QSR Interview | By Sherri Daye Scott
What was your third challenge as the new head?
To help our restaurants drive profitability in the toughest year for profitability in a very long time.
When I got here the wheels started falling off the bus on commodity costs. Fuel surcharges. Utility up charges. Even the guy who mowed your grass took a price increase. It was every line item in the P&L.
We immediately seized as a priority (we called it “Finding Your 2 Percent”) to help our operators find two margin points on their P&L to offset the two or three margin points we’re losing to commodities. We delivered a workbook systemwide that goes through every line item and provides guidance on how you can build profitability in that arena. The reason we called it Finding Your 2 Percent is because it’s different for every restaurant. It’s been really well taken to within our system and viewed as a real leadership move—a tool like that in a year like this.
I’ll give you two specific examples: We set up a Web-based portal for managing your key item variances, which is a way to control your food costs. Some sophisticated systems do this in the back-of-the-house every day. Our system isn’t able to do that so we provided them with a very simple, free tool. The second thing we did was put in place some shortening management practices. We’d been doing it the same way for forever. There were a lot of new filtration systems and practices that we’d not adopted. They saved the restaurant a lot of shortening and kept the product quality top notch.
We found a waste pick-up contractor that gave us national rates and picked up trash at lower costs. We put together a franchisee committee with members of our team on it as well and they systematically hunted for those big things that could add up to savings on the bottom line.
Is Popeyes in a position to finance its own growth?
It is not my first choice to become a banker because I don’t think it’s our area of expertise. I could envision us helping facilitate new banking relationships with our franchisees.
I’m waiting to see who wants to jump into the space. One of the leading lenders to the space has really slowed up business. But in this competitive world, somebody is going to step into this space. We’d like to be aligned with the people who really want to invest in what I consider a very stable and long-term investment proposition. I’m waiting to see who that’s going to be.
We meet with bankers routinely. That’s what we’re doing right now: making sure we know the thought leaders at these newly merged banks who are deciding where [the banks] are going to put their lending dollars. Frankly, Bank of America and Wells Fargo might emerge. Wells Fargo is already very involved in the restaurant space. BofA seems very interested in growing their relationships in this space.
The health news is buzzing about sodium counts right now. What might that mean for a brand like Popeyes?
We pay attention to all of our customers’ concerns. In the health arena, there have been several … But we have not immediately transformed our menu around salt. I want to watch it closely. I want to understand it better, and over time make a smart decision about that.
Salt is a flavor enhancer so all restaurant companies will have to figure out how to deliver the flavor their customers have come to know with less salt. That’s a technical challenge. I think we’re up to it, but it’s a challenge.