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5 answers to nagging restaurant questions

Answers to plenty of pressing restaurant problems were served up during the Restaurant Leadership Conference in Phoenix.

Operators who came to the Restaurant Leadership Conference in search of answers were provided on Day Two of the restaurant groupthink with resolutions to a host of puzzling issues. Here were some of the queries that expert speakers addressed.

1. Franchise, or stick with corporate development?

The question of whether an emerging brand should franchise was squarely addressed during a breakout session on building the right management structure.

“If you could do north of $1.5 million in [average unit volume], it’s probably a good concept to own,” said Jason Morgan, CEO of the ChopShop and Bellagreen chains. If the AUV is in the hundreds of thousands, franchising might make far more sense as a way to fuel growth, he observed.

2. How much of a threat are cybercriminals?

A typical business in the United States is probed an average of 10,000 times a day by would-be hackers, said Dan Schulman, the CEO of PayPal. “You have very aggressive invaders coming at you all of the time,” he noted.

Fortunately, Schulman said, the majority of those attempted data thefts are unsuccessful, though the level of success is hardly a comfort, as he readily noted: “Hackers are successful 15% of the time.”

He also told the audience of restaurateurs and suppliers, “Ninety-five percent of you have been hacked.”

3. How effective are the conventional data safeguards?

“If you’re using a user name and password to let people in, it’s almost a useless deterrent,” said Schulman.

He also noted that 40% of computers in the United States have already been infiltrated and assimilated into “botnets” that can collaboratively attack a data repository.

4. Is there a reliable gut check on making an acquisition?

“My No. 1 question before we buy a brand is, ‘Would I be comfortable being a franchisee of that brand?’” said Aziz Hashim, founder and manager of the NRD Capital investment fund and a former franchisee of several quick-service brands. The company’s portfolio includes Ruby Tuesday, Fuzzy’s Taco Shop and Frisch’s Big Boy.

5. Is there anything new (and ideally more effective) in training?

KarpReilly, another private-equity firm that’s active in the restaurant market, is about to set up a new training program that’s based on psychology and hardcore scientific principles.

“There are different ways to teach that get different results,” said Adam Burgoon, a KarpReilly partner. “Can you imagine having a GM training session where the people walk out with twice the usual learnings?”

The pilot program was developed in collaboration with a university that Burgoon did not identify.

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