Yum! Brands keeping headquarters in Louisville, moving executives to Texas

March 1, 2016

Caitlin Bowling
INsider Louisville
February 24, 2016
http://insiderlouisville.com/business/yum-headquarters-louisville-moving-heads/

With Yum! Brands Inc. relocating five key C-suite executives to Plano, Texas, Louisville may become a show headquarters for the restaurant conglomerate, while employees in Texas are the ones actually steering the ship.

Yum Brands Inc. is headquartered at 1900 Colonel Sanders Lane. | Courtesy of Yum! Brands

Yum Brands Inc. is headquartered at 1900 Colonel Sanders Lane. | Courtesy of Yum! Brands

“Whenever you move your C-level team … in effect you are moving your headquarters because that is where your heads are,” said Darren Tristano, president at Technomic, a Chicago-based restaurant industry research firm.

Business First previously reported that Yum CEO Greg Creed, chief public affairs and global nutrition officer Jonathan Blum, chief legal officer Marc Kesselman, chief people officer Tracy Skeans, and a yet-to-be-named CFO will move to Plano, where Yum’s global operations team and its subsidiary Pizza Hut are located.

Yum’s former CFO Pat Grismer resigned effective Feb. 19, Insider Louisville previously reported.

The company is adamant that Louisville is and will remain Yum’s home. Virginia Ferguson, a spokeswoman for Yum, told IL that none of its nearly 1,000 Yum and KFC U.S. employees are moving to Texas.

“We are proud to be here,” Ferguson said.

IL was scheduled to interview Blum this afternoon about the impending move; however, a few minutes before the appointment, IL was told he was suddenly pulled away and would be unavailable for comment. Ferguson forwarded along statements from Yum explaining the decision.

Creed and the other four executives “will be highly mobile, traveling to many of our international markets and offices throughout the year, including Louisville for 1-2 weeks each month,” Ferguson said in an emailed statement. “Given the global nature of our business, which has transformed over the years, the YUM executive team’s office will be in Plano, but they will retain an office in Louisville.”

She also noted that Yum has based its international operations in Texas since 1997, when the company spun-off from PepsiCo.

It makes sense that the company’s leaders would want to be close to its overseas operations, Tristano said. “Today, a lot of the growth restaurant companies are seeing takes place outside our borders.”

Texas also is home to a number of other restaurant chains and restaurant-related businesses, including Pie Five Pizza, Dickey’s Barbecue Pit, Romano’s Macaroni Grill and Apex Restaurant Group.

“Dallas is considered a very big restaurant town,” Tristano said, noting that many industry events and restaurant innovation happens there. It also is warm, has a large population and is somewhat centrally located.

While Louisville city leaders often tout the city’s location and its proximity to other places, the truth is one of the few ways to get a direct flight is to be a box the United Parcel Service is shipping.

The Louisville International Airport has fewer than 20 nonstop flights to cities in the United States. The Dallas/Fort Worth International Airport is a major transportation hub; it has nearly 50 nonstop flights to international cities and countless more within the continental United States.

“There is no way to overlook that,” said Nat Irvin, the Strickler executive in residence and professor of management at the University of Louisville College of Business. “We can get to the airport in 20 minutes from any place in the city, but part of the downside is you can’t get to any place directly.”

And Dallas is closer to China — where Yum will spin-off its operations this year — offering a nonstop flight to Beijing. Although Yum China will technically operate as its own company, Yum leaders will no doubt be keeping a close eye on how the company is faring in China’s sometimes volatile market.

Already, Yum executives spend a good portion of their year abroad, according to the company.

“I think what (the move) represents is the importance of face-to-face communications when you are developing strategy,” Irvin said. “You like to see them; you like to hear them; you like to be close to them.”

The only factor in Yum’s decision, according to Ferguson, was the fact that the company’s global operations offices are in Texas

“Our business is a global business, and it makes sense,” she said.

Tristano said he wouldn’t be surprised if Yum moved more jobs to Texas in the future, but the company also has good reason to remain in Louisville. If the company said it planned to move its headquarters but keep jobs in Louisville, it could end up with a retention problem.

“It would make sense for them to continue to have that (Louisville) location regardless of what they call it,” he said. “This is a less disruptive strategy for them.”

With its name plastered around the city (see KFC Yum! Center), Irvin said he is confident Yum will continue to maintain a large presence in Louisville.

“I think Yum is fully ensconced in this community. The company has a very broad footprint in this community, and I think the heart still remains right there,” Irvin said. “I think what they have made is a decision for the company. I don’t think it’s a detriment to the community — a good idea for them, not necessarily a bad idea for us.”

Still, the decision by Yum is an unusual one.

