Conference speaks cover Jobs to technology
“We’ve defied those trends,” said John Miller, right, CEO of Denny’s, about the decline in family restaurants. Nigel Travis, CEO of Dunkin’ Brands, also spoke on the presidents’ panel.
What do multi-unit franchisees want? Can casual-dining chains be saved? Those topics and more headlined the recent Restaurant Finance & Development Conference. We offer a rundown.
Nigel Travis is chairman and CEO of Dunkin’ Brands, but to him every day starts with the franchisee’s bottom line. “You have to balance relevance of the brand with franchise economics,” Travis told attendees at the Restaurant Finance & Development Conference in November.
“I get up every morning and worry about what our franchisees are making, and I work backward from that.”
That’s not necessarily what shareholders want to hear. “It puts comps second to franchise economics, which is tough to tell investors,” Travis said, adding his focus is singular: “What can build the business in a cost-effective way.”
Feedback from investors is also prompting Dunkin’ Donuts, one of two companies along with Baskin-Robbins that Travis oversees, to redesign its kitchens. “Investors were getting concerned about the number of breakfast sandwiches we’re selling. It’s a great problem but it’s still a problem,” he said.
He believes technology will help solve the riddle of serving customers who are on the go, but he worries about dividing customers into the tech haves and the tech have-nots.
“One thing we have to be careful about is two classes of citizens,” he said, relating a recent visit to Universal Studios with his two young children, where he had purchased the ability to skip the long lines. “Any time I jumped to the front of the line, I was conscious of that.
“We have to think about how people feel when someone else is treated in a special way. I think that’s a big issue we all need to tackle.”
John Miller, CEO of Denny’s, came to the brand when it needed revitalization, and he described how he approached change. “We think about what we’re doing in food, service and atmosphere, getting all those right,” Miller said. “We’ve made several changes in all three, and then we measure the results. And if we’re not getting the results, we retreat” and re-do.
When Miller first came to Denny’s, he often fielded this question when visiting locations: “How do you get franchisees to comply?” “And I said, you don’t make anybody do anything, just like you can’t make customers come to your restaurant. When we find the right food changes, the right atmosphere changes, then we step on the gas,” he said.
Miller isn’t concerned about the decline of the family-dining segment, Denny’s niche. “The family category has continued to shrink over the last 30 years dramatically. What is the future of family dining?” he was asked by an audience member.
Miller shot back: “My vision for it is everybody’s gone but us, and we have 100 percent share,” he said, to laughter from the crowd. Then he elaborated. “Often people ask, who wants to be John Miller in a category that’s declined so much? But the fact is, we’ve defied those trends.
“Our category peaked in 1999; it’s lost share every year since then, but that doesn’t mean every brand has lost share. We’re gaining momentum in both transactions and comparative sales as a result. We see more momentum going to the top players in our category.”
Tried and true
Three multi-unit, multi-brand franchisees own more than 550 units among them, but at least two of them have no interest in emerging concepts. They spoke on a Restaurant Finance & Development Conference panel.
“Be open and adapt to the changes that are happening around us,” said Joleen Goronkin, People & Performance Strategies.
“I find new concepts very exciting, but we’ve never pulled the trigger,” said Bob Berg, the largest Popeyes operator in the country with 150 stores in seven states. He also owns 200 Taco Bell and Burger King restaurants. “We feel more comfortable—we like to see the brands we invest in that withstood the test of time.”
Tony Lutfi, CEO of Marlu Investments, owns 208 stores across 11 states, including Jack in the Box, Captain D’s, Sizzler and Sears home appliance franchises. He, too, sticks with the tried and true.
“Great brands are going to come up,” he said. “But we pay just as much attention to the risk as the opportunity.” He likes brands that are at least 25 years old, and which have “faced the down cycle at least once and recovered.”
Sunil Dharod, on the other hand, a large Applebee’s franchisee in Texas, offered at least a little hope to franchisors of emerging concepts, who covet multi-unit franchisees. “I would like to add one more brand” in the next year or two, he said, but didn’t specify which kind.
Quality not quantity
“Steve Jobs once said, one home run is better than two doubles,” declared Joleen Goronkin, CEO of People & Performance Strategies and a speaker at the conference.
People might say Jobs, the late founder of Apple, wasn’t in the baseball business, and so discount his comments. But to Goronkin, Jobs was “in the impact and innovation business. That’s to say quality always beats quantity,” she said, and went on to describe how restaurant operators should approach talent development.
She pointed out the challenges restaurant operators face: “The minimum wage is increasing, and it’s not a matter of if but when. A Gallup poll last year said 70 percent of Americans want to see an increase in the minimum wage.” Likewise, she said, Obamacare is a done deal; Republican control of Congress is going to mean just tweaks, not wholesale change to the Affordable Care Act, so restaurant operators need to adapt.
What should an operator do? Goronkin had four suggestions:
No. 1, manage performance, she urged. “People need to rise above. They need to continue to increase performance, and if they’re not increasing they need to be managed out,” she said.
No. 2, embrace technology. “It’s already left the station,” she said about technological change. “The iPads at the table, it’s old hat now. Who’s watching the technology? Who’s looking at ways to move your brand forward?” She mentioned Do-Right Donuts, which on Fat Tuesday offered all people with an Uber app, the driving service, to order six donuts and have them delivered. She applauds that type of innovation.
No. 3, expose the hidden paychecks. “Start getting credit for all the things you’re paying for,” she urged, from sick pay to uniforms to health insurance to meals. “All these things add up. All these things are an investment in your employees. Make sure you’re getting credit for it.”
No. 4, innovate. “You can’t always do what you’ve always done. You have to look at ways to move forward, to find different ways of doing business,” she said. As an example, she offered the idea of nixing the tip system in favor of a house service charge, where the funds from the charge would be distributed among all staffers.
The bottom line? “Be open-minded,” she urged. “Be open and adapt to the changes that are happening around us, because we are all in the impact and innovation business,” just like Steve Jobs.
Tech on the move
Technology has gone mobile and the two or three devices customers and employees carry can provide restaurant operators with a lot of opportunity, said Robert Grimes, CEO of ConStrata Tech Consulting in Potomac, Maryland.
Robert Grimes, ConStrata Tech, talked technology.
“One of the hottest trends,” Grimes said, “is electronic payments, but operators should not select one method, like Apple Pay. You have to be ready to accept all types of mobile payments, just as you once had to take 20 different credit cards.”
Customers can use their smartphones or tablets to place their orders ahead of time and, if they allow it, the GPS features on their mobile devices will beam their proximity, alerting restaurant operators to get their take-out or drive-through orders ready. Fine-dining operators can use proximity alerts to greet customers by name at the door and suggest menu items that align with their favorite foods.
“Tablet ordering, on the lowest-priced devices that will hold up in your environment, allows servers to take care of more tables and helps up-sell more items, like wines.” Grimes said.
Because data is now stored in the cloud, and not on site, operators can monitor their POS systems and back-office activities from anywhere, any time. Employees can use their own devices at home to download their work schedules and take video training classes.
Franchisees have another advantage, Grimes said, because their franchisors develop applications for them. But, he warned operators, “don’t spend money on new applications, because you may never get a return on your investment. Make sure they’ve been tried and tested by the big guys first.” Beware of technology fads, like Google Glass (glasses): “They’re expensive and look stupid,” Grimes opined. “Better wearable devices will soon be developed.”
Finally, to take full advantage of mobile technology, make sure all your applications are integrated and your restaurant offers the best wireless bandwidth available, Grimes said.