Latest / Choppin’ It Up by Bloomberg Intelligence / TGI Friday CEO’s Plans for Top-Line Growth

Transcript

TGI Friday CEO’s Plans for Top-Line Growth · Choppin’ It Up by Bloomberg Intelligence

• 0:13
  Speaker 1: Welcome to Chopping it Up on Mike Hanlon, a senior
• 0:16
  Speaker 1: restaurant food service analyst at Bloomberg Intelligence. You can find
• 0:19
  Speaker 1: our research and that a bi's five hundred analysts around
• 0:22
  Speaker 1: the globe on the Bloomberg terminal. If you enjoy the pod,
• 0:25
  Speaker 1: do me a solid and give us a five star
• 0:27
  Speaker 1: review on Apple or Spotify. Today we're joined by Ray Blanchette,
• 0:31
  Speaker 1: CEO of TGI Fridays. Welcome Ray, Thank you, Mike. Great
• 0:36
  Speaker 1: to see you again. Yeah, man, always great to see
• 0:38
  Speaker 1: you too. Before we get into it, do you have
• 0:41
  Speaker 1: a favorite Wu Tang album? Or is that question like
• 0:43
  Speaker 1: asking somebody to pick their favorite child.
• 0:48
  Speaker 2: I can't say I would know very much about the
• 0:50
  Speaker 2: Wu Tang clan.
• 0:52
  Speaker 1: Unfortunately, all right, cole Man, Yeah, so far our listeners.
• 0:58
  Speaker 1: Ray commented he liked my shirt once. I think we're
• 1:02
  Speaker 1: on our way to the ICR conference from Noork down
• 1:05
  Speaker 1: to Florida. I was rocking the Woot Tang shirt and
• 1:08
  Speaker 1: Ray complimented, complimented me on it. So yeah, it's hard
• 1:14
  Speaker 1: for me. For me, it's like picking my favorite I
• 1:17
  Speaker 1: only have one child. If so, I would be like
• 1:19
  Speaker 1: picking my favorite niece or nephew. You know, I have
• 1:22
  Speaker 1: a few. I can't just pick one. So what do
• 1:24
  Speaker 1: you listen to? What's like on heavy rotation right now?
• 1:27
  Speaker 2: Oh? You know, I'm all over the place anywhere. You know,
• 1:31
  Speaker 2: a lot of times when I'm working out, it drives
• 1:33
  Speaker 2: my wife crazy. I'll listen to Luther Vandross because I'm
• 1:36
  Speaker 2: sort of trying to keep myself in a mellow place,
• 1:39
  Speaker 2: right or if i'm out, you know, out in the
• 1:42
  Speaker 2: park or something. I kind of a lot of old
• 1:44
  Speaker 2: R and B is really sort of my style. But
• 1:48
  Speaker 2: then I listened to classic country and I'm literally all
• 1:52
  Speaker 2: over the place.
• 1:53
  Speaker 1: Oh that's awesome, though, Man, you look like it makes
• 1:56
  Speaker 1: no sense. Now that's cool. You know, I was having
• 2:00
  Speaker 1: conversation last night, like I love pretty much everything except
• 2:03
  Speaker 1: for pop.
• 2:04
  Speaker 2: So I don't listen to a lot of new music,
• 2:07
  Speaker 2: but like classic hip hop. You know, I've got Big
• 2:10
  Speaker 2: E on there and all that.
• 2:12
  Speaker 1: Sort of stuff.
• 2:13
  Speaker 2: When you need a little more energy right when you're
• 2:15
  Speaker 2: heading into the gym.
• 2:17
  Speaker 1: For sure. For sure. Awesome. So, as many of our
• 2:21
  Speaker 1: listeners know, this year second stint as CEO, what I
• 2:25
  Speaker 1: convinced you that the brand was worth betting on again?
• 2:28
  Speaker 2: You know, it's interesting, Mike, I never really left right
• 2:31
  Speaker 2: when I was removed as CEO. I became a franchise
• 2:38
  Speaker 2: in very very short order, and so try to do
• 2:42
  Speaker 2: my best to kind of remain supportive of that current
• 2:45
  Speaker 2: management team and and help from a different way right
• 2:49
  Speaker 2: as a franchise and I think, you know, it really
• 2:53
  Speaker 2: sort of put me in tune with kind of the
• 2:55
  Speaker 2: needs of the business from and certainly raised the logency.
• 3:00
  Speaker 2: Right when it's your own money that's on the line
• 3:03
  Speaker 2: and you either make it or you don't make it,
• 3:05
  Speaker 2: I think you develop a completely different perspective on what
• 3:09
  Speaker 2: the franchisees are dealing with. So it was really just
• 3:12
  Speaker 2: a couple of months. Became a franchise e, was a
• 3:14
  Speaker 2: franchise e for a little over a year before we
• 3:17
  Speaker 2: had the opportunity to as Sugarloaf to take over the
• 3:20
  Speaker 2: whole brand.
• 3:21
  Speaker 1: Yeah, and your experience from virtually every level of the
• 3:25
  Speaker 1: organization kitchen manager, GM, director of OPS, franchise e, CEO
• 3:31
  Speaker 1: obviously is very uncommon. When you were a GM. What
• 3:36
  Speaker 1: frustrated you most about corporate and how has that influenced
• 3:39
  Speaker 1: the way you lead?
