ARJUN:
The bigger the name of the brand, the more difficult it is to make an impact, because in the consumer's mind these brands already have a niche. Steve, it’s fascinating to me how you have continuously made this impact over the last 20 years. But before we take that deep dive into everything you’ve done, let’s go right to what you’re doing now, and how you’re positioning the brand to win big despite the COVID-19 challenge that’s impacting so many companies.
STEVE:
I was asked by our board of directors to take back on the role of Maggiano's because as you can imagine, Maggiano's is uniquely challenged by this pandemic time. You have a brand that has the highest net promoter score of all polished casual dining chains, that did $8 million-plus volume in the average restaurant pre-pandemic, and that has five businesses under one roof. But it's also a brand where 20% of sales come from banquets, 4% come from corporate catering to corporations, and two thirds of the units are based in malls. All of which are, at worst, under attack and at best, big question marks as we endure this pandemic.
Right now, my team and I are thinking of restructuring the P&L, the business model, and the brand so we can survive and live to fight another day. What I like about a situation like this is it forces you to look at ideas with fundamentals that, whether it’s consciously or unconsciously, are off limits in normal times.
ARJUN:
How are you so positive? And what advice do you have for other leaders in similar situations in this journey?
STEVE:
The biggest advice I give is something a mentor of mine told me years ago. David Novak, the CEO of Yum brands, used to say the leader’s job is to define reality and offer hope. So literally a hundred times over the last four months I've been in a restaurant or talking on a Zoom call, defining reality and offering hope. You need to define reality because the closer you are to the front line in an organization, the more you know what's really going on. People are looking for leaders who lay it out there. We have to evolve or else we won't survive.
Then you have to offer hope. You have to tie that to the things we do that we can control. So while it's true that banquets make up 20% of the Maggiano's business, there's a big question mark right now regarding how large people’s gatherings will be even a year from now. It's also true that Maggiano's food travels enormously well, and we were an early innovator more than a decade ago in the off-premise business. But we continue to look at other businesses such as McDonalds or Chipotle and bring customers innovative ways to see their food. As long as we work on something new, we are looking forward, which is a piece of hope for our team.
The other thing is to involve the team in the solution. Some of our best ideas have come from a server, a cook, a person on the front line. The day I came back to this job, my first 40 phone calls were to chefs and general managers, basically asking them questions like, “Here’s the big picture, what would you do?” Some of the best thinking came out of those conversations.
ARJUN:
Let’s talk about you being the Chief Concept officer of Brinker. Your team launched $150 million in annual sales, and that was done in record time with no major investments. How did the team come about with that?
STEVE:
We didn't really have anyone thinking about the disruptive trends that are all around us. But I had the privilege to work with a really great team. We sat down and said, “Can we look at robotics in the kitchens? Can we look at robotics in front of the house?” Then we looked at some of the emerging cooking technology to move production outside of the restaurants.
The other big area we looked at was this emerging area of ghost kitchens. I think in the last calendar year there was $5 billion invested in the United States, just in building kitchens to do nothing more than plug into Grub Hub or UberEats or DoorDash and provide virtual food to hungry guests at home. We actually had a pared-down Maggiano's menu, running out of a truck in downtown Dallas, the prep food being supplied from a neighboring restaurant every day. We realized the limitations of that model so far. The labor required to support it didn't match the sales you can get out of what is basically a 15-minute treat area, which is as far as the dasher can drive.
In hindsight, why are we looking at new kitchens? When Brinker International, as a company, already owns 1,100 kitchens. This was one of the coolest things in my 30-year career. We were slated to test in Denver and Atlanta. In three days we moved the test to Dallas, our hometown. We ran four weekends on DoorDash. We went from about two deliveries a day to more than 25 deliveries a day across six restaurants. I walked into Wyman Roberts’ office one Monday morning and said, "I don't know if you saw this weekend. We grew again just through the DoorDash platform." He said, "Why don't we just roll it national?"
This is not the time to do the traditional big company thing, run the test for another six months and evaluate pre post net of control. It's easy to execute. It's differentiated. It offers a value because we're leveraging the fixed cost in our restaurant that no one can match. Let’s just go national. Eight weeks later, we were in 1,100 kitchens. We are now a top 200 restaurant brand, and we don't exist in brick and mortar. It taught me a lot about not waiting for the crisis to do big things and understand the business equity.
