On Jan. 1, the same question loomed for the CEO of every restaurant company, big or small, established or new: What now?
What should they do with their charges to earn success and the buy-in of everyone, from stakeholders to employees, the community and, most important, customers? Where would they take the organization?
How they answered will determine what kind of Dec. 31 they’ll be having. Will they look back on the past year with a wince or a smile? Or will it be the stone face of someone who rings in the New Year without a paycheck?
This has not been a year of shifting tides, with all the boats floating at whatever level is set by economic or social trends. With the possible exception of 2009, I can’t think of a year where leadership and strategy yielded such a difference in the performance of chains. Consider the top three burger chains and how different their 2014s were—about as different as the courses they were led to pursue.
From where I sit, here are the five chain CEOs who best illustrate the paramount influence that astute leadership can have on a restaurant business.
1. JJ Buettgen, Ruby Tuesday
If he’d arrived on Day One in a dark suit, onlookers might have mistaken him for an undertaker. The venerable grill-and-bar chain looked as if it would needed one in short order. Predecessors had pushed the mid-market concept into pricier territory—an iffy play in the best of times, a disaster in the wake of the Great Recession. If the Darden and Brinker alumnus spent his time choosing a casket and the appropriate funeral song, the industry would have understood.
Instead, Buettgen drew on his deep marketing and operational experience to draft a comeback plan that he spent this year enacting. It was not a miracle cure: Bring back lapsed customers by showcasing what they liked, lure new ones with an ambience that’s more comfortable than tony, and appeal to the value conscious in both target groups with high-craft/low-ticket items like hand-breaded chicken fingers. Everything was recast in a more mainstream version, from dishware to uniforms, lighting levels and music.
The result: For the first time in a long stretch, same-store sales and guest counts are positive (albeit just 1.1 percent and 1.3 percent, respectively, for the quarter ended Sept. 2), and the company is profitable. Restaurant-level margins have also improved.
The company isn’t exactly in Chipotle or Starbucks territory. But the memorial service can wait.
2. Cheryl Bachelder, Popeyes
If Las Vegas took bets on restaurant turnarounds, Popeyes would have merited the same odds as the Cubs winning the World Series. But the rescue of the chain is yesterday’s news. Bachelder gets the nod for 2014 because of how she added momentum to the chain’s resurgence and built it into a quick-service frontrunner despite the baggage of specializing in fried chicken. For the third quarter, comparable store sales climbed into the rarified territory of 7.2 percent. That’s more than double the gain posted by the only other large fried-chicken chain, KFC.
Bachelder didn’t resort to astrophysics to accelerate growth. Popeyes still focuses on fried chicken, it still strives to be more of a QSR than a fast-casual pretender, and the fixes of recent years were definitely of the Doh! variety. The advances included the switch to drive-thru microphones and headsets that actually worked, and adding a customer-feedback mechanism.
But she succeeded in tasks that vex many of her peers: Boiling down a brand to the attributes that resonate with consumers, then clearly conveying those points of distinction in the marketing, menu and restaurant design. And it worked.
3. John Miller, Denny’s
If there’s a tougher place for rebirths than the fried-chicken business, it has to be the family restaurant market, a sector that all but shuffles along with oxygen tank in tow. Few segments of the business saw more bankruptcies and shutdowns during the recession. Afterward, the only excitement came from debating who’ll die first, the brands in the segment or their clientele.
And the biggest and arguably least agile resident of that napkin-sporting retirement home? Denny’s.
Enter Miller, who’s been Viagra of sorts for the brand. It’s on track to post a higher same-store sales gains for 2014 than the chain has seen in eight years, the result of menu, pricing and marketing tweaks. A new building design is also a factor, but only a portion of the chain has gotten the facelift to date.
The effort can be summed up as putting new allure into the brand without alienating the customers who liked it as it was. Operations were also simplified to help staffers do their jobs better, which usually translates into a better time for the guest.
Not surprisingly, at least one financial analyst is now predicting a revival of the whole family restaurant market.
4. Steve Ells & Monty Moran (co-CEOs), Chipotle Mexican Grill
Two data points sum up why there was never a doubt of this pair making the list. Chipotle’s same-store sales for the second quarter: 17.3 percent. The chain’s comps for the third quarter: 19.8 percent. Those are not typos.
Chipotle may be the most differentiated broad-market brand in the business. Consumers have a clear impression of what it is and how it differs fundamentally from the chain’s one-time parent, McDonald’s. Ditto for what it serves, what it supports, and how it engages customers.
All those dynamics were there in 2013. But Ells and Moran really hit their stride in 2014, further distancing their brainchild from the mainstream in character as well as financial success. They’ve positioned Chipotle as the Apple of the restaurant business, and the image is sharper today than it was before the company topped $1 billion in revenues.
5. Howard Schultz, Starbucks
Another nominee from Captain Obvious. The one-time housewares salesman has fostered what’s arguably the most innovative culture in the business, and 2014 was a particularly fertile year. Starbucks opened a gourmet burger place, upgraded its food, experimented with evening bar service, added the upscale Reserve venture to a concept portfolio that will also soon include express and “micro units,” and jumped to the forefront of mobile ordering and payments.
Schultz led that nonstop brainstorming while opening 344 company-operated stores in the third quarter alone and raising comp sales for that three-month stretch by 7 percent.
Clearly he has that rare gift of being able to tend today’s business while bringing the future of it into focus.
Disagree with my choices? Let me know at promeo@cspnet.com.
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