“Uncertainty” was the operative word uttered numerous times by two leading franchise operators on the stage at the Restaurant Leadership Conference in Phoenix Tuesday as they talked about the year ahead.
But first, Jim Balis, one of the franchisee panelists and partner in investment firm CapitalSpring, addressed the “gorilla” in the room when asked to confirm last week’s report of an acquisition of Sizzling Platter, a multi-franchise group with 750 restaurants, by Bain Capital.
“I can confirm [the reports] but unfortunately can’t comment on the specifics,” said Balis, former CEO and current chairman of the board of Sizzling Platter.
Then Balis and Robin Robison, president of emerging brands for Thrive Restaurant Group, the second largest Applebee’s franchisee and operators of HomeGrown, a brand developed by Thrive, got into the theme of the session: “Franchisees Leading with Innovation.”
“We started preparing for tariffs far back in November, after the election, and we made a conscious choice to actually purchase all of our small wares and equipment for our openings this year, to ward off any potential risk,” said Robison.
But tariffs aside, she also thinks that with all the uncertainty in the world, restaurants have such an opportunity to provide a safe haven for team members and guests. “If you get an hour in a restaurant, you want it to be a lovely experience and to be of value,” she said.
Balis said that although consumer confidence was low, his fine-dining business is seeing record sales numbers and year-over-year traffic growth. “The QSR segment seems to be more challenging and more impacted by these uncertain times,” he added. But, said Balis, “obviously if you’re a restaurant using a lot of avocados or coffee, you’re going to be impacted. We figure prices may have to go up by about 15%. And about 75% of our produce comes from Mexico. We just don’t grow enough in the U.S. to make up for that.”
Labor is another uncertainty, and both panelists are using technology to help meet that challenge.
“I talk a lot about how the ‘flywheel’ of successful labor retention is key,” said Balis. “If you invest in your people, they stay longer and there’s a lot of technology out there that assesses employee sentiment so you can get ahead of issues.”
In his restaurants, Balis engages team members by putting a screen in the back of house and displaying a picture of them, welcoming them to the team, talking about their hobbies, celebrating their birthdays, anniversaries, etc. “But we learned that social media posts from team members are a mistake,” he said.
Thrive is testing a pilot program in which they put counselors onsite in restaurant locations to help vulnerable team members with everyday skills, like opening a bank account, finding housing and getting a mortgage. “When we say flourish and thrive, we genuinely mean that from our hearts and provide resources,” said Robison. “So far, it’s only in a few of our restaurants but team members have really responded to it.”
Robison added that labor is not an easy equation to solve, “but we’re fanatically focused on getting it right so our franchisees can flourish.”
In Balis’s restaurants, predictive AI is being used to help with forecasting sales and product mix to schedule deliveries more accurately and reduce waste. He also predicts that camera technology will evolve. “You’re starting to see cameras in the back- and front-of-house to ensure a high level of execution and pinpoint training,” he said.
Robison works with a company called Local Clarity, a review aggregator, which generates responses to reviews and comments using AI. A team member can then edit and add a personalized spin. “Our goal is to respond to every franchise guest,” she said.
But on the Applebee’s side, she prefers an old-school approach. “We contract a guest relations company that uses technology to answer the phones for us, so the phones aren’t ringing in the restaurants. The people work from home and can take catering orders and meal orders and it’s an amazing model financially,” said Robison.
Both panelists are optimistic about the future despite the uncertainty of the present. “I’m optimistic because [restaurant people] are the most dynamic, flexible people in the world and we can adjust to anything,” Robison said. “Just think where we were five years ago, when we figured out to provide hospitality in a [delivery] bag.”
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