best mistakes

8/4/2019 Best Mistakes

1/7

MybestmistakeThe wrong turns that put executiveson the right trackBY PATRICIA COBE, KATHRYN HAW KINS AN D PETER ROMEO

I lost my co ol-a t the wrong personPresident, Cinnabon

Not long after rising into h erfirstexecutive post at a casual chain, ICat Colelearned that higher-ups don't always make the soun dest decisions. Butwhat haunted her after a particularly rash directive from above was howshe reacted.

"We were launchin g a massive menu initiative. I was in charge of the researchand training," she recounts. Big support was ready to be rolled into the field."Then I got a call from one of our opera tors in thefield,"she continues. "One

of the higher-ups just wanted to throw the initiative out there a nd see if it sticks."No advance training, no ramp -up, just run and gun.

Cole, now president of the Cinna bon bakery chain, admits she was rash inher response. "I was so young," she says. "I picked up the pho ne and called thisexecutive, 'Why are you doing this? Don't you realize how imp ortant training is?"'

The rollout proceeded despite her protests. She realized th e superiors weregoing to p revail, and all she did was "make m atters worse."

"Reacting that way," she says, "you're going to have a sho rt career. The lessonfor me was learning the power of diplomacy. It's always best to take a breath andto ask some questions instead of freaking out."

Emb arrassed and convinced "I had just screwed my career," she condi-tioned herself for the better part of a year to react "more strategically."

"It was a very humb ling ex perience and a critical point of ed ucation,"she recalls.Mistake Pain Index: (G )

Restaurant Business August 2011 www.monkeydish.com


2/7

Mistake Pain IndexMINOR SOUL CRUSHING

10

I waited too long to get rid of dead weightob Bai'ry

COO, Green Turtle F ranchisingarly in his career. Bob Barry, currently COO of the CreenTurtle Franchising Group, made the same mistake over

and over again. "I didn't act quickly enough to m ake m anagerialchanges when things weren't going in the right direction. Instead,I tried to work with man agers' weaknesses."

Eventually, Barry realized that he needed to separate his car-ing personality from his business persona. "Ifyou give people the proper tools and the rightdirection, but they still don't get it, they aremoving them selves out," he says.

These days, Barry is passionate about hiringthe best people and investing in their training.He also advocates hiring managers w ho aresmarter than he is.

( )

ew too fastEO and Chairman, Smashburger

mashburger was founded in 2007 in Denver, Colorado, and inits second year,went from four locations to 20. "It was like weovernight,"says CEO and Chairman David Prokupek

From the beginning, Smashburger's intention was to measureuccess in the quality ofthe units they opened not the quan-ityand Prokupek felt

it was time to return tohat goal. So he slowedorporate store growth

for 18 m on ths andinstituted a dramatic

ing sites.Since real estate selec-

tion is extremely imp ortant, we took that decision-making back tofour key people, myself included," he notes.

Although the team cannot physically visit every potential site,they use Google Maps to simulate the experience.

This personalized app roach has directed Smashburger on asmart, controlled path toward growth. It now counts 103 restau-rants in operation45 corporate locations and 58 franchisedwith plans to open a nother 85 this year. And Prokupek rem ains infavor of making mistakes. "The Smashburger culture is high-riskan d we 'budge t' for lots of little mistakes. That's what seeds ideasand that's what led us to where we are today."Mistake Pain Index: (5 )

Too much of my menu w as outsourcedKerry KrampCEO and President, Sizzler

When Kerry Krampreturned to SizzlerUSA in 2008 to spearhe ada tu r na rou nd , h i s f ir stpriority was the food. "Weworked with an outsidesupplier to re-create prod-ucts that our culinary teamhad developed. When weconducted product cut-tings, we said, 'It's alm ostexac t ly the s ame , ' bu tsomething was lacking. Guests didn't think it tasted exactly thesame. Plus, it hurt me as a food personI didn't feel a connectionto the pro duct. O ur kitchen staff felt they had little control over theoutcome and little emo tional connection to the food," says Kramp.

