Reconnecting: with Tom Barnett

Flight Controller: Enduring values keep Tom Barnett aloft in turbulent times

In business, a lot changes in three years, especially in a down economy. And while his business has taken a turn for the worse, Tom Barnett's values and commitments remain strong as ever.

Since Multi-Unit Franchisee profiled the Arizona-based multi-unit, multi-brand franchisee in 2008, the skier, pilot, and family man has purchased a small private jet that he flies. His son is now 18, his daughter is 20, and he and his wife, Georgia, have been married for 25 years. His favorite pastimes include skiing with them in Colorado.

Unfortunately, what hasn't changed, says Barnett, is the four-year decline experienced by his Phoenix and Tucson area Burger Kings, The Good Egg restaurants (a full-serve concept he owns with friends), and Blue Burrito Grilles he contracts out in airports.

"I've never seen anything like it--none of us has," says Barnett, a former fighter pilot in Vietnam turned UCLA MBA-wielding franchisee and franchisor. "Many of my fellow Burger King franchisees are doing worse than we are. I keep asking myself how things can be worse."

Born into a military family and having spent six years in the U.S. Air Force, Barnett knows about hunkering down, and that's what he's been doing. Growth has been put on hold and bonuses and raises suspended for the past three years. The up side, in addition to the fact that he's been able to spend more time with his family, is that "We've been able to keep everybody so far."

One thing the economy hasn't affected is his close working relationships. "I've been so blessed with the two best partners you could ever have. On the Burger King side, Shelley Krispin has been my partner for 30 years, and she does the work of two or three people. And in the Good Egg franchise, there's Charlie Syburg, who I've worked with for 25 years. Our partnerships work because we truly trust and love each other and we share Christian values."

Another positive, says Barnett, is the new ownership and management team at Burger King corporate. "They are doing a wonderful job of turning around and revitalizing what had been a concept in a four-year death spiral. They understand the business and what it means to be franchisee-driven. Operations are improving and products are greatly improving."

With the same tenacious approach he takes to business and life, Barnett says he has worked hard to become a better Christian and to demonstrate that in every aspect of his life. "I'm very committed. I have an ethical and moral responsibility to treat everyone in a certain way. I've been inordinately blessed by God. Any success I've had I see as a blessing and the result of everybody else's efforts." It's those values, along with a can-do attitude, that keep an energetic Barnett going. "I've been taught to never, ever give up. If you give up, you've lost," he says.

Barnett, a graduate of the U.S. Air Force Academy, is an admitted workaholic, and in the current economy, he doesn't see slowing down much any time soon--but he also doesn't intend to stop living life. "I'm not in the office every day, but there's never a time I'm not working," he says. "I'll be skiing in Colorado in February, but I'll still work every third day for several hours a day. I'm relentless."

For Barnett, the key to making it all work remains working with outstanding partners to run the best franchise operation possible and maintain a system that allows everyone in the company to develop and do their best. "I like to say I'm in the people development business," he says.

Barnett clearly is not looking toward 2012 through rose-colored glasses, and remains frustrated with government actions and inaction regarding the economy. His best pep talk for would-be franchisees? "It had better be something you really like to do and are willing to work at seven days a week. You need to set an example for your people, keep expenses down, and grow slowly. Everybody doesn't have to own a huge company. Some people enjoy being behind the counter every day, and that's fine."

Questions

Name: Tom Barnett
Title: President
Company: Barnett Management Co.
No. of units 2012: 21 Burger Kings; 19 The Good Egg restaurants (a concept we own with friends); 6 Blue Burrito Grilles (which we franchise out to airports)
No. of units 2008: 22 Burger Kings; 20 The Good Egg restaurants; 2 Blue Burrito Grilles (plus 5 operated under license by HMSHost at airports)

Personal

Age: 65
Family: Wife Georgia; a son, 18, and a daughter, 20
Years in franchising: 32
Years in current position: 32

Key accomplishments:
Having two successful, drug-free kids who still want to be in the family.

Biggest mistake:
Taking on too much debt.

How do you spend a typical day?
Most days aren't typical, but I do a fair amount of reading, spend an hour or two exercising, and meet with key people.

Work week:
24/7, unfortunately.

Favorite fun activities:
Flying and skiing, having great times with my wife and kids.

Exercise/workout:
Mainly cycling to stay in shape for skiing and weight lifting.

Favorite tech toys:
My private jet is my favorite toy. I also like my iPad and iPhone.

What are you reading?
The Tehran Initiative by Joel Rosenberg.

Do you have a favorite quote/advice?
I have several. This one has been on my desk for more than 25 years: "Develop people--they will become your image, build your strength, and set you free." I also like: "Have the courage and the foresight to concentrate on critical tasks rather than trying to do it all." And Peter Drucker's, "If the pressures, rather than the executives, are allowed to make the decisions, important tasks will predictably be sacrificed." And I was taught--and I've taught my children--that you must be willing to pay the price without any guarantees of achieving any exact goal.

