Larkburger provides insight on creating company culture

“The Anit-Chains Chain”

QSR Magazine, February 2015, Mary Avant

There are more differences between chain and independent restaurants than just unit count. And operators are trying to leverage them to have the best of both worlds.

Asking how a chain and an independent restaurant differ may seem like a deceptively simple question, with the most obvious answer being that independents have one unit—or maybe two, according to an official definition from The NPD Group—while chains are larger in both size and scale.

And though that’s valid, the separation between the two is more significant and much less trivial, experts say, with variations in operational structure; the type of culture and guest experience that’s developed, cultivated, and delivered; and the challenges and opportunities that each type of concept faces.

Because independent restaurants function on a relatively small scale, for example, they have the distinct advantage of receiving the full attention of ownership, says Aaron Noveshen, CEO of restaurant consulting firm The Culinary Edge.

This means independents often have an easier time developing and maintaining a distinct brand culture, as well as providing a quality experience, primarily because their founders and owners are physically present in and engaged with the restaurant on a day-to-day basis, says Adam Baker, CEO of Colorado-based burger chain Larkburger.

“The people that are behind the brand—the people who are setting the culture, the people that are making the food and greeting guests and ensuring the experience—they’re on site with regularity,” he says. “When you get into multiple units, that can’t happen anymore. So you’re relying on people to be the ambassadors of the culture and the brand, and to infect the rest of the crew with that culture.”

This leadership presence is one thing Patrick Fox, founder of one-unit, Denver-based salad concept Cava Greens, says allows him to deliver a superior experience—one that’s different than what customers would find at a chain restaurant. That’s especially true considering he’s often personally on site prepping and handling the product before it’s delivered to the guest. “I cut all the meat, so when people say, ‘Is that piece of salmon gluten free?’ I can say, ‘Yes, it is,’” he says. “I have the personal touch with all of the product because I’m putting it together.”

Having just one unit also allows Fox to make many of his dressings and vinaigrettes from scratch each day. “If I was at 20 or 30 restaurants, I’d have to rethink that because all the vinaigrettes would be tasting differently,” he says. “I would have to sit and train daily on what the shallot mustard’s supposed to taste like. If it’s not made by one person who knows exactly what it tastes like, then it’s going to be different at every store.”

Operating an independent restaurant also allows owners and operators to turn on a dime when it comes to making decisions about products, processes, and their employees, Fox says.

“You can be pretty nimble,” he says. “You have to worry about the bank, but you don’t have to worry about investors. If I want to remove something from the menu, I don’t have to go to the board and say, ‘This is why I’d like to do this.’”

That type of freedom means independent operators like Jim Hoben, owner of El Pelón Taqueria’s two Boston locations, aren’t faced with the pressures of making decisions that will need to be replicated across a system of units, whether those decisions involve policies on employee sick leave or the requirements for comping customers’ meals. This independence, Hoben says, allows both him and his staff to engage with consumers in a way that’s authentic and unscripted.

Whereas chains often focus on brand above all else, he says, his team focuses on being themselves and not taking the brand too seriously. “We have a strong brand and people know who we are, but we can be ourselves. I think that’s one of the things you start to lose in a chain,” he says. “You have a very polished brand that’s kind of brand above people. With us, the people are the brand, and it’s a lot more flexible.”

What’s not flexible is the amount of responsibility owners like Fox and Hoben have to take on when operating an independent unit. A small staff rarely justifies the need for mid-level management like human resources and IT directors, which means the owners are the ones responsible for filling these roles themselves, Hoben says. “I wear more hats as an independent, but I like the freedom that comes with that, too,” he says.

In addition, because concepts like El Pelón and Cava Greens operate independently—or, in some cases, with just one or two additional units—they are often unable to leverage purchasing or attract top-tier talent, Noveshen says, adding that market penetration and marketing buying power are a struggle to achieve, too. Chain restaurants, on the other hand, typically have access to a more robust supply chain and better pricing on products, which allows them to keep the cost of menu items down and, in turn, keep cost-conscious customers happy.

A more refined, replicable system means chains also have consistency in experience, whether a guest is sitting down for a burger in North Carolina or California. “They don’t have the same inconsistencies [as independents], and they’ve perfected what they do,” Baker says about chains like his 13-unit Larkburger. Market share also expands as a brand grows, increasing brand awareness, consumer engagement, and guest loyalty. “As you get more restaurants open, more people are aware of you, and the buzz around your restaurant increases,” Baker adds.

