QSR 311 January 2024 by WTWH Media LLC

EVOLVING QUICK SERVICE FOR THE FUTURE JA N UA RY 2024 / NO. 311

Subway Redefines its Future

AND FEATURING:

7 BREW DISRUPTS THE BEVERAGE SEGMENT

The rising brand is grabbing attention with its swift growth trajectory.

WITH A NEW OWNER IN PLACE, THE LEGACY CHAIN IS PREPARED FOR A KEY EVOLUTION.

| P. 30 |

| P. 20 |

PLUS:

What’s New with Workforce Training P. 36

Sliders Enjoy the Spotlight P. 11

INSIDE:

P.51

Restaurant Equipment & Technology

January

TABLE OF CONTENTS

Restaurant Equipment & Technology

/P. 51

JANUARY 2024 #311

Q SR / LIMITE D -SE RVICE , U NLIMITE D POSSIBILITIES

DEPARTMENTS

F E AT U R E S

BRAND OF 20 24 THE YEAR

N E W S

16 FRANCHISE FORWARD

Earning and Learning How one company is incentivizing educational success. BY SAM DANLEY

TRANSFORMATIONAL

44 INNOVATE

C-Suite on a Diet

For this chain, nutrition starts at the top. BY SATYNE DONER I N S I G H T

11 FRESH IDEAS

Slider Shake-Up

The sector is filling with serious franchise deals. BY SAM DANLEY

14 ONES TO WATCH SUBWAY / PETER GARRITANO. LAUREL WREATH: ADOBE STOCK / MARTIALRED

Curry Pizza House

SUBWAY KEEPS ON THE RIGHT TRACK WITH ITS MULTI-YEAR TURNAROUND STRATEGY.

How Subway Became a Winner Again

Where Fast Meets Friendly BY BEN COLEY

BY BEN COLEY

With a new owner and overall growth philosophy, the iconic chain has breathed new life into its future prospects. 2 BRANDED CONTENT

7 Brew sprints toward thousands of locations by focusing on speed, quality, and an energetic culture.

4 EDITOR’S LETTER

7 SHORT ORDER

A fast casual brings a new twist to a popular staple. BY SATYNE DONER

42 OPERATIONS

What Awaits Restaurants in 2024? A look-ahead at the important issues facing the industry this year. BY GARY STERN

50 START TO FINISH

Rethinking Worker Training

Tony Hunsoo Ahn The TOUS Les JOURS CEO discusses the brand’s growing foothold in the U.S.

BY SAM DANLEY

Brands are finding new ways to engage employees in an ever-changing labor market.

64 ADVERTISER INDEX O N

T H E

C O V E R

QSR is a registered trademark of WTWH Media, LLC. QSR is copyright © 2024 WTWH Media, LLC. All rights reserved. The opinions of columnists are their own. Publication of their writing does not imply endorsement by WTWH Media, LLC. Subscriptions (919) 945-0704. www.qsrmagazine.com/subscribe. QSR is provided without charge upon request to individuals residing in the U.S. meeting subscription criteria as set forth by the publisher. AAM member. All rights reserved. No part of this magazine may be reproduced in any fashion without the express written consent of WTWH Media, LLC.

Subway is working through a major comeback journey.

QSR (ISSN 1093-7994) is published monthly by WTWH Media, LLC, 1111 Superior Avenue Suite 2600, Cleveland, OH 44114. Periodicals postage paid at Cleveland, OH and at additional mailing offices. POSTMASTER: Send address changes to QSR, 101 Europa Drive, Suite 150, Chapel Hill, NC 27517-2380.

PHOTOGRAPHY: SUBWAY LAUREL WREATH: ADOBE STOCK / MARTIALRED

www.qsrmagazine.com | QSR | JANUARY 2024

BRANDED CONTENT EDITORIAL

BRAND STORIES FROM QSR

EDITOR I A L DIR ECTOR

Danny Klein

dklein@wtwhmedia.com

QSR EDITOR

IN THIS ISSUE

Ben Coley

bcoley@wtwhmedia.com

FSR EDITOR

Callie Evergreen

cevergreen@wtwhmedia.com

AS SOCI ATE EDITOR

Sam Danley

sdanley@wtwhmedia.com BRANDED CONTENT STUDIO

DIR ECTOR OF THE BR A NDED CONTENT S T UDIO, FOOD A ND HOSPITA LIT Y

Peggy Carouthers

13 Ambitious Franchise Growth Plans Drive Flavor-First Franchise A family tradition of franchise success continues. SPONSORED BY THUNDERDOME.

SAVVY SLIDERS

THUNDERDOME

pcarouthers@wtwhmedia.com

BR A NDED CONTENT AS SIS TA NT EDITOR

Ya’el McLoud

18 Innovative Brand Plans to Grow by 50 Percent in 2024 A unique franchising opportunity with room to grow. SPONSORED BY SAVVY SLIDERS.

ymcloud@wtwhmedia.com

BR A NDED CONTENT AS SIS TA NT EDITOR

Olivia Schuster

oschuster@wtwhmedia.com ART & PRODUCTION

SENIOR A R T DIR ECTOR

Tory Bartelt

tbartelt@wtwhmedia.com

FSR A R T DIR ECTOR

Erica Naftolowitz

enaftolowitz@wtwhmedia.com SALES & BUSINESS DEVELOPMENT

GROUP P UBLISHER

Greg Sanders

gsanders@wtwhmedia.com

N ATION A L S A LES DIR ECTOR

Eugene Drezner

ADOBE STOCK / STRATFORDPRODUCTIONS, CHRIS JOUBERT

Restaurant Equipment & Technology / January 2024 Restaurant Equipment & Technology

As restaurants continue to combat new challenges, here are some of the companies and vendors offering solutions.

JANUARY/ 2024

Old wisdom has noted that the restaurant industry was slow to adapt to certain technologies. The digitization of, well, everything was a slow and steady process playing out during the 2000s and 2010s. New equipment, technology, and digital solutions were rolled out fast and furious, all with the aim of helping restaurants become more efficient.

52 ECOLAB

Edward Richards

erichards@wtwhmedia.com 919-945-0714

N ATION A L S A LES M A N AGER adobsovic@wtwhmedia.com 919-945-0712

56 LOOMIS 58 DOOSAN ROBOTICS 60 DSA SIGNAGE 62 XENIAL 51

A Big Task That Can be Easily Automated

Automating the Future: Restaurants Embracing Technology Amid Economic Uncertainty

Why Restaurants are Switching to Hybrid Drive-Thru Menuboards

Brandy Pinion

bpinion@wtwhmedia.com 662-234-5481, EXT 127

ECOLAB

DSA SIGNAGE

They’re the perfect tool for the post-pandemic landscape. SPONSORED BY DSA SIGNAGE

SPONSORED BY THUNDERDOME

Ambitious Franchise Growth Plans Drive Flavor-First Franchise

THUNDERDOME (2)

A family tradition of franchise success continues. THUNDERDOME RESTAURANT GROUP has established itself as a force to be reckoned with. Established by the Lanni brothers and their partner Alex Blust in 2012, they have collectively founded eight different restaurant concepts. At the forefront of this culinary empire is Currito, the pioneer concept founded in 2005 by the Lanni brothers. Currito currently boasts 24 locations (eight corporately owned units along with 16 franchise locations) and is embarking on an ambitious franchise development journey. They hope to double the size of the brand over the next 3-5 years. "We founded the Currito concept with the idea that meals could be quick, delicious and on trend,” says Joe Lanni, co-founder and owner of Currito and Thunderdome Restaurant Group. “We have plenty of healthy options, but flavor comes first at Currito." The Currito commitment to flavor and health has resonated with customers, positioning Currito as a unique player in the market. The need for healthy, flavorful, quick-service options is only growing in the U.S. with 46 percent of consumers reporting they aim to eat healthier in 2022—the highest ranked lifestyle change, according to a recent Nextbite survey. The journey to success for Currito has been marked by strategic growth with a shift toward franchise expansion in recent years. "As we have grown regionally, we have seen an explosion in sales and brand traction,” Lanni says. “The model is working, the reviews are in, and we have fans who are raving about what we do." The positive reception and lifelong experience the Lanni brothers have has propelled the leadership team to bring a more focused approach to franchising as a means of reaching new heights. The familial touch within the Thunderdome Restaurant Group has played a pivotal role in its success story. With lessons learned from their father, who founded The Great Steak and Potato concept with over 250 locations, Lanni emphasizes the importance of strong relationships with franchisees. "The strength of our relationships with and taking care of issues for the franchisees is the most important thing we can focus on day to day." This philosophy creates a unique and supportive environment, where franchisees can reach out directly to the leadership team. Critical transformations within the brand began approximately

five years ago, spearheaded by a comprehensive menu review and a technological overhaul for both front- and back-of-house operations. "We have streamlined our processes while improving taste, consistency, quality, and profitability," Lanni says. The dedication to continuous improvement has paid off, contributing to Currito's resilience in an ever-evolving industry—especially through the recent COVID-19 pandemic. The year-long preparation for the acceleration of Currito's franchise program has culminated in remarkable success. Despite economic challenges faced by the industry, Currito has not only weathered the storm, but is also experiencing an upward trajectory in brand performance. The Currito leadership team attributes this success to strategic hires, a robust infrastructure, and a relentless commitment to the company’s core values. Currito offers both multi-unit territories and single-unit opportunities in select markets. This flexibility allows the brand to cater to a diverse range of entrepreneurs, fostering growth and success within the Currito family. From the experienced leadership team to consumers being primed for healthier quick-service options, this franchise opportunity is primed for success. ◗

For more information on franchising with Currito visit currito.com/franchise. www.qsrmagazine.com | QSR | JANUARY 2024

DEPARTMENT

ONES TO WATCH

Curry Pizza House An emerging pizza fast casual hangs its hat on diverse flavors and toppings.

