Last week’s episode of the Restaurant Business podcast A Deeper Dive featured Ed Nelson, the CEO of Whataburger, and Debbie Stroud, who will take over for him at the end of this year.
The San Antonio, Texas-based burger chain is one of the restaurant industry’s most consistent performers. But it also has a long history, and the transition will mark a new era for the company.
Nelson is retiring after five years at the helm of the chain. He will hand the title to Stroud, a former McDonald’s and Starbucks executive who was named chief operating officer last year.
I sat down with those two to discuss the transition. We talk about the chain’s history, about Nelson’s tenure as CEO, why he’s retiring now, and what Stroud brings to the table.
Here is a transcript of the conversation.
Jonathan Maze: Okay, I am here with Ed Nelson and Debbie Stroud. Ed and Debbie, welcome to the podcast.
Debbie Stroud: Thank you so much for having us today.
Ed Nelson: Good morning. Yes.
JM: All right, super. So, let's start a little bit with you. You just announced your retirement as CEO and after a long career with Whataburger. Talk a little bit about what went into the decision and why you decided to retire now.
EN: Absolutely. So it's, it's, is my 20th year, five years ago, the Dobson family made a decision to transition the company from family owned to a merchant bank on BDT to really give the company the opportunity to grow to the next level, to really, really expand the white space for Waterburger is has so much potential. And so why five years for me? Well, five years ago,
The Dobsons asked me to lead the company forward. BDT asked me to bridge the transition from family -owned to, again, private equity, merchant bank -owned. It's been a phenomenal transition. I didn't plan for COVID. I didn't plan for the great resignation. I didn't plan for inflation to be what it has been.
But I have a leadership team that has been able to respond to every challenge that's been put in front of us as a business. A lot of them we didn't have plans for as the country didn't have plans for. But it's been such a phenomenal, phenomenal five years.
Great team in place now. It's time for me to step back and watch the brand flourish again under Debbie, her expertise, the confidence she will build and she has already built with the investors, the confidence and leadership that she brought to the table for our people at Whataburger, 50 plus thousand family members.
She is absolutely focused on the legacy of what made Whataburger great, which is being known for highest quality food delivered by the friendliest people and an consistent experience that is a reasonable amount of time in clean, well -maintained stores. She believes in what got us here. Her experiences gave me the confidence to choose a time now to know that Whataburger can be carried into the next five, 10 years. Because again, this was my time and my chapter and the team's in place now to move forward. So, a blessing.
JM: Yeah. that, mean, she, well let's, spend a little time so you can embarrass Debbie on, on a podcast. So you were, was she, was she always part of the process? I mean, when she, she just got to the, to the company, I believe last year, if I'm not mistaken. Yeah.
EN: She's been there a year and We were looking for, I was looking for a president COO who brought her in as a COO and just was able to see her passion for the people in the restaurants, her connection to the customers, her ability to have the awareness in the restaurants around.
The customers and I say the customers because it's very important in the restaurant business that when you're there, you're constantly watching family members and trying to create the best environment for them. But also making sure their awareness is there from your family members about what customers want. The natural awareness of seeing that customer going, solving things.
And again, she's such a natural at those things and that ability to come in to take 27 years at one brand, five years at another brand, and take all those things in her past and all that stuff that she learned and now be able to apply it to a unique brand, a unique experience that we're working toward being that hometown burger to every community that we serve. She has it. And that's why the passion is there. And that's why it's so special at this time for her to take over.
JM: Right. And not just, yeah. And not just any two brands either. I mean, no, no, she's not coming from small ones.
DS: Thanks Ed.
EN: No, very, very great brand, great systems, great standards. And the restaurant business literally is one on a daily basis, transaction by transaction. It's about structure. It's about routines. It's about systems. And Whataburger has all of those in place. It's inspiring people in new communities and existing communities, especially after COVID to embrace those and really, really use those to win our customers on a daily basis and also win our family members. And we've seen that over the last year and a half with our family member retention getting better and better and better. Our changes in the bonus programs, absolutely enabling a focus on the right things from the business leaders and the operating partners and market leaders. mean, everything's clicking really well.
And I think the brand's ready for, and I know Debbie's ready for that next level of leadership.
JM: Before we, have a few questions I need to ask you, Ed, but before I do that, I want to ask Debbie this question. What attracted you to Whataburger? Why, what attracted you to this?
EN: So, thank you.
DS: Yeah, you know, it's been a brand that I've been falling in love with, but from the onset, it was the heart of the brand. It is an iconic, fun brand that is recognizable. There is truly, there's a unique history and legacy of this company, which I really have loved learning about and immersing myself in.
