Please give a warm Georgia Tech Welcome
to you Paul ground thank

you thanks it's a real
privilege to be here and

thank you for coming in on the right first
week of school is the first week back or

second second we've got my
daughter's a sophomore at S.M.U.

and they don't start until next week and
so but

of course it is tech So it's a lot harder
so you start out or you tell her that So

what I thought I would do is try to make
this as interactive as possible to talk

a little bit about the the journey
that we are on at Arby's and

it certainly is a journey I tend to
be a little bit of a glutton for

punishment like turnaround
situations I've had an opportunity

particularly at Hilton right before Arby's
to be part of a leadership team that

took a business that was
in a fairly difficult spot

right at the beginning of the recession
get the business a better place and

and turn into a great result for
the shareholders and so

I decided to take on this opportunity at
Arby's as C.E.O. to do the same thing so

what I'll start doing is it is explain
a little bit give a background of R.B.S.

the situation that it was in and
then what we're trying

to do kind of how we are going about
trying to turn around the company and

turn around the brand and show some of
the results early signs are good so

far so first if I do this right.

Just a little bit about R.B.C. hopefully
most of you have eaten at Arby's before

but it is a fairly significant fast
food brand it has been around for

fifty years in fact we celebrated our
fiftieth anniversary last year and

not a lot of fast food companies a lot of
restaurant companies actually been around

for fifty years it was founded in
the middle of the country Boardman Ohio.

The raffle brothers in
fact the original R B was.

The original what they one of the name
of it to be but they couldn't do that

because it was trademark so
they used the phonetic spelling bees and

that's how the name came along just for
you that we're interested in that but

it's actually neat because the company did
start in the middle of the country and

work its way to the coast which most
brands actually think about them start on

one coast to the other worked their way
in so that has something to do about

the culture and heritage in a very
American type of culture and the company

it's very seen as a very Americana type of
brand has thirty four hundred restaurants

vast majority of them in the United States
we do have restaurants in Canada Turkey

and Qatar which people say Well Turkey and
Qatar have that happen.

Certain franchisees want to do them and
that's kind of how they got started

there were actually at fifty in Turkey and
we have over one hundred in Turkey

in the next several years one of the
opportunities for the brand is obviously

expand more internationally three point
two billion dollars and system sales so

if you add up all the sales of all
the restaurants about a third of

the restaurants are company owned and two
thirds of the restaurants are franchise

and so we are a mixture of that we have
nine hundred fifty company restaurants

the revenues of the company are one point
one billion which is a combination of what

we make from our own restaurants most
royalties off of the franchise restaurants

and we have been on a nice run so far
we've had seventeen consecutive quarters

of same store sales growth which I'll talk
about why this happened and that's fairly

unique in the industry particularly right
now and then also as far as the number

of people that it employs we have seventy
one thousand people that work for

the Arby's brand twenty one thousand
of them work for the company in our

company owned restaurants and the
remaining team members work in franchise

restaurants so it doesn't employ
It's a very people oriented business

which is something that always excites me
there's a lot of problems that come with

a people oriented business but
I really love the experience of people who

were inside of it more talk about that
going forward so what was the problem.

If you look back at the time of the last

downturn RB suffered dramatically during
that town turn out a lot more than most

restaurant companies did and
there were a lot of reasons behind that

first a kind of lost sight around what
it was trying to be is a brand and

it got too tightly defined around
a particular product roast beef in fact

if you think about Harvey's today most of
us a roast beef in is very defined around

roast beef and in fact they at the time
said We are a roast beef company and

everything we're to do is roast beef The
challenge with that is while roast beef is

a great product not everybody wants
to roast beef all the time and

so that kind of narrowly defined the space
it had gotten where there was no

product innovation going into the downturn
and also was distracted by a merger

with Windies And so you may have you know
when you think about people say it was

a part of Wendy's actually Arby's and
Windies merged in two thousand and

seven right before the downturn and so
a lot of distraction was going on so

a combination of lack of product
innovation pretty poor marketing

service levels of degraded in fact they
degraded even worse after two thousand and

eight in a lot of distraction going
on with a big corporate merger

we saw a significant decline in formants
So what you see here is starting in two

thousand and six the blue line is what the
industry tracked if you set them both to

the same point to index their average unit
volumes to one hundred starting in two

thousand and six the blue line is what the
quick service industry did quick service

which is the McDonald's the.

Includes Pizza Hut's all the fast
food chains you think are Q.S.

are and then what Arby's paua performed
during that same period of time and

you saw that it was a tremendous decline
and even during we'll say was that part of

because the recession well if you compare
it to the industry armies did a lot worse

than that in fact it's hard to
find a brand or restaurant brand.

That did any worse relatively during
that time period than Arby's and what

that did was take its average unit volumes
down challenge the economics greatly and

get to a point where our Windies decided
that they had to do something about that

and what they decided to do was sell
because if you frankly I got tired of

answering the question I have an answer
question during the endless calls around

yeah that's great but what about our bees
so they decided to sell our bodies to

a private equity firm private equity
firm is work Capital Partners which is

capital manager rather which is based here
in Atlanta right down the street actually

they hire some people from
Georgia Tech they specialize in

franchise of all multi-unit brands
a lot of those being restaurants but

not all restaurants and they saw an
opportunity in this and said it by taking

it private by focusing on the brand
again by bringing in new management

by investing capital back in the business
they said there's an opportunity for

this to be a great business again and so

they bought that about four years ago and
then two years into about

eighteen months into it brought me on so
that's kind of the situation so

the question is not how we have them
what how we try to address this what's

the approach that I in the management team
of taken on trying to turn the business in

the brand around and
I kind of distill it down into really

answering in addressing I call almost the
five most important questions and business

and because I think as a senior team and
as particularly is the C.E.O.

if you are clear around the the answer
to these questions over the right

answer these questions but

if you're clear about these answers
questions and drive these through this is

a great way of approaching I think
getting a business back on track and

keeping it on track so what are the first
question is why do we exist.