HEADQUARTERS: Fremont, CA YEAR STARTED: 2012 ANNUAL SALES: Average annual store sales as of 2022: $1,089,184 (12 open stores) TOTAL UNITS: Total of 36 have been signed, but 15 of them are yet to open. FRANCHISED UNITS: 21 open franchised locations

CURRY PIZZA HOUSE FOUNDER GURSEWAK GILL came from a trucking background, but his days on the road gave way to the kitchen when he decided to indulge his foodie persona. As a first-generation Indian American, his family would order pizza on Friday nights, but they would add spices and curry on top to liven up the flavor. 14

JANUARY 2024 | QSR | www.qsrmagazine.com

Soon, Gursewak found himself experimenting, making his own pizza dough, and inviting people over to try it. He would serve it to friends using original sauces and recipes. The home-cooked fusion concept quickly evolved into Bombay Pizza House in Union City, California. After 10 months of successful business, the mom-and-pop restaurant burned down in a fire. Gursewak persevered, partnering with good friend Gurmail “Romy” Gill in 2013 to bring his Indian-inspired pizzeria concept to life under the rebranded name Curry Pizza House. The chain’s menu is built on a blend of Indian flair, contemporary favorites, and everything in between. Signature dishes include the Curry Chicken Masala Pizza,

the Palak Paneer Pizza, and the Shahi Paneer Pizza. Classic pizza styles like Meat Lovers and Hawaiian are offered. There are also gluten-free and vegetarian options as well as thick and thin crusts. In addition to innovative pizza designs, Curry Pizza House features wings marinated in curries, spices, and tikka, achari, and tandoori sauces. A robust wine and beer menu is available too. The menu evolved to get to this point, starting with Southeast Asian tastes and slowly adapting to different flavor profiles. The founders often visit European and Asian cities in search of new and innovative ingredients to add to recipes. “What started happening is [Gursewak] became a great pizza maker,” COO Neelu Gill shares. “He added traditional pizzas to half the menu, which started helping cross over into markets he traditionally wasn’t targeting.” Even untraditional dishes, such as the Mexican Pizza, have been a hit, Neelu says. Each style performs well in its own right, but she has noticed patterns in sales depending on the demographics and community. For example, in areas with a heavy South Asian population, the Vegetarian Pizza is a best-seller. However, in cities like Dallas or Sacramento with large populations of Northern Indians and non-vegetarians, other styles of pizza are more suitable. “No matter where, one thing is for sure— the flavors of our pizza have always been compelling,” Neelu adds. “All of the pizzas at all locations do well. One does not completely overpower the other.” At the cusp of the pandemic, the Curry Pizza House team found itself at a crossroads: Do they keep opening stores in the Bay Area, or do they expand the concept into a franchise? “The feedback we [CONTINUED ON PAGE 48]

CURRY PIZZA HOUSE (4), IMAGES: ISABEL BAER

BY SAT YNE DONE R

New Year, No Sticky Situations Here! Serve up the perfect slice all day, every day with Release Agent and Equipment solutions from Vantage® Food. • Improve product consistency • Decrease waste and cleaning frequency • Extend the life of your pans To learn more, contact us at: info.food@vantagegrp.com Our integrated approach includes industry experts, processing ingredients, and precision spray equipment that help increase operational eﬃciency and your peace of mind.

Better Performance Made Possible

DEPARTMENT

FRANCHISE FORWARD

Earning and Learning A franchisee is paying employees to do homework and awwarding cash bonuses for good grades. BY SAM DANLEY

“We tweaked a few things here and there as we were doing the pilot. That came from listening to the associates about what they liked, what they didn’t like, what was working for them, and what wasn’t working for them.” As an example, the idea to carve out homework time either before a shift starts or after a shift ends came directly from team members. “We wanted to make it as available and flexible as possible for the people that are participating in it, and we wanted to create more of an opportunity for them to really step into the program easily,” Hamra says. After fine-tuning the parameters based on feedback from student employees, the company brought the pilot to more restaurants, mostly Wendy’s and Noodles locations in its home state. When all was said and done, around 60 employees at 22 stores participated in the test run. Hamra Enterprises started rolling out the program across its entire footprint last spring. Paid homework time and cash rewards for good grades are now available to all eligible employees at nearly 200 stores across 11 states. “As with any new program, it’s great if you can come up with a brilliant idea, but it makes no difference unless you build awareness around it,” Hamra says. “That’s always the biggest challenge. You have to empower your leaders, your managers, and your other team members to talk about it.” Word-of-mouth is the most effective way to drum up support and encourage buy-in throughout the organization, he adds. That comes from sharing information through as many employee touch points as possible, from in-store posters and the company’s website to its internal newsletter. “Of course, with younger adults, the key is reaching them through communications on their desired platforms, so we’ve also launched a social media campaign to help get the word out,” Hamra says. As far as the financial tradeoff that comes with paying employees to sit in the dining room and do homework, he sees it as less of a cost and more of an investment. “There are lots of anecdotal stories of businesses buying into the next fancy new trend or direct financial resources in the hopes of getting some competitive edge,” Hamra says. “As [CONTINUED ON PAGE 48]

amra Enterprises is rewriting the rulebook for student workers with an onsite homework program. The Wendy’s, Panera Bread, and Noodles & Company franchisee pays employees to sit in the dining room and work on homework for an hour before or after their shift. The Springfield, Missouri-based company also rewards team members for good grades, offering $300 for report cards with straight A’s, $200 for A’s and B’s, and $100 for all B’s. “A lot of people that work for us who are in high school or college aren’t just there to have a job,” says CEO Mike Hamra. “There’s a financial need for them to support either themselves or their family, so we wanted to help ensure they can be successful in getting an education while they’re working to make ends meet.” The onsite homework program began in 2022 at a Panera location in Needham, Massachusetts, that was struggling with staffing. The company set out to find a way to provide an extra level of support for employees while also improving turnover and retention. “We put together some ideas, and then we really worked with the management team there to craft the program,” Hamra says.

JANUARY 2024 | QSR | www.qsrmagazine.com

HAMRA ENTERPRISES (3) NOODLES & COMPANY / STEVE LIPOFSKY

Hamra Enterprises pushes for big success in the classroom.

As a family owned, grown, and made business, Red Gold understands the importance of family support, which is why we’ve joined forces with Folds of Honor to donate proceeds directly to families of fallen American military and ﬁrst responders. So when you choose Red Gold , you’re not just serving your customers top-notch products, you’re also serving your nation—a testament to the distinctive diﬀerence of Red Gold. ®

Request your free sample at RedGoldFoodservice.com/FOH Red Gold is a registered trademark of Red Gold, LLC. Elwood, IN

RG1427-1023

S P O N S O R E D B Y S AV V Y S L I D E R S

Innovative Brand Plans to Grow by 50 Percent in 2024 A unique franchising opportunity with room to grow.

rapidly growing brand, differentiating itself with an innovative menu and strategic expansion plans. With unique prototypes, effective location strategy, and commitment to franchisees, Savvy Sliders is not just a business venture but an exciting opportunity to build and grow a market. Savvy Sliders saw instant success in 2018 when it opened its first two locations in Michigan. Entering 2024, Savvy Sliders is not slowing down. The restaurant is on a trajectory for approximately 50 percent growth, with plans to open 25 new stores in the coming year. A big part of Savvy Sliders’ strategy is its two prototype models. The first is a smaller restaurant tailored for carryout and drive-thru orders. Then, there is a larger version with seating for up to 60 guests, measuring about 2,800 square feet, which is designed for family dining and dine-in experiences. “We have flexibility that gives us a great opportunity to maximize the profit potentials of the markets we go into,” Bryon Stephens, chief development officer at Savvy Sliders, says. This flexibility allows Savvy Sliders to effectively cater to varying market needs, from fast-paced urban areas to family-oriented suburban neighborhoods. Location is crucial in fast food, and Savvy Sliders excels in this regard by strategically using second-generation spaces from previously closed fast-food locations. This approach reduces costs and leverages existing infrastructure for rapid growth. “Being opportunistic to take advantage of these closed opportunities gives us access to lower costs,” Stephens

says. “With the uniqueness of our menu and the quality of our products, we can make those second-generation spaces perform extremely well for our brand.” This strategy has enabled Savvy Sliders to transform existing locations into profitable restaurants. Understanding the importance of a well-trained team, Savvy Sliders provides extensive training programs. The help of digital content combined with a multi-person training crew ensures that franchisees, managers, and teams are well-prepared, even before getting hands-on experience. “We want to make sure they're going to give the same service to consumers as stores that have been in the marketplace for years produce,” Stephens says. Savvy Slider's goal is to have every crew member and manager be an expert in their functional area before the training crew leaves, even if that takes four–six weeks. Partners of Savvy Sliders can look forward to being part of a brand with significant growth potential. “We're so new franchisees that sign up with us will be able to reinvest the cash flow from the existing stores that they own into being able to build and grow out a market, in contrast to being with a mature brand where growth is really hard to come by because they're already fully saturated,” Stephens says. “Franchisees today can become the developers of an entire marketplace for us. They can create and own their destiny.” ◗

To grow with Savvy Sliders, visit savvysliders.com/franchising 18

JANUARY 2024 | QSR | www.qsrmagazine.com

SAVVY SLIDERS (3)

In the fast-food industry, investing in a franchise that stands out from its competition is wise. Savvy Sliders is a

t NEX OUR zine D A a RE mag n qsr ature i 24 e f Y 20

UAR Y FEBR STOR OUR H OW OWT FOLL R GR

SEE O

WE ARE...

