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Some of the most successful restaurant brands have positioned themselves favorably by associating managers (or operators) with ownership. Consider chains like Texas Roadhouse, Chick-fil-A, Raising Cane’s or even smaller chains like Waldo’s Chicken and Beer; Although these examples differ in the details, the goal is the same: to give operators or general managers more leverage in the game so that they are forced to run better restaurants. These parent companies aligned incentives, such as profit sharing, with restaurant performance and community engagement.
Now Chili’s wants to do something similar. CEO Kevin Hochman began talking about the company exploring such a model last year, noting that the motivation for doing so came from the chain’s incredibly successful results over the past few years.
“We have a larger and better talent pool to be able to attract at both the hourly and management level. Our turnaround is pushing us to improve the talent that runs the restaurants, as well as provide them with important ownership training. We believe we need to bring more ownership to the restaurant level and delegate more decision-making to them so that they can grow the business and run it as if it were their own business,” he said during the conference call on parent company Brinker International’s first quarter results in October.
He acknowledged that such a change would require a few years of training on what such “extreme ownership” looks like, but the company has already rolled out its first round of training.
The next step is to “look at how to put in place long-term shareholder incentives” for executives so they can share in the company’s growth that is expected to continue. Indeed, during this second quarter earnings call this weekChile’s growth continued with same-store sales increasing almost 9%, prompting the company to raise its guidance for the full year.
“Our people’s current focus has been on investing in making them more owners of the company and ultimately that will translate into changing incentive structures,” he said in October.
This week, Hochman doffed his “best in class competitor” cap for his mastery of general manager ownership.
“Part of that is their incentive structure. They also do other things that we study,” he said.
For now, the training of Chili’s managers will continue. The program includes a deeper understanding of the P&L so they can have the tools needed to improve their bottom line and results. Brinker is launching a new P&L tool as part of a broader Oracle upgrade to make this process easier.