Best advice you ever got:
Surround yourself with the best possible people.

Formative influences/events:
When I was in high school, I knew some generals in the Air Force (my father was in the military) and I met a Thunderbird pilot and decided that being both of those things would fulfill my ambitions. That got me into the military and got me flying. Along the way, I've known exceptional leaders I've been able to emulate. These include Pat Ryan of Pat Ryan and Associates of Chicago and General Troy Tolbert, my leader in combat in Vietnam.

How do you balance life and work?
Not very well. It seems my mind is always racing and I'm always thinking about possibilities, the business, and cash flow.

Management

Business philosophy:
My overriding business philosophy is that I can prosper and grow only to the extent that first I can attract, motivate, and retain exceptional people in each critical area, and second, to the extent that I am willing to allow them to use their own initiative to exceed our mutually established goals.

Are you in the franchising, real estate, or customer service business?
I'm in all of those.

What gets you out of bed in the morning?
The possibilities of the day get me out of bed. It's a chance to build something or fix something.

What's your passion in business?
My passion in business is to do the right thing. As a really strong committed Christian, I need to honor God with all I say and do and in all my work and efforts.

Management method or style:
I'm always looking to the future, being proactive, putting people in the right place and then getting out of the way. My 18-year-old son says, "Dad gives me lots of freedom, great wide boundaries. But I know what they are and I don't ever want to cross them." I want our team to be motivated and inspired and to feel free enough to make honest mistakes.

Greatest challenge:
Cash flow.

How close are you to operations?
Not very close. If I try to spread myself too thin, then I'm taking over somebody else's job.

Have you changed your marketing strategy in response to the economy? How?
Burger King has in the last six months gone more toward solid product advertising that says our great food is getting even better.

Personality:
I'm extraordinarily driven and intensely goal-oriented. I am the easiest, gentlest person to get along with but my standards and expectations are very high.

How do others describe you?
The same.

How do you hire and fire?
At this point, all my key people have been with me for at least 20 years, so I don't hire or fire anybody. I delegate that.

How do you train and retain?
We train thoroughly, thoroughly, thoroughly. The number-one cause for a person leaving a job is a feeling of insecurity and inadequacy from lack of training. We retain our employees by honoring them and showing them where their personal and professional goals can be met within our company. Our average tenure for restaurant managers exceeds 8 years, and we have several who have been with us for more than 15.

How do you deal with problem employees?
For a judgment failure--a bad decision or lost temper--we will retrain, motivate, and encourage once or twice before letting them go. Years ago, an employee made a $10,000 mistake and he was amazed that I didn't fire him. I told him, "I just paid $10,000 in steep tuition, but you'll never make that mistake again. So get back to work." For moral failures, such as stealing or sleeping with the staff, they're gone immediately. But as a Christian, we don't want anybody leaving angry or not having learned something from being associated with us. We never want to damage anybody--we invest in people; they're the heart and soul of the company.

Bottom Line

Annual revenue:
About $40 million.

2012 goals:
Most important, we want to deal with cash flow and reverse this decline. All my businesses have been on a steady decline for the past four years. I've never seen anything like it.

Growth meter: How do you measure your growth?
With the way things are in this economy, we're not concerned with growth. We're concerned with being here next year.

Vision meter: Where do you want to be in 5 years? 10 years?
Five years from now I intend to be semi-retired devoting much more time to the faith and family charities I have supported for over 20 years, organizations such as Young Life and Crisis Pregnancy Centers.

How has the most recent economic cycle affected you, your employees, your customers?
As a company, we've had to put growth on hold. Our key employees have received no bonuses or raises for three years and have had to take a 5 percent pay cut, which is devastating. However, we've kept everybody so far. We know we're seeing our customers less often because they have much less discretionary income.

Are you experiencing economic growth/recovery in your market?
No.

What did you change or do differently in this economy that you plan to continue?
We're just more careful than ever and trying to hang on until things improve.

How do you forecast for your business in this economy?
Because of the trends, we're forecasting down 2 to 5 percent.

Where do you find capital for expansion?
We're not working on that at all.

Is capital getting easier to access?
No, harder.

Have you used private equity, local banks, national banks, other institutions?
All of the above.

What kind of exit strategy do you have in place?
We have excellent people and I have two sharp kids. My son is interested in the business, but my daughter is not. I'm uncomfortable with nepotism, so he knows he'll need to go somewhere else and be successful before he comes to work with me.

What are you doing to take care of your employees?
Holding the business together so they have a job.

How are you handling rising employee costs (payroll, healthcare, etc.)?
We'll have to take a price increase in January 2012 when the minimum wage goes up in Arizona.

How do you reward/recognize top-performing employees?
In the past, we've rewarded with recognition and bonuses. Unfortunately, now there's just no extra cash.