Last Updated on May 24, 2021
Many public company restaurant CEOs have been called on recently to answer for their sluggish responses to the emerging challenges that characterize the modern foodservice era. Oftentimes, their responsibly worded reply is an acknowledgment that the world was changing outside their business faster than it was improving inside their business.
Rising food and labor costs, the challenges and capital intensity of retooling and modernizing a company, geopolitical threats for multinationals, activist investors, shrinking share and margins, and so much more — it’s a wonder how a chain restaurant CEO or leadership team can get any restful sleep at all. On top of that, of course, there’s the realization that any hour a corporate communications nightmare could break out, threatening to undo a brand (and careers) that took decades to build as each new sensationalized headline hacks at hard-won reputations and shareholder value.
But, you already know being on top and building something remarkable has never been easy. So, you continue with what’s worked — putting in the hours, the homework and the hard work, surrounding yourself with brilliant people, and asking the tough questions of both yourself and your team.
In that spirit, here are a few new questions restaurant CEOs will need to ask and answer more frequently than in years past:
- Are we really prepared for a sizable and sustained crisis communications challenge? Starbucks, Chipotle, McDonald’s, Papa John’s — they’ve all been in the headlines lately. Some responded better than others to the situations that hurled them unexpectedly into primetime news. But, every billion-dollar brand has faced — or will face — its own acute crisis. Just as software companies must continually iterate and patch new security vulnerabilities faster than the threats evolve, so too must CEOs support investments in their corporate communications departments and reputation management function. Ultimately, the CEO will have to run with this playbook on a fast relay — much like a president and secret service must train so they know what to do in an emergency as quickly as they discern if that sound was a bullet cracking or a balloon popping.
- Have we engineered as much convenience as possible into the guest experience and our own internal operations as we can and should? What areas of friction keep guests from getting our food, and how can we smooth those out?
- Are we relying on the same tired and routine annual planning approaches we’ve always used, or are we taking a fresh approach that will help stir passions and performance?
- What’s on the horizon in terms of PESTLE (political, economic, societal, technological, legal, and environmental) implications? How might they impact CAPEX and OPEX over a rolling 36-month period? Do our financial and operational models need to be updated?
- Is our marketing function properly modernized and fit-for-purpose to outperform our traditional competitive set and new challengers? Are we doing the right things with earned media, mobile and omnichannel strategy, pricing psychology and promotional strategy, PPC, SEO/SEM, e/m/s-commerce, geolocation technologies, CRM, LSM, loyalty initiatives, and UX/UI optimization across all devices, including self-ordering systems? This may seem like a gratuitous use of acronyms and marketing mumbo-jumbo that the head of marketing should be handling, and to some extent it is and she is, however, there are also a lot of organizational interdependencies to get these initiatives implemented to their full potential. And to the extent of top-level support — and just how quickly competitive advantage is had in these areas — that warrants a review. Is the functional area leader and the team getting the support of resources and buy-in needed to modernize marketing? In many instances, more is needed from the CEO to get marketing, technology, operations, finance, and strategy function leaders to ensure the potential of MarTech is not hampered by politics and internal turf wars.
- What should we be doing about emerging disruptive forces in delivery, drive-thru, self-ordering, and mobile optimization? Which fit best with our brand promise and positioning, and which will do more damage to our unique value proposition than boost sales?
- Is our organizational design optimized for how the business has and continues to evolve?
- Do we have the right brands and locations, or should we give our portfolio a trim? What brands and units should we create, acquire, grow, or divest?
- Should we reconsider our prototype design and location strategy in light of the new unit economic models being rewarded with capital and customers? As people move back to cities, reversing decades of suburbanization, new formats — such as food halls, dark kitchens, delivery-only concepts, meal kits, home meal replacement, and curbside pick-up — are revolutionizing the industry. What does the restaurant of the future look like for us?
- Do we have the right tools and technology? What should we source from third parties, and what should we create in-house? What emerging concepts and competitors should we have on our radar? What are the true costs and benefits (from a holistic impact-analysis study that factors in the wider implications on time and materials, SG&A, trade-offs, competitive proposition, and so on)?
Though many of the challenges restaurants CEOs face today relate to the incredible pace of change that’s making us faster and more connected at an exponential rate, they all come back to the question that sits at the heart of the hospitality business: Are we doing everything we can to make our guests feel welcome, cared for, and heard? Looking at digital marketing, social media, and mobile, digital, and self-ordering technologies through the lens of care, compassion, and empathy is the first step toward ensuring that you’re finding the right answers for your business.
And, in case you’ve got these concerns all sorted out, we have more questions for the scrolling marquee hanging overhead.
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About Aaron Allen & Associates
Aaron Allen & Associates works with leaders of global foodservice and hospitality companies on strategic issues related to growing and optimizing performance and value. Specializations of the firm include multinational expansion, system-wide sales building, brand and portfolio strategy, modernized marketing, industry trends, technology, and advanced analytics. Aaron has personally led more than 2,000 client engagements spanning six continents and 100+ countries for companies collectively posting annual revenues exceeding $200 billion.