• 3:40
  Speaker 2: You know, it's that's a great question and one that
• 3:44
  Speaker 2: I think about a lot, because I think about one
• 3:46
  Speaker 2: are the things that we do that will drive our
• 3:50
  Speaker 2: general manager's nuts.
• 3:52
  Speaker 1: Right, And it's usually, you know.
• 3:54
  Speaker 2: Requesting information at the wrong times of day when you
• 3:57
  Speaker 2: want to be out active servicing the guests and and
• 4:01
  Speaker 2: motivating team members, and feeling like you're sort of left
• 4:06
  Speaker 2: out of the loop, right when you see bad decisions
• 4:09
  Speaker 2: get made and you were never part of the decision
• 4:11
  Speaker 2: making process. I mean, you certainly know that people have
• 4:15
  Speaker 2: a lot more ownership than things they helped create.
• 4:19
  Speaker 1: And I think we've.
• 4:20
  Speaker 2: Pulled a lot of that learning into the way we're
• 4:22
  Speaker 2: leading the brand today.
• 4:24
  Speaker 1: That's great. And you mentioned to be in the franchise
• 4:26
  Speaker 1: and you mentioned it added a level of urgency. Is
• 4:30
  Speaker 1: there anything maybe that you learned like quickly as a
• 4:36
  Speaker 1: franchise e that that you did you hadn't learned prior
• 4:38
  Speaker 1: in the corporate office.
• 4:40
  Speaker 2: Well, I mean, just the precarious situation that the brand
• 4:45
  Speaker 2: was in with regards to eroding margins, right, and whether
• 4:50
  Speaker 2: you're I mean a lot of my my businesses tend
• 4:53
  Speaker 2: to be in the Northeast, right where we're dealing with
• 4:55
  Speaker 2: some of the highest wage rates in the country, and
• 4:59
  Speaker 2: you're fighting that on a state by state level.
• 5:02
  Speaker 1: So I think really what it affirmed in.
• 5:03
  Speaker 2: My mind is if we want to achieve the global
• 5:07
  Speaker 2: objectives that we've set for the brand, it starts by
• 5:11
  Speaker 2: making the franchise e'se priorities your priorities right and really
• 5:15
  Speaker 2: investing in franchise health. Because you know, as you know,
• 5:19
  Speaker 2: I mean, you follow enough of these stories. You see
• 5:21
  Speaker 2: all the people come out and go, oh, we just
• 5:24
  Speaker 2: signed you know, fifteen hundred new stores. The only way
• 5:28
  Speaker 2: you're going to see those fifteen hundred new stores is
• 5:31
  Speaker 2: if every single time they open one, it exceeds their
• 5:35
  Speaker 2: earnings expectations, right. And if they're exceeding the return on cash,
• 5:40
  Speaker 2: you can't slow them down. And if they're not delivering
• 5:43
  Speaker 2: on the expected returns, there's nothing you can do to
• 5:47
  Speaker 2: make them build those restaurants. You can threaten to take
• 5:50
  Speaker 2: back development rights, but they don't care because they don't
• 5:53
  Speaker 2: want to.
• 5:53
  Speaker 1: Develop it anyway.
• 5:54
  Speaker 2: And so you really have to make sure that you
• 5:57
  Speaker 2: have a healthy franchise system. It wants to reinvest back
• 6:01
  Speaker 2: into the brand in order to deliver against those big.
• 6:03
  Speaker 1: Goals col and you know, the chain has closed the
• 6:07
  Speaker 1: sizable amount of US stores over the last handful of years.
• 6:11
  Speaker 1: How many remain and is there any unit economic data
• 6:15
  Speaker 1: you can share we have.
• 6:17
  Speaker 2: Are you talking about domestically or globally?
• 6:19
  Speaker 1: Yeah, in the US.
• 6:21
  Speaker 2: In the US, there is around eighty restaurants left. We
• 6:24
  Speaker 2: are now talking to several new potential franchises. We've got
• 6:30
  Speaker 2: a couple of deals in the pipeline, both East Coast
• 6:34
  Speaker 2: and West coast, traditional and non traditional. So you know,
• 6:38
  Speaker 2: we're excited that we're seeing the potential for growth again
• 6:42
  Speaker 2: in the domestic business. But there's been significant rationalization since
• 6:48
  Speaker 2: you know, TGI Friday's at its peak, right and sort
• 6:51
  Speaker 2: of the early twenty tens.
• 6:56
  Speaker 1: But you know, I think I saw some pretty high
• 6:59
  Speaker 1: AUV estimates online. I don't know, it sounded like the
• 7:03
  Speaker 1: remaining store base is really strong in terms of sales volumes.
• 7:08
  Speaker 1: Can you comment on that?
• 7:09
  Speaker 2: Yeah, it certainly is is much much healthier. It's gonna
• 7:14
  Speaker 2: get skewed in all in all candidness now that there's
• 7:18
  Speaker 2: been the rationalization. The airports tend to over index in
• 7:23
  Speaker 2: the AUV, right, and those are just staggering. I mean,
• 7:27
  Speaker 2: if you're building a restaurant in an airport, it should
• 7:30
  Speaker 2: be a TGI Fridays based on I mean, we're the
• 7:32
  Speaker 2: number one retailer in all of DFW, you know, which
• 7:36
  Speaker 2: is obviously a pretty big airport, you know, a huge
• 7:39
  Speaker 2: footprint in Atlanta, the biggest airport in the world. So
• 7:43
  Speaker 2: you know, we know how the business performs in those environments.
