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3 cautionary restaurant tales from 2015

Experience to the rescue: Lessons from chains’ big ‘oops’ moments.
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Restaurant executives often learn the right thing to do by looking in hindsight at what was done fantastically wrong. Here are three misjudgments from the past year that hold lessons for every operator. The common blunder: Not listening and therefore misreading the customer.

1. Riding out guests’ beef with pork

Chipotle figured customers would stick with the brand after it yanked carnitas from about a third of its stores, an act of conscience cited (loudly) by the chain as proof of its commitment to responsible sourcing. A supplier of the pork wasn’t meeting Chipotle’s humane-farming standards, so its product was dropped amid considerable publicity. So was Chipotle.

The oops: “We had hoped that the shortage would encourage our carnitas customer to try another menu option and some did, but many have decided to hold out until carnitas returns to their market,” CFO Jack Hartung said at the time.

The fix: The chain resorted to what management described as a “rolling blackout,” where the limited supplies of carnitas were rationed to stores for a short stretch, then discontinued again to those units.

The aftermath: Shipments of carnitas returned to normal levels after Chipotle lined up a new supplier in the United Kingdom—a marked departure from its pledge to favor local ingredients.

2. All but setting its hair on fire

What didn’t Famous Dave’s do wrong, according to now-chairman Adam Wright? Changes in portion sizes, uniforms, menus, dishware, promotions—all were major flubs that drove away customers and worsened the rib chain’s financial plight, the company acknowledges.

The oops: New management led by former McDonald’s CEO Ed Rensi left little unchanged at the concept in its pursuit of a turnaround. The aim was to draw new customers by pushing Famous Dave’s slightly upscale and adjusting the menu. But core customers were disappointed to see favorites like a cornbread muffin being dropped, and they were turned off by smaller portions and tony touches such as the addition of a small-plates bar menu. Headquarters was flooded with complaints, and same-store sales fell 9 percent.

The fix: Rensi was ousted, Wright stepped in, virtually all of the prior team’s decisions were reversed, and founder Dave Anderson was recruited to come back and right his baby.

The aftermath: “The changes will take time to take effect as we undo the mistakes of the prior management team and attempt to win back customers we disappointed, while at the same time acquiring new customers,” said Wright.

3. It’s all in the timing

Promoting pricier shrimp and carne asada specials might have been fine for El Pollo Loco, an example of the subsegment that industry researcher Technomic has dubbed QSR Plus. But the moves were almost simultaneous with the elimination of a $5 every-day-bargains menu, and the unconnected steps sent the wrong message to customers. “This confluence of actions drove reduced business from some of our more value-oriented customers,” said CEO Steve Sather.

The oops: Same-store-sales gains slipped to 1.3 percent, below management’s expectation of a 3 percent increase, and triggered a class-action lawsuit against the company. 

The fix: The $5 combo meals returned to the menu, as did a value deal that’s touted on tray liners. The chain also added four combo bowls, priced at $5, as a limited-time offer.

The aftermath: Comps for the chain’s next quarter were fundamentally flat. El Pollo Loco’s efforts to win back value-conscious patrons continue. 

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