I think it's really important for a brand
and for a company to be clear on what its

purpose is there is a great book and
a great TED Talk.

How many of you heard Simon Sinek talk on
start with why I think it's a wonderful

book you don't even really need to read
the book just Google Simon Senate starts

with why in the eighteen minutes it's
a second most watched Ted talk I think

still ever talks about
why it's important for

any organization to be clear on its
purpose both from the fact that consumers

like to do business with brands that
have a higher order purpose even if they

can't necessarily articulate what that
is they can sense what that is and

certainly team members like to be part
employees like to work for his ations and

companies that are clear on their purpose
hopefully it's a purpose that they can

align around and when you're clear on that
purpose everything else everything else

should fall out of that and
align with that purpose statement and

it needs to be something I believe
in a lot of people say vision

mission you call it whatever you call I
like to call it purpose statement because

there's always this big debate
around missions versus visions and

those kind of things so
fine which is called Purpose and

not even have to have a debate but
it should be something that survives for

a long period of time should
be relatively lofty and

in fact when you come up with
a purpose for the first time it should

generate a little bit of an eye roll
it should but it shouldn't be so

ridiculous that people can't see it going
so we went through this process the mantra

team and said What would be the purpose of
our bodies and we look back spent time and

try to rooted in the past not
make it up completely new and

we came up with a statement.

On our purpose is to inspire smiles
through delicious experiences and

we every word in this matter and what we
were trying to convey first and foremost I

go backwards is I wanted to really
get it right as mine around the fact.

That we are in the experience business but

we're not in the food service
business yes we serve food right but

ultimately that is the means to
an end the means to an experience and

if you think about the fact that if you're
in the service business every service

business really should think about
your the experience business

your facilitating experience whether
that be straight up nourishment and

feeding somebody when they're hungry
whether that be the experience that our

food may actually facilitate when you
take it back home with your family or

being aware of the fact that people
are always coming everybody has

a back story right when somebody walks
into that restaurant it comes a drive

through they're coming from somewhere
going to somewhere and having that empathy

in thinking about that fact the number of
letters that I get around the fact that I

was having this horrible day I was coming
in the hospital and my wife you know

having to visit my wife in the hospital
and I went into your restaurant and they

just had a smile on their face and they
gave me a hot water speech sandwich or

a hot curly fries and
I felt so much better right

that is an exciting business to be and in
so really raised that delicious is a word

that's been part of the brand for a really
long period of time and so that sets a bar

it's not just about experiences about
delicious experiences and everything we do

need to be able to held up to that bar
both literally and figuratively and

then inspiring smiles is kind of
ultimately the law of the of course if

you're in the experience business what was
your objective be to inspire a smile and

in fact my what I would like to be is if
we're successful long term you can even

drop the external issues experience at
some point say are our purposes fire smile

Disney has one of the best
purposes of ever her does and

I know Disney's mission statement vision
same a purpose to make people happy

that's a great that's a great you know
I mean who wouldn't want to work for

a company of any that you know their their
their goal is to make people happy so

once you answer that
the second question is what

are our beliefs right so what or so we're
here here's why we exist what are our

beliefs that's another way of saying
what are about as our company baddies.

Values are really important in a company
in there really extremely important

a franchise system because what they do
is they set the guardrails right there in

the movable way that we work and
I think it's important for

values of a company to be not just
the human being kind of words right

honesty integrity and that's great but you
wouldn't want to hire anybody who wasn't

honest or didn't have integrity I think
it's good to go beyond that and have to

work that actually define you I was lucky
that Arby's had had the set of values for

a little over a decade but
they stopped talking about them and so

we really we invigorated that and they're
great values think about it dream big work

hard get it done play fair have fun and
make a difference great values in

what we do is make those come to life and
we have we tell stories around that and

we celebrate people that are examples
of those values in people that actually

aren't you know work out of those values
there are consequences to that but

that really sets what I
company in a brand is this may

sound like a bunch of soft stuff it
is kind of soft in many ways but

it's really the glue that holds
it together and it's amazing and

a business particularly
with seventy one thousand

front line often part time people that
they really people want to work for

a company that has strong values
people want to be part of that and

actually we talk in terms of that and
it really defines what we do.

So now it gets a little bit harder in that
you know this starts a little soft and

we get a lot so the third is OK so

fine we know what we're about we
know what our beliefs are OK fine so

where we go what is our strategy and
so we embarked upon an exercise

to really define you know in a very
classic fact this is a slide of a B.C.G.

deck could have been a slide McKinsey
back at work for both and you know of.

Find what our strategy is and what does
that mean what is the space that we're

going to play and what's the competitive
space that we should be playing in

where is there white space where do we
have a right to play as a brand based upon

our history and our capabilities which by
the way I also believe strategy based on

capabilities is is incredibly important
lot of people who side of that

if you can make sure that it's
rooted in your capabilities.

That are differentiated and so we went
out there and to find that space and did

it in a very big you know there's a binder
like any other strategy with lots and

lots of data behind it.