BIGGER. BETTER. BOLDER.

We are known for offering great-tasting food made with the highest quality ingredients. Our 100% Angus Beef slider is always fresh, never frozen and like everything on our menu – made fresh to order. Our famous chicken fingers are marinated and hand-breaded on-site. You can always choose from our fantastic assortment of sauces to compliment your meal. With several delicious flavors of hand-spun custard shakes there is something for everyone.

HAND-CRAFTED SLIDERS

HAND-breaded chicken fingers

HAND-spun custard shakes

On-site Account Acquisition Assistance In-Market Training Innovative Delivery Packaging

JOIN OUR TEAM. WE HAVE MORE 2 LOVE. Expand your portfolio with the team that won’t stop innovating and growing | www.SavvySliders.com

WANT TO KNOW MORE? SCAN HERE

TRANSFORMATIONAL BRAND OF THE YEAR

HOW

SUBWAY BECAME A

BRAND OF 20 24 THE YEAR

TRANSFORMATIONAL

WINNER AGAIN CEO John Chidsey arrived at Subway in November 2019 and was met with an organization reeling from six straight years of negative sales. The sandwich giant was filled with nearly 60 years of history, but the organization had seemingly never been professionalized. Over the next few years, Chidsey pulled in experts with experience inside and outside the restaurant industry—McDonald’s, Burger King, Outback Steakhouse, Focus Brands, Coffee Bean & Tea Leaf, Pepsi, and Michael’s, to name a few—all of whom helped him start “really cleaning things up.”

With a new owner and overall growth philosophy, the iconic chain has breathed new life into its future prospects.

BY BEN COLEY

LAUREL WREATH: ADOBE STOCK / MARTIALRED

JANUARY 2024 | QSR | www.qsrmagazine.com

TRANSFORMATIONAL BRAND OF THE YEAR SUBWAY’S MENU IS A MAJOR FOCUS OF ITS TURNAROUND PLAN.



SUBWAY

www.qsrmagazine.com | QSR | JANUARY 2024

TRANSFORMATIONAL BRAND OF THE YEAR

Through a variety of marketing, menu, and development initiatives, Subway found itself booming with eight straight quarters of same-store sales growth through the end of 2022. Global comps grew 9.2 percent versus 2021 and 29.1 percent against 2020. In North America specifically, same-store sales lifted 7.8 percent in 2022 year-over-year. Restaurants were repeatedly beating decade-old AUV sales marks. Digital sales quintupled, and international deals were being signed in droves. The success put Subway, QSR’s 2023 Transformational Brand of the Year, in a position to reconsider its future. Co-founder Fred DeLuca passed away in 2013, and his partner Dr. Peter Buck passed away in November 2021. The children weren’t heavily involved in the business. Chidsey, as a steward of the brand, initiated a conversation with both families, letting them know that a transition was necessary. And when he mentioned “transition,” he was referring to selling the largest restaurant footprint in America. “We were through the turnaround phase, and there was enough growth that we said to them, ‘I think we can go out and we can get a big pool of potential buyers,’” Chidsey says. “And clearly want to leave some growth for the next buyer. You

don’t want to exhaust every avenue. I think the timing was just right from a business standpoint and from where they were in their family situation. The stars aligned, and we took advantage of that window.”

SANDWICH SALE

Subway’s sales process was well-publicized by the media throughout 2023. The Wall Street Journal first reported the news in January, and the brand followed up a month later with confirmation. The restaurant was seeking a company that believed in its multi-year turnaround efforts. There also had to be an “incredible commitment” to the franchise community, Chidsey says, given that Subway has partnered with operators since 1974, and there are now thousands across the world. “Somebody that [the families] thought would love to see Subway—which I would argue we do have our swagger back— continue to be put back on the top of the pedestal where it was and where it’s headed,” Chidsey says. “I mean obviously they want to get a fair price for the business, but I think they were

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SUBWAY

SUBWAY IS GETTING BETTER AT CONNECTING WITH ITS PASSIONATE CUSTOMER BASE.

JANUARY 2024 | QSR | www.qsrmagazine.com

COME GROW WITH US! AMERICA’S LARGEST BUFFET AND GRILL 350 UNITS • 39 STATES • +50 YEARS

2022 AUV $5.6M

*This figure is the Average Unit Gross Sales for 2022 of the Top 20% of Franchised 11-M Restaurants. See Item 19, Table A-2 of our 2023 FDD

Top 50 Most-Loved Brand YELP 2023

Top 3 in Category Franchise 500 Entreprenuer 2023

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America’s largest and only national buffet

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Access to national accounts and equipment supplier

•

Deep rooted culture with commitment to giving back to the communities where our guests live and work

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We proudly support our military and their families

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Multiple development options

Top 50 of Top 500 2022 & 2023 Nation’s Restaurant News

11.8% Sales Increase 11-S Models 2021-2022*

9.5% Sales Increase 11-M Models 2021-2022* *24-week period 7/15/21 - 12/29/21, and for the 24-week period from 7/14/22 - 12/28/22. See Item 19, Table B-1 & B-2 of our 2023 FDD

FRANCHISE WITH US! goldencorral.com/franchise *Please see our April 25, 2023 Franchise Disclosure Document for more details. This ad is not an offering. An offering in New York can only be made by a prospectus filed first with the Department of Law of the State of New York. Such filing does not constitute approval by the Department of Law.

TRANSFORMATIONAL BRAND OF THE YEAR

concerned about finding the right buyer as much as they were focused on maximizing the last possible dollar.” The transaction was unique in that it was a family-owned business looking at private equity as opposed to one investment group selling to another. That’s why it helped to have executives from other major restaurant companies who had experience dealing with these types of firms. Chidsey also notes that one of the beauties of Subway’s turnaround is that the company has always been private. Meaning, there’s never been outside pressure from analysts or required explanations every quarter about progress. “This a public fact—Subway never had any debt,” the CEO says. “So the fact that we could devote any amount of cash flow we wanted to fix our business and growing it and not have to worry about servicing a large amount of debt like you might have to do if it was a private equity company or even if it was a public company for that matter, really made the turnaround much more enjoyable and doable.” Several companies were reportedly involved in the bidding process, including Goldman Sachs, Bain Capital, TDR Capital, TSG Consumer Partners, and TPG. Adding to the financial complexities was the fact that the federal government raised interest rates multiple times in 2023. Plus, this was one of the most expensive leveraged buyouts in restaurant history, and it “meant that the equity check that a private equity firm had to write was quite large,” Chidsey says. As a result, most of the bidding groups combined into consortiums because Subway and its 37,000-restaurant fleet were too big to handle alone. That paved the way for some confusion. “Like wait, one group said X and Y,” Chidsey recalls. “Aren’t you guys in the same group? You’re saying X and they’re saying Y? And so I think those two factors, the financing markets and just the size of the deal and what that required, made it go on longer than it would have had it been a smaller deal.” Subway revealed in August that it selected Roark Capital— a private equity firm that’s familiar with striking major transactions in the restaurant space—at a reported price of approximately $10 billion. This is the same firm that spent $11.3 billion to acquire Dunkin’ and Baskin-Robbins toward the end of 2020. Those two chains fall under Inspire Brands, which also operates Arby’s, Buffalo Wild Wings, Jimmy John’s, and Sonic. Roark’s other investments include Focus Brands (Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s, Moe’s, and Schlotzsky’s), The Cheesecake Factory, Hardee’s, Carl’s Jr., and Culver’s. Roark, based in Atlanta, has $37 billion in assets under management. Altogether, its brands span across various industries, including food, restaurants, consumer and business services, health, wellness, fitness, and education and youth activities. It generates roughly $77 billion in annual revenue across 69,000 locations in 50 states and 89 countries. The price tag is a sizable amount for a restaurant that had its beginnings in 1964 when Buck provided DeLuca with a $1,000 loan. To Chidsey, Subway selling for such a high number proved how valuable the chain’s action plan is. Illustrating his point further, Roark’s stated investment philosophy is to “partner 24

JANUARY 2024 | QSR | www.qsrmagazine.com

with outstanding management teams and provide capital to businesses where sound strategies and superior execution can enhance growth and profitability.” “I think that’s a testament to what buyers saw in the business,” the industry veteran says. “You wouldn’t pay a ton of money for a strategy that you didn’t think was right for a management team that you didn’t like. You would have sold the business for 70 percent of what it went for or 50 percent, depending on how messed up you thought the strategy was. Again, the fact that it went for such a price that it did indicates that the buyer liked what they saw. And the buyers, all of them to be fair, were very much focused on, ‘Hey, we want to make sure the management team stays. We want to make sure you continue to nail your international growth. We want to make sure you continue your menu innovation.’” Chidsey says franchisees responded with optimism for a handful of reasons. For one, it didn’t go unnoticed by operators that when DeLuca passed, there was a moment of uncertainty. There were questions in their mind about what would be the next stage for Subway. The CEO says the unknown was emphatically eliminated with the transaction. Another factor is that Subway chose a company that “understands franchising backward and forward and understands the restaurant business very well.” Franchisees also know the brand will enter Roark as a standalone entity, and they expect that many years down the road, it will exit in the same way. It’s the same business plan, same leadership, and same strategy. Chidsey is confident that operators couldn’t have asked for a better outcome. “Franchisees see how they’ve handled other brands,” Chidsey says. “I don’t think if you look at previous transactions, you don’t see them doing U-turns and deciding to go in a completely different direction. I think that also gives them confidence that things should remain the same and we should continue on the same path we’ve been on.”

