Roaring into ’18 with Measured Confidence: Takeaways from ICR
by Bob Gershberg, CEO/Managing Partner Wray Executive Search
Digital, delivery, value and labor costs remained the dominant themes at the 2018 ICR Conference, with corporate tax reform adding a new dimension. Consumer confidence is running high and sentiment was generally positive. Fundamental concerns on cost and competition continue across all segments. When a resurgent McDonald’s talks value, the other QSRs listen and react. Labor cost inflation and scarcity remain a substantial focus with technology as an offset to these issues.
What the Bigs had to say:
Gene Lee, CEO Darden – The only major restaurant chain to invest a substantive amount of their tax savings ($20 million) into their workforce. “We thought this was the appropriate time to pass through some of these savings to our team members and workforce.”, said Lee.
Nigel Travis, CEO Dunkin’, said the ongoing simplification of the Dunkin’ menu emphasizes beverages and offers opportunities. “Simplification is really the basis,” he told ICR Conference attendees. “Some have called it the biggest simplification exercise in the industry. … It’s very data-driven, based on research.”
Denny Marie Post, CEO Red Robin, spun exceedingly well, and said the casual-dining chain would reconsider future growth in a “next generation” format, which the company is now researching. “We also know we have a future ahead of us that requires us to give guests what they want, when they want it, where they want it and how they want it,” She was succinct in spelling out the plans to right the ship. Her “labor lite” proposal…not so much (see John Gordon article below).
Jeff Lawrence, CFO Domino’s, said delivery has been part of his company’s DNA since it was founded in 1960. “We’ve been, I guess it’s first-party delivery for 57 years,” Lawrence said. “We know a little bit about food delivery. What I can tell you about food delivery is it’s extraordinarily difficult. It’s not an easy business to do well at scale, especially everywhere at scale.” Heck, they are pretty damned good at digital as well.
Jose Dueñas, CBO Sonic, said the company’s marketing was intent on personalizing the customer relationship. Sonic is evolving its television advertising to more 15-second ads, from the traditional 30-second ads, to improve penetration. The long-running “Two Guys” campaign will be updated. “In the next three to six months, you will see new approaches to our campaign,” Dueñas said. “The Two Guys will continue to play a role, but you should not be surprised to see different people in the car.”
Russell Bendel, CEO The Habit Restaurants, said the company is considering delivery. “We met with all third-party delivery companies,” he told ICR Conference attendees. “People want convenience, but we’re not willing to give 30-plus percent of the proceeds to a third-party delivery company. We’d like to get into a test sometime in the first quarter of this year in a specific area. … Some of that cost of delivery has to be borne by the consumer, not totally by the restaurant company.”
Michael O’Donnell, CEO Ruth’s Hospitality Group Inc., said: “I think the business is up. … We are in a mature business. The result is we consistently have to be that much better. It’s certainly not inexpensive to eat in a steakhouse. We continually have to find ways to create value.”
Tony Laday, CFO Fogo de Chao Inc., said the churrascaria chain is seeing great confidence among consumers. “People are going out not just to any restaurant, but to restaurants that provide the kind of service that we do,” he said. Thanks, Tony for hosting a stellar party on Monday night!
Tara Comonte, CFO Shake Shack, said the company is still determining the effects of the recently signed tax reform bill. “We are working through the tax bill, as every other company is. We will give you tax notice next month on our call. Of course, the lower federal tax rate will decrease our effective tax rate.”
Onward and upward. May all your 2018 dreams come true!!!!
All the best,
Bob Gershberg |CEO|Managing Partner|
(888) 875-9993 ext 102
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