Now and that's a great thing
to do the challenge is

while only about ten people will
take the time to read that and

can understand that So the big challenge
is once you come up with a strategy

assuming it's the correct one how do you
actually start driving that through and

communicate that and so
before you this I what we were so

what we've done is we've come up
with some names around that so

the first thing we did is really define
clearly the competitive space and

the challenge that Arby's has had in
the past is it's always been not this and

not that it's kind of been a tweener thing
right so it's not burger it's really not

traditional fast food you know it really
kind of says you had it own space but

it was a people talk about it like
we're not this we're not that so

instead of doing that why don't we
actually come up with what we are and so

we said we're going to follow We're going
to play between Take us our space and

fast casual how many people you
know fast casual would be is

the trendy restaurants that are starting
it's still a very small segment but

it would be the Chipotle lazed and
the willies and fire house and

you know so it's a little bit
of an industry made up term but

anyway it's kind of the upper
end of Q.O.S. are and

we said we're going to we're going
to occupy that ideal space but.

Tween the two and
we're going to make up our own name for

it because why not instead of saying
where in between we're going so

we are we came up with this
name called Fast crafted and

in fact kind of stole a little bit
of a line from Starwood very sternly

made up the term lifestyle hotel we now
use lifestyle hotel like it is what it

is he actually just made that up because
he said I'm coming up with a new category

I'm going to call it what I want to
call it so he called lifestyle hotel and

so we kind of cheated and did our own
version of that but the way that we when

we defined how we went we're
going to win versus the Titian or

the McDonald's of the world if
you will buy superior food and

we're going to have superior service and
we're going to win versus

the Firehouse Subs of the world because
we have comparable food it's going to be

priced just below it and it's going to be
more convenient more community because we

have more locations and we have drive
through is fact very few fast casual have

drive through is right you have
to get out you have to go in so

it's not as convenient as it could be and
if we do that we're actually going to win

we're going to play on both sides now
playing on both sides is a very for

those that have spent a lot
of time in strategy and for

the press in the room that
it can be a dangerous

if done poorly that is a really bad thing
to do you have to actually execute that be

very clear exactly how you're
going to differentiate here and

exactly going to for to here or
you can't you can't fail right so

that you know we're very conscious of that
and we'll talk about that so great so

we do that and we have this great B.C.G.
strategy document so

what we do next and what we decide to do
is I want to paint a picture literally

paint a picture of what this looked and
felt like and

because in a franchise system
particularly I can't just say

this is what we're going to go do in make
everybody go do it right we can do that

for a third of our system but
we have over four hundred franchisees

with thirty two hundred twenty
two hundred franchise units.

That I need to get on board and so how do
you get them on board cinema big B.C.G.

deck that doesn't work I can tell you I've
tried that before so what you could do is

paint a picture and come up with terms and
so we came with a term called our whole

vision which is if we are successful
as a brand this is what our bodies

will look and feel like not literally but
just kind of paint a picture and

we call it deli inspired delicious saying
that we're not trying to be a deli we're

going to take our inspiration from Delhi's
because what do what we think of Delhi's

in the great delis not the public's delis
with a great delis you think of high

quality proteins you think of sandwiches
put together in a way that you wouldn't

easily make it home with unique
ingredients you think of you know

a neighborhood type of feel you think
of Create think of creativity and

so we said what does that look like and
we actually created a book and

I had a firm that's done this for
me before Hilton that actually created

a series of pictures this is what
the buildings could look like if you're

thinking Delhi inspired delicious This
is Qana what you would think about

that we went out and toured a lot of Delhi
particularly in New York and went and

took a lot of pictures as inspiration if
you think about the food it's not in these

rappers with bunch of
logos all over it and

it but it's actually wrapped up and
it's the cut this kind of food.

And so.

We did that and got a line around it and
it spent about three or four months.

At least four months just getting
a line around that vision

because once everybody was bought in
the vision the thought would be it's a lot

easier to go through the executional
steps of your advice kind of bought in

with where you're trying to go.

So the fourth question then that
brings us to four QUESTION OK fine

that's where we're going.

Our we going to get there right so
what are the steps to get there and

if this if our path our destination
the mountain we're going to take what if

you want to call it is that
deli inspired delicious and

we're going to be there
in five to six years.

How are we going to get there and so you
go through this process of lat everything

needs a ladder up to that so if you see
right here at the top we have our purposes

in the middle our brand vision our values
and then the next thing not surprising

is the thing is Who are your customers
right so if you if we're in here and there

be to see business you can't go very long
without talking about your customers and

so we went through a process of being
very clear on who not only our current

customers are but who our target customers
are and we went through a process in

in everybody says well I feel like
to start with demographics and

talk about customers in terms of how
male are they how female What's their

how is their ethnicity and
in a mass business

like fast food that's not the you can't
look at it that way because you serve

you serve a lot of different types of
people what we did is we decided to take

a very psychic graphic approach to it and
so we went in and said What are the who

are the people that like the type
of food that we serve and

like the vision of Delhi inspired
delicious and what are their belief system

right what do they do what we have who
are they are what are they as a person and

how many of them are there and
then we flip that back around and

said OK based upon that water their
demographics and we came up with a view of

there was a much broader potential
customer base for the brand

than anybody would have ever thought if
we just started with a pure demographic

segmentation looking at who
our current customers and

let's go find more people
that look like that.

Because by the way if we had done
that our current customer base was

older wider more male and you

know not necessarily not representative of
where the country is certainly go in and

where the fast food population
is growing so we did that and

then out of that we've made very clear
about what our brand promises are voice.