REIMAGINING THE LEGACY

Subway’s turnaround efforts touch many areas, one of the most significant being unit expansion. Last year marked the first time the brand experienced systemwide net growth since 2016, with most of it being international. In the U.S., the story is about growing AUVs through boosting digital sales, building a catering business, continuing menu innovation, and implementing remodels. With that said, Chidsey sees domestic whitespace. Between the beginning of 2020 and 2023, Subway shuttered a net of 3,200 U.S. stores. That lost footprint would be among the top 20 biggest quick-service chains in America. “If you think about the fact that we closed 6,000 restaurants in the U.S. over the last seven years, I’m not suggesting for a minute that you can go back and re-open 6,000 of them, but you could easily go back and probably open half of those,” Chidsey says. “I think there are growth opportunities in the U.S. Smart growth opportunities.” Subway is inviting well-capitalized, multi-brand franchisees

For more information: CoatesGroup.com info@coatesgroup.com

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TRANSFORMATIONAL BRAND OF THE YEAR

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portfolio of 30-40 restaurants, you can always have four or five over here that are not doing so well, but you’ve got a big enough pool over here that will help balance it out. Larger operators tend to have bank lines. They’ve got banking relationships with people. And so when I came here and put the team together, one of the things I said to the family is you have to be willing to pivot away. We’ll always have onesie, twosies in little small towns in America.” Much growth could come from nontraditional avenues. Previously, foodservice providers like Aramark and HMSHost operated Subways through many business developers. The competing voices and opinions gave these companies a reason not to work with Subway, Chidsey explains. But the chain has since bought out these developers and removed the middle layer. “They’re like, ‘Now you’re a much easier partner to work with. We always liked your economics. We always liked the product,’” says the CEO, recounting conversations with the foodservice entities. Meanwhile, existing restaurants are undergoing remodels. Called the “Fresh For ward ” design, the changes come with LED lighting, new f loor coverings, containers, tables, colors, and chairs. The switch brings a 20-25 percent sales lift if it also involves a franchisee relocating their restaurant to a better trade area. Not including that, the increase is about 10-11 percent. Even if it were minimal incremental dollars, Chidsey says remodels would still be a competitive necessity. “If everybody else is building new shiny objects and yours is looking dated and tired, it’s hard to compete. To me it’s table stakes,” the CEO says. However, he acknowledges that it’s an easier sell in the franchise business when you can demonstrate profitable paybacks on the investment. At last count, around 10,000 units in North America made the change. About 50 percent of the system remains, and Chid-

into its system to acquire stores from other franchisees and build out viable trade areas. It’s a relatively new way of thinking for the legacy brand. DeLuca’s philosophy was for Subway to be the only concept within a franchisee’s portfolio. It wasn’t just about not having another sandwich chain. No one could be anywhere else in quick service. He also wanted restaurateurs to be small. The chain has now largely moved on from that strategy. Chidsey told the families that if they truly want to fix the brand in the U.S. and grow it internationally, industry veterans with scale needed to enter the system. But the smaller players won’t go away completely. In a town of 2,500 people, Chidsey argues that a single-unit operator is better suited to succeed. “You can’t really fault how [ DeLuca] built it. It worked,” Chidsey says. “But I would say when you go through a six or seven-year slide though, if you only have one or two restaurants and you get in trouble, you’re not super well-capitalized. You don’t have a portfolio. The beauty is somebody that has a 26

JANUARY 2024 | QSR | www.qsrmagazine.com

SUBWAY (3)

SUBWAY IS WORKING TO BRING A FRESH DESIGN TO ALL ITS STORES.

TRANSFORMATIONAL BRAND OF THE YEAR

sey estimates Subway will get there in the next few years at a clip of 3,000 per year. “It works from a franchisee standpoint,” Chidsey says. “I think part of Subway’s problem was, like all brands, when you go through an extended period of sales declines, brands tend to look the other way in terms of enforcing things like remodels because they’re worried rightfully so that people will just hand you the keys and say, ‘I’m not going to do it.’ Now that we’re on 11 straight quarters [of same-store sales growth], franchisees have a lot of confidence and enthusiasm in the brand. They have a lot more money in their pocket. So it’s much easier to get them to do what they’re supposed to do.” International growth is the immediate prize. Subway has the fourth-most restaurants outside of the U.S., trailing McDonald’s, KFC, and Starbucks. Globally, the chain has inked 15 major franchise deals over the last couple of years, resulting in over 9,000 restaurant commitments spanning across Europe, the Middle East, Africa, Asia Pacific, Latin America, and the Caribbean. Notably, in June 2023, the brand unveiled a monumental agreement in China, adding nearly 4,000 units to its portfolio and expanding its presence in the country by a factor of seven. As of late October, at least three to four more deals—all in large sizes—were expected to happen in the next one to two quarters. Then, through the next two years, Chidsey hopes Subway can ink another 12-15 agreements. Some potential future countries include Spain, Italy, Japan, Mexico, and Vietnam. Subway has almost 17,000 international units in 100 countries, but Chidsey says the chain is “a mile wide and an inch deep” in most of these markets. Other brands like McDonald’s, Domino’s, KFC, and Burger King have a roughly 2:1 ratio— or greater—of international to domestic units. If Subway rose to the same proportion, that would put its international footprint past 40,000. “Now, I would argue we should do even more than that because Subways are smaller, cost less money,” Chidsey says. “So in theory, if you went to an international developer and they said I want to put $50 million into the brand, you can build a lot more Subways with $50 million than you could Burger King.”

JOURNEY ISN’T OVER

One of the hallmark moments of Subway’s comeback came in July 2021 when it unveiled the most significant menu launch in its history. There were over 20 updates, including 11 new and enhanced ingredients, six new or returning sandwiches, and four reimagined signature sandwiches. Chidsey says this effort came at a time when franchisees were disillusioned about not seeing menu innovation for a long time. The launch two-and-a-half years ago conveyed a message to customers and franchisees that a new era had officially begun. The other feedback Subway heard from consumers centered on craveability. So the chain came back in July 2022 with the Subway Series, a category of chef curated sandwiches that can be ordered by name or number. A year later, the brand pushed the envelope further by introducing a Deli Hero lineup featur28

JANUARY 2024 | QSR | www.qsrmagazine.com

ing sandwiches with freshly sliced meat. The company invested $100 million in providing meat slicers to all of its 20,000 U.S. locations. “We’ll never walk away from customization,” Chidsey says. “We can’t because that’s how the brand is built. But I think one day we’ve always said we’d love to be 50/50. Just continue to build the Series but still have what people have known forever if that’s the direction they want to go.” The innovation not only appeals to customers’ taste buds but also their growing need for convenience. From a digital perspective, it’s easier for guests to order pre-constructed sandwiches than to check individual ingredient boxes. And Subway is motivated to drive people to toward this because the website and app are its most profitable channels. Global digital sales increased 12.9 percent through the first three quarters of 2023. In North America, it lifted 22.4 percent during the same stretch. The mix is around 16-17 percent, a huge jump from around 3.5 percent prior to the pandemic. Subway’s end goal is to push it to 30-35 percent. Chidsey understands that’s a distant future, but the brand has levers to pull, like seriously diving into the catering business— a sales channel that didn’t get much attention before the CEO came on board. Loyalty will play a role too. Subway enhanced its rewards program in the fall, and within the first month, it signed up an incremental 704,000 guests. That was a 60 percent increase year-over-year. Menu innovation and digital strategies reel in new customers, but recent marketing initiatives have proven how passionate core customers are. Around 8,000 signed up to ride a branded Subway blimp, including one who lived in Portland and flew across the country to cash in his ticket in Orlando. Another time, the chain wanted to see how many would be willing to legally change their name to Subway to get free sandwiches for life. Apparently, 10,000 would. The initiatives have put the brand “in a completely different place” compared to before the current C-suite took over, Chidsey says. Subway surveyed operators in 2020, not having ever done it before. It did the same at the beginning of 2022 and found that belief in the brand was up double digits. He believes all signs indicate that Subway will continue to maintain its position as the No. 1 global sandwich player. “We have an ability to do things that our competitors in our space sandwich space can’t really do,” Chidsey says. “Because of our scale, we obviously can purchase food packaging cheaper than they can do, we can afford to invest way more money in technology in terms of loyalty programs, digital, etc. I think we have the scale and the benefit and the blessings of that scale and size to really do pretty much what we want to do. The onus is on us to take advantage of the financial scale that we have and just the brand presence that we have to continue to elevate the guest experience. And I think as long as we do that, it’s going to be very hard for anybody to catch us just because we’re so far ahead and we have that opportunity that would take them decades to get to that level of funding and brand trust.” Ben Coley is the editor of QSR. He can be reached at bcoley@wthwmedia.com.

