worked together and for whatever reason they’re somewhere else and they’re somewhere that they realize their values don’t align. So we have this gravitational pull to work together.”
By attracting top executive talent, Garrett said, his job gets a lot easier. Because they all want to forge ahead, he basically helps set a few goals and let them run. There’s not a lot of formality or bureaucracy necessary when everyone is pushing in the same direction.
As for the target of reaching $1 billion in sales by 2022? While it’s one of the big goals, don’t expect Garrett to change things up if they miss the mark.
“When we set our goal to be at $1 billion, there weren’t many players like that but today, there are many. But I don’t think many will get there as fast as we will,” he said. “If we’re at $999 million, you know what? We had a great run. It’s really about setting stretch goals and aligning people behind a common vision.”
Part of that vision is tapping into brands beyond the core of Burger King and Popeyes. Enter Kent Dawdy. He’s the new vice president overseeing the company’s push into Pizza Hut after it acquired 75 restaurants earlier this year. He jumped between a few franchise groups, most recently helping one grow from 19 units to 62, but the draw to come home was strong.
“It’s like homecoming for me. A lot of our team has worked together at some point; it’s truly a family. It’s not like if I need something strategy-wise or system-wise, it’s like going to a friend, not another department,” said Dawdy.
One of his first tasks after the Pizza Hut acquisition was checking out the restaurants with Garrett. For three days straight the two of them connected with store-level employees and explored how GPS would implement its vision at the unit level.
“He was able to take all three days’ worth of knowledge and questions and narrow it down to a few priorities so I’m not overwhelmed with 50 things on a to-do list,” said Dawdy. “That’s what he can do on every level.”
It’s not all equity and company cars. But Dawdy said even the tough feedback pushes people in the right direction.
These bobbleheads represent the 34 partners who share in the growth at GPS.
“He can deliver the feedback that you don’t really want to hear,” said Dawdy. But when Garrett leaves, “instead of being mad you’re fired up, you want to knock down walls for the guy.
“He might say you’re doing great, but your restaurant is filthy. And you’re fired up and the next time you show up, it’s sparkling.”
Garrett’s playbook will be tested at Pizza Hut, a brand recently passed in sales by Domino’s and dealing with operational challenges plus the need for major updates. The brand’s largest U.S. franchisee, NPC International (No. 2 on the Restaurant 200 with more than 1,200 stores) recently saw its credit rating downgraded by the S&P 500, which noted it expects NPC’s operating performance “will remain challenged for the next 12 months, resulting in sustained, very weak credit metrics and negative free cash flow exacerbated by high capital expenditures for remodels and modest unit growth.”
Dawdy, though, said he thinks GPS has “the ability with our infrastructure to help the brand just as much as they can help us.”
How much ground Pizza Hut can help GPS cover on that journey to a billion will be something to watch.
Scaling down to scale up
A major effort now is scaling Garrett’s leadership style down to the restaurants as the company absorbs more. Garrett has long delivered company cars and generous bonuses to top managers, which garners a lot of focus in return. That intense focus at the store level, paired with the focus at the top, secured a big nod from Burger King. GPS was named Burger King’s franchisee of the year in 2018, an honor the company commemorates in grand fashion in its lobby.
Scruggs was at the convention when GPS received the honor and saw that focus in person. “It was so fun for me to walk around the exhibition floor with district and regional managers and see their absolute focus. It’s a culture that really rewards performance and potential,” he said. “If you start as just an entry-level worker there, and you’re honest and work hard, there’s no limits to how high or how fast you can rise in the organization.”
Attention is now on getting hourly employees just as focused. There aren’t many visible cracks in the GPS organization, but after a company-wide survey, Garrett said he found “we could do a better job recognizing hourly workers.”
While employee reviews on the job-review site Glassdoor are higher than close peers, improving the connection with restaurant workers has become a big initiative for the team. Now, more than 10,000 hourly employees have downloaded the company communication app and are plugged into a new reward program designed to get them as focused as their higher ups.
Garrett’s ability to enhance that focus is what initially attracted Nonami Enterprises, the family office backing GPS along with the Cynosure Group. And Nonami, the investment office for Atlanta-area real estate developer Tom Cousins and his family, doesn’t typically invest in restaurants.
“I’m not sure we would ever have thought we’d invest in a restaurant, frankly,” said J.T. King, the chief investment officer at Nonami. “This is way oversimplifying,” but Tom Garrett “is really good at being a better operator than the last guy who owned the stores. He fixes food cost, he fixes labor management and productivity.”
King said the cultural piece also makes GPS a great investment for his firm. They don’t need help operating, and Garrett can attract talent and instill the goal-oriented culture and backers that pushed GPS from No. 170 in 2013 to No. 12 on the Restaurant 200 list in just five years. (And expect some movement next year when the Pizza Hut acquisition shows up on the balance sheet.)
“His ability to attract talent and people who are excited to work at GPS stores from the top down is phenomenal because he’s a guy that worked his way up,” said King. “So he wants his partner and employees to achieve success. It was very easy for us to get our arms around what would be the drivers of success.”
Garrett knows that success isn’t guaranteed, but he’s confident in the path he’s navigating for GPS and doesn’t plan on taking any detours.