Our guest experience and I will go through
this in detail but really laid it out in

very clear detail everything
laddering up to not surprising our

purpose statement of and
really communicated that.

And then the last question is OK That's
fine if we've laid all this out and

we know where we're going this is
the step that a lot of people forget but

I think it's probably the most important
one is what is each person's role

in the journey you can also call the
divided by me function if you have seventy

one thousand people that you actually want
to deliver this deli inspired delicious

vision right well great that's fine but
what is everybody's individual role

in that and how do you think through
all the elements of the experience and

define it in such a way that everybody
knows what they're trying to do and so for

us we had to take this and it needed to
align around all the touch points what

does it mean for the product what
it means for the service experience

what it means for the actual
physical plants in the buildings and

what in service what does it mean for
the marketing the message and

by the way I put the marketing
in the messaging last purpose

because a lot of times you know brand
guys me included like to start with you

know get really fast the advertising and

go straight to I'm doing it you
know turning around a brand so

what's the new ad campaign right well
the new ad campaign is important but

it only works my belief is that the new
ad campaign actually supports and

tells the story that is a story
that people want to be part of

you can put a new ad campaign on a product
that nobody wants and you might get

a little bit of a pop in sales but it's
not going to fundamentally change it so so

I'll just take you
through a little that So

what we did is really crease
the pace of innovation and

stop talking about roast beef it said
look if people want to we have great

roast beef it's a great recipe probably we
have people that you know Arkham credibly

loyal to that product but you know what
if you want to roast beef sandwiches.

Fast food format where you going
artists do we need it to you know so

do we want to if we want to bring in other
people we need innovate around that and so

we came up with products that we
actually built off of proteins and

that we had in the restaurants but put it
together in interesting ways that tell

an interesting story and really jump
started that and you can see we started

with a few two thousand and fourteen we
had great we have so many prospects there

were now all the way out into two thousand
and sixteen because we've gotten so

focused we've changed the whole process
around product development we've changed

our whole market research approach
to who we talk to that it's really

really sparking some very interesting
great products that are certainly very

differentiated we went through and change
the whole in-store experience the menu

the packaging all those kind of things
which actually are not the easiest things

that we did all this before we
launched our new marketing campaign.

And we also wanted to focus on
the in-store experience and

I'll pause here for
a minute because this is perhaps one of

the most important
things that we're doing.

Is the service culture it's a challenge in
the fast food environment or any kind of

service environment we're dealing with as
many people in a high turnover environment

of the seventy one thousand people
that work for us the majority of them

are part time majority of them
are actually working temporarily in fact

the average tenure restaurant employee
on the front line is six months.

And so you have part time high
turnover and people that are not

entirely gauging the brand I mean
it's a job I'm going to be here for

six months or so do I really care right so
how do you get people engaged in so

we said how do you get the message out and
so we contest against Dole a little bit of

a playbook out of Starbucks camp and
modified it a little bit.

So you may remember several years ago when
Howard took Starbucks back over again

he did a little bit of a stunt part
stunt part reality where he shut all.

All the restaurants down for
an entire day.

And retrain everybody
on how to be a barista.

And you know it served a real purpose
which he did really retrain everybody and

was a cultural reboot but
it also was a nice little P.R.

move in Starbucks being Starbucks they
could afford to shut the whole brand down

for an entire day so we decided to kind of
do the kind of gentler version of that and

we did it on a rolling basis but

we invested in every team in every
team member in every restaurant for

half a day taking them out of
the restaurant offsite and

bringing them to all chefs and go through
a lot of what I'm just talking about here

take them through what the brand is
trying to be why the brand vision is

the purpose statement what we're trying
to be who our target customer is and

then also went through an exercise
a personal goal setting

the divided by me function taking them
through the what are you trying to get by

the way you're here for however long you
hear what is what is what are you trying

to get out of being part of Arby's
which by the way if you think about

the type of team member that works for
us a lot of them come from environments

where they've never been taught how to do
personal Never never been asked actually

think about what your goals are personal
and business wise and then we take and

then the last step is they go back out and
reengage in the community

either through charity or
through canvassing the the public and so

we did this in a period of two months
we took twenty one thousand people

through this exercise and then we have now
had another fifty seven thousand people go

through this this year we're going
to do it again next year and

it was a way of getting everybody we also
changed our hiring process as our training

process everything to
align with this vision and

we really saw you know we
really saw a change and

in people's pride we also uses
the opportunity to Kohl we told the team

members by the way this is the we told the
General Managers this is the opportunity

that if there are people that are
currently working for you that you know.

Are not going to be able to deliver
this this is kind of the opportunity for

them to kind of move on and go work at
McDonald's or whatever they want to do and

so we also use that opportunity and it
really has changed a lot of the services

and then finally the restaurants this is
always the this is the we're not funny

funny will be the marquee next to finally
the restaurant this is the part that's

hard it's a bricks and mortar business
hotels are bricks and mortar business and

one of the frustrating things about
a brick and mortar business is you just

can't wave your hand and
change all the buildings at one time.

So we in an Arby's has some good buildings
and they have some challenge buildings

shall we say the one on spring state down
here was a challenge building and and

hopefully we're working to get a new
one not too far from from here but

so we had to think about that how do
we actually create a design a new

design that works with a wide variety of
buildings which makes economic sense for

our owners and actually aligns with
the brand and so we went through the whole

process and we've come up with
a whole new building design

by the way this building right
there became that building.

Through a remodel probably looks like
a completely different building and

we can apply that design to us and
this is the interior.

