FoodTalkSTL

Why do brands like Chick-fil-A, Culver's, In-N-Out, Raising Cane's, etc. outperform the big, publicly traded companies? John Weiss, senior advisor with the investment banking firm Harrison Co., noted a few reasons at the Restaurant Finance conference: They "manage for the next generation, not the next quarter" and "focus on the lifetime value of a customer" and don't spend too much effort on operationally complex limited-time offers. They take care of employees who do a better job in the restaurants, giving customers a better experience that drives sales over the long term. The large public companies "focus on cutting costs to improve margins" and have high turnover. Their operations suffer, customers have a bad experience, and sales and margins decline. The private companies have long-tenured CEOs, which leads to consistency in operations. Public company CEO turnover "is more of a problem than hourly turnover." Wendy's has had four CEOs in three years. The private brands don't use kiosks and focus on hospitality. Public company franchises use kiosks aggressively. (I'll also add that some of the big public companies, notably McDonald's and Taco Bell, are aggressively going after drive-thru AI). "At McDonald's, it seems as if they've almost abandoned cashiers. You're forced to use the kiosks. Those kiosks don't smile." Some of the private companies also don't do delivery, notably In-N-Out. Raising Cane's also doesn't have formal arrangements with delivery providers. While delivery provides incremental sales, "some of those public companies that have sold their souls to and outsourced their business models for third-party delivery companies are learning to regret it. Wingstop may be an example. Those third-party delivery companies really don't care about your brand image." I agree with a lot of this. I do believe that brands have made a deal with the devil on third-party delivery, especially for franchisees. And by the end of next year almost none of your McDonald's orders will be taken by a person, given that the company plans to implement drive-thru AI. Those fast-growth chains don't make these types of compromises. You have a better experience when you visit them, and so they're worth the money you spend. So they're thriving.