Tristano could not think of any comparable examples, except possibly Tim Horton’s and Burger King. However, the quandary over where to headquarter those two restaurant chains is the result of their merger back in 2014. As of now, Tim Horton’s base of operations remains in Canada, while Burger King resides in the United States.

Overall, Tristano said he thinks Yum is making good decisions to focus more globally and try to appeal to younger generations.

“They seem to be moving in the right direction strategically.”


Go Greek

February 10, 2016

Restaurant executive Nick Vojnovic joined Tampa-based Little Greek Fresh Grill in 2011. Photo by Mark Wemple

Restaurant executive Nick Vojnovic found a novel way to beat back a mid-life crisis after he moved on from a decade-long gig running sports pub chain Beef ‘O’ Brady’s.

Forget the convertible or the Harley. Vojnovic went back to school. He enrolled at University of South Florida, where he earned an M.B.A. in about 18 months, mostly in weekend classes. At 51, and already with a degree from Cornell University’s famed hospitality school, Vojnovic says he learned a lot from the experience — both in life and academically. “It was humbling,” says Vojnovic. “My 13-year-old daughter had to show me how to make up a power point presentation.”

Five years later, Vojnovic, 56, is back in his comfort zone, helping upstart restaurant franchise operators go from the toddler stage to something more mature. Vojnovic is doing that with Tampa-based Little Greek Fresh Grill. The concept, founded by entrepreneur Sigrid Bratic in 2005, is authentic Greek food in a fast-casual setting.

Little Greek is on a big run under Vojnovic. It has gone from four locations in 2011, when Vojnovic partnered with Bratic, to 25 by the end of last year. And system-wide sales have nearly doubled since 2013, from $7.4 million to $14 million in 2015.

The chain also recently picked up some national industry notoriety. Restaurant News named it a breakout brand, and more recently, national foodservice research firm Technomic named Little Greek one of its six franchises to watch in 2016. “Little Greek Fresh Grill is a fast-growing concept in an under penetrated fast-casual Mediterranean growth segment,” Technomic President Darren Tristano says in a statement. “The experience and knowledge of its leadership team, speed to market and accelerated success put Little Greek in a strong position to be a category leader.”

Vojnovic, with his M.B.A. and his on-the-job leadership experience at Beef’s and Famous Dave’s barbecue chain, is more cautious than the complements. That’s because growing too fast is one of his biggest takeaway lessons from Beef’s. The chain grew from 30 locations and $16 million in annual sales to 270 chains doing $250 million a year in sales during his 12 years at the helm, from 1998-2010. The downside to that fast growth is it led to a litany of issues, from poor store openings to underprepared staff to back-office slowdowns.

The goal is to open up to seven Little Greek stores in 2016. Locations include Lakewood Ranch in east Manatee County, Riverview in Hillsborough County and Kennesaw, Ga. Vojnovic says he intends to make sure every location focuses on all of the company’s five core values, which include passion, integrity and constant improvement.

On continuous improvement, Vojnovic has many items on his to-do list. It includes better training systems so employees can be more efficient; streamlining food purchasing and other costs to lower expenses; and instituting a process of audit and store visits to bring uniformed quality control to the chain.

Vojnovic also addressed an external challenge: Greek food has a certain turn-off level to people who don’t know the culture and flavors. One step there was to put the American version of the food first on the menu followed by the Greek words, such as spinach pie (spanakopita.) “People can be intimidated by gyros and souvlaki,” says Vojnovic. “We Americanized the menu.”

Going back to his Beef’s lessons, Vojnovic does more to share financial metrics with franchisees and managers. For example, each franchisee has access to daily sales data so he can spot trends quickly. And all franchisees share profit and loss figures on a regular basis, to come up with ideas and get in front of problems.

“I’m a big believer in constantly trying to improve yourself,” says Vojnovic. “(But) I’m working harder at this than I thought I would. We still have a long way to go.”

By the numbers
Little Greek Fresh Grill
Year Revenues Percent Growth
2013 $7.47 million
2014 $10.47 million 40%
2015 $14 million 33.7%


McDonald’s reaps the benefit of all day breakfasts and table service

February 9, 2016

McDonald's signature rangeEven though we’re only into its second month, 2016 been rather a good year for Steve Easterbrook, McDonald’s chief executive. His football team, Watford, is enjoying its best season in years and much the same can be said for the US fast-food giant.

The company surprised analysts with its latest quarterly results last week, with sales up 5.7pc in the US – nearly twice as much as had been predicted. Global sales are up by 5pc.

It has taken a Briton – albeit one steeped in McDonald’s corporate culture – to revive the most American of institutions, which was in danger of being left behind by rather nimbler competitors in the fast food industry.

From introducing all-day breakfasts throughout the US to testing waiter service at some of its outlets, including in the UK, Easterbrook has overhauled how the company operates at a bewildering pace.