Of and it looks like it actually
looks surprisingly like that

whole picture that we put very beginning
around the vision for the interior and

it's just an example of people latching on
to that in finding out a way to do that

it's finding out a way to do that in
a cost effective environ we don't have

unlimited budget these are fast
food outlets so we can't go and

spend ridiculous amounts of money so
we had to value engineer this down and

find a way that actually works and

makes economic sense and it does these are
generating fifteen percent sales increases

when when we go with the new
building design versus the old.

Generating over twenty percent
return on investment for capital so

makes a tremendous amount
of sense economically and

we're seeing a lot of traction in
it we also are going for we come

up with new building designs let us going
to urban locations for the first time very

small footprints will we're looking for
sites in Manhattan for the first time in

a long time we're going to be in downtown
Atlanta at the corner of Marietta and

Peachtree in a very urban location in
the base of a building by the mid in

the next year very small footprints
which completely changes the whole.

Potential growth proposition of the brand.

Finally it brings me to
the marketing are so

that's great you're doing
all these wonderful things.

You need to go tell the story in
Arby's I don't know what your opinion of

Arby's previous marketing different than
you know current but previous marketing is

I had a very poor opinion of it myself in
fact they kept changing the tagline every

couple of years there's a slide that was
put together by our ad agency if you go

back in two thousand and two we changed
our tagline to every two years for

that period of time so obviously if you're
like if you're a customer on the outside

you don't even you don't even know what
Arby's is trying to say about itself so

we decided to go through in the line
with our deli inspired to Lucius we can

harden ad agency and we said we want you
to tell the story and what and we and

most importantly we want you to tell it
because in the in the personality that

Arby's wants to be we want to
be authentic it is what it is

we're going to tell you what we're going
to show you we want to be very transparent

we want to you know have a little
bit of humor about it but

at the end of the day we're not
trying to distract you sometimes

marketing particularly fast food market is
a little bit of a sleight of hand exercise

if you think about right there doing all
these things and open the way his sandwich

Don't look at it too long right so
there's you know the little bit they're

trying to distract you about it WORKS AS
want to come straight at it and

so we came up with this whole
they came up with this as.

This called you know we have the meat

because the issue is we have
high quality proteins and

really do much the same they can see
you know very high quality proteins.

And and a lot of a lot more than than
roast beef a lot of we have a lot of high

quality proteins people just don't
know what they want to believe it so

what do you do about that surprise
surprise when we just tell people in fact

the montra the ad agency I love it is so
what you sell

is that simple particular you sell good
product you know sell a good product and

I guess you can't use that approach but
and and so.

I will show you first.

And I know how many people have seen one
ad agencies come in they'll generally

do the brand manifest sort of everybody
aligned this is not a commercial but

just care about it kind of aligned
around what you're trying to be so

I'll show you that brand manifesto for.

Takes out a clear vision
it's all say here we go

it.

Was me

and.

Me.

So it was going to stay with
us on our commercial but it.

But it takes out a clear position I
think it's important to take me for

a brand like Arby's that stake
out a position of who you are and

most importantly who your target audience
is not you can probably guess your target

audience is not by watching those but
that's OK.

Because we've done the math and our target
audience is bigger than the other one so.

And so that's kind of the out
of that came you know a set and

I'll just show you a quick set of
commercials that they kind of show you and

you'll see that we've tried to
differentiate ourselves again by being

very clean crisp very open and
honest about our

product.

And

there's one more.

OK so you can see and it set out you
know a clear view of what we are and

it's really I think got
people's attention.

I was going to so we've had some real wins
in social media we in that that has come

from us saying that social media is very
important creating a dedicated social

media organization and
also empowering our team to speak for

the brand we had a number of successes for

else hat was one where we actually sent a
tweet about frills had during the Grammys

that until Ellen's tweet at
the Oscars was the most reach we did

tweet in history and and
really got us back on the map

in fact by the way that the gift keeps
giving because we also bought the hat for

charity in the Hat is going to be on the
Grammys and it's part of the Grammys again

this year which is kind of nice for us but
we really try to just be authentic So

we also got a lot of buzz around this ad
we did for Pepsi and for some reason won't

play here but you'll play the minute I
think it's because there's price something

in the system here that won't allow
a Georgia Tech ad for Pepsi play.

The story here is that Arby's is a Pepsi
company it has been has to be for

a while contractually won't
get into the details on that.

But we were supposed to show Pepsi
twice a year in ads I didn't know that

I wasn't really wanting to do that
anyway and but they called us and

said By the way you have not met your
obligation you need to show a Pepsi and

this was in November and.

Most I don't know how to do that and so
he had the ad agency say why don't you put

together an ad that you know
show me what you got so

they came up with this which I said when I
saw it said if Pepsi says OK which I can't

believe they'll say OK go ahead and do it
because it will get a lot of buzz and so

I don't know if you can
show them you to be.

But it just shows how we're
trying to have fun and be

authentic.

So that you had three million
views before it even aired.

Wall Street Journal
just rated as the tenth

the whole story around it in
the buzz around it as the tenth.

Biggest marketing story of
two thousand and fourteen.

You know one of the big marking stories
put in perspective was the potential

merger between publicists and.

On the other ad agency so
I mean it's a calm so it was fun.

So I'll kind of wrap up we've
had some great success and

I want to show this is I'm running a
little long here net net because I want to

open up a Q. and A net net results so
far I'm happy so

I take that same chart and
go back to two thousand and ten so

where that last chart left
off in re index the industry.