And there is a feeling of family that extends from every family member in all of our markets. And we work very hard to extend that to the customers that visit us every day. And what really attracted me was when this legacy phrase of pride, care, and love, when I learned about that from the onset through talking with Ed and other members of the executive team, pride, care, and love is something that lives on. it's...something that our founders aspire to and is something that I think is just rooted in our history. And that's really what connected me to purposeful leadership in what we do and how we serve every day.
JM: All right, so Ed, correct me if I'm wrong, but you're the first non -Dobson to lead the company, were you not?
EN: So basically the company for 69 years was legacy and founder led. And now in 2019 it became legacy inspired. I was the CFO for 15 years with the Dobsons prior to the, to the promotion of president and then CEO the next year, 19 and 20. So I did get to listen and learn and really understand what Pride, and Love meant to the Dobson family, what it meant to the Whataburger family members, what it meant to the communities. But yes, I was the transition leader.
It really, really has been just such a blessing to be able to protect what got us here, but also change the things that were necessary during COVID, digital order ordering, curbside ordering, different revenue ports, kiosks, the things that the brand really had to evolve to with COVID coming and people's mindsets changing.
So it did give me an opportunity to make sure that I continued to focus on the Dobson family legacy and what really, really was important and got Whataburger where it was, but also to change and what Debbie is bringing to the table is again, the systems, the focus on the things that make drive -throughs great, that make kitchen execution great, really helping to, and inspiring the people to utilize our systems and also looking at the next level of Whataburger in technology and back office and all the things that we're looking at right now to create scalability for this brand and for our people.
And so it's that level of what she's bringing to the table is going to help the team really focus. And again, I'm just passionate about and believe that she's going to elevate our leaders to that next level and drive through execution and truly the execution of our brand at the next level. And again, we're very focused and she's very focused on.
Being able to be in the restaurants and listen to the people, watch what's going on, see the things that have opportunities and bring them back to corporate, work on them with teams and get it back in a structured way that our people can execute. And just really, really proud of what we're doing right now.
JM: No. So, I want to, you, you mentioned the, the, the sale of majority ownership in Whataburger. When that happened, and I'm pretty certain you're aware, there was a reaction in Texas about that. quite a bit of reaction. And to me, it sort of illustrated really essentially one of Whataburger's main strengths, which is that,
Your people in Texas really love Whataburger and have a connection that you can't really buy that. Can you talk a little bit about that and what that means to the brand? also, I guess the risk in going forward is that it seems like probably the issue for Debbie is to maintain that connection with with your core customer. Can you talk a little bit about that?
EN: Sure, so first a couple of things. So Texas reacted because, and it really wasn't Texas. We left Texas in 1959 and went to Florida. So we were in 10 states when the brand sold. But really the reaction was about, know, Whataburger, this is a guest perspective, Whataburger, I love Whataburger. What does that mean? Again, I love a burger, a Whataburger, just like I like it.
I love friendly people serving me. I love clean restaurants, you know, and I'm connected to making great memories around food. And that's what Waterburger gave them for 74 years. Excuse me, 69 at that time. My focus with my leadership team at that time and my operators were, okay, you hear what our guests are saying.
They're telling you exactly what they want. It's on us to deliver to that. It's on us to protect what's made us great from our legacy. It's on us. And so that was part of the transition was my continued focus with my operators and really my leadership team. Our guests, basically the customers tell us what they will keep at it. Let's deliver exactly what they're saying. And we did.
We didn't change the quality of the food. We actually invested in quality during shrink inflation or inflation. I say straight inflation. As you know, a lot of a lot of retail brands, restaurant brands change their products. The water burger is still a five inch burger. Our meat is still ranch to restaurants seven to 10 days. We've had to expand into four meat processing facilities from two, so that we could absolutely continue to deliver that fresh meat to every store three to five days per week. So again, the transition of leaning in on what made us great was what I focused on. The customers experienced it from operations. We delivered exactly what they wanted and it proved itself well because we really have. AUV has gone from, to 4 million, 4 .1 million AUV right now. Our revenue has gone up significantly. Our guests, as Debbie said, she said this morning in a franchise meeting, we monitor guest results, guest experiences. And our guests are telling us, we love Whataburger. And so as you can see, we've been able to focus on the right things. again, Debbie has that same view and focus because we know what makes Water Burger special and we're going to keep that up.
JM: Yeah. One real quick question. They're to hammer Debbie with a bunch of questions for the last part of talk. You have, you switched or you elevated general managers to operating partners. And also you gave like $90 million in bonuses to your employees, what you call family members. Can you talk a little bit about that move to, you know, the, the elevating to operating partners, what that, what that is, what that means?
