Turning Around a Restaurant Chain

Overall restaurant industry sales and traffic are expected to climb no more than 3 percent in 2017, according to National Restaurant Association economist Hudson Riehle, who showed several slides to that effect during his presentation at this week’s UCLA Extension Restaurant Industry Conference. To be sure, geographical variations exist; yet nearly every operator is feeling the pinch of slow growth. Blame rising labor costs, a scarcer workforce and an ever-growing number of competitors.

Now imagine the impact of those and other factors on already ailing chains. How do they gain traction under dramatically worse circumstances? Three veteran execs on Fred LeFranc’s conference panel provided some painful insights. Here’s a brief look at their remarks.

Turn around panelists: Clarice Turner, CEO, Boudin SF, Boudin Baker; Fred LeFranc, RTS Managing Partner; Hazem Ouf, president and CEO, Logan’s Roadhouse; and Tim Dungan, director and CEO, Day Star Restaurant Holdings

Logan’s Roadhouse CEO Hazem Ouf described how he toured the formerly bankrupt chain shortly after joining the company early this year. His first job, he said, was explaining to district managers, GMs and hourlies his plan to ensure company survival. “I talk about my commitment, investor commitment and the culture,” he said, adding he also sends out weekly emails and a monthly video that discloses progress being made.

Fred asked Day Star’s Tim Dungan how he attempted to inspire the troops after closing two-thirds of the chain’s restaurants during February’s bankruptcy filing. “Great question,” Tim declared. “I made appearances in the stores, met with management teams and made personal calls to managers. I explained we did this for the best of everyone and going forward we are going to steward what we have left and make it the best location it can be and that we will be there to support you.”

Boudin’s Clarice Turner has an easier job given the legendary San Francisco-based chain was more in need of a brand refresh when she joined last September. She said she launched that process by working every job in the bakery-cafes and then touring the units. “After awhile, they don’t notice you and you can then easily spot inefficiencies,” she said.

At the same time, she posed five questions to her management team “two levels in”: What’s working? What’s not? What would would do if you were CEO? Are you happy? Where would you take the brand next? “I marinate all that for 60 days and then come back to the team with my SWAT analysis,” she added.