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BREAKOUT BRAND OF THE YEAR

The simplicity of 7 Brew starts with its name. When the brand was founded in 2017 in Rogers, Arkansas— also known as the home of the first Walmart—it debuted with seven choices. Those were Blondie (caramel and vanilla breve), Brunette (hazelnut and caramel mocha), Smooth 7 (white chocolate and Irish cream breve), Cinnamon Roll, White Chocolate Mocha, German Chocolate, and Triple 7 (Smooth 7, but with six espresso shots). Six years later, the chain’s offerings have ballooned to 20,000-plus combinations, including the most recent addition of cold brew. But at its core, the simple model remains. 7 Brew—named QSR’s 2023 Breakout Brand of the Year—is “drive-thru only and drinks only” CFO Nicole Miller Regan explains. The executive chooses her description carefully because she wants others to know the company isn’t just about coffee. There are chillers, teas, infused energy, sodas, and more.

BY BEN COLEY

7 Brew sprints toward thousands of locations by focusing on speed, quality, and an energetic culture.

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FRIENDLY 7 BREW

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BREAKOUT BRAND OF THE YEAR

“It’s delivering energy to people all day long and then hospitality,” Regan says. “Being kind is always in style. Always.” Franchisees bought into the philosophy. The chain grew to 40 locations by the end of 2022 and had 150 stands in 24 states as of late October. That means 7 Brew’s unit size skyrocketed by 275 percent in less than a year. Of those shops, roughly 90 percent are operated by 45 franchisees.

The long-term goal is to stretch coast to coast, and 7 Brew has the pipeline to do that and more. The company’s FDD states there were 2,000 store commitments as of December 2022. CEO John Davidson has said publicly that it’s since increased to more than 2,500 and is on track for 3,000. This year’s objective has been to solidify the Southern, Midwest, and Northeast regions of the U.S. “How do you go from 40 to 150? We need franchise partners. That’s why we’re going so fast and breaking records,” Miller says. “And then operationally there are physical attributes. I mean, it’s a two-lane drive-thru the whole way through without any friction of a zipper. It is a glass building that lights up with a blue light at night. This is gorgeous. It feels good to work inside. It’s not a closed structure. We customize like everyone. We’re fast like everyone. We’re accurate like everyone.”

SWIFT SIPS

7 Brew’s website instructs visitors to “Forget everything you know about working at ‘cafes’ or ‘coffee drive-thrus.’ We’ve started a revolution to bring the fun back.” True to this point, the growth story is quite the outlier, not only in the beverage space but the quick-service segment overall. The brand’s current trajectory began in January 2020 when it was acquired by Brew Culture, a parent company formed by Davidson and a group of entrepreneurs. At the time, there were seven shops. A year later, the brand initiated its franchise program and back-to-back record development years followed in 2022 and 2023. The company crossed the 100-unit mark in June thanks to openings in Auburn, Alabama; San Antonio;

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7 BREW (2)

7 BREW CROSSED THE 100-UNIT MARK DURING LAST SUMMER.

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Springdale, Arkansas; and Traverse City, Michigan. The success was enough to place 7 Brew on QSR’s Best Franchise Deals in September. The chain’s massive rise is fueled by serious multi-brand operators who are signing on for 50-60 shops on average. Notable franchisees include Tacala Companies and K-Mac Enterprises, which both oversee Taco Bell restaurants. There’s also Meritage Hospitality Group, a franchisee of more than 380 Wendy’s units in 16 states. It announced in August that its board approved to proceed as a 7 Brew franchisee in the Midwest. The preliminary agreement calls for up to 64 restaurants by the end of 2030. Another operator, Brew Crew LLC, owned by business partners Larry Wilson and Brandon Sebald, said last year that they want to open more than 200 locations across the U.S. Each box—built offsite and then dropped onto a slice of real estate—features canopied double drive-thrus. According to the FDD, typical 7 Brew stores require a lot ranging from 8,000 to

•7 BREW PRIDES

ITSELF ON DEVELOPING RELATIONSHIPS WITH ITS GUESTS.

Although a small sample size, 7 Brew’s FDD shows that 14 measured locations (13 company-owned units and one franchise) earned more than $2.3 million in average gross sales in 2022, with the highest-performing outlet exceeding $3.1 million. The documents show no closures between 2020 and 2022. “There’s a financial return robustness, no doubt, but people want to be a part of excitement, energy, and a movement,” Regan says. “I think that’s what happens at the stand level every single day. And that’s what our franchisees have been attracted to and joining us in partnership to grow this business.” However, Regan wants to make one thing clear: 7 Brew didn’t rise from 40 to 150 shops in less than a year without any obstacles. That couldn’t be further from the truth. The reality is that much diligence is required. There’s a stage gate process, from pulling permits and getting a design and construction team involved to finally dropping the building. From then, it takes roughly 30 to 60 days to open. Even during that seemingly mundane timeline, 7 Brew prioritizes excitement. The company allows the community to watch as the structure is put into place via crane. Once the grand opening rolls around, the chain moves quickly to establish a cult-like following. With every store debut comes Swag Day, a time when customers can get free swag with the purchase of a large drink. “We want to go as fast as possible, but I think the modular building aspect is pretty cool because it’s something that you can see in the community and draws attention to the brand but it’s also really fast. Then there’s definitely plenty of stuff that takes a lot of time,” Miller says. “Ordering certain things through the supply chain and the permitting process—none of that has gotten any easier. We just make sure we plan for that accordingly.”

50,000 square feet on which a roughly 500-square-foot modular building will be placed. Units are usually on an out-parcel to a shopping center with highway exposure or proximity. The total investment necessary to begin operating is approximately $900,000 to $1.9 million. 34

JANUARY 2024 | QSR | www.qsrmagazine.com

7 Brew’s growth is supported by an experienced leadership team. Regan joined in December 2022 after serving as the managing director and head of the consumer equity research practice at investment bank Piper Sandler. COO and director of franchising Drew Ritger came on board in June 2021 after previously working as CEO of Zips Dry Cleaners and spending 22 years at Sonic. Director of training CeCe LaBorde is homegrown. She worked at the store level for three years before assuming her current role. The group views itself as franchisees’ No. 1 support system. Every operator starts by visiting the Northwest Arkansas headquarters for a two-day orientation. The franchisees, who bring along a certain number of employees with them, tour a nearby store and physically learn how to work all the stations. As of late October, there were 28 training weekends in 2023. 7 Brew’s corporate team never tells employees beforehand that a franchisee is coming because it wants workers to be authentic. “I’ve seen it 45 times walking in and out of the stand,” LaBorde says. “Everybody has the same reaction. They’re blown away five minutes into it. You see the line, you see the excitement, you see the culture. You also see Sally Q taking a dub shot with one of her regulars every day. You see the con- [CONTINUED ON PAGE 46]

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EMPLOYEE MANAGEMENT

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CHIPOTLE (3)

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EMPLOYEE MANAGEMENT CHIPOTLE IMPLEMENTS A COHESIVE WORKPLACE CULTURE.

