Paul Brown took over as CEO of Arby’s in 2013 after a career spent largely in the hotel industry.
So perhaps it’s not a surprise that he would tap into that hotel experience after acquiring Buffalo Wild Wings and forming the newest multibrand restaurant operator in Inspire Brands.
The new company is unusual in that it is starting with a quick-service chain in Arby’s and a casual-dining concept in Buffalo Wild Wings—while also operating the fast-casual taco chain R Taco.
That’s different from typical companies that usually stick with a specific service style—such as Yum Brands with quick-service chains Taco Bell and KFC and Darden with casual diners such as Olive Garden and LongHorn Steakhouse.
But Brown, who worked with Hilton Worldwide, Expedia and Intercontinental Hotels before taking the Arby’s job, believes his former industry offers a good blueprint for a brand-operating company.
“It is more similar to the approach hotel companies have done in the past,” Brown says. “Their approach is to have brands that span the occasion spectrum and be as noncompetitive as possible for the occasion.
“We think this is a way, a different way, a more interesting way, of organizing a portfolio of restaurant brands.”
But that’s where the similarities with the hotel business end. Hotel companies, Brown says, typically have the same operations teams because operating a luxury hotel isn’t that different from operating a midscale hotel, for instance.
Yet operating two different restaurant companies can be very different, given that Arby’s, for instance, doesn’t have the waitstaff that a Buffalo Wild Wings employs.
“The operations teams will be brand specific,” Brown says. “If you think about a hotel brand, operations are not dramatically different. It’s a more similar operating model. But if you go to the restaurant industry, operations are part and parcel to what a brand is. We’re not going to share operations teams.”
That’s key for a company that is agnostic about the brands it operates. “We feel confident we’ll be able to operate various models,” Brown says.
The strategy is to use Arby’s and Buffalo Wild Wings, two similarly sized brands based on sales, to establish a “foundation” for a company that “will have the ability to hopefully acquire other brands in the future,” Brown says.
The strategy was formed over multiple conversations between Brown and Neal Aronson, the founder of Roark Capital, which owns Arby’s and funded its $2.9 billion acquisition of Buffalo Wild Wings. Brown and Aronson are the co-founders of Inspire Brands. Brown is the company’s CEO.
Brown has indicated it would take on brands with system sales between $1 billion and $4.5 billion. Given the company’s service-style agnosticism, that’s a wide range of brands. About 30 brands fit that description, based on information from Technomic's Top 500 Chain Restaurant Report.
“It’s a pretty wide net,” Brown says.
That doesn’t include a handful of concepts, such as Jimmy John’s and Hardee’s and Carl’s Jr. owner CKE Restaurants, that are owned by Roark and would also fit that description. But Brown says the company is largely a vehicle for acquisitions, rather than one to lump a few Roark concepts together—though he didn’t fully dismiss the possibility of one of those Roark-owned concepts being merged into Inspire Brands.
“The strategy is to look for pure acquisitions,” he says.
The company does hope to find brands that are more unique, similar to the relatively unique offerings of its two existing chains. Few concepts of any size compete directly with either Buffalo Wild Wings or Arby’s.
“The ideal scenario is to find complementary brands, and wherever possible that are unique in their space,” Brown says.
Right now, however, Brown says the company is focused on integrating Buffalo Wild Wings. Inspire Brands will be based in Atlanta, with a support center in Minneapolis where Buffalo Wild Wings was headquartered.
Brown says the company is focused on putting the two companies together “the right way.”
He also says that Inspire Brands is focused on a turnaround at Buffalo Wild Wings. The chicken wing chain is coming off of what has arguably been the two toughest years in its history—the company says its same-store sales declined 1.6% to 1.7% systemwide in 2017, for instance.
Brown says that the same basic strategy he used to help turn around Arby’s will be used to determine how to bring Buffalo Wild Wings back.
That starts with ensuring that the company is aligned while making clear the brand’s market position. He wants Buffalo Wild Wings to build off of the brand equity it has built over the past 36 years.
Once the brand has its mission, then the company will focus on its menu, the service experience, its restaurants and its marketing. But Brown also says that the company has done a good job of finding new channels to market its chicken wings and beer.
He believes Buffalo Wild Wings could also help Arby’s when it comes to delivery. The wing chain gets 19% of its sales from takeout and delivery and has been aggressive in adding delivery to its restaurants. “They’re ahead of where Arby’s is, in part because of the business model,” Brown says.
And Arby’s could help Buffalo Wild Wings learn about product innovation. “We’re pushing the envelope of what products typically are served in QSRs,” Brown says. “That’s not accidental. That’s a process, a methodology put in place.
“We feel strongly that we can leverage a lot of those learnings. The products will be very different, and the brands will be very different, but the process behind it will be similar.”
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