Kramp realized how important it is for hourly employees to feelthat connection to the m enu by making items from scratch. It alsoempowers them , and that helps them connect better to the guests.Mistake Pa in Index: @

Restaurant Business ^ August 2011 www.monkeydish.com


3/7

I sacrificed quaiity for growtiiM i ch ae l MackCEO, Souplantation &Sweet Tomatoes

Suplantation and Sweet Tomatoes, twin San Diego-basedchains with 120 locations, kicked their expa nsion p lans intohigh gear in the late 1980s. While things went well for awhile, itsoon became obvious that their parent company didn't set highenough standards for sites and managers.

"We were too full of ourselves," recalls Michael Mack, CEO ofGarden Fresh Restaurant Corp. "We felt that anywhere weopeneda u nit, it would be successful." Onc e same store sales began to d ip.Garden Fresh realized its mistake and developed a much morerigorous site selection process. Mack's team ramped up analytics,looking at traffic flow and custom er beh avior in each area. Andinstead of assuming a location would work, they changed theirperspective to one of dou bt.

The second plan of attack was assessing those managers w ho

were already in place tosee if they were capable.Simultaneously, their jobswere simplified. The 25or so actions expected ofthem were whittled downto thefivemost important.

"Durin g the assessmentphase , we also looked athow we could best attractand retain quality managers," says Mack. "We learned that highest prio rity was to keep the workweek as close to 40 hou rpossible. So we created the 'Best Job' program in which managget the same pay to work a reasonable workweek." Although Madmits the program is not yet perfect, it has proven effective inhiring and retention of top people. "And our m anagers report they are leading more balanced lives," Mack adds.Mistake Pain Index: (s)

Choosing suppliers based soieiy on price? Not good.Scott JenningsPresident, Cheba Hut

Sott Jennings owns Cheba H ut, amariju ana-the med , six-unit Fort Collins, Colorado -based ch ain that serves toasted sub sandwicJust starting ou t, the small chain found it tough to get good dealsfi-ombig national suppliers, so Jennings went with a local suppthat claimed it could give his company a bargain.

However, the supplier couldn 't actually afford the prices it was offering, an d went belly up on g rand open ing day for a new Cheba unit. The next supplier Cheba Hut went to, a big national comp any, offered a bargain compared to other vend ors. That sup plier went ba year later. Jennings learned his lesson. "If a deal sounds too good to be true, it probably is," he says.

Now he co nducts extensive background checks on all suppliers, looking at their longevity and the ir balance sheets. He also has back-up suppliers in case of emergency.Mistake Pain Index: ()

S a Restaurant Business August2011www.monkeydish.com


4/7

I didn't create a clear m ission statem entBob John stonCEO, The Melt ing Pot

rom 1985 to 1995, Tbe Melting Pot tried to launch a francbise program, buttbings didn't progress as boped. In 10 years, tbe Tampa, Florida-based concep

only grew firomfive o 19 restaurants."We bad trouble attractingfrancbiseesbecause we were self-centered and focused

primarily on tbe bottom line," claims Bob Jobnston, CEO ofparent company FrontBurner Brands, wbicb also runs Burger 21 and GrUlsmitb. "Potential francbisees d id

not u nderstand our principles and vision because we were not com municating well. Plus, we weremaking decisions for tbe wrong reasonsw e sbould bave been paying more attention to team mem bers and guests."

Witb input from manage ment, suppliers,francbiseesand team mem bers, Tbe Melting Pot set priorities tbat put everyone on tbesame page. "We formulated a mission statement tbat could be printed on a four-panel card tbe size of a business card," says Jobnston"Everyone in our com pany carries itfrom man agem ent to servers. It's a platform from wbicb we can coacb and develop."

In simplest term s, tbe com pany's mission centers on improving tbe quality of tbe experience. Tbat translates into providing enougblabor to make tbe guest experience tbe best; no mo re cutting corners to increase tbe botto m line; and investing in food quality andtbe pbysical plant.

During Tbe Melting Pot's second decadefrom 1995 to 2005tbe cbain grew from 19 to 100-plus units, and tbere are now142 restaurant locations. "I attribute tbat growtb to tbe power ofan organization tbat bas a single, concrete mission w itb tbe sametbinking and goals," believes Jobnston .

