The legacy turnaround: Listening tour done, TGI Fridays turns to action
“My mission is to go bottom up” by empowering ‘zees, says Aslam Khan, CEO of TGI Fridays.
When Aslam Khan first took over as CEO of TGI Fridays, he and CFO Giovanna Koning embarked on a learning and listening tour of the brand.
“We wiped out the past, good, bad and ugly. We’re on a new mission here,” said Khan back then. “Most of the franchise businesses are run top down. My mission is to go bottom up. I want to help support and empower franchisees to engage and participate in that mission.”
So how are things going a year into that mission of alignment? Khan said it’s going very well. A franchisee council was created and various stakeholder groups built with representatives from both the corporate executive team and the franchisees. One of the first pain points they heard from franchisees was an endless appetizer program.
“He listened to the operators. One of the things he heard loud and clear is, given the operational things that went through with endless apps, we had some churn,” said Koning.
Endless apps meant the store-level employees had to do the same amount of work (or more) for smaller tickets and smaller tips, so employees left.
“A lot of discounting was causing a lot of stress on the wait staff and the operations in the kitchen. So we got rid of some of that stuff and cleared it all up,” said Khan.
Koning said that early insight came directly from franchise operators, and served as proof in the proverbial pudding that the new corporate stewards were really listening.
Labor, of course, has been a huge concern for operators. And with franchisee input, it started down a radically new path of training, certification and transparency for store-level workers.
The initiative aligns with Khan’s longtime management philosophy of putting people first, something he said allowed him to largely step away from his franchise company Falcon Holdings to take on the CEO role at TGI Fridays. He said he found a very similar culture at Fridays during his listen-and-learn tour.
“I learned the culture of Fridays, and it’s a really good culture. There’s a big people focus. It fits into what I’ve been talking about all my life, people are everything,” said Khan.
The new training system was designed to first get everyone on the same page, but also give store-level employees a career trajectory. It became one of the first initiatives under Khan.
“At the beginning of 2018 we launched a general manager pivot program. It’s a two-year program that goes through a very disciplined, almost back-to-basics process of certifying every level. It’s not a flash in the pan, its very focused,” said Koning. “All 450 domestic restaurants are in this program. We’re halfway through the year, we’ve gotten some great feedback and there are some people that are really moving along.”
As it moves along, the team is creating a certification track for all positions, from bartender to cook to dishwasher. Ultimately, each position will be certified and people will renew their certification regularly via training modules and boot camps around beverage or culinary execution.
Making this a company initiative instead of a store-by-store process was also inspired by franchisees. In an early franchisee council meeting, operators said the brand needed to put franchisee accountability first and foremost to ensure the big new changes aren’t seen as just the flavor of the month. It’s a way to deliver accountability by going “bottom up,” through the store-level employees.
Communication of those changes and decisions has been reworked, too. So changes like the discounts and training procedures were communicated early and often.
“Nobody wants surprises,” said Koning. “In the past, they were in the know, but maybe at the last minute. So they want to know well ahead of changes.”
Khan said there can’t be too much communication for tuned-in franchisees. “We want to give them information daily, weekly, monthly and make sure we influence them by showing that we know what we are talking about and breaking it down mathematically. My message to franchisees is to stay informed and engaged.”
‘A 50-year-old startup’
Parallel to that cultural work, the company has been working on a lot of new initiatives. All the changes are aimed at returning to the company roots. At the core of the changes is the bar. No, Fridays won’t return to its original life as a singles bar, but the bar is getting a lot of attention.
Leading the charge on a lot of the operational changes is Sherif Mityas, the chief experience officer who said he oversees “basically anything that touches the guest.”
He joined shortly before Khan took over as CEO, when the brand was 50 years old. Since then, he’s been tasked with teaching the old brand many of its new tricks.
“There’s a lot of tradition, a lot of heritage in the brand and I didn’t want to disrupt that but I said, we need to think differently,” said Mityas. “We have to think of ourselves as a 50-year-old startup.”
To that end, he’s implemented a whole slew of technology. He’s testing a dizzying number of initiatives, from an all-new digital platform for ordering, reservations and payment to a social media chat bot. And he pushed to be the first restaurant on the voice-powered Amazon Alexa to be integrated with Amazon Pay.
He’s also taken a hard look at the menu and beverage program, modernizing the offerings and putting the bar experience at the forefront for a franchised brand. He said he’s doing a lot to change the consumer experience, but the technology, the new menu and future changes mean evolving without forgetting Fridays’ historic roots.
“To me, it’s enabling us to respect our roots and our tradition but make them relevant to today’s consumer. Our roots were as the first singles bar, but you don’t really need a singles bar in today’s world. The roots of getting people together and having fun in a social environment, you still need that,” said Mityas.
So far, franchisees say they are seeing real results. For example, an artificial intelligence-powered ordering platform doubled off-premise sales as the brand not only caught up with that trend but pushed further than many competitors.
But there is still a lot of work for many of the leadership team’s initiatives as they roll out from test markets to the entire system. In this year’s Franchise Times Top 200+ listing, TGI Fridays slipped to No. 52, down from No. 50, and it closed 11 stores. In all, systemwide sales slipped 3.7 percent through 2017.
Like many legacy brands, international growth has been one especially sweet spot. The brand has already opened 13 of 33 planned international restaurants with new prototypes in Taiwan, Australia and Amsterdam.
Khan said this is all part of the plan, to effect change without changing too much too fast. It’s a pitfall some casual dining competitors couldn’t avoid.
“Other casual diners that I don’t need to name have had a lot of trouble recently, and they’re either changing things too dramatically or not changing enough,” said Khan.
“It’s a question of how do you balance change and maintaining the soul of the company through a transformation?”
He said the brand is about one year into a “couple years” process of testing, implementing and updating. He and the team expect their hard work to gel in 2019.