EN: I wasn't sure I was going to that.
So we basically, you know, when we did the transition, we didn't change our general managers ran the stores during COVID. We didn't allow area managers, now market leaders into the stores. We tried to create a bubble within those stores. You we were the only brand that stayed open 24 hours a day, seven days a week during COVID. We were there for our communities and I watched my operating, my general managers at that time lead at a different level, at a higher level. They were responsible and took care of their people. They were conscientious and they showed up every day with the leadership team at Waterburger to stay open 24 hours a day. They worked their schedules. We paid our people. We gave hours to our people. And I watched my general managers take on that responsibility at a much higher level during COVID. And so part of transitioning out of COVID was operating partners, general managers, you have shown your ability to lead. You've shown your passion for the brand. You've shown your responsibility to your people. And so let's elevate your role to a different role, operating partner, because you did this during COVID. We watched you do this.
And then from a bonus perspective, we saw what they could do from transactions, delivering margins. They really elevated their game. And it shows in the results we've given to our investors. And so that process allowed me and the leadership team to look and say, let's elevate and change the bonuses. We see what's driving success.
Let's align the bonuses to the success metrics that really are delivering to our managers who get bonus, to our operating partners who are bonus, to our investors who invested with the desire and focus on growth of this brand, creating the next level of leadership, succession planning, creating the next group of managers and new operating partners to see it into these new markets. so it was, COVID was a challenge for the country. It really gave us some opportunities to see what people could do. And it gave me the opportunity to really align bonus roles to the level that I saw the people. And once you see people at a different level, you inspire them to that level, you elevate them to that level, you train them to that level. You're going to see an elevation in the brain. And that's what we did.
JM: So Debbie, want to ask you, so you had your career before Whataburger was with McDonald's and Starbucks, the two largest chains in the United States. How, I mean, can you talk a little bit about, mean, it's, Whataburger is a very different company from, from those two. Can you talk a little bit about that and, and, and, and what your experience brings to this role?
DS: Yeah, thank you. So for those of you that are first learning about me, I did join Whataburger in February of 2023. And I've had almost two years now working alongside one of the most fantastic brand ambassadors, you know, for Whataburger, and namely, that's Ed Nelson. You know, and it was day three as I landed here in San Antonio, where we went to Corpus Christi, and we immediately immersed in the history and the beginnings of this wonderful brand.
And what I love to think about that is while I may have had fresh eyes, you know, to this brand, it's what's helped me to fall in love with what's exactly special about this brand because I had so many people sharing and telling me about it. And every week and I would say it's darn near every week I'm in the restaurant with family members and customers. And, you know, that's what absolutely motivates me and lights me up about why we know, need to lean into what makes this so special. And so while I have these wonderful experiences from my career to this point, it's really allowed me to think about what are the differentiators for Whataburger so that Whataburger is the absolutely best Whataburger that we can be. And that's what we are working on.
We're committed to working on and what we've been listening to our family members and our customers about, you over the past several many, many months. And I think that's what I bring to the table. And I for seeing efficiencies of operations and also most importantly meeting the guests with what they expect. And Whataburger has very high standards, you know, as Ed mentioned, fresh, never frozen beef, know, fresh bread, vegetables chopped daily in our restaurants and extraordinary hospitality. But what I've fallen in love with too is just our bowl flavors.
So, you know, I joked the first few months I ate my way through the menu, like it's amazing food. And that's where no matter where I travel, you know, when somebody sees me, you know, with the brand on, I get stopped and I usually get a request to bring, you know, a wonderful sandwich back or can you tell me when are you opening here? And, you know, those are the stories and the things that allow me to think about and lead into the future. And it's this, this, this, the balance we're going into our 75th year. That's what a birthday we're going to have next year. Right. And there's some nostalgia that we'll be able to lean into for our forever fans. And we also get to introduce what table tents and spicy ketchup is, you know, it may be a few new locations that haven't experienced what a burger.
JM: Right. Yeah, super spicy ketchup. So what are your priorities as you take this position? What do you think Whataburger needs to get to the next level?
DS: Yeah, well, the great news is that this is a continuation. know, Ed and I have worked very closely along with the rest of the executive team, our franchisees, you know, our board, and we listen again to our customers. When you think about what we need, to me, it always begins with people. You know, this is about developing leaders. So, you know, in our business, developing leaders, as you just finished talking about in terms of our operating partners developing leaders that can be part of the community and lead and develop other leaders for the future. There's like a tremendous opportunity and career path for leaders within Whataburger. And that's exciting. So that will always remain a top priority. The customer experience, as I mentioned, you know, and thank you to everybody that wrote notes of encouragement, congratulations, suggestions for changes and awareness. We are listening. I am listening.
