A bunch of sheep might look at restaurants’ charge into delivery and think, “Whoa, they really have that herd thing down.” That’s why the industry flinched a few weeks ago when one of its bad boys yelled from a hilltop, “Screw that!”
Kent Taylor, the founder and CEO of Texas Roadhouse, may not be the sort of guy a father hopes his daughter brings home. By any scientific measure, he’s a smartass. He conceived the idea for Roadhouse, one of casual dining’s few strong performers, while drearily slinging drinks as a bartender in a TGI Fridays. So when his brainchild became a success, Taylor took time out from promoting the company’s initial stock offering to visit that same Fridays and show the bartender how far he’d come from the days of slipping little straws into bloody marys.
During that same tour to hawk Roadhouse’s stock, Taylor was goaded into wearing the cut of business suit a Wharton-educated East Coast banker might sport for a board meeting. He couldn’t take it, and resorted back to wearing jeans and his signature cowboy hat for meetings with pinstriped institutional investors.
The company’s financial adviser freaked, Taylor recounted, but he didn’t care. Investors apparently thought more of Taylor’s leadership than his unwillingness to go corporate, as the stock sale raised about $160 million—for 38% of the company.
Taylor, that rube who didn’t know enough to wear a tie, came away with $100 million and 62% of a debt-free public company.
The 13 years that followed didn’t temper Taylor’s rebel tendencies, especially when his brand continued to outpace the pack of roadhouse-themed steakhouses. Still, that didn’t stop jaws from dropping when he responded to a financial analyst’s comment about his brand being “the only company in the universe” that wasn’t at least testing delivery.
“We encourage all of our competitors to do as much delivery as they can so they can deliver lukewarm food to their people,” Taylor shot back during Roadhouse’s quarterly conference call—for which he was late. “We will stick to our guns on this.”
Taylor isn’t the only contrarian the industry boasts, particularly on the matter of delivery. Like Roadhouse, the A&W burger chain can’t see how it can deliver all the positives of a restaurant visit. How do you capture the uniqueness of getting a frosted mug of fresh-drawn root beer?
Red Robin has told investors it has qualms about disappointing customers and paying 20%-30% of the ticket to a third-party deliverer. But, “That said, guests are clearly interested in more delivery options,” acknowledged Red Robin CEO Denny Post.
Wingstop was an avowed skeptic on delivery, but the sales potential made it a believer. Branches participating in a one-market test saw sales rise 10% year over year, and virtually all of it from a jump in transactions, noted CEO Charlie Morrison.
We don’t know if Texas Roadhouse is right or wrong for digging in the heels of its cowboy boots and refusing to try delivery. But you have to admire its insistence on doing what’s right for the brand instead of rashly jumping aboard the latest wave. It may ultimately have to renege and give delivery a try, but not because it lacks the resolve to go its own way.
To march blindly in that direction, just because everyone else is heading there, is worse than bleating like a sheep. It’s acting like a lemming.
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