• 7:47
  Speaker 2: But yeah, generally speak, I mean, we've seen a stabilization
• 7:49
  Speaker 2: in the US. You know, apart from the winter activity
• 7:54
  Speaker 2: that we had this year that was really the first
• 7:56
  Speaker 2: time we've had a real winter in ten years. You know,
• 7:58
  Speaker 2: we got hit by those those handful of weeks when
• 8:02
  Speaker 2: we had really serious weather in the Northeast. Because the
• 8:05
  Speaker 2: majority of our stores are there, we felt that. But
• 8:07
  Speaker 2: beyond that, we're seeing you know, nice same store sales
• 8:12
  Speaker 2: growth in the low single digits and a stabilization of margins.
• 8:17
  Speaker 2: And you know, we've really got the franchise's working collaboratively,
• 8:21
  Speaker 2: so we feel we feel really good about the ability
• 8:23
  Speaker 2: to return to growth here in the US.
• 8:26
  Speaker 1: So I met Alan Stillman, you know, the founder of
• 8:30
  Speaker 1: Fridays some years ago. He was absolutely great, as Sa
• 8:34
  Speaker 1: Michael Till they're both awesome. Alan told me that originally
• 8:39
  Speaker 1: I think he started with a five hundrellar alone from
• 8:41
  Speaker 1: his mom. But originally his vision was like a singles bar,
• 8:45
  Speaker 1: and he had he had like pilots and stewardesses like
• 8:48
  Speaker 1: in mind. So I'm just wondering, was he like very
• 8:51
  Speaker 1: early on with the airport licensing, because to your point,
• 8:55
  Speaker 1: when I see a Friday's in an airport, it's always jamming, right, Yeah, well, I.
• 9:01
  Speaker 2: Mean I think it's that was certainly not something that
• 9:04
  Speaker 2: Alan envisioned. I don't think him wanting to meet stewardess's
• 9:09
  Speaker 2: near his apartment has nothing to do with why we're
• 9:11
  Speaker 2: in airports today.
• 9:13
  Speaker 1: But I do love Allan stillman.
• 9:15
  Speaker 2: I've had the chance to spend time with them in
• 9:17
  Speaker 2: New York, and there's nobody to spend you know, there's
• 9:20
  Speaker 2: any more fun to spend time with in New York
• 9:22
  Speaker 2: than him. He's he's obviously a Hall of Fame restaurant tour.
• 9:27
  Speaker 2: But yeah, I don't think those two are linked.
• 9:31
  Speaker 1: All right, that's funny, man. How many and so you're
• 9:35
  Speaker 1: larger internationally at this point, right, how many international stores
• 9:38
  Speaker 1: do you have? Kind of international growth do you expect?
• 9:41
  Speaker 2: There's around three hundred today internationally, and you know, we've
• 9:46
  Speaker 2: clearly seen that return to growth because over the last
• 9:50
  Speaker 2: six eight months and we've signed development agreements for over
• 9:54
  Speaker 2: two hundred and fifty restaurants and these are real you know.
• 9:58
  Speaker 2: We just did a big announcement in Kenya this week
• 10:02
  Speaker 2: where Phil the President and Phil Broad was in Kenya
• 10:07
  Speaker 2: doing a big splash. Very excited about being in Sub
• 10:11
  Speaker 2: Saharan Africa.
• 10:12
  Speaker 1: We never have.
• 10:13
  Speaker 2: But the good thing about when we look at the
• 10:15
  Speaker 2: development that's coming, it's coming from new groups that want
• 10:19
  Speaker 2: to do new countries and that's exciting, but it's also
• 10:22
  Speaker 2: coming from our legacy franchisees that have been around twenty
• 10:26
  Speaker 2: five thirty years that are signing up for more. Typically,
• 10:30
  Speaker 2: you know, you go into a developing country. You look
• 10:34
  Speaker 2: at the Philippines or Peru thirty years ago when we
• 10:37
  Speaker 2: did it, and we really thought we'd get a handful
• 10:40
  Speaker 2: of stores in the Philippines. I think we signed for
• 10:43
  Speaker 2: two stores in Peru and thought that's what the market
• 10:47
  Speaker 2: could hold.
• 10:47
  Speaker 1: And today, by.
• 10:48
  Speaker 2: The end of this year, Peru will have twenty seven restaurants.
• 10:52
  Speaker 2: You know, so those numbers tend to get revised up.
• 10:56
  Speaker 2: And with these, you know, franchisees of ours, I mean
• 10:59
  Speaker 2: Greece Site Bris, they've all signed up for you know,
• 11:02
  Speaker 2: new development agreements. Recently we've got new development agreement in
• 11:06
  Speaker 2: the Philippines after we just celebrated our thirty year anniversary
• 11:10
  Speaker 2: and compounding double digit growth. So what we're seeing in
• 11:13
  Speaker 2: the brand around the globe is you know, mid to
• 11:20
  Speaker 2: almost double digit same store sales growth in a lot
• 11:24
  Speaker 2: of these really long term legacy businesses. Taiwan's on a
• 11:29
  Speaker 2: tear right now. Really all of Asia is kind of booming.
• 11:34
  Speaker 2: In the pockets that we are in Western Europe, which
• 11:37
  Speaker 2: generally are around the Mediterranean, are performing extremely well.