And that will continue. The customer experience is top of mind. whether that's speed of service or accuracy, again, the bold flavors, we're operating 24 seven. So we meet the needs of a lot of different Americans and we'll stay true to that. So that will also remain a top priority. And then finally, you know, we do have this expansion plan and I would tell you that it's a thoughtful.
It's a thoughtful and intentional expansion plan and that's exciting. And it's also one that we want to ensure that we do through the legacy of this great Texas brand.
JM: When you say thoughtful expansion plan, could you expound on that? do you mean by a thoughtful expansion plan? I assume that means you're just not going to throw restaurants all over the place just because somebody asked you in an airport to bring a Whataburger to Oregon.
DS: That would be exactly a good example of that. And I get a lot of, I do get a lot of requests to include my family members that live in, in our footprint. But, know, Ed shared, you know, he's expanded into several states and yet we've been in, you know, Florida or we've been in, you know, Arizona for a very, very long time. So we have room to grow even where our footprint exists today. We just entered our 16th state in South Carolina. It's known that we will,
DS: We’ll be entering in North Carolina next year. And we just had a wonderful food truck event as an example in the Tampa market. And this takes time. And again, we want to do so in a way where we can introduce ourselves to the community, where we can build upon and engage with the people that live there. It's about us being your favorite hometown burger. And that's important to us.
The warm welcome in many of those places that I just named is overwhelmingly positive. And what I would just say is we don't take it for granted. We know that our customers have choices and we don't take that for granted. And so we want to do so in a way that keeps this brand, you know, you know, a love, a love, a love for Whataburger.
JM: Yeah, so you're not going to put one in Minnesota just because I asked you to on this podcast. That's probably good expansion strategy.
DS: You know, I just want you to ask me and I'm going to tell you I'm listening and we'll make that a note.
JM: Right. And it's probably good expansion strategy, not just to listen to some random person, even if he is the editor of a restaurant publication. So like on the technology front, I mean, you guys talk a little bit about technology. mean, is that something that you're going to be looking into a lot more even going forward? Is that something you can, that you think Whataburger needs more of? Can you talk a little bit about that?
DS: Sure, I'll start it off and Ed, please add in. It's been a topic, it's been a priority for us. It was already in motion, but you think about the changes that Ed led through during COVID, whether it was digital, the app, curbside delivery, all of those things are, we know that the digital consumer, it's growing, it's not going to decline. And I think that when we think about the broader context of technology, it's about, first, internally, how do we make things easier for our managers so that they can focus on the customer experience? So that's removing any of the redundancy or paperwork type of manual things that technology can help us move towards. And then certainly on the customer side, it's how do we make an app that is easy for our customers to use? And how do we have kitchen technology or kitchen management system that makes it easy for new family members to come in and learn how to build?
You know, the quality what a burger that we want to deliver to our guests. So it's on both sides of the counter would be what I would say. And I think we have, again, we've got a good foundation and a very active plan in motion to continue to enhance that.
EN: So, I'm just saying that the technology is very important to us and technology is about those four walls. And then we have some technology work going on at the customer level for us to be able to listen, as Debbie said, but listen more intently, respond quicker, understand what customers want. So we're investing heavily in some systems to be able to really connect. And I love this. It's a family member connection, real time. It's a customer connection, real time. And the information goes back into the hands of our operating partners and our market leaders, real time. So that's, the responses and the passion you hear in Debbie's voice about listening to our customers, the customers feel that. And so there's technology that can help that. And so that's the piece outside of the four walls that I think will really, again, create that, that Waterburger experience and elevation to the next level as we continue our journey.
JM: One last question for Debbie. So any pressure in taking over a brand like this and how do you deal with that?
DS: Sure, sure there's pressure and here's what I would tell you. I love this team. You know, I love this team. I feel the support of the team that we have in place. You know, the 51 ,000 family members are who I've gotten to know and I have every bit of confidence in what they do every day to make the moment right for our customers. And that makes it a lot easier, I think, for me and along with the executive team, you know, to focus on the future.
And that's pretty special. And I feel the support of Ed and the board. I value our friendship and his guidance will extend beyond January 1st. And yeah, the future's bright orange.
JM: Ed and Debbie, that is a perfect time to end this podcast. I really appreciate you joining me this week.
DS: Yeah, thanks for having us.
EN: It was an honor. We appreciate the opportunity to be here and to share Whataburger to everybody.