Average unit volumes and hours together to
one hundred and start in two thousand and

ten you see the red line that we have
outperformed what I get very excited about

is what's been happening recently and

that kink in the line actually
corresponds actually perfectly

with where we started really implementing
the new strategy even pretty

the marketing the marketing didn't start
until right here but it just shows that

you know it looks like what we're doing
is working the financial results are also

private equity firms happy as that way and
we continue to make progress so early.

Signs are a success so hopefully that
gives you a bit of an overview of what

we're trying to do and
open up for any questions.

And I know I did run I guess a few
minutes long and I apologize for that.

Of the of thank.

You.

Want to know more about your product
development and if there are any specific

programs you used in developing
some of the new sandwiches or

methods for coming up with new things
yeah I mean the method starts with

your being again Once you're clear on
the vision we have a call on every team so

we actually have corporate chefs that will
come up with you know a potential almost

a thousand different combinations of
different things around certain platforms

like we need to do this with beverages we
want to sandwiches going to the sides and

so they'll try lots of different types of
combinations and then kind of filter that

down through certain processes to
a subset that we then take and

put in front of consumers and so we have
our version of focus groups so we recruit.

Consumers that look like our target and
it is like a focus we bring them in there

sitting at desks and we describe the
sandwich them put a price point to it and

actually serve them each of these
sandwiches one by one in a very controlled

environment they rate all those sandwiches
and out of that will come a very small

subset of that that kind of ranks of
the top we're also now taking an approach

to that we want to look for food that
is going to broaden the base two and

so sometimes we were always take the
highest rated one but we'll take the one

that seems to bring in a new customer
base versus just switch people around

because sometimes you can say you know
you'll do is bring in somebody instead

of eating this when they go we need this
when you want to bring in new Then we put

it through an operational test because
one thing about this this business is we.

We have thirty four hundred restaurants so

therefore thirty four hundred
manufacturing plants and so

you actually have to be able to.

Go through the supply chain and
make millions of these things every

time you do it you know we serve six
hundred million meals a year right so

it's a high volume you have to make
sure you can actually produce this and

produce this quality and then if it passes
that test will go through a full market

test will actually put the product in
a market and then turn on advertising and

see what it does to that business
versus control markets and

then finally if it passes
that test will go into

you know become part of the menu or become
a promotional item so it's actually a long

process you can shorten the front end
it's kind of hard to shorten the back end

particular if you're making big bets
on marketing so it can generally be.

You want to be about a year out if
possible because you really would like to

be doing a market test for a product
in the same season that you're actually

going to launch it because some people
might want to heavy steak sandwich in

the winter but they would might not want
to eat out as much in the summer if you're

testing it in the summer you may not get a
very good read for what it would actually

do in the winter so you really want to
be thoughtful around that window so

that's the you know
the process of the show.

My question is in the past marketing
campaigns has there ever been

I guess like an idea that or
a factor that you thought was a mistake or

the east there are we
should not have done.

Where do I start.

All before I got there of course
no I think the challenge with.

I think the challenge of the previous
Arby's campaigns is it actually

talked about everything other
than the food it really went

in tried to tell these funny
cute entertaining stories.

That didn't.

Necessarily selling thing and I learned
this I had an opportunity to Expedia to

work directly for Barry Diller and I don't
know if you know Barry Diller just a great

entrepreneur an amazing marketer actually
responsible for the Simpsons actually

he was the one who's President Fox who
actually took the risk and put sanctions

on the first time and he told me about
advertising he said The one thing to keep

in mind is that advertising needs to be
entertaining because you want to capture

people's attention but ultimately the
objective of an ad is to sell something.

And you can create something that is
incredibly entertaining but if people

can't remember the product it doesn't sell
something then it's a miserable failures

and that and I think that is you
know where a lot of the ads fell

down I think a lot of ads fall down
today fact I was reading at age.

And they were talk about the most
successful ad campaigns of last year and

you look at it most of them you look at
line it up with the company's results and

you're like how could that have been
a successful ad campaign the company.

Sales didn't grow and so what's this I
think there's still a disconnect between.

The talking about the ads do
you have something ready for

the Super Bowl it would be nice for.

You showed today for
which one for the Super Bowl.

No we don't.

We're not I don't think you'll see us on
the Super Bowl anytime soon given that.

Even though maybe you know we found
I don't know if we actually get

any real success on social media too I
think what if anything maybe we'll get

some get something going on there but
we're not going to put it out on.

The Super Bowl shows so
much money it really is.

And I question whether that's really

valuable in fact Go Daddy right was
always the big advertiser right.

There almost bankrupt so

I'm not really sure that really
helped them out that much.

As see like how many people
do you directly work with and

I can you decide think what task.

Yeah so I have six direct reports in there

what you would think C.M.O.
head of operations C.F.O.

general counsel people officer and
you know and I have an executive committee

which is made up of of those people
another couple of individuals and

we meet in spend time once once a once a
week going through key business issues and

keeping on touch and then I do
a series of one on ones with them and

talk on a weekly basis and and then
what I dig into does change depending on

the focus so early on I was really digging
into the strategy side of it then I

got really focused on the marketing side
of it because we had to get that right and

then I've turned a lot of my
attention to the service side and

getting the service culture and then I've
spent a ton of time on the building and

I've gone back to service culture and
now I'm spending a lot of time on

the development side around how we
actually sell more franchises and

getting And so my focus will shift
with what the priority focuses but

I think a good learning for a C.E.O.

and where to spend your time and I heard
a great P.R. person speak on this and

one of the biggest thing it took away from
it is always think about spending your

time on something where there is leverage
to that activity not where there's a one

to one cause an effect right so
if you're spending your time.