• 11:41
  Speaker 1: That's great. What do you think What do you think
• 11:43
  Speaker 1: is driving that? Right? Because especially i'd say in recent months,
• 11:47
  Speaker 1: the inflation is hitting Europe and Asia harder than it
• 11:51
  Speaker 1: is the US. So what is it?
• 11:53
  Speaker 2: You know, we're trying to understand it. I mean, Mike,
• 11:56
  Speaker 2: and you know this. Gas prices have a straight line
• 12:01
  Speaker 2: correlation to same store sales growth in restaurants, right, I
• 12:04
  Speaker 2: mean it comes out of the same pot. Yeah, right,
• 12:08
  Speaker 2: And we haven't seen.
• 12:12
  Speaker 1: A meaningful impact, but we know.
• 12:14
  Speaker 2: But what we are there are certainly red flags out
• 12:17
  Speaker 2: there when we see credit card spending and you know
• 12:21
  Speaker 2: the amount of debt that the consumer is carrying in
• 12:24
  Speaker 2: credit cards. Look, at some point all of this is
• 12:28
  Speaker 2: gonna is going to mash together, and it's going to
• 12:31
  Speaker 2: be it's going to be an issue when when the
• 12:35
  Speaker 2: Iran conflict began, and clearly you knew there was going
• 12:39
  Speaker 2: to be fuel pricing issues. They're all tied to the
• 12:43
  Speaker 2: US dollar in developing countries. That's devastating, right, That creates
• 12:50
  Speaker 2: gas shortages. I mean they literally because it's pegged to
• 12:54
  Speaker 2: the petro dollar or whatever. It creates real problems in
• 12:59
  Speaker 2: those economies. And shockingly, those are some of our strongest
• 13:04
  Speaker 2: performers around the globe. So it feels like there's just
• 13:08
  Speaker 2: a lot of noise out there, and it's it's becoming
• 13:11
  Speaker 2: harder and harder to cut through the data and understand
• 13:15
  Speaker 2: how to predict sort of what's coming next. Historically, we've
• 13:19
  Speaker 2: always we've always known what a dollar or actually what
• 13:23
  Speaker 2: a ten cent increase in gas prices would do. You know,
• 13:26
  Speaker 2: it's just recent that we've seen these massive swings right
• 13:30
  Speaker 2: where four dollars gas became part of the part of
• 13:33
  Speaker 2: the story. So, yeah, we're having to we're having to
• 13:37
  Speaker 2: rebuild all of our algorithms to understand how do you
• 13:40
  Speaker 2: really forecast in this environment.
• 13:42
  Speaker 1: Yeah, it's it's really interesting. I mean know it was
• 13:44
  Speaker 1: reading and following the Indonesian stock market. It's like getting
• 13:49
  Speaker 1: hammered and talking about the higher gas prices. Yeah, it's
• 13:53
  Speaker 1: very interesting. And you know, kudos to you and the
• 13:55
  Speaker 1: team for driving strong results.
• 13:57
  Speaker 2: You know, we've got a big footprint in Malaysia that
• 14:00
  Speaker 2: performing extremely well this year. You know it just the
• 14:04
  Speaker 2: places where we were most concerned, we haven't seen major
• 14:11
  Speaker 2: issues and in places like the Middle East where we
• 14:13
  Speaker 2: obviously have a big footprint. I mean, I've got an
• 14:16
  Speaker 2: office in Dubai, we have are the president of Fridays
• 14:20
  Speaker 2: is based in Dubai. So you know, when this all
• 14:24
  Speaker 2: started and missiles were getting you know, launched it into
• 14:28
  Speaker 2: Dubai and Bahrain. You know, we have an airport in
• 14:31
  Speaker 2: Bahrain airport. You know, our sort of primary focus has
• 14:37
  Speaker 2: been all about health and safety for our team members,
• 14:41
  Speaker 2: health and safety for the people that we have on
• 14:43
  Speaker 2: the ground, you know, in these places. And you know
• 14:47
  Speaker 2: that caused many sleepless nights. But when when all the
• 14:53
  Speaker 2: Middle East sort of shut down and people stop traveling
• 14:57
  Speaker 2: outside because airports are closed, restaurants I was actually started
• 15:00
  Speaker 2: performing very well, the only area that we we got
• 15:05
  Speaker 2: dinged is if they were under direct direct attack, you know,
• 15:10
  Speaker 2: like in Bahrain Airport or Dubai, which is heavily tourist based, right,
• 15:16
  Speaker 2: so there's not a lot of tourism activity in Dubai,
• 15:18
  Speaker 2: but everywhere else, all the locals were eating out right
• 15:22
  Speaker 2: as and so we've seen actually sales lift in those
• 15:27
  Speaker 2: markets directly related.
• 15:30
  Speaker 1: Wow, it's yeah, it's and that's promising. You know, if
• 15:33
  Speaker 1: you're in some of these markets that the economy's not
• 15:37
  Speaker 1: looking so great and still performing that that's sounds really promising.
• 15:42
  Speaker 1: And going back to the US, you mentioned you had
• 15:46
  Speaker 1: some same store sales growth. I think you mentioned low
• 15:48
  Speaker 1: single digits. Can you speak a little bit to what
• 15:52
  Speaker 1: drove your success last year and what maybe you have
• 15:55
  Speaker 1: planned here in the US to boost results this year.