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engage employees in an ever-changing labor market. B Y S A M D A N L E Y /

Restaurants are only as good as their employees, but those workers can be hard to find and even harder to keep in a competitive and fluctuating labor market. The challenges of cultivating a dedicated workforce in a sector known for high turnover are pushing brands to scrap their old rulebooks and find new ways to recruit, onboard, and retain employees. Chipotle has rolled out a slew of initiatives to counter rising turnover in recent years, from bolstering benefits and increasing compensation to refining pathways for development and investing in new technologies. KELLY LEE

www.qsrmagazine.com | QSR | JANUARY 2024

EMPLOYEE MANAGEMENT

“As we think about our path to 7,000 restaurants, we’re going to need to bring in a lot more talent to help us grow and scale,” says Haris Khan, vice president of operations services. The company is turning to social media for its hiring campaigns. It aims to “pull back the foil” on platforms like TikTok and Instagram with behind-the-scenes content highlighting the daily life of employees and the perks of working for the brand. “We’re able to really tell a story that resonates with folks, versus just some flashy graphics,” Khan says. “We continue to see some strong trends in reduced turnover and better retention than in years past, particularly for the general manager role. It all starts with recruiting and adapting to today’s workforce to meet candidates where they are.” Chipotle has zeroed in on GM stability with programs that offer pathways for development and teach skills like emotional intelligence, situational leadership, and food safety coaching. It also is finding ways to reduce friction for store-level leaders and increase productivity inside the restaurant. Khan says his team looks at the end-to-end checklist of everything a GM is responsible for and works backward to identify high-impact opportunities for upgrading processes or introducing new technology. “One of the things we found was that they’re spending a lot of time training the grill employees,” he says. “We asked ourselves how we could streamline that area, and then we developed this new dual-sided grill.” The equipment cuts the time it takes to cook chicken from 12 minutes to four minutes and results in a more consistent product. It takes one of the most complex and difficult-to-train positions and streamlines it so an employee can learn it within hours instead of weeks. Similarly, the fast casual is testing an “Autocado” device that cuts, cores, and peels avocados before they’re hand mashed into guacamole. It also is experimenting with a digital make line that uses intelligent automation to build bowls and salads while employees operate the top make line to make burritos, tacos, and quesadillas. “You’re never going to walk into a Chipotle and see robots serving on the front line,” Khan says. “What you’re going to see is these automated tools coming into play that eliminate some of those boring, repetitive, or challenging tasks the team members just don’t like. What we try to do on our side is leverage the stage gate process to identify what those key pain points are.” The company also revamped its learning management system (lms) to create what’s called the “Spice Hub.” “It’s where we house anything and everything trainingrelated for our restaurant teams to quickly go and reference,” Khan says. “Over the last year, we’ve really assessed the holistic onboarding program and identified key areas to further optimize our processes, which is reducing friction for both general managers and new hires.” One recent change Chipotle made is reducing the amount of time new hires spend in front of a screen. It streamlined the day-one onboarding process from four hours of digital training to just 25 minutes. “We’re pushing the new hires into more of a shoulder-to38

JANUARY 2024 | QSR | www.qsrmagazine.com

shoulder training experience,” Khan says. “We’re not just starting them off with a bunch of videos. What’s really been highlighted for us is that digital training can never really replace hands-on training.” Spice Hub offers a centralized location for accessing e-learning materials that supplement the shoulder-to-shoulder training. On that front, Chipotle is exploring ways to make the content more playful and engaging by fostering friendly competition among team members. “We’re seeing how we might be able to gamify courses and create more of an interactive learning experience,” Khan says. “We’re already doing that with our LTOs, where these little quizzes are baked in throughout the actual course, and people are able to retain the information better. It’s a lot more engaging than taking you through the course and just asking a couple of questions at the very end.” Dog Haus is taking a similar approach with its onboarding and training program. It was the first foodservice partner to team up with 1Huddle, a platform that turns employee handbooks into quick-burst mobile games that workers play in lieu of traditional training programs. “It really revolves around the ability to connect with people,” says Dog Haus partner Hagop Giragossian. “One of our challenges as a franchisor is that we work with entrepreneurs who are hiring their own staff. We have to figure out a way to connect with them, sometimes without ever actually meeting them, and give them an understanding of our brand, our core values, and what we’re all about.” Prior to 1Huddle, Dog Haus relied on “archaic, old-school manuals” to get employees and franchisees up to speed. “I thought to myself, ‘There has to be a better way of doing things. This is so boring,’” Giragossian says. “If I put myself in the shoes of an employee, I wouldn’t want to sit there and read through this manual.” The platform features mobile games that challenge employees on topics ranging from menu items and corporate culture to operations and food safety. Employees compete every day to land on the leaderboard and win prizes while also learning how to do their job better. “We’re moving more and more into the gamification style of learning every day,” Giragossian says. “We use it for onboarding all of our new franchisees and all of their staff. We use it to launch restaurants and make sure every single person is ready for the grand opening. We use it for ongoing training and all of our new initiatives. There are other ways of learning besides playing games, of course, but I don’t think they’re as efficient. They’re definitely not as fun, and that’s important, too.” Gamification does more than add an element of fun to the training process. The entertaining and interactive approach leverages people’s natural curiosity and competitive spirit to encourage voluntary participation and stronger long-term retention. By infusing training with a competitive element, employees are motivated to actively enhance their skills. “There’s also the fact that it lives on their mobile device, which everybody always has in their hands or in their pocket,” Giragossian says. “That’s exactly where our information needs

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to live. I wanted employees to have access to it space for ongoing conversations about develall the time, instead of just having it on a tabopment. let in the back of the house.” “Most of our district managers and general Dog Haus works with franchisees to incormanagers come from the restaurants,” Broesaporate playtime in work shifts and reward mle says. “They aren’t external hires. I think employees for high scores. It also monitors it’s important that people aren’t just hearing how long team members play games and how us talk about it, but that they’re actually seemuch time they spend on specific questions, ing it modeled.” which helps address training gaps and idenFlame Broiler is updating the employee tify areas of improvement. experience with digital-forward, self-serThe company is still compiling data to vice tools for hiring, scheduling, payroll, and quantify the impact of gamification on a range more to “meet younger employees where they of key outcomes. Anecdotally, Giragossian are,” she says. It also is finding ways to infuse says the mobile training platform results in a its core values into onboarding and training reduction in mistakes and an increase in sales. materials, starting with the orientation proIt also helps with retention. gram for new hires. “Nobody wants to feel anxious at work,” “Those first few hours that an employee has he says. “When you have the ability to gamin the restaurant are some of the most imporify just about everything your staff needs to tant hours that they have with us,” Broesamle SHERRY BROES A ML E know, their job becomes a place where they says. “You have to ask yourself, ‘What are feel comfortable and confident. I think that’s those hours going to look like?’” “ We can do everything why there’s significantly less turnover when The company is in the process of switching we can to attract the franchisee and the general manager really its orientation program to something it calls workers ... they can lean into the platform.” “Culture Day” to ensure it is making the right still walk into a Flame Broiler has a turnover rate of under impression from the outset. It begins with a store, meet their 40 percent and an internal promotion rate of message from CEO Young Lee, who launched manager, and say, 74 percent, something vice president of people the brand nearly 30 years ago after immigratSherry Broesamle credits to strong company ing to the U.S. from South Korea. Employees ‘No way. I’m out values and a focus on store-level leadership. learn about the history of the brand and why of here.’” “It always goes back to the managers inside its mission to “feed communities with healthy the restaurant and their experience,” she says. “We can do every- food” still matters today. thing we can to attract workers ... they can still walk into a store, “I think in the past, it was more like, ‘Sign this paperwork, meet their manager, and say, ‘No way. I’m out of here.’” take your T-shirt, and get to work,’” Broesamle says. “Now, we’re The rice bowl chain recently shifted its district manager sup- using our values as the starting point to really inform that time. port and restructured it for better coverage. The very first experience they’re having with us is an opportu“We wanted a greater presence and greater availability to nity to tell a unique story and make sure we’re fully engaging district managers to general managers and leaders in the store,” with them on a more personal level.” Broesamle says. When it comes to training, Flame Broiler is using opporAlong with robust support for store-level leaders, Flame tunities to gamify learning materials. It also is revamping the Broiler has bolstered employee benefits, like paid family leave, way it presents information to better explain the “why” behind increased wellness and mental health resources, and continued key processes. evaluation of compensation. It also is opening up lines of com“With the workforce we’re engaging with, you can’t just say, munication across the organization to foster a positive culture ‘This is how you do it,’” Broesamle says. “It can be time conthat keeps workers engaged for the long haul. suming and add another layer of complexity to training, but it’s “Our CEO is in the restaurants every single week,” Broesa- really important that everyone understands why we’re teachmle says. “Our district managers are right there in the stores ing them to do something in a certain way.” listening and engaging with team members. We’re always That focus on ‘why’ goes beyond kitchen tasks and daily thinking about easier lines of communications for employ- operations and cuts straight back to the culture at the heart of ees, whether that’s going out and soliciting feedback, creating the organization. a messaging tool with their general manager and their district “It’s also about, ‘Why is this restaurant here? Why does it manager, or being able to message people in operations with make a difference that we’re in this community?’” Broesamle questions or concerns.” says. “I think attaching it to something larger, thinking about Last year, the fast casual introduced a new initiative where this idea of feeding communities with healthy food, and having each team member meets with their GM and DM once every that deeper ‘why’ really matters to this younger generation.” four months. Those meetings encourage two-way feedback between employees and leaders. They also create a dedicated Sam Danley is the associate editor of QSR. He can be reached at sdanley@wthwmedia.com 40

JANUARY 2024 | QSR | www.qsrmagazine.com

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EMPLOYEE MANAGEMENT

DEPARTMENT

OPERATIONS

What Awaits Operators in 2024? Off-premises, inflation, and staffing woes are likely all still in play.

The residual effects of the COVID crisis are still in play.

he pandemic rocked the restaurant industry in 2021 and 2022, closing many eateries, reducing revenue for the survivors, and curtailing employment. When indoor dining was prohibited in many locations, off-premises skyrocketed and has continued to do well. But in 2023, and looking into 2024, the industry is bouncing back, and making adjustments, especially in technology. During the pandemic, restaurant employment declined by 6 million jobs and lost $300 billion in sales compared to expected levels, explains Hudson Riehle, the National Restaurant Association’s senior vice president of the Research and Knowledge Group. In 2023, the forecast was restaurant sales would reach $997 billion, which he says shows a reviving industry. Though this is still 11 percent below where the industry was in 2019, before the pandemic hit. One other major adjustment has been in menu prices, which ran almost 8 percent higher in 2023 compared to 2022. Riehl attributes that increase to a rise in restaurant budgets, based on food, labor, and operating costs. For many brands, the cost of rent, insurance, and credit card fees has been spiking, so raising prices was mandatory to keep pace.

