CEOs of Wing Zone, Focus Brands, Captain D's, Backyard Burgers, Koti Pizza predict industry changes, trends
Koti Pizza Group CEO Tommi Tervanen speaks on the CEO Roundtable at the Fast Casual Executive Summit in Nashville.
This year's Fast Casual Executive Summit wrapped up Tuesday night with insights from some of the industry's most successful CEOs.
The five chain leaders represented all forms of the fast casual industry from those heavily franchised to largely corporate-owned concepts.
Mike Todd of Heartland Commerce moderated the panel, which included:
- Captain D's CEO Phil Greifeld.
- Wing Zone CEO Matt Friedman.
- Back Yard Burgers CEO David McDougall.
- Focus Brands CEO Steve DeSutter.
- Koti Pizza Group CEO Tommi Tervanen.
What follows are some of the prime cuts from this meaty session on the state of the industry and what brands must do in order to stay relevant.
Q: How are all of your brands handling the overall increased costs associated with labor?
DeSutter: It's kind of a good new/bad news kind of thing. … It's become an employee-driven market, which is great for employees, and they are demanding higher wages. … To really get good (restaurant hourly worker staff) we are easily paying $10 or $11 an hour now, and that's something we all have to contend with.
Tervanen:Wages are high to begin with in Finland … but it is actually finding the people for us in the Nordic areas. … And health care? Well everybody knows that we Nordics are the happiest people in the world … and the government handles that … so that's not really an issue.
Q: Is your brand an early technology adopter or do you tend to wait?
Friedman: We are delivery mostly and … we really feel that's where the future lies with our online business and … my philosophy is that in this day and age, you truly do need to take some gambles.
Tervanen: I'd say we are an early adopter … and our heavy users appreciate that. … We were the first to launch chatbot, for example. I think like you (Friedman), that you have to really take some gambles and being an early adopter is part of the game. …
And speaking of technology, we launched a mobile app to employees where we push all the (training) videos out through … because we like to be on the pulse every day and this technology helps us to do that.
DeSutter: If you're not looking as far ahead on the horizon as you can, you're going to lose. … So, it would be a mistake to not be reaching forward … but you really need to be "leaping" forward as fast as you can … in the restaurant business. Like that quote from the millennial said to us (in the earlier session that day, Ask a Millennial), "I want to have a relationship with you, but I don't want to talk to you."
Q: What are your thoughts on the trends of mobile payment and ordering and delivery as far as it relates to whether you choose to grow delivery yourself or go with third-party providers?
Friedman:This is the hottest topic in the restaurant industry now, and I'll give you my take on this. … The three big players are going to be in third party, … No. 1 – Ubereats. No. 2 is Amazon and the third one that they just announced is Google's $1 billion investment in Lyft.
And I also think you're going to see some fee reduction … but it's going to settle somewhere in the 25 percent range … and they'll become more efficient as well.
McDougall: I'll say that the last couple years, my head has been spinning about where do we start … and I think I have the answer. As we all know, everything is very interrelated now. … So whatever your brand is and technology, it's always understanding your current users and what is most beneficial to them and how do you serve them. … So for the operators out there and the owners, … wondering about where to start, it really is about figuring out what is the best thing for us.
DeSutter: And ducking down is not going to work – that's just a fact of life.
Q: What's the next big thing going to be in the tech space for restaurants?
DeSutter:Bots. For me, it's all bots. … Once I remember the big brag was one click. Well now, bots are no click. … They will be in all your households, all over the place. For me it's bots.
Q: What about food safety? What are the precautions you're taking now?
McDougall:At the restaurant level, we're doing online training… then it also gets back to your distribution systems – your suppliers … and making sure they are safe and they have systems in place around it. … We have to be diligent about this.
DeSutter:It's really unclear, too, who bears the liability once (the food) leaves your place.
Friedman:In the delivery business the consumer does not view that they "own" that product until they get it from that driver. … It's a whole different game out there.
That's one thing interesting about third-party deliveries: They don't care about you or me. They care about the consumer and whether they're going to order again … so they're going to take care of the customer.
Tervanen: We are using IOT tech for delivery, We have it in the stores – all the IOT readers and it's working through our app and all the franchisors have it and they signed off on it. … And we also push that into the cloud and that is open to all the health authorities, so it's kind of pre-emptive. … They are there measuring and pushing it into the cloud 24 hours (a day) and it will wake up the franchisee in the middle of the night if something is wrong.
Q: What is your growth plan?
Friedman: The landscape is very interesting right now. I'm not sure the franchise prospects know what they want right now.
So, I think this is the time for us all to focus on our "box" and our actions … and we are, for our brand, absolutely concentrating on a smaller footprint.
|Matt Friedman, CEO of Wing Zone, and David McDougal, CEO of Back Yard Burgers, weigh in on the state of the industry.|
Greifeld:At Captain D's we see the off-premises trend continuing … like the drive-thru has inched up and that alone creates a big opportunity and we have taken advantage of that. … so I would echo the comments of the panel when they look at the future and we don't really see construction costs taking that, but it's up to all our restaurants to do what they can to cut costs.
Q: What about the state of franchising?
Friedman:I think it's here to stay, but you have to create your uniqueness. … so we're more intimate at Wing Zone … we believe it's about relationships.
Tervanen:I believe in entrepreneurship. … I believe franchising is a safe way into entrepreneurship.
Q: What are your tips to a small restaurant or small restaurant group to better grow and multiply your concept?
DeSutter: I'd say understand the franchise model and understand the franchise model over time. That same model has to morph and change with someone else's money … so the model has to have something like air brakes to respond. … You have to be very nimble and solid and have strong leadership to change.
Friedman: You have to prove your model in more than one city … and I also think you need to be patient. There is nothing wrong with taking the methodical approach to growth. … Nothing wrong with that because it's about the quality of the unit, not the quantity.
Greifeld:Ask how you're different from others in the market. … So what is my competitive advantage? Think about those questions.
McDougall: First, make sure if you partner with someone, you are aligned and there's a cultural fit and you like them. Then, what are the things you hold true about your business and then hold to that.
Registration is now open for the 2018 Fast Casual Executive Summit in Seattle.
Photos by Matt Tilbury.
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