• 15:59
  Speaker 2: Yeah, you know, we've got a major quality initiative that
• 16:03
  Speaker 2: we're focused on. When we started looking at the guest
• 16:06
  Speaker 2: attribute ratings of the brand right after we took over
• 16:10
  Speaker 2: last January, not this past January, but January of twenty
• 16:13
  Speaker 2: five is when we took over the global brand Sugar
• 16:16
  Speaker 2: Loaf Management, and you know, looking at the guest attribute
• 16:21
  Speaker 2: I was like, Wow, we're getting you know, a lot
• 16:24
  Speaker 2: of sort of one and two star ratings, which means,
• 16:28
  Speaker 2: you know, we're clearly dropping the ball. I mean that
• 16:31
  Speaker 2: somebody wouldn't have chosen the brand if they were even
• 16:35
  Speaker 2: capable of giving me a one or two star rating.
• 16:36
  Speaker 2: It means we've done something wrong. And I'm like, we
• 16:40
  Speaker 2: really have to plug the holes in this boat before
• 16:43
  Speaker 2: we start adding on more complexity or other things. And
• 16:47
  Speaker 2: so we sort of focused inward and we're doing some
• 16:51
  Speaker 2: really down and dirty tactical things. I mean, we meet
• 16:55
  Speaker 2: once every Thursday morning. There's a quality focus. We're taking
• 16:59
  Speaker 2: one or two items. I mean, this is this is
• 17:01
  Speaker 2: the basic nuts and bolts of restaurants, right, and we
• 17:04
  Speaker 2: get all the general managers around the domestic system. We
• 17:07
  Speaker 2: even have the UK doing their own because we bought
• 17:10
  Speaker 2: that business, you know, in the last year, and just
• 17:15
  Speaker 2: focusing on four wall execution with intensity and the the
• 17:22
  Speaker 2: impact that we've had in those attribute ratings is staggering
• 17:27
  Speaker 2: and most mostly around failures. Right now, the top box
• 17:31
  Speaker 2: square is going up, which is great, but what I
• 17:33
  Speaker 2: really wanted to obsess over is eliminate those failures because
• 17:38
  Speaker 2: I simply don't understand We're not like, we're not fast food, right,
• 17:42
  Speaker 2: It's not a three minute transaction or a one point
• 17:45
  Speaker 2: seven to four second transaction, right, It's they're there for
• 17:50
  Speaker 2: an hour. And I'm just asking, you know, our manager,
• 17:53
  Speaker 2: how can somebody be in our restaurant for an hour
• 17:56
  Speaker 2: having a bad time.
• 17:59
  Speaker 1: And you have no idea? How's it possible? Where the
• 18:03
  Speaker 1: hell are you?
• 18:04
  Speaker 2: And so that's really we hired a great new head
• 18:08
  Speaker 2: of learning and development that's based out of Dubai, and
• 18:11
  Speaker 2: you know, we're focused on salesmanship and hospitality and just
• 18:17
  Speaker 2: doing those sort of nuts and bolts things that that
• 18:20
  Speaker 2: are important. You know, I think we call it casual dining,
• 18:23
  Speaker 2: but it's not casual to our to our our consumers.
• 18:28
  Speaker 2: This is Middle America that we're feeding. This is a
• 18:31
  Speaker 2: it's a you know, if they choose to eat out,
• 18:33
  Speaker 2: it's a big decision, and it's an expensive decision.
• 18:37
  Speaker 1: Even even though we're a.
• 18:38
  Speaker 2: Great value right and we've got all the value layers,
• 18:40
  Speaker 2: it's still that's a lot of disposable income and we've
• 18:43
  Speaker 2: got to earn it.
• 18:44
  Speaker 1: And so that's what we're focused on. You know, it's
• 18:46
  Speaker 1: really you know, obviously those are both you know, the
• 18:50
  Speaker 1: quality of the food and the service are so so important,
• 18:53
  Speaker 1: and we've seen that a big part of Chile's turnaround.
• 18:56
  Speaker 1: I had a guest on Zach Oates talking about a
• 18:59
  Speaker 1: customer recover because it's really interesting that you mentioned that
• 19:01
  Speaker 1: you're really focused on the people that were having a
• 19:05
  Speaker 1: bad experience, and I forget the number, but he was
• 19:09
  Speaker 1: saying that the lifetime value of a recovered guest is
• 19:13
  Speaker 1: like multiple times more than just your typical guests. So
• 19:18
  Speaker 1: it really is a massive opportunity to gain, you know,
• 19:23
  Speaker 1: a lifetime customer.
• 19:25
  Speaker 2: No question about it, no question about it. Yeah, and
• 19:29
  Speaker 2: it's it's manageable, right, I mean if you just review managers,
• 19:33
  Speaker 2: I mean, to do all the things that we've all
• 19:35
  Speaker 2: known to do for decades, but you get caught up
• 19:39
  Speaker 2: in busy work, and we're just trying to strip away
• 19:41
  Speaker 2: the busy work, put the primary focus on the team members,
• 19:47
  Speaker 2: creating great environment, recognizing the behavior that we want to
• 19:50
  Speaker 2: see repeat, you know, Fridays and pins and buttons. You know,
• 19:54
  Speaker 2: it may seem silly to people outside the business, but
• 19:57
  Speaker 2: to us, we take it very seriously. I mean, look
• 19:59
  Speaker 2: behind that's a recognition board, right, I mean in my office,
• 20:05
  Speaker 2: it is. It's something that we take very seriously because
• 20:08
  Speaker 2: it's a way of managing people. With that, I'm feeling
• 20:10
  Speaker 2: like they're being managed. You know, when you tell a
• 20:14
  Speaker 2: broiler cook while you season that burger, the grill marks
• 20:17
  Speaker 2: are perfect. It's a perfectly toasted bun. You know, the
• 20:21
  Speaker 2: fresh vegetables that let us tomato, onion pickle look great.