JANUARY 2024 | QSR | www.qsrmagazine.com

Prompted by what happened during the pandemic when consumers were reluctant to dine in, off-premises sales continue to increase and likely will keep rising. Fast and convenient are the new mantra of many consumers, driven by the reliance on drive-thrus, curbside pickup, mobile app ordering, and delivery. Hence, Riehl says technological advances are helping restaurateurs adapt to consumer tastes. He notes that in the front of the house, tablets, kiosk ordering, and electronic menu boards are becoming commonplace, and in the back of the house, supply chain tracking and ordering and automated kitchen systems expedite operations. It doesn’t reduce staff but makes operations more efficient. Two movements that Riehle says started in 2023 and likely will continue to rise in 2024 are the increase in breakfast sales and afternoon snacking. Breakfast is booming because of the increase in employment numbers, exemplified by 330,000 new jobs created in September 2023 alone. “When someone is employed and has less time at home and has additional income to spend, it creates additional business for restaurants,” Riehl says. Afternoon snacking leads to consumers ordering specialty coffee drinks like pumpkin spice lattes or even an afternoon burger before dinner because they’ve skipped lunch, he suggests. In some metropolitan areas, but not all, the ability to take out liquor for the first time, is also boosting revenue. David Portalatin, an SVP and food advisor at Circana, describes 2023 as “a year of recovery” for the restaurant business. Customer traffic increased by one-half a percent since 2022, but quick-service food recovered faster. He expects 1 percent traffic growth in 2024 over 2023, which in an industry that had declining revenue, is a positive sign. Overall, he says, consumers are more “home-centric than they were in the past.” He notes that on any given day 50 percent of the workforce stays at home; therefore, consumers prepare more meals at home and also have a greater tendency to pick meals up at a fast-casual eatery. Despite the rise in off-premises dining, some consumers still crave experiential dining, though baby boomers prefer dining in [CONTINUED ON PAGE 48] more so than millennials or Gen-Xers do.

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C-Suite on a Diet Main Squeeze creates a unique executive role to better communicate to guests. BY SAT YNE DONE R

“I understand the emerging trends in the field as well as how to counsel people on the education they want and how they need to hear it,” Canseco explains. Canseco cites post-pandemic shifts as one of the main reasons for Main Squeeze’s departure from the conventional definition of a CDO. In 2017, the brand was at what she calls the cusp of new-wave juice bars, but after years of incremental growth, pivots were necessary to stay successful in a hyper-competitive market. Through marketing testing and analysis, Canseco says the brand noticed guests’ desire for information, which is a factor unique to wellness brands. She explains that customers are increasingly interested in the “how and why” of the product, not just the “what.” “[The brand] has been missing connections, personality, and authenticity,” Canseco says. “This position is really meant to fulfill those needs, being able to educate consumers … creating a connection I think people are desperate for right now.” Main Squeeze Juice Co. wants to break educational Breaking educational barriers with cusbarriers on being healthy. tomers will occur through public relations and menu advancement, Canseco says. As chief ain Squeeze Juice Co. unveiled its newest leadership role dietitian officer, she is responsible for aligning strategic partnerin late September—one that many in the industry may ships and development to build customer fandom. not be familiar with. Together with a team of dietetic interns, Canseco is working on Instead of the traditional chief development officer, the fast a database compiled of podcast pitches, blog posts, and nutritional casual formed the position of chief dietitian officer. Standing at knowledge pieces to equip Main Squeeze’s marketing team with the heart of this is Julie Canseco, who previously served as Main information for future product initiatives and campaigns. Squeeze’s chief operating officer. “My dietetic interns are a huge help to me because I am workThe newly created title focuses on product development and ing in this role independently,” Canseco says. “It’s fun to see new media outreach, connecting Main Squeeze to communities and perspectives as they research and develop recipes and create edueducating the public about its health and wellness efforts. cational content.” Canseco, who joined the Main Squeeze corporate team in 2020, The larger goal at play is to increase Main Squeeze’s fresh-food has a record of accomplishment in health and wellness. After grad- category from 5 percent to 30 percent by 2024, driven by customer uating from Louisiana State University, she became a registered appetites. Canseco is currently revamping menus and recipes, adddietician in 2014. She developed a special interest in community ing grab-and-go hot food, and launching new LTO lines. nutrition, working for the nonprofit Eat Fit NOLA and securing “Through menu adaptations, we’re meeting customers’ expecgrants with BlueCross BlueShield. tations,” Canseco says. “On the PR side, we have done nothing She believes this prior experience gave the Main Squeeze team but promote innovation, which is huge for our franchise sales. We confidence in creating these functions for her, where she has the want to gain credibility for the brand as we are expanding rapidly.” space to expand customer loyalty and franchisee relationships. With 30 locations open in five states and [CONTINUED ON PAGE 46]

JANUARY 2024 | QSR | www.qsrmagazine.com

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nections people are making on a day-to-day basis. You see, ‘Oh, I went to their wedding last week. They’ve been my regular for two years.’ That goes a really long way, especially in today’s world where people are starting to work remotely.” Per the FDD, there’s also a 14-day training program for store management and above and a three-day training program for hourly employees. Each beverage stand is required to have two fully-trained managers onsite. Within these sessions, leaders focus on the usual suspects—speed, quality, and customer service. If someone isn’t meeting those expectations, Miller, Davidson, or LaBorde will facilitate a conversation to identify pain points and where improvements can be made. It’s the corporate team’s mission to “not let them fail operationally throughout the entire opening game plan,” LaBorde says. She adds that “over-communication is a big part of what we do here.” Field workers are assigned to regions and franchisees to provide extra assistance. “I can’t teach you how to be a team player, speed, quality, customer service,” LaBorde says. “Those are things that truly are embodied by the brand and the team. Whenever you walk into a stand, you feel that energy. It’s fun. You want to be there. But I think that some of those things are just not tangible to where you can read it and learn it. There’s a lot of training in place to make sure that they’re successful along the way.” Arguably, the most significant lesson taught by 7 Brew is about human interaction. Instead of customers pulling up to a speaker box, employees greet cars and take orders. These workers have an iPad in their hands but are required to make friendly eye contact with guests and drum up routine conversations. The whole 7 Brew experience, start to finish, is focused on eliminating tension, Miller says. “This customer is going to spend a few minutes today with us, but we’re going to make their day and that’s exactly what we’re aiming to do,” she says. “We want to relieve any tension points, any friction points. Speaking to a human versus the side of the building is phenomenal in that regard. In a lot of ways, both our physical attributes and the human attributes make it really simple, really fun, really easy to get people on their way. You have to be fast, you have to 46

JANUARY 2024 | QSR | www.qsrmagazine.com

INNOVATE / CONTINUED FROM PAGE 44

be accurate. But we’re also going to spend a little bit of time with you. A couple of minutes at a time can go a long, long way.”

Miller doesn’t have a precise number for what development will look like in 2024, but the hopes are that it will be “just as awesome as this year was” and that 7 Brew will continue to break records. For context, the chain forecasted 193 openings for 2023 in its FDD. That includes 36 in Texas, 16 in Florida, 13 in Oklahoma, 12 in Tennessee, and 10 each in Arkansas, Georgia, Indiana, and Kansas. In October, there were 17 corporately owned units, which represents a net gain of one compared to the previous year. The shops are a vehicle for everything the company wants to test and upgrade in terms of operational excellence and menu innovation. Nearly every future new store will be owned by a franchisee. And 7 Brew is keen on giving them the proper tools to grow positively. “I think that whenever it comes to training, we always do shoulder to shoulder,” LaBorde says. “We’re really big on culture, we’re really big on making everybody feel supported. People really want to work with us. We don’t call people employees. They’re teammates. We work one-on-one with our franchisees, and we wouldn’t be anywhere without them. I think really pouring into them and really having them embody the culture is huge. People physically coming to Northwest Arkansas for a new market to really understand the brand and the culture. It’s something that we really dive in and teach the new baristas and the franchisees.” Miller agrees. If the beverage chain is to continue its rapid pace—but in a sustainable manner—the right multi-unit operators must be in place. “That means understanding real estate, understanding development, understanding operations, and having the financial capital to make these commitments,” Miller says. “And then of course, first and foremost, laying on top—day in and day out—the culture. That’s what we’re looking for. We go into these stands and make sure that we’ve transferred the energy, transferred the culture.”

