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R&IEditorial Archives2001July 15 — Business

Thinking on Their Feet
An ability to adjust and adapt helps chains maintain healthy sales growth.

Buca di Beppo, Famous Dave's and Panera Bread Co. would appear to be three very different concepts. But look more closely and you will find shared traits: an ability to think on their feet, to do what it takes to get jobs done, with an eye to making sure bottom lines continue to grow at a healthy clip, which is what this business is all about.

Among this year's Top 400 chains, these three concepts registered some of the strongest 2000 over 1999 sales growth: Buca di Beppo, 81.5%; Panera Bread, 73.6%; and Famous Dave's, 45.2%. And all three, in some way, are able to shift directions when difficulties pop up, when the tried-and-true might be showing signs of fatigue, or when opportunity shows itself.

Minneapolis-based Famous Dave's one location in Chicago proper was having difficulties, accounting for "a 7-cent drag on [overall] earnings," says Martin O'Dowd, president and CEO. Located north of the Loop, the restaurant "was a bit out of its element," trying to compete with the city's late-night entertainment scene, says O'Dowd, adding that "strategically, we had to do something fairly radical."

That radical step was to create a limited partnership with Memphis-based Lifestyle Ventures and Isaac Hayes, the singer and songwriter whose "Theme from Shaft" won him an Oscar for best musical score. The partnership acquired the Famous Dave's location and converted it to Isaac Hayes Restaurant, with Famous Dave's providing the food and Hayes and Lifestyle Ventures the talent. The partnership plans to open another venue, in Memphis, later this summer.

Meanwhile, Famous Dave's site location process "has changed dramatically," says O'Dowd. Instead of locating stores in single towns, the chain is creating clusters. Two years ago, there were two Famous Dave's in the Chicago area; now there are eight. And on the East Coast, where there were no units two years ago, there are seven in the northern Virginia-Maryland area, says O'Dowd. He adds that the concept plans to continue its ambitious expansion plan, growing by 25% this year (following a 10% increase in 2000).

The chain also has made significant strides in reducing turnover among its managers through a new screening process and beefed up training program; in the past year, turnover has dropped from 48% to 24%, says O'Dowd. "If you scan our top six performing restaurants, all of them have the most stable management teams," O'Dowd says. "Stability equals profitability."

Buca di Beppo has made two shifts that might not seem earthshaking, but nonetheless are expected to make a major difference in sales growth, says Lane Schmiesing, senior vice president of marketing. "One is simply focusing on the takeout business," says Schmiesing. "There is an increasing demand on the part of consumers to find higher-quality food for takeout. That's a tremendous opportunity for us, given that our food travels so well."

The second has been to allow customers to make reservations. "Waits [at Buca di Beppo restaurants] can be long indeed," says Schmiesing. Tests showed that a reservations system would help to expand capacity, he says, by enabling each unit to serve more customers more efficiently.

Both moves are expected to boost same-store sales, which grew a respectable 6% last year, even further, says Schmiesing. Its count unit, meanwhile, increased 50% to 51.

Change at Richmond Heights, Mo.-based Panera Bread units (which increased in number nearly 45% in 2000) is a regular occurrence, says Mike Kupstas, vice president of franchising and brand communication. New flavor profiles for bagels are rotated in and out routinely, as are soups and other items on the menu. "People get tired of the same ol', same ol', particularly at lunch," says Kupstas.

Yet another component of the Panera philosophy works to assure that managers and employees are not so hemmed in by operating procedures that they cannot meet varying customer expectations. "We definitely have rules," says Kupstas. "One of the rules we have, in fact, is what we call rule No. 1: Do whatever it takes to satisfy and make customers happy."

Perhaps the best of example of this rule at work took place recently at a Panera unit in Vernon Hills, Ill., a suburb north of Chicago. When fuel spilled from a delivery truck, local police closed major routes, causing a tremendous traffic jam. Many motorists anxious to get to work on time happened to find themselves trapped near the Panera store. A quick-thinking manager sent employees out to offer free bagels to the harried commuters.

"If we do it right, culturally speaking," says Kupstas, "our managers will execute and do exactly that. They're not running the business from a formula. It's about customer satisfaction and wows that provide the kind of return and loyalty we're seeking."

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