• 20:25
  Speaker 2: What you're really you know, obviously you're making them feel
• 20:27
  Speaker 2: good about what they're doing, but what you're telling them is,
• 20:29
  Speaker 2: I'm watching that you're following the recipes and I appreciate
• 20:34
  Speaker 2: that you're doing that exactly right, and so will our guest.
• 20:38
  Speaker 1: Yeah, it's and it's so important for employees to feel recognized. Right.
• 20:41
  Speaker 1: It just creates a positive, fulfilling work environment, you know.
• 20:45
  Speaker 1: And casle Joining more broadly had a strong and unexpected
• 20:50
  Speaker 1: comeback last year. You know, what do you think is
• 20:53
  Speaker 1: driving that value? Yeah?
• 20:56
  Speaker 2: Right, I think two things. I think Number one, you know,
• 21:00
  Speaker 2: my wife, Robin is in the business. She owns Norton
• 21:02
  Speaker 2: Creative and so she's you know, we spend some time.
• 21:05
  Speaker 2: We try not to talk too much about work at home,
• 21:07
  Speaker 2: but uh, it's inevitable. And when you see a lot
• 21:12
  Speaker 2: of the new places that are coming up around because
• 21:15
  Speaker 2: we live in Houston and that's a great food city,
• 21:18
  Speaker 2: one of the best in the country. But it seems
• 21:21
  Speaker 2: like all the new places are so similar, right, the
• 21:23
  Speaker 2: design is similar, The abbreviated menu prices are you know crazy.
• 21:31
  Speaker 2: It's hard to go out and have a meal for
• 21:35
  Speaker 2: two and you know, a bottle of wine or a
• 21:37
  Speaker 2: couple of drinks and get out for under under two
• 21:40
  Speaker 2: hundred dollars. And I think clearly Kevin saw this as
• 21:45
  Speaker 2: well in Chili's when he pulled fast food into the mix.
• 21:49
  Speaker 2: Is that whether it's it's a fast you know, QSR
• 21:52
  Speaker 2: or fast casual, they've gotten so aggressive with their pricing.
• 21:57
  Speaker 2: And then above us, they've gotten so aggressive with their
• 21:59
  Speaker 2: pricing and it's sort of recreated our original market. Yeah, right,
• 22:06
  Speaker 2: which is you know, you want family, You want to
• 22:08
  Speaker 2: be able to take your family out and get a
• 22:10
  Speaker 2: high quality meal with great service in the right atmosphere,
• 22:15
  Speaker 2: but you don't want to pay an arm and leg.
• 22:17
  Speaker 2: And so you know, those of us that have been
• 22:20
  Speaker 2: in this industry a long time, you've been through these
• 22:23
  Speaker 2: cycles before. Right when it's a down cycle, people are
• 22:28
  Speaker 2: less willing to take a risk right, that new place
• 22:31
  Speaker 2: that just opened up the street might be the best
• 22:33
  Speaker 2: burger you've ever eaten in your life, or it might
• 22:36
  Speaker 2: just be an expensive thirty dollars burger, and you wish
• 22:39
  Speaker 2: you would have went to Chili's and got three for me,
• 22:42
  Speaker 2: you know, or more importantly, I wish you would have
• 22:44
  Speaker 2: went the Fridays and.
• 22:47
  Speaker 1: Enjoyed ours.
• 22:48
  Speaker 2: But you know, I think what Kevin and the team
• 22:52
  Speaker 2: at Chili's are doing is re illustrating the art of
• 22:56
  Speaker 2: the possible here as it relates to casual dining. Yeah,
• 23:00
  Speaker 2: An Texas Roadhouse and alivegard I mean they just continue
• 23:04
  Speaker 2: to do that, you know, to do the right things
• 23:07
  Speaker 2: for their guests, reinvesting in their business, the quality of
• 23:10
  Speaker 2: the product, executing consistently. I mean, these are the this
• 23:13
  Speaker 2: is the recipe.
• 23:15
  Speaker 1: Yeah, you've seen every not everybody, but most chains like
• 23:19
  Speaker 1: get back after it in terms of the operations right
• 23:22
  Speaker 1: and doing and you know, making sure that customers are
• 23:26
  Speaker 1: having a great experience. It's at the core of what
• 23:29
  Speaker 1: you know, the business is.
• 23:31
  Speaker 2: Yeah, it's one great experience at a time, Right, That's
• 23:33
  Speaker 2: the only way to really turn the brand around and
• 23:37
  Speaker 2: rebuilding your advocacy over time.
• 23:40
  Speaker 1: Have you seen a meaningful shift in alcohol mix in
• 23:43
  Speaker 1: recent years. And is it different in the airport locations
• 23:47
  Speaker 1: versus regular locations?
• 23:50
  Speaker 2: You know, surprisingly airport's obviously there's a high incident of
• 23:55
  Speaker 2: at least one alcoholic beverage, but it's primarily a food business,
• 24:03
  Speaker 2: you know, And we certainly have seen some top side
• 24:07
  Speaker 2: pressure on.
• 24:10
  Speaker 1: The bar itself.