80 committed franchise locations, Main Squeeze debuted nearly one store per month in 2023. As the brand looks to become the nation’s largest fresh-made juice franchise, Canseco’s duty as chief dietitian officer helps drive the product breakthroughs franchisees are looking for. After surveying franchisees, Canseco found her job could respond to their desire for menu flexibility and development by setting up controlled trials and what she calls “innovation studies.” By providing information on what the brand is growing toward, her position streamlines the deployment of systemwide updates. Rolling out new fresh-food options like the Apple Pie Bowl in the fall gives franchisees and customers “a breath of fresh air,” says Canseco. She is working on a line of protein-packed products to introduce in Q1, alongside fresh marketing campaigns and partnerships with hospitals, college campuses, and local athletic departments. The first quarter will also bring at least three additional items in the fresh-food category, including hot and grab-and-go options. Additionally, new smoothie and juice sizes will be introduced, allowing for more flexibility with choices and prices. “Our mission is to make healthy easier, which is at the core of what I’m doing and what my priorities are,” Canseco adds. “For example, being able to lower the price point on our juices opens us up to a whole new population … and be able to make habits and rituals because the price point is more affordable.” In all, the chief dietitian officer position gives Canseco the ability to create a pipeline for new initiatives in 2024 and beyond. She will button up LTO programs, lend support to operations teams, and send the marketing department valuable information to implement throughout the year. By collecting feedback from both guests and franchisees, she hopes to make a positive impact on the brand. Main Squeeze Juice Co. acquired I Love Juice Bar last year and used most of 2023 converting businesses and preparing them to be fully operational in 2024. Canseco is looking forward to energizing the updated stores and continuing to foster connections with the local community.

Ben Coley is the editor of QSR. He can be reached at bcoley@ wthwmedia.com.

Satyne Doner is a staff writer at QSR. She can be reached at sdoner@ wthwmedia.com.

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OPERATIONS / CONTINUED FROM PAGE 42

were getting is that even non-South Asians were loving the concept and trying new flavors,” Neelu says. “They are open to fusion brands. So, we sold the initial running stores and started to expand the franchise out of state.” By partnering with a law firm specializing in franchising, Curry Pizza House created a program in about 18 months. The franchise program includes real estate and construction expertise, modern restaurant design packages, established operational and training standards, and lending partners. Initial investments fall between $293,500 and $995,700. Ideal real estate includes inline, endcap, and standalone locations ranging from 1,500–2,600 square feet with pickup windows. The brand is not shying away from conversions, with its first Texas location in Cedar Park being the product of a restaurant flip. Through the franchise program, Curry Pizza House has grown to over 40 signed franchise locations. The chain is actively developing in California, Texas, Nevada, Oregon, and Washington. The team credits its cult-like success to a high volume and simple model. Most of the current franchisees share a common thread, hailing from the Bay Area and transitioning to other states. “During and after the pandemic, they went elsewhere and realized there was no concept like this,” Neelu says. “They really missed our flavor and approached us for a franchise.” The emerging concept has its sights set on expanding to Arizona, Utah, Colorado, and select cities running up the East Coast. Through franchising, Curry Pizza House is committed to adding 100 more stores in the U.S. in the next two to three years. Neelu describes the next chapter of growth as one marked by area development deals, with one recently signed by a husband-and-wife entrepreneurial team in Southern California. “Signings for other areas are going east from here, and there’s a huge opportunity for us to take this into other areas in the northeast like Boston, New Jersey, and naturally Chicago,” Neelu says. “I think Michigan would also be a great fit.”

we see it, by attracting the best employees and retaining them, any investment in the homework program is more than offset by a reduction in training costs.” He points to the Panera in Needham, where the program helped bring about a significant improvement in the staffing situation. Turnover was around 80 percent in October 2022 before the pilot got off the ground. A year later, it was down to 58 percent. Retention at the restaurant improved from 51 percent to 65 percent during the same time period. “There are other things that we’ve done around leadership training and supporting employees, but the homework program definitely contributed to that,” Hamra says. “If you look at it on an annual basis, turnover dropped by 22 percent and retention went up by 14 percent after the implementation of that program at that particular store.” The good grades incentive, meanwhile, is proving particularly useful for employees who need help covering education expenses like tuition, school supplies, and activity fees. “One of my favorite things to do when I’m in the stores and meet somebody who’s in high school or who’s in college is talk about these programs,” Hamra says. “They say things like, ‘I came here to work to support myself, or I came here to work because my family needed the extra money. I don’t have anybody else to give me a financial incentive to go get A’s and B’s, so I feel better about putting my time and attention toward my education because I know I’ll get something out of that.’” Helping student employees succeed in the classroom is just one way Hamra Enterprises aims to support its workforce. There’s a program called Hamra Employes Reach Out that is partially funded by employees, with the company matching every contribution dollar-for-dollar. Those funds provide financial assistance for things like extended medical leave, funeral expenses, and transitional housing. The company also has programs that aid in financing home ownership and covering daycare costs.

Restaurant franchises, post-COVID, have been holding their own as well and were predicted to rise 2.5 percent by the end of 2023, explains Michael Layman, the SVP of government relations and public affairs at the International Franchise Association. “When unemployment increases, people re-evaluate what they do for a living and look at franchises as an opportunity to be your own boss,” he says. During COVID, 30,000 franchises shuttered, but many franchise brands helped franchisees survive and overcome the obstacles. “Having a brand partner that has more know-how and firepower” and one that encouraged operators to enroll for PPP ( Paycheck Protection Program) and tax forgiveness programs contributed to their survival, Layman says. Major issues that surfaced for restaurant franchisees in 2023 are workforce challenges, finding and keeping skilled workers, and inflation. Working with brand partners via job banks and availability of resumes have helped attack the problem. Restaurants are turning increasingly to technology so they can use QR codes, encourage mobile payment, digital app ordering, and drive-thrus. Portalatin notes that burger, pizza, and taco chains have performed well, but a new crop of chicken specialty menu items have become favorites including crispy chicken sandwiches, chicken nuggets, and chicken strips. But growth in 2024 will vary due to population shifts and where people are moving. Riehl says the fastest-growing population centers tend to be in the West and Southeast, and certain cities in Texas are seeing steady population growth. Because consumers are under intense economic pressure because of rising credit card debt, high interest rates, and costlier rents for apartments, Victor Fernandez, Black Box Intelligence’s VP for insights and knowledge, predicts a slowdown across the industry in the coming year. Fernandez says most mid-priced family concepts and casual-dining restaurants have fared the worst compared to the graband-go spots. “You might not go to Chili’s but may pick up from Chipotle,” he says, by example.

Satyne Doner is a staff writer for QSR. She can be reached at sdoner@ wthwmedia.com.

Sam Danley is the associate editor of QSR. He can be reached at sdanley@wthwmedia.com.

JANUARY 2024 | QSR | www.qsrmagazine.com

Gary Stern is a regular contributor to QSR and is based in New York City.

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Tony Hunsoo Ahn CEO TOUS les JOURS U.S.

What was your first job? My first part-time job was as an administrator at a casual restaurant where I first learned about the restaurant industry, marketing strategy, and time management. My first full-time job after college was as an online merchandiser for a retail company. What’s your favorite menu item at TOUS les JOURS? Our Cloud Cake is the outright winner in my book.

Who inspires you as a leader? I am inspired by Howard Schultz, the former CEO of Starbucks. His leadership was key in Starbucks’ expansion, and the compassion-oriented culture he advocated towards his partners is truly admirable. What’s the best piece of advice that other restaurant executives should hear? One of the best pieces of advice I can offer to other restaurant executives is to keep a focus on their core strengths and values and to look for the solutions to problems. What are some of your interests outside of work? When I’m not working, I enjoy hiking with my wife and our dog. Being outdoors and experiencing nature is a great way to recharge and stay active.

fell in love with the TOUS les JOURS brand over 25 years ago when my wife and I would frequent the location by our home in South Korea—the brand’s signature Cloud cakes soon becoming a staple at all our celebrations. My passion for the brand transcended the largest ocean and thousands of miles, and I am extremely proud to lead the U.S. division of CJ Foodville USA, the parent company of TOUS les JOURS. Since joining the team 10 years ago and becoming CEO in 2017, I have focused on growing TOUS les JOURS’ foothold in the U.S. with the goal of establishing the brand as a major player in the fast-casual bakery and café sector. What started as a singular French-Asian bakery in Guri, South Korea, in 1997 has proudly exploded into a bakery empire with nearly 1,700 stores around the world, including more than 90 locations in the U.S. Our strong franchise system fuels our expansion in the U.S., and we are very grateful to be experiencing heightened franchise interest and

JANUARY 2024 | QSR | www.qsrmagazine.com

growth, with many new franchisees opening TOUS les JOURS cafés in their own markets. Asian Americans are extremely familiar with TOUS les JOURS’ concept and unwavering commitment to providing freshly baked, highquality goods. Since the brand’s arrival in the U.S. in 2004, we have been embraced by these communities, which further cemented our success and reputation as a beloved bakery café chain. Moreover, we are witnessing customers become franchisees as they recognize the attractive business opportunity that TOUS les JOURS presents—a path similar to my own experience with the brand. Each year we see exponentially more franchise interest, allowing us to achieve rapid, yet sustainable, growth. In 2022, we opened 14 locations across the U.S.—a record-breaking growth metric for our bakery—and our business development team inked nearly 50 development deals from coast to coast.

TOUS LES JOURS U.S.

What’s your favorite cuisine outside of TOUS les JOURS? Definitely Korean cuisine. Not only does it have a bit of that nostalgic factor since it is a taste of home for me, but it also is versatile with a simple range of spices and natural ingredients that caters to everyone.

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