A View From The Top
How Teriyaki Madness ducked and weaved past COVID-19
CEO Michael Haith explains how an adaptable spirit helped it make 2020 its most successful year ever.
February 8, 2021
ByMichaelHaith, CEO, Teriyaki Madness
Hey, we can admit when things aren't going our way, and for a couple of weeks in March of 2020, like the rest of the restaurant world, we were scared. COVID-19 was surging, dining rooms were closing and the future looked bleak. We had to lay off about half of our team at the corporate office and move those remaining to partial pay. It was like a punch in the gut, but we were determined to do what we needed to ride this thing out.
But, wait: Adapting is part of our brand's DNA. We've been doing it for years. In fact, we soon realized adaptability was our COVID-19 counterpunch: stay flexible, adapt operations where needed, and most of all, keep that sweet, sweet teriyaki flowing.
So in 2020, when COVID zigged, we zagged. When dining room restrictions were launched, we, um, bagged? Anyway. The point: we stayed light on our feet, and took the world as we found it.
And it worked. Boy, did it work.
Turning change into franchise profits
As early as May, we were able to hire everyone back — and better yet, we repaid their lost wages, which we were so grateful to be able to do. And we doubled down. We have since expanded our team and even needed to hire an additional 27 people in 2020.
It turned out we needed all hands on deck: While the industry as a whole struggled, our system saw big gains in 2020, with system-wide revenue increasing by 48% across the franchise system compared to 2019 and a 39% increase in grand opening sales for shops that opened during COVID over those that opened before COVID. Our YOY Q3 same-store sales were up 18%, and last year we opened 30 new shops — 25 of which opened during the pandemic.
So did we just get lucky? Maybe. But the truth is: the world is always changing, evolving, and throwing in something like a pandemic-shaped crisis whenever it gets the chance. Here's how we maintained revenue and kept our foot on the gas pedal of growth.
Learn Your ABCs: AlwaysBeChanging
Long before anyone heard of COVID-19, another word struck fear into the hearts of chief operating officers everywhere: third-party delivery.
We saw the writing on the wall, and in 2018, we embraced it. We launched our mobile app and added a robust loyalty program in 2019, allowing fans to accrue points with every purchase that can be redeemed for free drinks, sides and our delicious teriyaki bowls. The loyalty program has proven a massive success, with loyalty members spending an average of 16% to 19% more per order than non-loyalty members. In 2020, we saw an 88% increase in the number of loyalty members from 2019.
People are really loving the app and our loyalty program, so that's great. But, we also addressed the elephant in the driver's seat: delivery fees. We were determined to refine the process. We partnered with Olo to integrate third-party delivery so that orders flow seamlessly into our POS system. We also use Olo's Dispatch platform, which allows our food to be delivered through orders that originate in our app or from our website, but our partners execute the delivery.
The bottom line is that with Dispatch, we were able to reduce the expensive third-party commissions, and in 2020 alone saved $425,000 in commission fees for our franchisees.
Technology to the rescue
This is where a culture of adaptability had another payoff. Because we've been heavily investing in technology all along, unlike other brands, we didn't have to pivot much once the pandemic hit — we just had to crank it up the tech we had.
Just prior to March, we streamlined our menu to reduce the number of SKUs to below 90. This allowed us to slash labor and, as usual, focus on franchisee profitability, guest customizability and satisfaction.
We just didn't have a strong need to make delivery an emphasis in our operations. Off-premise continues to be a huge part of our daily operations, and we don't see that changing anytime soon. We're only getting more plugged in.
Maybe one of the coolest things we started, which our fans are loving, is that we added an "I'm Here" button in the app, which allows shop employees to meet customers at their cars the moment they arrive.
Driving forward, paying it forward
Our culture of "neighborhood' Teriyaki Shops connected with our fans to help support their local communities with top-of-mind giving opportunities. We launched a number of campaigns in 2020 to pay our success forward, including our "Pay It Forward" campaign, where we teamed up with customers to split the cost of more than 6,000 meals for healthcare workers, and the "Wok-Star Teacher Teriyaki Bar," which also split the cost of meals that were delivered to teachers and educators in local communities.
What does the future hold for the world? Heck if we know. But we do know that by keeping a nimble, adaptable spirit as part of our brand's vision, we'll be ready for it.