• 24:14
  Speaker 2: We've seen a change in how people are drinking and
• 24:16
  Speaker 2: what they're drinking. Certainly with gen Z, it seems like
• 24:23
  Speaker 2: alcohol is less a part of their lives, and then
• 24:25
  Speaker 2: it has been historically. But we also know that these
• 24:28
  Speaker 2: cycles change quickly, right because there's a downside to it, right,
• 24:33
  Speaker 2: The lack of socialization, the lack of getting together with
• 24:36
  Speaker 2: friends after work, all of those types of things don't
• 24:40
  Speaker 2: last forever, right, And so I think people being able
• 24:47
  Speaker 2: to connect and making sure that our design and our
• 24:50
  Speaker 2: offerings and everything enable that it's just a matter of
• 24:54
  Speaker 2: time until this problem solves itself, until people start putting
• 24:58
  Speaker 2: their phones down and go you know what I need
• 24:59
  Speaker 2: to real conversation?
• 25:01
  Speaker 1: Yeah, what are the demographics of your customer base, particularly
• 25:05
  Speaker 1: age and income all over the place?
• 25:09
  Speaker 2: You know, I mean you walk into a Friday's, we
• 25:11
  Speaker 2: tend to over index with African American, we over index
• 25:15
  Speaker 2: with Hispanic you know, relative to the population. Those are
• 25:19
  Speaker 2: two very important customer bases for us. And it's generally
• 25:25
  Speaker 2: that sort of twenty to forty five. I mean, it's
• 25:30
  Speaker 2: just such a big span. It's hard to even say
• 25:32
  Speaker 2: that it's generational, because you got anything from young families
• 25:36
  Speaker 2: to young people hanging out, and then you certainly got
• 25:39
  Speaker 2: older groups that are all part of the legacy of
• 25:44
  Speaker 2: the brand.
• 25:45
  Speaker 1: Yeah, so that's interesting. So how do you preserve the
• 25:48
  Speaker 1: brand's heritage while trying to become maybe more relevant with
• 25:52
  Speaker 1: the younger guests.
• 25:54
  Speaker 2: Yeah, you know, it's interesting. What we're seeing in the
• 25:57
  Speaker 2: younger guest is a desire for the nostalgia. We're actually
• 26:01
  Speaker 2: calling it no stalgia internally, right that there is. I mean,
• 26:06
  Speaker 2: you probably saw a couple of weeks ago that Pizza
• 26:09
  Speaker 2: Hut had announced there, you know that they re kind
• 26:13
  Speaker 2: of resurrecting the red roof, right and the old I
• 26:20
  Speaker 2: don't know if if it's all the way to the
• 26:22
  Speaker 2: salad bar or whatever, but they put something out there
• 26:25
  Speaker 2: and I thought that was interesting and it was trending
• 26:28
  Speaker 2: there for a few days, right where people sort of
• 26:31
  Speaker 2: latched on. So look, I think the idea of having
• 26:36
  Speaker 2: the general menu segment right where you avoid people not
• 26:39
  Speaker 2: being able to find something they want to eat, is
• 26:42
  Speaker 2: still a really good idea.
• 26:46
  Speaker 1: For us.
• 26:48
  Speaker 2: Knowing that the younger consumers have the highest food IQ
• 26:52
  Speaker 2: that we've ever sort of seen, right, I mean they're
• 26:55
  Speaker 2: raised around TikTok, and they're raised with the Food Network
• 26:58
  Speaker 2: and all the shows. It does enable us to push
• 27:03
  Speaker 2: flavors a little further and evolving trends. And because we've
• 27:07
  Speaker 2: got a global footprint to draw from, you know, we're
• 27:10
  Speaker 2: able to tap into some of those global trends a
• 27:13
  Speaker 2: little sooner.
• 27:14
  Speaker 1: No, that's cool. And you had mentioned in January you
• 27:17
  Speaker 1: had some success around Christmas.
• 27:19
  Speaker 2: Oh yeah, that was fun.
• 27:21
  Speaker 1: Yeah. Can you talk a little bit about that and
• 27:23
  Speaker 1: if you have any plans to do some similar type
• 27:28
  Speaker 1: pop up of events around other holidays or wherever it
• 27:31
  Speaker 1: might be.
• 27:31
  Speaker 2: Yeah, Well, our strategy for the World Cup was really
• 27:36
  Speaker 2: born out of what we learned from the holiday takeover, right,
• 27:41
  Speaker 2: and what we did. You know, around the holidays. We
• 27:44
  Speaker 2: basically created a fully immersive holiday experience designed for people
• 27:51
  Speaker 2: with young families, right, Because if you think about all
• 27:53
  Speaker 2: the pop ups in then attan or whatever. Right, they
• 27:57
  Speaker 2: tend to be bars, right, and when you think about
• 28:01
  Speaker 2: the family memories that you're looking to create over the holidays,
• 28:04
  Speaker 2: it tends to be more focused on your kids and
• 28:07
  Speaker 2: your parents. And yeah, so we we just spent a
• 28:12
  Speaker 2: bunch of money just completely decorating the restaurant in the
• 28:15
  Speaker 2: sort of four different zones, making an interactive for kids.