I spent the last 18 months really partnering closely with the DoorDash team. When you work side-by-side with tech leaders you learn two things. One, the power of the network effect, which is having 1,100 kitchens and being able to leverage them. Second is how fast they move. Everyone inside DoorDash is bonused on a quarterly basis on precise goals. I thought the restaurant business moved fast, but I learned a lot from them about what speed really is. And speed is one of the few things you, as a leader control, and you should use it to your advantage.
ARJUN:
What's your advice for anybody who is fascinated by the ghost kitchen side of the business? What tips do you have for them?
STEVE:
Look at the two opposite ends of the scale. One is dream big, because I do think this will be a transformative change for the restaurant industry. I think if you're in a segment like casual dining, the bad news is these restaurants weren't built to bring food to your home. They were built to bring food to table 45. But the really good news is this allows us to play in a consumer occasion that has a hundred occasions a year. Whereas dining out is down 15 occasions a year due to the pandemic. So you get to play in somebody else's pool. And that should be exciting.
On the other hand, know your business at the smallest level of detail. You cannot move that fast unless you understand what a cook faces, working a fryer in a Chili's or at Maggiano's on a Saturday night. We were able to go so fast because throughout the entire testing period, we worked every weekend in the restaurants. I find a lot of marketers, at least in my category, delegate that part of the role or are afraid of that part of the role. But there's nothing that beats that frontline reality and perception. Because then you problem solve quickly along the way. And you don't wait for the feedback loop to take it's torturous 16 week journey to get back.
There is no shortcut, and that's why it's exhausting. I will often have young people come to me and tell me they’re ready for direct reports. And I always say, “Are you ready for headaches? Are you ready for three to seven people who literally look at you every morning and question if you’re ever going to do what you said? And can you make that test every day?” Because that's exhausting and hard and it's why leadership is so challenging.
ARJUN:
Chili's was under your leadership when the casual dining category was getting hit hard, both business-wise and every possible critique. What was the secret for the team to turn that around?
STEVE:
I had the good fortune of going in at the depths of its plunge when Chili's was in double-digit traffic declines. There were a lot of articles being written about how the bar & grill was dead for tomorrow's guests. Now Chili's is leading the industry in both sales and traffic growth in the midst of a pandemic. I think for me, the big learning was to be bold. Don't wait for a crisis to be bold. The first thing we did was cut the menu by a third. That needed to happen, and it was clear to me after one night in a restaurant. There was a gap between the complexity of the menu and the capability of the execution.
Then we restructured our entire media model. We were clinging to the mass media model just because it had built a category and we knew deep down inside that that was irrational. But we just decided to rip the Band-Aid off because what do you have to lose when you're bleeding 11% traffic? We shifted, almost overnight, a big chunk of our spend to digital.
Then the third thing we did was invest in off-premise everyday value. Everyday value was something we knew we had to do. It's so painful because it crushes the PNL and you get nervous. Can we actually make it up in the traffic? We have a great team and they figured out the formula to make it unique to Chili's, and then put it into practice. This is the off-premise carryout and delivery. That was a series of little wins. A lot of investments in technology were stubbed toes when they happened. We literally launched and relaunched three different loyalty programs. Each one more painful than the previous one until we got it right.
On value, it took us three times because we weren't being bold enough. And on loyalty, it took us three times because we were leading with the guests. We finally figured out our loyalty in casual dining through doing the wrong thing first. People were so tired of points programs. They didn't really follow them. They couldn't tell you what was in them. So we basically said, “We'll give you something every time you come to the restaurant,” and then it became just a mathematical equation of what we could give them that we could afford. But it was the consumer insight that was there that really led us to the game changer on that. I'm very proud now of how the Chili's brand is sustaining this growth. And now the articles are being written about how the bar & grill is well-positioned for the digital economy.
ARJUN:
I want to follow up on something you said. You talked about unique value. In the restaurant industry, most of us look at value to be discount taking from the numerator, and that's like the kiss of death. So how did you come up with the unique value off the brand?
