Huddle House: Trust Keeps Core Values Intact During Brand Refresh
Change in a franchise system is inevitable. All franchise brands across all segments -food, home services, health and wellness, B2B, and others--eventually come to a point in their growth where the choice is clear: either change and continue to grow, or remain stale and gradually fade away as more progressive competitors pass you by.
Having been in the restaurant industry since age 14, I've seen my fair share of "change gone good" and "change gone bad" situations. Some of the most expensive events are when change isn't handled correctly. I've learned that whether it's small tweaks to a menu or entire system-wide rebranding programs, in a primarily franchised system the deciding factor of the success or failure of change and of enlisting the support of the franchise partners has been, and always will be, trust.
Of course you need validation, data, proven ROI, a clear vision, and a commitment from the team to help promote the change, but it all starts with trust. Trust is paramount. If you are asking franchise partners to invest in change of any kind, they have to embrace the idea. But for them to embrace the idea, they must trust the source and trust that the change will ultimately improve their bottom line. My experience is that if the franchisor is willing to invest in company restaurants or invest along with the franchise partners to help validate that the change efforts will result in an acceptable ROI, you then begin to build trust. With franchise partners, the saying, "Put your money where your mouth is," goes a long way!
That's why when I joined Huddle House as CEO in 2012, building trust before executing change was a key step. Our 400-unit, full-service family restaurant chain that serves "Any Meal, Any Time" was, and still is, loved by thousands of loyal customers for our delicious comfort food and value pricing. Founded in 1964, we had experienced 44 years of positive growth - until the recession in 2008. Unit count growth slowed, and the C-level executives soon began to exit. When I came on board, the reality was that longstanding franchise partners were not inspired by a common vision for the brand and had little trust in the management team.
The rebranding vision
I was brought on to rebuild and reignite unit sales and franchise growth. To do that, I knew a brand refresh was necessary. I had a vision for this concept to evolve so that Huddle House could continue serving existing brand loyalists while gaining new customers for the next 50 years to come. My plan involved the following elements:
- Accelerate system remodels. We developed a remodel that drove significant comp transactions and sales. The franchise partners were excited and proud of the new image, which included a signature tower entrance, plush seating, contemporary furniture, and vibrant lighting. To ramp up participation, we developed an aggressive incentive program for our franchise partners, and they jumped on board. We offered a $2.5 million fund for the first 100 franchisees who would commit to a restaurant remodel by July 31, 2014. These franchisees receive financial support to help offset the costs of the remodel and for local marketing efforts.
- Optimize the menu. We hired a best-in-class culinary director with a proven track record to develop more differentiating, "crave-able" LTOs, appetizers, and desserts, and to improve on the flavors and recipes of some of our core items. A new menu eliminated high-cost, low-selling items, improved navigability, and helped grow margin by promoting incremental purchases of appetizers, drinks, and desserts.
- Strengthen the leadership team. We brought on a new chief development officer to lead franchise sales, a new chief marketing officer to drive progressive marketing programs, and a new chief operating officer to improve restaurant operations and franchise partner relations.
- Improved franchisee communication and support. When I began the new job, I spent the first two weeks interviewing franchise partners, company directors, and field personnel so I could understand exactly what the system issues were and begin working on the right priorities. I also hit the field and visited nearly 100 restaurants in the first three months. We instituted monthly system-wide calls and created a franchisee forum, which sent the executive team on the road to meet with franchisees. We also hired four additional franchise area directors, a director of training, and instituted an improved help desk.
Keeping sight on core values
In the process of change, we wanted to make sure we did not lose sight of our brand's original core objectives and values. That's why we constantly remind ourselves of the key values that have remained at the forefront of the brand: great service, everyday affordability, quality food, and an environment that is warm, friendly, and comforting. We have long been known for our great breakfasts, but we serve "Any Meal, Any Time," as our tagline promises, allowing guests to enjoy their favorite breakfast, lunch, or dinner items any time of the day or night. We know who we are and what our guests want; you won't find us chasing every latest food fad.
As we enter our 50th anniversary year, Huddle House experienced robust growth during the first quarter. We closed 8 deals to open 15 new restaurants, and our remodeled locations are experiencing renewed energy and significant sales growth. Currently, 21 percent of our system has been remodeled. By the end of this year, we expect that share to reach 30 percent of the system, with the entire brand being remodeled by 2019.
Through it all, you can sense the excitement and energy across the entire system and at our support center. While we have a long road ahead, all signs point toward a "change gone good" scenario.
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