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How to be profitable in tough neighborhoods

Connecting to the community is the top priority, operators say.

Where others see danger and violence in Chicago, White Castle’s Darrin Cotton sees opportunity. After seven years of declining sales, the regional district supervisor’s stores were recognized for having the highest same-store sales increase in Chicago. “I want to be a part of the community because the money is there,” Cotton said during an operators’ panel at this week’s Multicultural Foodservice and Hospitality Alliance’s Operators’ Conference. “It’s what you do with those problems and opportunities that dictates the success of your operation.”

Cotton and the other panelists at the event, which took place June 25–26, 2014 at the Bob Evans Farms headquarters in New Albany, Ohio, stressed that making connections with police, politicians and members of the community is key to restaurants’ success in tough neighborhoods. “It took a year to build those relationships,” Cotton says. Now he has his local alderman on speed dial and participates in community groups such as CAPS, the Chicago Alternative Policing Strategy, a partnership between the police department and community to brainstorm ways to solve problems within a beat area. “You need that [kind of] partnership. If you don’t do that, I guarantee you won’t be successful,” Cotton said. Because he oversees 11 area White Castles (eight of which are in the inner city) and can’t be everywhere at once, Cotton also has made community involvement the workday for his store managers and GMs.

Karim Webb, a Buffalo Wild Wings franchisee, said his location in the Crenshaw Corridor area of Los Angeles was the first sit-down family restaurant for miles. While it took some time to gain traction in the community, he has since seen success by focusing on developing employees. His location was celebrated for having the highest comparable store sales increase year over year between 2012 and 2013. Since he opened, Chipotle and other concepts have come to the neighborhood. And he’s been able to attract guests from outside the primary trade area because he’s been able to “make people feel comfortable about being there.”

Webb, Cotton and the third operator on the panel, Victor Rivera, director of operations for McDonald’s Ohio region, admit that security is an important part of the equation. Webb even negotiates it into his occupancy costs and hires security people who have ties to the community in which he operates. “They open the door for people, they help with deliveries to make sure everything that’s supposed to come in comes in; if they have to look in a bag, they’re discreet.”

But focusing on employee development has had the biggest impact on creating a profitable and successful inner-city business, Webb says. “We deal with populations where a high percentage of the kids are not graduating from high school; half or more are in the foster care system. Many are devoid of the moral compass many of us were raised with,” says Webb. “But if you embrace integrity and show it every day, and explain [to workers] that you can make that happen for yourself … you’ll see the light bulb go on in people.

“People want to be developed. When people know you care about what’s important to them, they’ll care about what’s important to you. Your margins are going to be in tact because people are doing the right thing.” It’s not just talk. Webb says he makes a contract of sorts with every new hire, making a commitment to help each employee see his or her own worth and promising to provide the skills, tools and opportunities they’ll need to fulfill their own promise, he says.

Connecting to the community also is key. “We make our restaurant a community hub,” Webb says. Both he and Cotton say that hosting fundraisers and other private events in their stores is something that they’re not only happy to do but also is good for business.  “Because we’re there, we’ve ingratiated the brand to people who wouldn’t otherwise be as passionate,” Webb says.

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