Paul Brown: The Listener
CEO, Arby’s Restaurant Group, franchisor of 2,200 quick-service sandwich restaurants, operator of 1,050 more; owned principally by Roark Capital
- President, brands & commercial services, Hilton Worldwide
- President, Expedia.com
- Partner, McKinsey & Co.
- SVP, global brand services, Intercontinental Hotels
- Kellogg School of Management, MBA
- McCormick School of Engineering & Applied Sciences, M.S. in engineering
- Georgia Institute of Technology, B.S. in management
Passions outside of work
- Family, travel, being outdoors, fine food and wine
To hear Paul Brown tell it, anyone with ears could have put the juice back into Arby’s, a nearly 50-year-old brand that wheezed like one when he became its CEO in mid-2013. Associates are the ones who provide the qualifier that there’s listening, and then there’s paying attention a la Brown.
Consider, for instance, what Brown took from an exercise early in his tenure to gauge what prospective customers thought of Arby’s. Consumers designated as potential users were provided with logos for fast-food chains and asked to arrange the symbols on a table to reflect the state of the market.
The participants put the logos of the better-burger brands at one end of the table, and the icons of the low-priced burger chains at the other. Arby’s logo ended up smack in the middle. “They told us, ‘You have the same kind of food as these guys,’ pointing to the fast-casual players, ‘but you’re cheaper than they are, and you have drive-thrus and you have more locations,’” Brown recalls.
The feedback was an aha moment for Brown and the team. “We said, ‘Let’s run with that. Let’s not accidentally be in the middle, let’s deliberately be in the middle.’”
That effort would become a pillar of a turnaround celebrated as one of the most impressive rebounds the industry has seen this decade. The prevailing assessment beforehand was that Arby’s was on life support.
Even the brand’s owner seemed doubtful. Instead of betting on the roast beef specialist, Nelson Peltz’s Triarc Cos. purchased Wendy’s for $2.34 billion and sold 81.5% of Arby’s to Roark Capital for $430 million.
Today, Arby’s is outpacing the rest of the LSR market by a good clip. Same-store sales for Q3 2016 rose 2.4%, compared with a 1.3% gain for the same period for McDonald’s, the industry’s other turnaround brand. Wendy’s, which still owns about 18.5% of Arby’s, posted a 1.4% rise in comps.
The rebound is attributed to Brown, a key reason why he was selected by the editors of Restaurant Business as the 2017 Restaurant Leader of the Year. The honor has previously been bestowed on Danny Meyer, co-founder of Shake Shack, and Gregg Flynn, CEO of the industry’s largest franchise organization, the $1.2-billion-a-year Flynn Restaurant Group.
Brown is quick to note, “We made a lot of progress in the transformation of the brand, but we have a long way to go. In fact, one would say we’ll never be fully completed.”
For one thing, there’s the need to put a fresh face on stores. About 450 of the system’s 3,300 units have the brand’s more contemporary look, a refresher that also extends to more advanced ovens and other kitchen equipment. About the same number will get the facelift this year, and half the system should sport the new look by the end of 2018.
He also cites the ever-pressing need to make noise with new products like the venison sandwich Arby’s featured this past fall. Only a limited number of sandwiches were offered, and only at 17 units nationwide. But the LTO sold out in minutes, drawing widespread coverage to the brand for the novelty of the product and its unexpected acceptance.
To foster that news-making and creativity, Brown has changed the way traditional disciplines work together at Arby’s.
“We’re siloed in that we have a marketing department, an operations department, and so on,” he says. “If you look at how we work, you really can’t tell the difference between the groups. It’s everybody’s responsibility to come up with the ideas and make them work. It’s not a matter of marketing coming up with this little thing and throwing it over the wall to operations to make it work.”
A major piece of the process, Brown stresses, is Arby’s franchise community. “Our franchisees are great about having that mindset of, ‘How can we make this work? And can we do more?’” he says. “It’s not a matter of coming up with four or five reasons why it wouldn’t work.”
Brown says franchisees were his main source of information and direction when he joined Arby’s as CEO, his first job in the restaurant business. “I visited a large number of our franchisees and just listened,” he recalls. “‘Tell me about the brand. Tell me about times when the brand was working. Tell me about times when the brand struggled. Tell me about the opportunities.’”
The eagerness to hear their input won the attention and allegiance of the operators, who’d watched a parade of executives march in and out of the top job at Arby’s in prior years. They cite in particular Brown’s willingness to serve on the chain’s franchise advisory board, in essence putting himself on their level in discussions of key strategic issues.
It’s one example of Brown’s willingness to see Arby’s rewrite the rules. But the most visible switch might have been a new social media policy, a departure that delivered one of the industry’s biggest-ever marketing coups.
Arby’s social media team famously tweeted “Give us back our hat” when they saw musician Pharrell Williams sporting headgear at the 2014 Grammys that was a dead ringer for the chain’s logo. After considerable back and forth, all of which was avidly followed on Twitter, the star eventually sold the franchisor the hat for $44,100, which was donated to charity. It was a notable moment on social media, and a turning point for Arby’s.
“We used to have a policy where anyone who spoke for the brand had to go through several cycles of approval,” says Brown. “That doesn’t work in social media.”
It’s an illustration of what he calls a carefully cultivated culture of innovation. “This type of fast-paced and risk-taking environment has been a core part of the [turnaround] strategy,” Brown says. “We can’t act fast enough if every idea has to come from me or management. The ideas can come from anywhere, and then people build on those ideas, and we operate cross-functionally, bottoms-up and organic.” It’s all a part of what he calls “fighting above our weight.”
The chain has also forgone moves that helped competitors but didn’t seem right for Brown’s charge. Arby’s didn’t jump into breakfast. Selected units offer a.m. service, but the number is smaller than what it was when Brown came aboard. “We don’t need to be distracted at this time by breakfast,” says Brown. “I’m a big believer in focus.”
That doesn’t tell the half of it, subordinates say. Among Brown’s most noticeable strengths, they say, is his ability to articulate an objective, then focus everyone’s attention on the goal and the means of getting there.
“For a company to be successful, it has to be constantly innovating,” says Brown. “Innovation is creativity with a focus.”
He recalls one of his first listening sessions, when he spent time talking to Arby’s loyal core customers. “What we heard was, ‘You can do whatever you want, just as long as you don’t mess with my blank, ’and they filled in the blank with their favorite product.”
But everything else is fair game. Or at least, that’s how he heard it.
Brown’s style by the numbers
Brown says his tech background taught him to approach management as a problem in need of being solved, as well as attention to the nitty-gritty. By blending that orientation with other influences, he’s developed a leadership philosophy that rests on five principles, explained in his own words:
- Set a clear vision and get everyone aligned about where we’re going and how we’re getting there.
- Hire and retain great people.
- Stay out of their way and let them do the job.
- Always have their backs when they need it.
- Be their biggest cheerleader.