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Chain LeaderEditorial Archives2005 — September — Cover Story

The Standard-Bearer
Jean Birch plans to systematize operations at Macaroni Grill while keeping its quirkiness.

Jean Birch wants to retain some of Macaroni Grill’s quirkiness but at the same time, institute standards for menu execution, back of the house and brand interpretation.

A new prototype will restore the “Alamo” façade of the original Macaroni Grill.

Macaroni Grill’s Chicken Scaloppine doubles as a lunch ($9.49) and dinner ($11.99) dish. Service times could be quicker at lunch, Birch says.

Macaroni Grill’s “Italian with a twist” culinary approach shows up in dishes such as Penne Rustica, $11.99, shrimp, grilled chicken and prosciutto baked in a cream sauce.

Some of Romano’s Macaroni Grill’s quirkier elements include white butcher paper on each table and an “honor system” for wine that trusts guests to tell servers how much they drank.

Traditional dishes such as the $9.99 lasagna offer customers a point of entry: “With Italian, you want to try something familiar,” explains Nancy Hampton, vice president of concept strategy.

Romano’s Macaroni Grill enjoys a reputation as one of the industry’s quirkier concepts. There’s the huge vase of white gladiolas in each restaurant, a detail more fine dining than full-service casual; the white butcher paper on each table; servers who write their names upside down, some even in cursive, on that paper; and an “honor system” for wine that trusts guests to tell servers how much the table drank during a meal.

Overall, the dining public has responded well to that quirkiness. The restaurant that Phil Romano opened in Leon Springs, Texas, in 1988 has grown into a 230-unit, $679 million brand, the second biggest in Brinker International’s stable of restaurants.

But there are signs that Macaroni Grill’s dominance in casual Italian dining might be slipping. For the past four years, Macaroni Grill was ranked first among Italian chains in Restaurants & Institution’s annual Consumers’ Choice in Chains Award; the latest survey ranks the chain third, behind Carrabba’s and Olive Garden. And while systemwide sales and unit counts have risen steadily, comparable-store sales have largely remained negative or flat over the past few years with a few positive months here and there.

The same-store-sales slump is a result of “perpetual repositioning,” says Bryan Elliott, senior vice president of equity research at Raymond James in Atlanta. “When it started out, it was a much higher-ticket restaurant, and when it opened in densely populated, high-demographic areas, it did well,” Elliott says.

To allow expansion into more modest demographic areas, Macaroni Grill management lowered price points. Check averages have fallen, but traffic counts haven’t yet risen to make up for the decline in checks, Elliott says. “Eventually that will have to happen for the business to be healthy,” he says.

Jean Birch, who was named president of Macaroni Grill in January, agrees with Elliott’s assessment. “At one point in the history of the brand, we had attempted to be all things to all people,” Birch says, adding that the effort included a “less unique culinary approach” to the menu. “That wasn’t a strategy; it was a mistake,” she says.

That’s all behind the brand now, Birch says. “We’ll focus on culinary greatness and the little quirkiness that’s just us,” she says. “Now we know who we are.”

That said, some operational fine-tuning is in order for Macaroni Grill. “We need to fix some stuff,” says Birch. “There needs to be more structure. There needs to be a way we do things.”

On her to-do list: more standardized menu execution, a more efficient back of the house and consistency in interpreting the brand.

Potato Chips to Pizza
Birch’s résumé is as quirky as the chain she now leads. “I didn’t choose foodservice; it chose me,” Birch says. Planning on a career in international business, she studied economics and Chinese with a minor in French at the University of Arizona. That degree led her to a job managing a union potato-chip plant in Vancouver, Wash. “I learned to swear like a sailor and manage by the book,” she says.

From Vancouver she moved to Phoenix, where she worked in electronics manufacturing and then as a franchisee and area franchisor for a maid-service chain. The business was profitable—margins of 20 percent or more—but Birch didn’t like it. “You are your labor of last resort,” she explains, meaning that as often as she crunched numbers in the office, she was at a client’s house scrubbing toilets. “I hated it,” she says emphatically.

When Birch’s husband got a job as an area supervisor for Pizza Hut in San Diego, she persuaded Pizza Hut to hire her as a general manager. So in 1991, when the chain was putting a full-court press on its delivery business, Birch found herself managing a 31-year-old dine-in restaurant. “It was harder than it looked,” she says of her first restaurant job.

Pizza Hut then sent Birch and her husband to Fort Myers, Fla., where she managed a delivery store. There she began to fall in love with foodservice, thanks mostly to an hourly employee whom Birch had promoted to shift supervisor. “Her whole demeanor and whole life changed the first time she put on that white shirt,” Birch recalls. “Her family came to see her be the supervisor.

“It struck me that this is an incredible industry that lets people change their lives,” she says.

Star Quality
Executives at Pizza Hut parent Yum Brands quickly saw Birch’s leadership capabilities. “I was impressed that her stores looked better than anyone else’s,” says Aylwin B. Lewis, then COO of Yum and now president of Troy, Mich.-based Sears Holding Corporation and CEO of Kmart and Sears Retail. “When I met her, it was obvious she was going to be a star,” Lewis adds.

Birch held management positions in training and concept development at Pizza Hut. She helped rejuvenate the chain’s dine-in business and designed a high-impact training program that’s still in use today. Lewis moved Birch to Taco Bell as vice president of operations. While she was at Taco Bell, Brinker offered her the top spot at Corner Bakery.