Where you're trying to say you're in
a selling position right so you go out and

help sell an account that's great but
all you've done is help sell that account

if you spent a lot of time defining it in
designing and working with head of H.R.

to design an incentive system right and
you roll that incentive system out that

has a huge impact on anybody who is
touched by that incentive system right so

you really should be if you
spend your time on strategy

right if you implement a strategy it has
a big impact on the entire organization so

that doesn't mean you don't go and
spend time with individual counts and

the accounts but it is a good way of
thinking about prioritizing your time and

it's really helped me
think about that is spent.

Time on things that the end result of
that will have a multiplicative effect

a multiplier effect on the entire
business not just a one to one.

Implication business.

Yes Can you comment on.

Your application to see
the social media data.

The importance do you see.

The display of the application or

the social media data already data yeah
I mean it is unbelievably important so

the first one of the first things that we
did was put in the monitoring capability

right so you can actually see any
conversation that's going on about R.V.'s

that obviously can be monitored and
then dedicated team to that.

And so
we have it plugged into the process so

I have team that twenty four hours a day.

You know maybe a few hours in
the middle of the night or sleeping but

are monitoring anything going on and
it's routed real time to anybody who can

do something about it right so if it Chris
our head of P.R. is here he knows right if

it has an implication on how the brand
is being perceived we're on that

immediately it has a service implication
it is rooted immediately to our customer

service desk and then it starts and then
they handle it as if a call came in and

so the way I think social media to
look at it is first and foremost

you need to look at it as a channel of
communication you know like any other

channel of communication right when it
comes to the customer service side of it.

And so if somebody tweets about something
or somebody says something up a Facebook

it's we handle it no differently than
if somebody picked up the phone and

called or wrote a letter and we deal with
it as quickly as we possibly can and

we have rules around how
we we deal with that.

And then the other thing we do is social
media that's work so far is that we don't.

We use it to magnify conversations we do.

Don't use it to start conversations and
I think a lot of brands make mistakes

to where they try to be the one to start
the conversation about something and

that generally comes across as you
know like right where if you can

see a conversation going you can magnify
the threat tweets a great example so

Josh Martin our social media guy was
sitting at home he was actually feeding

a bottle to his baby watching the Grammys
because that's his role because one

of the things or social media guys do is
watch key events and monitor them and

you know for all came up with that
ridiculous looking hat and people or

you know talking about it obviously on
Twitter and then we and they noticed on

our Facebook page that a few people were
posting on our Facebook page going hey rbs

what are going to do about this looks
like he's still in your hat and.

So he put the two and two together and
sent out the tweet that said hey for

Elle we want our hat back and
why that worked this because

it was there he saw there was already
a conversation going on about it so

he knew he wasn't just out there taking a
complete flyer and then it was rbs coming

up with some that it was stupid it was
actually something that other people and

it magnified that conversation right and
we've taken that approach all the way

through and I think that's why we've had
one could argue more social media wins

than any out certainly any other brand our
size this year because every one of them

has been magnifying
a conversation of trying to start.

With your company being so
I'm over here your company so

you know from Lights Yeah because it's one
third corporate in two thirds franchise

you're rolling out all these changes what
are the challenges that that you kind of

face with I assume are there differences
in the way that you rolled out and

one of the challenges that are kind of.

The franchise system yeah OK.

You know I've worked in Francis's and
for most of my career so.

I think it's important what's helped us is
that we do own a third of the restaurants

because we can lead from the front.

Because the majority of my P. and L.

comes from those own restaurants
not the franchise fees so

I care desperately around whether
the restaurants make money and

so we don't do things in the restaurants
that don't make restaurants money and so

therefore that aligns us a bit
with with the franchisees and

then also lets us prove it so the remodels
we did thirty of those this year

with our own money to
prove the concept and

we are we have all the numbers and we walk
the talk and now they are able to embrace

that because they see it we're very
transparent about the numbers which show

that the new formats I talk
about we've built them first.

With our own money into a flyer on it and
so I think that's really really important

you know Wall Street will have various
attitudes around restaurant companies and

what percentage franchise versus
what percentage own they can be and

you could debate that to your blue on
the face people love to holy that one

hundred percent owned by people or same
Burger Kings doing a wonderful strategy

they just want a hundred percent franchise
and there's everything in between I think

it just depends on your point in time but
certainly right now trying to turn

around a brand that is one hundred percent
franchise is really really hard to do

because you can't you can't leave from.

It To.

Firstly I think.

About all the changes that you made doing
increase the morale of the employees

what did and does Did you fear the gods to
demand is going to negotiate who are these

ten years in a well known hunting
the brand and the entire company and

secondly as a SEAL What do you think
is the best way to get things done and

if she does wants a baby now.

So first thing is I was very fortunate
majority the brand management team

was great there was an obstacle.

An individual that I was aware was
an obstacle was a very senior guy

would've been a direct report of mine and
he was an obstacle for

a number of reasons but
most importantly was a cultural obstacle.

I could tell very very quickly in fact
even before I started that he would not

he would not be an embodiment of what we
were trying to create from a culture and

actually be an impediment and
so I took a very quick and

decisive move and let him go within
two weeks of my arrival C.E.O..

And sent a very strong signal to.

You know the entire system that this
is not the way that we were going to do

things that I listened to feedback from
everywhere about this individual and

said I'm not going to sit around spending
a lot of time on this were done and

there were a couple of
other people that work for

that individual that had that same
kind of issue Done done done and

clear that out very quickly and you know
because you have to take a decisive move

because if they the people are looking for
a key leader particular C.E.O. is is.