Perhaps the biggest struggle in growing and operating a chain is guaranteeing each new unit is just as good as—if not better than—the first. Unfortunately, that’s easier said than done, Noveshen says.

“The bigger you get, the more mediocre you often are,” he says. “You start to attract less risk-taking people as you get bigger, people who are just looking for a cushy place to land versus people who are inspired and growing and active.”

This idea of diminishing greatness as a brand grows is just one of the factors that has created a stigma around the word chain—a stigma that today’s blossoming foodie culture is only making worse. Perhaps that’s why more brands are trying to avoid this descriptor in the eyes of consumers, hoping instead to be thought of as an anti-chain chain—a brand that operates very much like an independent restaurant in terms of culture and experience, but with a string of units that by definition makes it a chain.

“There’s the assumption that chain means the restaurant has no soul,” Baker says of this increasingly prevalent stereotype around chains. Larkburger, however, is one of these anti-chain chains that works hard to ensure each of its units “has a soul and that each guest experience is exceptional,” he says—an effort that’s a daily work in progress.

“If the crew and the manager at the restaurant understand the importance of these things that we’re trying to deliver, they will take the torch and continue to deliver it,” he says. “But if it becomes where we’re watered down and these values of food quality and guest experience and hospitality don’t matter as much, I think we’re done.”

At the root of the anti-chain chain movement is a brand’s determination to reveal its authenticity in everything it does, which is the chief focus for 20-unit fast-casual pizza brand Project Pie. “We are exactly who we are. We’re unapologetically ourselves,” says founder and CEO James Markham. “We care about the guest. We care about giving them great value, and you’ve got to have a great vibe, a great culture.” As it expands, keeping this culture and brand DNA at its core is not just important to Project Pie, but is the primary way it judges its success. “If you start losing your DNA and what got you to where you are, then just give the keys to your landlord and go home,” Markham says.

Transparency is also a common trait among anti-chain concepts. At Project Pie, it’s taken to a new level, with the corporate team filming its executive meetings and posting them to YouTube. “We don’t want people to go, ‘This is what they say, but are they really doing these things?’” Markham says. “We want people to see the inner workings of Project Pie. Not just what you see at the store level.”

Another characteristic of today’s anti-chain concepts: a propensity to be forward-looking by investing in processes and developments that may not be profitable in the immediate future, but that benefit the consumers nonetheless. “They’re not short-term profit–driven. They’re long-term profit–driven,” Noveshen says, adding that it’s the point at which short-term needs exceed long-term visions that bad decisions—what some may consider chain-like decisions—are made by brands.

But not all brands want to—or should—try to skirt around the fact that they’re an old-fashioned chain. Take the biggest brands in the business, for example, that Noveshen says have become “incredibly successful by being a trusted brand.” While some customers might not like them, he says, millions of others support those brands with their dollars.

For those smaller brands wanting to grow into chains, whether the traditional type or one of today’s increasingly popular anti-chain versions, experts say ensuring financial stability and obtaining sufficient capital are the first steps to doing so successfully.

“We run into people who are like, ‘Yeah, we’re opening more units. We haven’t made a dime yet, but we’re going to scale,’” Noveshen says. “They should be focusing on how to improve the profitability so the return on investment for opening a second one is good use of somebody’s money.” He adds that a chain must have a strong business model, as well as documented standards and processes, before it can successfully expand and grow. Operators must know how to run the units without having to be in multiple places at once. “If the restaurant doesn’t know how to run without you being there, you shouldn’t scale,” he says.

At Larkburger, each new unit must maintain and communicate the brand culture, message, and DNA it’s become known for—something Baker says any growing brand should try to achieve, despite the effort it takes. “Maintaining that culture and making sure everybody understands and is living and breathing the culture as we grow restaurants is challenging,” Baker says.

Creating a team of brand evangelists at the corporate and store levels who understand the business, its core values, and how to execute is yet another prerequisite for successfully scaling a growing brand, Baker adds.

“You need to make sure that you have more than you need today, but what you need for tomorrow,” he says.

Read Full Article