STEVE:
We did research and we talked to a lot of guests. We concluded that what differentiates casual dining from fast food was their lunch doesn’t give you a full meal. With us, you can get a drink and appetizer and entree, and you can add a dessert. So we made our value structured around that. And then we let the guests tell us where the magic price point was. The guests basically said, Chipotle and Panera have been raising their prices to $10. They prefer Chili’s, and at $10 they would come here because their all-in costs might be less than the other places. We’ve now held that price point for three years. You get three for 10, a soft drink and a salad or appetizer and an entree. Then it just becomes the food cost management. How do you reset your food costs to have a chance to make the incrementality work? And it's funny, if you do one and two right, three is easier than you think.
ARJUN:
What is a common myth that you would like to debunk when it comes to restaurant marketing?
STEVE:
I think the biggest myth is that you can win by copying, that you can borrow your way to success. I've been in this industry since I was a dishwasher at 16. It's a copycat industry. Everyone reads the same trade magazines, listens to the same broadcast, and watches the same innovation. We experience it in the restaurant or see it on TV or on the internet. But the truth is there are no new ideas. All great ideas are truly two ideas that have never been crossed before. I'm not saying don't study your competitors, but ultimately your solution to value or convenience is going to be unique to your brand and be deliberate and disciplined about finding that solution. It will reflect a trend as it's occurring but the answer will only apply to you.
ARJUN:
You’ve had an amazing career. But do you ever think about what your career would be if you had not followed this path? What might Steve be doing today?
STEVE:
I think you know Arjun, my first passion is politics. At the age of 29 I had the great privilege of being the chief speech writer for H.W Bush. At that time, it was a crazy thing, that I was plucked from PR person for Kentucky Fried Chicken to work for him. I think if I wasn't in food marketing, I probably would be in politics. That’s saying something, because that's a very challenging arena to be in at this polarized moment in time. One of the reasons I love politics and restaurants is these are businesses that attract millions of consumers every day. And the human psychology behind them is fascinating. That’s how I think the two are linked together.
ARJUN:
Steve, I’m now going to ask a series of rapid questions. Give me three-to-seven word answers. One piece of advice to anyone in any walk of life about being a successful leader.
STEVE:
Make sure you never ask people to do something that you wouldn't do yourself.
ARJUN:
How do you define a big win?
STEVE:
It starts with the consumer. Does it break through the massive clutter we live in, and then does it achieve your financial objectives and sustain?
ARJUN:
I love the order. So what's one reason businesses fail to win big in today's world?
STEVE:
They don't think big enough. The big changes to big things are what really moved the needle. Small changes to big things create the illusion of progress. And that is so dangerous.
ARJUN:
Most leaders I work with are like great athletes in that they rule out some obstacles. Some literally removed the word “no” from the dictionary. Is there a word that’s not in Steve Provost’s dictionary?
STEVE:
This will take too long. I think you control the pace and speed of your organization.
ARJUN:
If today’s Steve could go back in time to meet young Steve, who is just graduating from high school, what would be one piece of advice you would give that kid?
STEVE:
Look around. Both at work and at home you should look around and enjoy and learn. I’ve always had an enormous work ethic, and the privilege of working on great teams, but there is a world beyond your teams and I haven't always done a good job of seeing that.
ARJUN:
To me, seeing a factor of success in mega brands, leading big teams, that has to be a process. Because I find that big success cannot be random. Is there a ritual for you?
STEVE:
When I did a stint in operations I learned a process I still follow today. Every six months I write out my life goals and underneath each one I write out the tactics to achieve that goal. I reevaluate every six months. I learned this from a guy named Alywin Lewis, who started as a fast-food cook in Houston, and in his career went on to become Chairman of Sears and serve on the Disney board. The most deliberate leader at connecting strategy to action I’ve ever met.
ARJUN:
Final Question Steve, is there a formula for consumer success?
STEVE:
30 years ago when I was a corporate speech writer, I had the privilege of working on a speech with a guy named Roger Enrico, who at 35 years old became chairman of the Pepsi-Cola company. The speech had this simple formula. It was called the tyranny of incrementalism. The formula said, small changes to small things are a waste of time. Small changes to big things are the most dangerous thing imaginable, because they create the illusion of progress. Big changes to small things are good, but big changes to big things are better. That's how you make the consumer notice, and that’s how you change your business. Roger is no longer with us, but it's the greatest business theory I've ever seen, and I think if leaders just kept that four-part theory in mind, the sky’s the limit.
ARJUN:
Thank you Steve. Thank you for sharing from you heart and thank you keeping it simple and walking the talk every time as a leader. Thank you