• 28:19
  Speaker 2: I mean, it was fun to'd be standing there inside
• 28:22
  Speaker 2: one of our restaurants and watch a family walk in
• 28:25
  Speaker 2: because the kids you can imagine, right when you walk
• 28:28
  Speaker 2: into sort of a winter wonderland, you know, no different
• 28:32
  Speaker 2: than Macy's there in Harold Square, right, and you go
• 28:35
  Speaker 2: up to the floor of Santa Claus and everything's like
• 28:38
  Speaker 2: the North Pole. That was our intent and we were
• 28:42
  Speaker 2: so happy with the results. We'll definitely be going back
• 28:44
  Speaker 2: to it. And then we you know, we we ended
• 28:47
  Speaker 2: up doing something with the with the World Cup similarly,
• 28:50
  Speaker 2: where we sent out some decorations just to remind people
• 28:52
  Speaker 2: were a great place as they're planning their watch parties.
• 28:57
  Speaker 2: You know the fact that it's in the US this year,
• 28:59
  Speaker 2: there's going to be a lot more interest. The time
• 29:01
  Speaker 2: zones are going to be perfect. It works for us,
• 29:04
  Speaker 2: it works for South America in terms of time zones.
• 29:08
  Speaker 2: And so we created some special menu dishes that are
• 29:11
  Speaker 2: sort of platters, if you will, right, so you don't
• 29:15
  Speaker 2: get palette fatigue.
• 29:16
  Speaker 1: You can sort of.
• 29:17
  Speaker 2: Gnash while you're watching watching the game. And the beautiful
• 29:20
  Speaker 2: thing about a soccer game is, you know, you know
• 29:23
  Speaker 2: when it's going to be over, right, I mean, you
• 29:25
  Speaker 2: got it.
• 29:26
  Speaker 1: It's two hours long, that's it. And so we're having
• 29:31
  Speaker 1: a lot of fun with that right now.
• 29:32
  Speaker 2: And we launched it a couple of weeks before you know,
• 29:35
  Speaker 2: the official game started, and we're seeing you know, enormous
• 29:38
  Speaker 2: interest in that. So we're excited about about the World Cup.
• 29:42
  Speaker 1: Very cool. Yeah, there's a local restaurant near me, Parkside
• 29:45
  Speaker 1: Tavern in Verona, New Jersey. They they really ducked the
• 29:49
  Speaker 1: place out and you know, make some menu adjustments, change
• 29:54
  Speaker 1: the bar specials. They have like a candy cane, old
• 29:56
  Speaker 1: fashion and stuff and they absolutely crush it. Man. Between
• 30:00
  Speaker 1: Thanksgiving and New Year's Yeah, well and then we did
• 30:04
  Speaker 1: the same. Yeah.
• 30:04
  Speaker 2: We had we had special drinks, we had special food.
• 30:09
  Speaker 1: It was yeah.
• 30:10
  Speaker 2: The holiday taker was fun. You know, I think that's
• 30:13
  Speaker 2: it's certainly A. It was a it was a good
• 30:16
  Speaker 2: piece of learning, and now it's informing our strategy.
• 30:19
  Speaker 1: That's great.
• 30:20
  Speaker 2: Uh.
• 30:21
  Speaker 1: And if somebody hasn't visited Fridays in a few years,
• 30:23
  Speaker 1: what would surprise them today?
• 30:25
  Speaker 2: I would think that the quality of the food that
• 30:28
  Speaker 2: you get for what you spend.
• 30:30
  Speaker 1: Right.
• 30:30
  Speaker 2: And you know what's interesting, Mike, As we were doing
• 30:33
  Speaker 2: this work on the consumer attribute ratings, one of the
• 30:38
  Speaker 2: things I noticed is is attached to every five star
• 30:41
  Speaker 2: rating is always a person's name. Nicole, our bartender was
• 30:49
  Speaker 2: blah blah blah, right beyond our server was do do DoD?
• 30:55
  Speaker 1: I mean?
• 30:56
  Speaker 2: And so we know that the brand is activated through
• 31:00
  Speaker 2: our people, right.
• 31:01
  Speaker 1: And when you can.
• 31:03
  Speaker 2: Get great food in front of people, serve it to
• 31:06
  Speaker 2: them at pace so that it's piping hot, and you
• 31:10
  Speaker 2: have a tent of service that's hard to compete against, right,
• 31:15
  Speaker 2: because there's just the inherent value of casual dining that
• 31:18
  Speaker 2: is noticeable when you get to check.
• 31:21
  Speaker 1: That's great, good stuff. Man, that was fun. Thanks for
• 31:25
  Speaker 1: doing this, right.
• 31:25
  Speaker 2: Hey, anytime you know that I told you that. As
• 31:29
  Speaker 2: soon as they said, when I see Arson over the recluss,
• 31:32
  Speaker 2: do you want to talk to Mike I'm like, yes, well,
• 31:34
  Speaker 2: I want to talk to Mike. It's like having a conversation.
• 31:37
  Speaker 2: I doing this over a couple of beers. Maybe some potato.
• 31:40
  Speaker 1: Skins, no doubt. Maybe next time eggs.
• 31:44
  Speaker 2: Absolutely good stuff, right all right, brother, Well thanks for
• 31:48
  Speaker 2: your interest.
• 31:48
  Speaker 1: I really appreciate it. Oh for sure, man, you got it.
• 31:51
  Speaker 1: I want to thank the audience for tuning in. If
• 31:53
  Speaker 1: you liked our discussion, please share it with your friends
• 31:55
  Speaker 1: and colleagues. Check back soon for another interview on chopping
• 31:58
  Speaker 1: it up.