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Some of the most successful restaurant brands have positioned themselves favorably by making managers (or operators) ownership partners. Think of chains like Texas Roadhouse, Chick-fil-A, Raising Cane’s, or even smaller ones like Waldo’s Chicken and Beer; though those examples differ in the details, the objective is the same — giving operators or general managers more skin in the game so they are compelled to run better restaurants. These parent companies have aligned incentives, such as profit sharing, with restaurant performance and community engagement.
Now, Chili’s wants to do something similar. Chief executive officer Kevin Hochman began talking about the company’s exploration of such a model last year, noting that the motivation to do so was coming from the chain’s staggeringly successful results in the past few years.
“We have a bigger and better talent pool to be able to pull both at the hourly and managerial level. Our turnaround is pushing to upgrade the talent that’s running the restaurants, as well as provide them significant amounts of ownership training. We feel like we need to get more ownership down to the restaurant level and delegate more of the decision making to them so they’re able to grow the business and run it like it’s their own business,” he said during parent company Brinker International’s first quarter earnings call in October.
He acknowledged such a change would take a few years of training regarding 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 place long-term ownership incentives” for managers so they can share in the business’ growth that is expected to continue. Indeed, during this week’s second quarter earnings call, Chili’s growth continued with nearly a 9% same-store sales increase, prompting the company to raise its full-fiscal-year guidance.
“Our people focus right now has been to invest in making them more owners of the business and, eventually, that will translate into some changed incentive structures,” he said in October.
This week, Hochman tipped his cap to a “best-in-class competitor” for its mastery of general manager ownership.
“Part of that is their incentive structure. They do other things, too, that we’re studying,” he said.
For now, Chili’s manager training will continue. The curriculum includes a deeper understanding of the profit-and-loss statement so they can have the tools to improve their bottom and toplines. Brinker is launching a new P&L tool as part of a broader Oracle upgrade to help with this process.
