Differing Leadership Strategies in the Restaurant Industry

As I talk with restaurant industry leaders around the country, I ask them how they are responding, in terms of growth and staffing, to the current market climate. What I’ve discovered is that there are primarily three schools of thought on the matter.One reaction I’m hearing is some concepts, out of necessity, are making cuts in many areas to insure they weather the storm. Mitchell Moore, Vice President of Operations for Nestle Cafe, told me, “We cut about 12-15 positions in the corporate office to lean up the outgoing costs. We will need to replace these positions at some point as we are still planning aggressive growth in 2009.” Carl Howard, CEO of Fazoli’s, whose concept is taking advantage of improving commodity prices and investing in quality in their menu, told me his concept “Made the necessary cuts back in October, 2008 as we saw what was coming.” Fazoli’s will be changing about 40% of their offerings starting 2/16/2009.Another response from restaurant leadership that I’m hearing is to “wait and see”. Some concepts are, for the most part, maintaining the status quo. David Newman, President of BP Newman Investments, who oversees 33 Church’s Fried Chicken units, put it this way, “Let the economists say what they’re going to say. We’re going to control what we can control.” David is using some of this time to “sharpen the saw” of some of his key people by sending them to leadership training. “This is a time to invest in my people.” According to Mitchell Moore, there’s a lot of “wait and see” from Nestle Cafe franchisees as they look for loans to become more accessible before they open additional units. That being said, “We’re aggressively growing 25-30 units in 2009.”, according to Mitchell. Sam Beiler, President and CEO of Auntie Anne’s had this to say, “In alignment with our focus on careful management of expenses in 2009, we are taking a conservative approach when it comes to the creation of new positions.”Probably the least touted and most enviable position some concepts find themselves in…being financially sound enough to take advantage of the current market conditions in the restaurant industry to grow their units through acquisition and attractive real estate terms from landlords who are currently much more willing to make concessions. Leon Irons, President of Churpeye’s, a Sonic and Church’s Fried Chicken franchise group, said he’s “Adding stores this year and should increase the total number of units for our restaurant group by a third. (They currently operate 53 Sonics and 33 Church’s.) Lance Benton, CEO of the 100% franchised Buck’s Pizza, is very optimistic about their position and says they’re getting many inquiries about their concept right now. “I don’t like to hear about people being out of a job, but those people have to replace their income with something and many are looking at our franchise opportunity to do just that.” Sam Beiler of Auntie Anne’s continues,”Based on the cyclical nature of the economy that historically shows that for the past 100 years, we experience a downturn every 7 to 10 years, we began to prepare for a soft economy over 18 months ago.” “Over the past few years, we’ve experienced strong same store sales comps and specifically in 2008 we had a strong year which has nicely poised us for continued growth in 2009. We anticipate opening 42 domestic locations and 53 international locations, adding to our over 980 store total in 20 countries.”These same restaurant companies are also able to take advantage of the current candidate pool to make “upgrade” hires from talent that hasn’t typically been available. Mike Hamra, CEO of Hamra Enterprises, which operates 27 Wendy’s and 47 Panera Bread locations, indicated his group’s stance this way, “We are strategically reviewing opportunities to improve the quality of our staffing and are upgrading consistent with our growth plans and attrition.” President of Wendy’s of Missouri, Chuck Ocarz, told me that while the next 3-6 months are a concern for him, he is definitely “taking advantage of the availability of the talent that is out there to upgrade my team.” Tim Cullers, Vice President of Restaurant Operations for Timberlodge Steakhouse is “taking a very aggressive approach when looking at talent” and sees the potential for his restaurant group to grow in this market.While there may be differing strategies for successfully navigating the current stormy market, some things remain constant. Fiscal responsibility is wisdom in every aspect of business, as is upgrading the talent piece on your team when that talent is available.