Change Management in the Restaurant Industry

There is no doubt that in the face of current market conditions, leadership in our business most likely will not sustain and grow their groups by maintaining the status quo. Change management must have a high priority in any Restaurant CEO’s or President’s vision. The question lies in how that leadership responds to the challenges of rising commodity prices, consumers who are less willing to part with their dollars, and a lending industry wary of where and to whom they make loans. There are those in the restaurant industry in executive positions who not only embrace change but who initiate the change necessary before the situation demands it, particularly in three key areas, Attitude, Focus, and People.

When I asked their approaches to managing change versus initiating it, here’s how some in the quick casual segment put it. B.J. Dumond, CEO of J&H Foods, a franchisor of the 240 unit Simple Simon’s Pizza, told me his attitude has to remain flexible. “You’ve got to be practical and have a common sense approach. But don’t be afraid to get outside the box.” Dumond told me. Seth Salzman, SVP of Corporate Operations for Stevi B’s Pizza sees his concept in a favorable position, given the consumers’ focus on value right now. “For the first time in company history, we’ve hired an advertising agency and we’re launching a system-wide marketing campaign.” Mike Shumsky, CEO of Dallas based la Madeleine sounded prepared for the current struggles when he told me, “You’ve got to get your organization right, lean and productive, regardless of the economic climate.” While the attitudes vary, the theme seems to be one of proaction and not reaction.

Focus is another area I asked them about. Shumsky said his group started making realignments back in February of 2008. One area of particular attention was to “maximize what we already have and use.” Shumsky went on to share how his group is rolling out a new web page for the company’s website to emphasize the franchising opportunity with la Madeleine. Salzman informed me that Stevi B’s marketing, which has in the past been mostly geared to highlight value, will change emphasis. “With everyone pushing price and value, we’re shifting our focus to quality in our marketing message. Everyone already knows the value we offer.” Dumond, of Simple Simon’s, who has seen an increase in the number of franchising agreements when compared to two years ago, is focusing on maximizing those increased inquiries from potential franchisees interested in taking control of their careers through ownership. “We’ve always found the most success swimming upstream of the market.”, Dumond told me. An increase in concentration on specific areas of opportunity seems to be paying off for those who recognize the needs and make appropriate and timely changes.

The people piece, which seems the most sensitive subject, also revealed different methodologies from restaurant leadership. Salzman’s immediate take is to “move people and shift or expand their roles for now.” “We need to be ready to bring the right people on board as soon as we can though.” Shumsky has a different strategy. The focus here is on where they invest in the people piece, and not so much the amount they’re investing. “We were pretty heavily weighted on the accounting, financial, and processing side as far as staffing was concerned. We automated many of those processes and focused on investing in marketing and service.” This is apparent by the $1 million increase in both the marketing and labor portions of their budget. Both strategies are a result of restaurant leadership understanding the need to manage and initiate change in the best interest of their companies.

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