Dear Rudolph,
It’s a shame the Man in Red put all his savings into NFTs and bitcoin. But, hey, the bankruptcy provides an opportunity to show you’re more than just a glowing nose. The replacement of Santa’s sleigh with a self-driving electric vehicle was certainly a smart first move for the new CEO of North Pole Enterprises.
But we, the folks at the receiving end of the chimney, have some concerns about the announcement that you and the antlered board are “exploring strategic alternatives” for NPE. Even Dimmy the Elf, the underachiever you put on Slinky testing, can see that’s just corporate-speak for a sale.
Please, whatever you do, avoid the zombie herders. You must recognize those folks from your naughty list, probably close to the top and starred.
They’re the opportunists who’ve bought up once-venerable restaurant brands for the equivalent of two sugar plums and then run them into sawdust. Boston Market was once such a leader in the charge away from highly processed factory food that its switch to pre-peeled potatoes raised eyebrows. Now it seems to care so little for customers and crew pride that it’d sell mashed fiberglass if it could get away with it. No wonder its principal owner might’ve crossed paths in bankruptcy court with Mr. Claus.
The other group we urge you to avoid might seem to sport a whiter Santa cap, but tread cautiously there, too. There are some admirable private-equity firms still buying and selling. But for each Roark Capital, CapitalSpring or Bain, there are plenty of equity investment outfits that are plainly not good for the industry.
They’re the ones who scared the catsup out of the business when they started buying restaurant concepts 15 years ago at a breakneck pace. The Pac Man activity has clearly fallen off from the pre-Covid rate, but the aftereffects are going to be with us for a while.
There’s plenty of talk today about the lingering effects of the pandemic, from the boost it gave off-premise sales to how it lit a rocket under crewmember pay. The aftereffects of the PE boom are less discussed, though they’re no less tangible or important. Consider, for instance, the effect that era still exerts on the industry’s diversity, or appreciable lack there-of.
When the strategic plan for your restaurant holding extends to just five years, as it did for many PE firms, you don’t care about spending money that won’t yield a return for far longer, no matter how important those investments might be to the industry’s long-term health. Plus, it’s hard to trace a direct correlation between DEI programs and sweeter returns for investors.
There was once a time when the industry sported six CEOs of color in the top jobs at public restaurant chains. Now we have none.
The count of women running high-profile chains is slightly better, but a survey of the business shows it’s not living up to its reputation as an industry of opportunity at every rung of the ladder. There’s a glaring disconnection between women working in the business and the percentage who ascend to running it.
For that matter, the PE movement has been a damper on leadership development in general. Members of the buying group took top jobs within their charges to ensure a big monetary return, then exited after cash-in time. The subordinates left in place were short on high-level experience and often unready for the top-echelon jobs.
PE-owned chains also tended to run lean, sporting what was euphemistically called flat organizations. Often, they could more appropriately be described as starved.
There are some positive influences, to be sure. PE owners’ sharp pencils often factored out true flab, and many of the acquisitions truly needed to refocus and lead a few sacred cows behind the barn. But if all the heart and soul of a restaurant business is cut for the sake of profits, its appeal to workers, executives and even customers can become collateral damage.
That leads us to a few management tips we’ll pass along in hopes of getting more than coal in our stockings this Yuletide. Complaints have reached us about how the North Pole Snack Shop is being run. Replacing French fries with hay may look good on paper, but you seldom see the move praised on Yelp. And as far as we can tell, there really is no such thing as plant-forward carrots, so drop the Impossible Tubers.
Oh, and see if you can bring plenty of new traffic to the restaurant industry this year. It sure could use it.