Romano’s Macaroni Grill

Brinker International, Dallas
2005 Systemwide Sales
$755 million*
Average Unit Volume
$3.3 million
96 inside, 25 on a patio
Average Check
$14.25 to $14.55
Expansion Plans

10 to 12 in fiscal 2006 (ends June 30)

*Chain Leader estimate

During her 16 months at fast-casual Corner Bakery, Birch restructured financials “to treat the P&L like QSR instead of casual dining,” she explains. She installed kitchen display systems in each restaurant to help improve operations, a move that she says significantly improved the chain’s return on investment.

Birch was tapped as president of Macaroni Grill in January, replacing John Miller, president of the brand since 1997. “She earned the right to take over a bigger brand,” says Brinker President Doug Brooks, noting that Corner Bakery’s top and bottom lines improved under Birch. Brinker, a public company, does not report financial results for Corner Bakery.

For Birch, the Macaroni Grill post allows her to use an egalitarian style of communication she developed as she rose through the ranks of the restaurant industry. “I feel we’re making progress when I talk to the people who do the work,” Birch says. “I wouldn’t know how to do that had I not been in their shoes.”

Nancy Hampton, who worked with Birch at Corner Bakery and who’s now vice president of concept strategy at Macaroni Grill, lauds that style of communication. “When we went on the road and talked to operators, Jean said, ‘We’re going to do three things,’” Hampton says. “They could take that back to the store.

“She has clarity of purpose and goals,” Hampton adds. “She can look across a system to see what drives results fastest, understanding what we can do really well first.”

A Chain-ier Chain
Aside from constantly improving financials, Birch wants to get Macaroni Grill’s 230 restaurants to behave more like a chain. For instance, there’s no corporate plan for in-house catering. Some restaurants offer a full menu, some a limited menu, some cater parties only on certain nights, “and none have been run through a financial model,” Birch says. “It’s all over the map.” Hampton is currently at work on a systemwide in-house catering plan.

Another example: interpreting the brand. Gladiolas and butcher paper unify the stores physically, but some locations freelance a bit, for instance, offering a happy hour. “We’re not a happy-hour concept,” Birch says.

Along the same lines, some restaurants veer from the corporate line when interpreting the menu; the corporate office will remove a dish from the menu, yet a restaurant will continue to make it when patrons ask for it.

Menu improvements remain “constant,” Birch says. Macaroni Grill now offers 55 to 60 items; Birch thinks the menu would serve guests just as well, and more efficiently, at 40 to 45 items. She also wants to boost the concept’s curbside to-go business (offered at all but 11 locations), which currently accounts for 6 percent to 9 percent of business.

Birch also plans to take a close look at the back of the house. “Space and equipment planning haven’t been approached with efficiency in mind,” Birch says. “The footprint could be 75 percent of what it is.”

Two years ago, Macaroni Grill began remodeling restaurants to give them more curb appeal and to divide the interior into smaller spaces. Although the 35 stores that were remodeled saw single-digit sales increases, Birch has halted the process. “The guest didn’t require it,” she says. Too, the remodel removed seats, “and we need the seats,” she says.

Keeping Customers Happy
Even as she standardizes operations, Birch will continue to open new stores, albeit at a slower rate than in years past. Seventeen new locations opened, and two closed, in fiscal 2005, which ended June 30; 10 to 12 new locations are planned for the current fiscal year. Los Angeles and San Diego are strong markets for the brand; other targeted areas include Harrisburg, Lancaster and Montgomery, Pa.; Shreveport, La.; and Orlando, Fla., home base for Olive Garden, the segment leader with 547 units and sales of $2.2 billion.

Brinker “has positioned Macaroni Grill right between Olive Garden and Carrabba’s,” remarks Elliott of Raymond James. “It remains to be seen if it’s a viable niche.”

Says Birch: “I feel comfortable competing. We have nothing to worry about.”

She doesn’t worry partly because of the volume of mail she gets from regular customers. This past spring Birch received a letter from an elderly man; he and his wife had been regular customers at a Macaroni Grill. After his wife died after a long illness, after her wake, he went to Macaroni Grill to find that the staff had set flowers and a sympathy card on his table.

And when it comes to keeping those customers happy, Birch is the world’s biggest proponent of quirkiness. “Creativity in how we treat the guest—I’ll take that all day long,” Birch says.


Stuffed Mushrooms: white mushrooms baked with ricotta and feta cheeses, spinach and seasoned bread crumbs, and drizzled with honey-balsamic glaze, $5.99

BBQ Chicken Pizza: spicy Italian barbecue chicken, mozzarella and pecorino cheeses, $8.29

Steak & Arugula Salad: tender cuts of beef on baby arugula, spinach, radicchio, apple-smoked bacon, blue cheese and Toscana dressing, $12.49

Penne Rustica: shrimp, grilled chicken, smoked prosciutto and Parmesan baked in a creamy cheese sauce, $11.99

Sensible Fare
Mediterranean Shrimp: five grilled jumbo shrimp on a lightly dressed Mediterranean salad of cucumber, tomato, arugula and fat-free feta, $13.99

Lemon Passion: citrus cake soaked in sweet cream, topped with lemon mousse, fresh Italian whipped cream and caramel, $4.99



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