Mistake Pain Index: (^

I got overeagerJon LutherChairman, Dunkin' Brands

It could be part ofrestaurateurs' DNA: Workingfor someone else, tbey can barely wait to operatetbeir own venture. So wben an ownersbip oppor-tunity came Jon Lutber's way in tbe late 1980s, tbeindustry vet eagerly made tbe jump from executiveto entrepreneur.

And in bis baste, be forgot to put on a p aracbute."I was so enamo red at tbat point in my career witb owning my

own business and putting my im print on it tbat I didn't tbink toprotect myself," says Lutber. He didn't bave a manage me nt c on-tract, tbere was no guarantee if tbe venture fell tbrougb, and bewasn't covered ifone of tbe principals walked away, robbing tbebusiness ofcritical support. Wbicb was exactly wbat bappened;tbe venture failed.

"I bad to start over witb two kids in college, stobroke," recalls Lutber.

He would go on from tbat career low to top poat Popeyes and Dunkin' Brands, wbere be still seras cbairman. But tbe experience cbanged bis tbinki

"Tbe big learning was I was never going to let tbappen again," be recalls. Witb eacb subsequent ption, "I did my due diligence" and "made sure I badrigbt contract, tbe rigbt protection, tbe rigbt peo

working witb m e and a relationsbip witb tbe financiers.""Tbe otber lesson w as always, always, always take calcula

risks," be says. "In 1987,1 didn 't take a calculated risk, I just ta risk."

Lutber also basn't forgotten wbat it felt like to be left witb n oing despite giving tbe situation bis best. "It cbanged my wboutlook," be says. "Tbe learning was I made sure I took carepeople, because you're also taking care of yourself."Mistake Pain Index: ^

2 6 Restaurant Business August 2011 www.monkeydish.com


5/7

I thought we'd make moremoney, and we didn'tA l Bhakt aCEO, Genghis Grill

1n t r e p r e n e u r s w o u l d n ' t

I bet their resources on adoom ed endeavor, so their opti-mism for a venture can run a little

high. Just ask AJ Bhakta, the CEO of 70 -unit G enghis Grill.When he and his partne rs opened their first Grill, "we put

everything on th e line for it." Naturally, they had a detailed businessplan to guide them throug h the start-up, including a contingencyfor an initial fiop.

But "we were very aggressive and didn 't think throug h ourworst-case scenario," Bhakta recalls about the pro forma. "It wasn'tnearly as worst as it could be."

They'd anticipate d sales of at least $18,000 a week. "We did

$7,000 ou rfirstweek," he says. "It was awful. We were on the bof shutting down."

Gradually, volume started to climb. But "it took us weeks toto break-even." In the me antim e, "there were no salaries. We bsurvived. It took a year to get out oftha t."

Successfinallyarrived. That first store was a franch ise. Bhand his partne rs buUt more^being far mo re conservative.

Eventually they prospered enou gh to buy thefranchiserighGenghis G rill. But the lessons of that first store stayed.

"We went from that situation to being a debt-free compasays Bhakta. "Wh en we sign leases now and when w e createformas, we are very conservative."

Franchisees are encouraged to do the same. "I'd say mosthem buy into it," says Bhakta.

"We probably wouldn't be where we are if it hadn't of beenthat experience," Bhakta recalls of his first opening . "But it loolike we were going to be one-a nd-don e at the time."Mistake Pain Index: ^

Too much overhead in my business modeiP ierre PanosPresident, Fresh to OrderWhen Pierre Panos launched his Atlanta restaurant chain, Stoney River L egendarySteaks, in 2000, he spared no expense. Each 7,000-square-foot location cost $3million to $4 million to build. Preparing the complex, time-consuming entrees required thepresence of a head chef. As a result, meals were expensiveaveraging $28 a head and $90per table.

When the economy was good, the chain prospered. But after customers startedtightening their belts, the business saw a 15 to 20 percent decrease in sales.