Basically hypocrisy on this is is you
say one thing you don't do it right or

you say this culture things that important
but you let this guy continue to act and

behave that way so I sent that
signal the rest of the team was

completely aligned around it in the great
thing about the company is the culture was

built a lot on the foundations that were
already there so so it was a little bit of

an embracing it and people really it was
actually not that hard the way you cascade

that through as you get the buy in of your
senior team in the next one down in down.

So.

Then on the C.E.O. question how I manage
sorry I've got to go on the culture

thing and get excited about this guy go.

Yeah it starts with a clear vision and
then

I have a set of strategic priorities with
it didn't go through and then said it.

Initiatives behind each one of those
strategic priorities and then so

every we actually go through
a killer goals cascading process and

so every single person in
the company starting with me and

then my direct all the way down to the
very front line individuals have all of

their objectives line up to our overall
strategic priorities and so it starts with

having your senior team feel like they
own those and be part of that and driving

through and then you drive you know you
create that real clarity around that but

the goals cascading processes
are really important.

And so on I have kind of an odd P.R.

question what's John Stewart in
The Daily Show forgive the pun

with Arby's I mean you see the yeah it is
negative or at least it keeps the name

guys Jon Stewart picks on us right now I
mean you know I will say before I go into

that the David Letterman loves us and
Jimmy Fallon loves us.

Jimmy Fallon last night said
something incredibly important

positive about us right there
talk about Forbes I think listed

hundred through that innovations of two
thousand and fourteen in the meat mountain

which I didn't spend time on was one of
them and Jimmy Fallon said no it's not one

of them is the most the best food
innovation of two thousand and fourteen.

You know it's funny Jon Stewart does
make fun of us I think he does it for

a couple of reasons one.

We are still a bit of a metaphor for
war middle America.

Brand and and and
he likes to pick on middle America and

all definitions of the word
Middle America and so and and and

and Arby's too was you know a bit of
a punching bag for good reason and

so there is that we have from a P.R.
standpoint.

Cater to him and I in fact we've catered
his crew a couple of times right.

But at least four times we send and
then actually his crew will treat and

say this is great we love our babies
to the point where recently when he

you know bad mouses he says I
don't know why I'm doing the.

Because they're really nice guys and you
know we saying that because we are nice

guys and we feed them we would actually
stop feeding him because I think that

if we had become positive reinforcement
you know why but every time he said

something bad they got a free lunch and so
we decided let's stop giving them so but

you know why it's part of the conversation
and it's real between you and

me it will become useful
at a certain point in time.

And.

You know there will be a point in time
that his that we will use this to our

advantage but you know like I said we
don't force things we're patient sit and

wait.

In the meantime sales are looking like
that so you know they can talk about us

all he wants to as long as cells
are looking like that but you know.

So as a successful C.E.O. yourself what do
you think is the most important now she

beautiful a good leader like
absolutely the most important one.

I I actually think.

It's a hard one and
I had to pick one where I'd say empathy.

Because you know in empathy and
all were well always at that

because what you have to do is get
people excited Well first you have to

empathize with their customers you have to
understand what they're trying to do and

if you really understand what their
core behaviors what motivates

their behaviors and I think therefore
understanding them and empathizing with

them gets you to a point of understanding
where you should be going but

ultimately what you do you need to get
a lot of people aligned and moving and

motivated and going in a certain way in
the best way to do that is actually again

understand why you think you know why are
they there right people work ultimately

for themselves and I I mean they don't
work for a company they're there for

themselves right you have your own
personal set of objectives and so

if you're a leader you kind
of understanding that and

understanding why and
trying to tap into that and.

In you know is I think a very
useful skill set and I do think

that the amount of time I spent
working companies I was a head of a.

I was a direct report of a C.E.O.
for two different companies for

you know acumen of eight years for example
I think it's helped me empathize for

what it's like to be a division
head of any company and

I think that's help me manage
them a bit better too because I

understand the trials and tribulations
that they're going through but

I don't know I mean I think if I
had one word that would be it.

I'm the last question for
today many of the students have

entrepreneurial mindset and
are building entrepreneurial capacity and

capabilities they want to own their own
businesses is a franchise with R.B.S.

or a geographic location to you
develop a series of restaurants

a viable entrepreneurial strategy for
students and

what is the process by which one would
appear to be franchising is a great you

know to be a franchisee of anything I'm
not going to do an Arby's commercial but

to be a franchisee of anything is if you
like to be in business for yourself.

And but at the same time also
like to have the support

structure of a broader organization that's
a great thing in fact if you talk to

franchisees of any Weatherby Hilton or
whether it be Arby's it's a bunch of

entrepreneurs going I mean they are really
you know have that same drive and

entrepreneurial spirit that any one of
you would actually you know feel tap into

I think the downside of being a franchisee
of any brand is you do have rules and

there are boundaries right so if you're
the kind of individuals I want to be in

business myself because I want to do
whatever the heck I want to do and

I'm into inventing new things and doing
things new ways then being a franchise

is probably not the right thing for
you while you run your own business you

do have to do it a certain way and you do
have to adhere to certain rules so I feel.

That you need to think through that but
there are a lot of people that have that

entrepreneurial I want to start and
run my own business and being control but

I don't actually want to have to go
through the creative process and

come up with a new idea and
do it all by myself so it's a mixture.

Thank you very much for
coming Polly greatly appreciate it thanks.