Michael Abt got his start in the restaurant industry at age 15, flipping burgers at Charlie’s Hamburgers in Houston, where they riffed on McDonald’s famous slogan with the catchy “Over Two Dozen Sold.” Abt was hooked; the restaurant industry was in his blood. Abt spent five years at Pizza Hut before heading to a franchise of Arby’s called RTM Restaurant Group.
“I’ve been in the restaurant industry all my life,” Abt says. “When I started with RTM in 1993, we had 350 restaurants, and when we sold the company to Arby’s Corp. in 2005, we had 800 restaurants.
“I got an awful lot of experience being on the franchisee side of the business with Arby’s for many years. When we sold the business, I wound up on the franchisor side of the business. I got a pretty good perspective of how both sides can work to help each other.”
Abt left Arby’s in 2010 to take some time off. With his experience in the industry, however, he was a highly sought-after executive. In 2012, Sentinel Capital Partners started a relationship with Abt and soon offered him an opportunity to become CEO of Huddle House Inc.
“We started talking about the Huddle House opportunity, and I spent a little time on due diligence and really fell in love with the brand,” Abt says.
Huddle House, a 50-year-old restaurant chain of 396 restaurants with system sales of $260 million a year, became Abt’s new home when he took on the role of CEO last October. With his prior experience and knowledge of both the franchisee and franchisor sides of the business, he had some new ideas for Huddle House.
Here’s how Abt is taking his unique experience in the restaurant industry and evolving the Huddle House brand.
Do your due diligence
When Abt was first introduced to Huddle House, he was unfamiliar with the brand, but after experiencing what Huddle House was about, he found numerous differentiators, as well as opportunities to make the brand better.
“As I started exploring the business, I thought the food was really good,” Abt says. “It separated itself from some of the other chain concepts in that the products are more cravable and aligned with Southern comfort food, which I thought was a great niche.”
He also liked the atmosphere that Huddle House restaurants provided to guests.
“I liked the feel of the restaurant in terms of the level of hospitality that we provided to our customers,” he says. “It’s the kind of place where customers show up, and you know the customer’s name. A lot of our servers have been there for a long time. The owners and operators of the Huddle House restaurants have one or two stores, so they live in the communities that they operate in and are entrenched in the community.”
One thing Abt was careful to avoid as the brand’s new CEO was jumping to conclusions.
“My approach at Huddle House is I didn’t want to come in assuming to know what we needed to do in the business,” he says. “I spent the first 60 hours interviewing people at corporate. I also interviewed franchise partners, field personnel and vendors. I had a series of questions I asked to understand what we needed to do to strategically move our brand forward.
“I spent the better part of two or three weeks on discovery. That helped lay the foundation for our strategic plan.”
Abt stresses that it is imperative to spend the time to get to know what you are working with rather than feeling as if you have to make immediate changes.
“Don’t feel like you have to change the company in the first 30 days,” he says. “Spend the first 30 to 60 days really understanding the brand’s personality, particularly if you are a franchised brand. What’s the brand about? We have 385 restaurants that are franchised. We have 11 company restaurants for a total of almost 400 restaurants. The success of our franchise business is dependent upon the individual franchise partner that we serve.”
Since Huddle House depends on its franchise partners for success, those are the brains Abt picked to get some answers for improving the business.
“I believe the way to start off a franchise business is to understand from the franchise partners what the critical opportunities are that we have from a brand standpoint,” Abt says. “Understand the relationships between the franchise partners and corporate. Understand who the key and influential franchise partners are in the system and start working through them to create advocacy within the system.”
Make strategic decisions
For Abt, it’s important for the franchise partners to understand that the company focuses on and cares about how they can make more money. In order to make more money, Abt had a few changes in mind.
“One of the things I recognized very early on was that we had an opportunity to provide significantly higher levels of support to our franchise partners, so we started hiring franchise area directors,” he says.
The franchise area directors are the individuals who work directly with the franchise partners to help them grow their capabilities and ultimately create an elevated experience for Huddle House customers.
“We started hiring field personnel immediately,” he says. “We hired five additional franchise area directors, we on-boarded a director and assistant director of training. Our goal was to strengthen our operations so we could provide better support to our franchise partners and they could run a better business and take care of their customers.”
Abt also recognized that the Huddle House menu had become bloated over the years, so a mission of simplification, menu optimization and management were on the top of the agenda.
“We embarked on a program to minimize the number of items on our menu and make it easier to execute in the restaurant,” he says.
A tweak in the menu wasn’t the only thing that Abt wanted to update. The company had a new design concept for its restaurants that gave them a fresh look.
“I think our new evolution prototype restaurant is a great-looking restaurant,” Abt says.
Earlier this year Huddle House launched its evolution remodel incentive program in which the company will give its franchise partners $25,000 to remodel their restaurant to the current prototype. It will cost franchisees $100,000 to $110,000 to do an interior and exterior redesign. Huddle House has seen sales increases of up to 30 percent in remodeled franchises.
“It has a very strong contemporary feel and we’re a 50-year-old legacy brand, and our new evolution prototype restaurant and remodel really elevates our brand,” he says. “We want our franchise partners to know that we’re in it with them, and we don’t think there’s any better way to do that than to give them some money back when they remodel.”
As Abt has identified Huddle House’s strengths and areas of opportunity, the main goal continues to be profitability.
“We are trying to keep it fairly simple here,” Abt says.
The key to making these changes successful is gaining buy-in from franchise partners.
“We established committees on the front end to help our franchise partners get more involved in the decision-making going forward,” he says. “We have a franchise advisory council that provides input on operations. We have a margin improvement task force that provides feedback on profitability, and we have a menu committee that provides feedback on our menu items.”
To make buy-in an easier task, Abt suggests having key players, franchise partners in his case, involved in as much of the decision-making as possible.
“One of the things that we did on the front end was to establish clear lines of communication to our franchise partners,” he says. “We established hour-long monthly system calls with our franchise partners, myself and our C-level executives where we outline our current plans and what our results have been.
“We also developed a newsletter that goes out every two months that gets more communication out to the franchise partners. And personally, I make myself accessible. I return phone calls, I pick-up my phone when somebody calls, I return emails, etc. My presence to the franchise partners is very important because if they know that the guy at the top of the company is listening to what they have to say, they feel like they are involved and they are cared about.”
What has Abt most excited about the future of Huddle House and its franchisees are the remodeled restaurants.
“About 10 percent of our system is refreshed at this point,” he says. “We have an opportunity with this program to refresh 80 percent of our system in the next five years. We have allocated $2.5 million to give back to our franchise partners in the form of the incentive rebate.
“We’ve allocated up to 100 remodels this year so we can elevate the image of our brand and I’m very excited about that.”
How to reach: Huddle House Inc., (770) 325-1300 or www.huddlehouse.com
Understand your company’s strengths and weaknesses.
Make strategic changes for growth opportunities.
Gain buy-in and move forward.
Published in Smart Business Online - Atlanta