"I made the mistake of exclusively focusing on perfecting the prod uct w ithoutconsidering cost," says Panos. "Inevitably, the price point became too high andthe wait time was too long for customers to hand le. In the end I decided I hadto sell the company."

In 2001, Panos sold Stoney River to O'Charley's, Inc., and started anotherrestaurant chain. Fresh to Order. This time, his goal was to serve the samequality of food for un der $10 in fewer than 10 minutes. The key to doingthis, says Panos, is buying cheaper locations and spending time and moneyupfront designing the perfect menu.Mistake Pain Index: (5)

2 8 Restaurant Business August 2011 www.monkeydish.com


6/7

We entered a new market at the wrong timeMichae l Ans leyFranchisee, Buffalo Wild Wings

In 2004 after seven years as a successful franchisee with BuffaloWild Wings in Michigan, Michael Ansley decided to take on som eadditional territory in Tampa. His timing was terrible. "The market

suddenly got very hot," he says. "We were looking at M anhattan -like real estate prices."Ansley knew that the wisest move would have been to pick up his franchise contracts and go

elsewhere. But because he had development agreemen ts already in place, he had to follow throu ghwith building new locations. "We ended up with some very poor sites," he says.

Now, rather than relying on the prom ises of developers, Ansley thoroughly vets each new loca-tion. He scopes out th e popula rity of existing retail anchors an d looks at plazas that are furtheralong in developm ent a nd feature retailers such asTarget, Lowe's or Hom e Depot. "We're no longerinterested in securing an end cap location and w aiting or hoping for an an chor to move in," he says.

In sites where a nchors haven't yet opened , Ansley negotiates leases that havefinancialpenaltiesfor developers: "If they don't deliver on the prom ised ope ning of, say, a Wal-Mart or a movie theater,we get back 50 pe rcent of the rental agreement," he adds.M istake Pain Index: ( )

Embraced my entrepreneurial driveto a faultRuss UmphenourCEO, Focus Brands

1rowing a restaurant chain requires more thanlining up sites, as Russ Ump henour can attest.

Today, as CEO of Focus Brands, he heads a supportoperation for six franchise brands encompassingsome 3,300 stores. But back in his en treprene urialpre-Focus days, he came close to bankruptcy becausehe had no use for that sort of infrastructure.

"When we had maybe 20 restaurants, I made aserious mistake in that I waited too long to hire aCFO," he recalls of the days when he was building an

Arby's franchise that w ould eventually extend to about 775 units."Me being the consum mate entrepreneur, it was all about growth, abou t building stores," he said.

"I was abou t eight or nin e years in the business. I didn 't know en ough to reach out."The education was a painfiil one . With th e switch from a "glorified accou ntant" to a "true" CFO,

"I probably did it 10 years too late ... It got us close to bankruptc y twice."The lesson has stayed with him . "As I grew older and wiser, I realized we needed mo re sm art

people around," he says. "Not boo k sm art, but sm art en ough to make the right decisions."M istake P ain Index: ()

Sacrificing control of m ykitchenJonathan DeSouzaOwner, 231 2 G arrett

Jnathan DeSouza launchis gastropub, 2312 Garra year and a half ago in DreHill, Pennsylvania. Because it his first venture in the restaurindustry, he thou ght it was wto hire an expert chef to run kitchen. "I entrusted the chef wmy vision," says DeSouza.

However, the chef's ideas abhow to run the place contrassharply with DeSouza's vis iAfter three months of frequclashes and arguments, DeSolet the chef go . He closed the rtauran t briefly, and re-open ed wa new philosophy: teamwork.

"N ow my team a l l w otogetherfrom the bartendersthe waitresses, to the kitchenthe ownersand it's a much beenvironment," he says. His curcook may no t have the imprescredentials of the former chef,he em braces DeSouza's vision ocollaborative work environme nM istake Pain Index: ()

L3 0 Restaurant Business August 2011 www.monkeydish.com


7/7

Copyright of Restaurant Business is the property of CSP, LLC and its content may not be copied or emailed to

multiple sites or posted to a listserv without the copyright holder's express written permission. However, users

may print, download, or email articles for individual use.

best mistakes

Documents