The chain was in something of a mess when Easterbrook took over as chief executive in March 2015. Last August, for the first time in more than 45 years, McDonald’s announced that it was closing more outlets than it was opening.

European sales had dropped by 1.4pc, between 2008-14. In the US, the decline was 3.3pc and in Asia, the Middle East and Africa, once considered a growth region, a rather frightening 9.9pc.

It was not just the dire figures which suggested that McDonald’s was in need of a cultural shift. The company was facing competition from not only its traditional rivals, such as Burger King and Wendy’s, but also from hipper new competitors entering the market, such as Honest, Byron, Five Guys and Shake Shack.

It was pretty clear that the golden arches had lost their sparkle. Within weeks of taking over the reins, Easterbrook appeared on CBS’s This Morning television progamme in the US to signal that the 60-year-old company was in for a radical overhaul.

“We really want to assert McDonald’s as a modern burger company. To do that you have to make meaningful changes in the business,” he said. “The pace of change outside McDonald’s has been a little quicker than the pace of change within. You act your way to success, you can’t talk your way to success.”

For once, this was not empty corporate-speak. All-day breakfasts were tested in San Diego in April, and within months were available at all the company’s 16,000 US restaurants. This has brought back customers who might have gone elsewhere and even tempted in newcomers.

Other changes have seen the introduction of a “McPick menu” where US customers can have two items for only $2, despite the wafer-thin profit margin the deal provides.

The range of burgers has also been increased to include Pico Guacamole and Buffalo Bacon, and diners are now being allowed to customise their burgers. McDonald’s has also launched its first loyalty programme for people who register their details, offering, for example, a free cup of coffee for every five bought at one of its restaurants.

Easterbrook has also done something to improve McDonald’s corporate image, announcing a 10pc pay rise for the 90,000 people who work in outlets directly owned by the company in the US. This has taken their hourly minimum wage to $9.90 an hour – increasing to more than $10 this year – considerably higher than the legal minimum of $7.95.

The one caveat, however, was that the pay rise was limited to those staff who work for the 10pc of restaurants which are owned by the company rather than franchisees. Even the white packaging is being ditched after more than a decade. Instead, food now comes in brown paper bags which, in theory, are seen as more environmentally friendly.

According to a company spokesman, the change is “consistent with our vision to be a modern and progressive burger company” –a phrase now something of a corporate mantra.

“One of the things Easterbrook has done is create a sense of urgency in the the McDonald’s business culture,” said Mark Kalinowski, a restaurant analyst at Nomura in New York. “When the company started trialling the all-day breakfast in San Diego county in April, it only took until October before it went nationwide.

“He doesn’t want to waste time, he operates on speed to market and saw it was clearly something customers wanted.

“For McDonald’s, that is rather quick. Although it can be innovative, the company is traditionally slow- moving. I think it’s a reflection on its sheer size.” Even though Easterbrook has spent much of his career with McDonald’s, having joined in 1993, he also spent time with the rather more upmarket Wagamama and Pizza Express chains. He returned to McDonald’s in 2013 as chief brand officer, having held previous roles including its head of Europe.

“Most of the presidents and chief executives at McDonald’s we have seen have been promoted from within. Having somebody with an outside perspective is exactly what the company needed” said Darren Tristano, president of Technomic, a Chicago-based company specialising in the food industry.

Tristano believes that Easterbrook’s strategy has been shrewd. “He has aggressively marketed the all-day breakfast, which has put McDonald’s back at the top of the mind of consumers.

“The price point appeals to lower and middle-income consumers who are looking for something which is less expensive than the dinner menu. This has helped McDonald’s get back some of the market share which it had been losing to rivals.”

McDonald’s has also been helped by the rehabilitation of the egg in the mind of the consumer, Tristano added.

“If you go back a few years, eggs were seen as high-cholesterol. Now they are seen as high-protein and eggs are a key part of breakfast.

“The sales growth on a year over year basis is over a few years of weak sales performance, so the numbers are good but we should expect to see sustainable growth and especially year over year, fourth quarter 2016 would signal McDonald’s is officially back.

“McDonald’s appears to be listening to their customers and staying more true to their brand under Easterbrook.”

The consensus appears to that Easterbrook has enabled McDonald’s to regain its mojo. “He has brought a sense of strategic clarity, said John Quelch, professor of marketing at Harvard Business School.

“There is a tendency when a company gets into trouble to sling products at the wall and see what sticks. All that does is adds complexity. If you reach a point when you can’t explain to an employee or a franchisee what the point of a product is, then how can you expect them to explain that to a customer?

“The bench strength of McDonald’s is enormously good. It is no surprise that they were able to find somebody like him to step up,” added Quelch.