Posthumous Lessons For Surviving The Unthinkable

Strategy
Credit: Courtesy of Texas Roadhouse

Kent Taylor was turned down more than 80 times by would-be investors when he sought funding in the early ’90s for his new venture, Texas Roadhouse. But the Louisville native and former college track star refused to give up on his dream of an “affordable, Texas-style” restaurant, and finally raised $300,000 in startup capital from three doctors in Kentucky. He went on to grow the chain to more than 600 locations in 49 states with revenues of $2.8 billion and a market cap of $6.5 billion.

Known for his humor, empathy and a unique brand of servant leadership, Taylor was beloved by employees, or “Roadies,” as Taylor coined them. Tragically, following a bout with Covid, Taylor suffered from debilitating symptoms post-illness, including severe tinnitus, which his family described as “unbearable” in his final days, and on March 18th, he took his own life.

His autobiography, Made From Scratch: most creative, if not roguish, store managers,” whom he frequently consulted for opinions on new and innovative ways to operate.

“I had little idea then,” writes Taylor, “how many completely mad, certifiable, batshit wacky ideas we were going to need to survive what was to come.”

“Learning to Pivot”

Since we had stores in Taiwan, the Philippines, and Korea that had already been affected, I reached out to Hugh Carroll, our head of international, to learn how the coronavirus had been pretty well contained in those countries. Taiwan, for instance, is just 110 miles from the Chinese mainland. They have twenty-four million people (more than the entire New York City metropolitan area) crammed into an island barely larger than an IKEA store, yet they had just five hundred Covid-19 cases and only seven deaths during the spring of 2020. Amazing.

Having learned lessons from the SARS outbreak of 2003, Taiwan had responded quickly to minimize cases, something quite different from what was happening at the time in China and Italy. Early on, Taiwan put in place travel restrictions, did aggressive testing and screening, quarantined the affected, and demanded strict social distancing and personal protective equipment from citizens. The question was, what could we learn from their example in our restaurants?

We decided to order massive amounts of gloves, masks, and temperature monitors for our people. That would not be a popular decision. “You’ll freak out our guests if we wear gloves and masks,” was a frequent pushback. I didn’t mind swimming upstream and was prepared to require our people to wear the stuff, as I believed that soon we’d be freaking out many of our guests if we weren’t wearing safety gear.

Equally pressing to the care of our Roadies and guests was figuring out how to move our operations from inside dining to to-go. How could we move the party to our parking lots? Doubling or even tripling our curbside business to about $20,000 a week per store would be a monumental task, and I didn’t have the answers. I made a note to call more of my crazies that evening, as I knew many would be figuring things out and we needed to learn from them.

The early years of Texas Roadhouse had been mostly about survival. Back then, I was stressed out and a total mess most days, as we barely covered payroll—with me accumulating my paychecks in a drawer since there wasn’t enough money in our account to cover them. With this crisis I was stressed, yes, but I’d been through so much that I was now firm with my hunches. I needed to be quick and decisive about charging forward.

We had always said we were a “people company that just happened to sell steaks.” Well, I was going to live that maxim now. Priority one was going to be figuring out a way to pay our people and keep them working (selling steaks). Then, with so little food left in grocery stores, priority two was going to be feeding America (steaks). We’d also throw in some salads, potatoes, and a side of love.

That Saturday, our leadership team held the first of many weekend crisis conference calls. Knowing that you-know-what was about to hit the fan, I sent out a note that all stores should send people out that very Saturday afternoon to their local restaurant supply store and buy up all the to-go supplies they could get their hands on. Everything they had. I’d have been okay if they hit up back-alley, black-market Styrofoam peddlers if it came to it ( joke, people; chill). By Monday all the to-go supplies would be gone. I was guessing that by the following weekend inside dining would not exist in the United States.

It was obvious that some thought the boss was overreacting. Most of our stores were still open, after all. But that wouldn’t last. Within seven days, all but a handful of our restaurants were closed to inside sales, and after another week we were one hundred percent curbside. When that happened, Nation’s Restaurant News predicted that dining rooms were going to be shut down for two weeks. Yeah, right.

That evening I cruised around Louisville, visited a few grocery stores, and saw what was happening to America. It was nuts. There were absolutely no paper products. There was no pet food, no meat. Forget about hand sanitizer or Clorox wipes.

Another idea began to brew, but I let it percolate as it seemed too crazy, even for the crazies. Based on what had already gone down in Asia and Europe, I felt two weeks of citizen lockdown was not going to cut it. We’d be looking at a minimum of six. And, frankly, since most of us Americans get freaked out about wearing gloves, masks, and safety glasses in public—and no one in government would try that hard to enforce the new rules—I figured it would be closer to two to three months before we got through this. Why politicians from either party can’t learn from other countries’ successes and failures is beyond me; I’ve spent my whole career learning from others’ successes and mistakes.

Monday, March 16, we set up in a larger control room for social distancing—at least six feet apart—with about twelve of us coordinating efforts. Using bullhorns and signal flags to communicate with each other (it felt like), we set about the monumental task of moving from 93 percent inside dining to nothing but curbside. And yet, to complicate matters, a few states had a transition period where we could do 50 percent inside occupancy for a while. In those stores, we were trying to ramp up curbside sales, but had nowhere to locate the expanded to-go operations inside the restaurant.

In the control room, the various cable news channels blared the latest updates while we created to-go iPads for outside orders, designed to-go banners and flyers, found more to-go supplies and gloves. We then calculated how to sell dispensed iced tea and brainstormed how to get the word out via social media about our various new promotions (as you may recall, we don’t do major media advertising). A debate raged for some time on whether to ditch our famous peanuts or put them in a bag (the bag won).

I drew up a diagram for a double drive-through, which worked for a few days as volume spiked. Eventually most of our stores ran with a curbside to-go model.

After a few calls with market partners, it was clear that our to-go sales were being hampered by kitchen constraints and other logistics issues. Our stores just weren’t designed to cook, package, and sell to people driving up in their cars. I removed myself from our control room and its many distractions—especially the constant media barrage, hysteria, and drone of talking heads—and locked myself in my office to dial up my crazies.

One of my favorite crazies is Greg Beckel, our market partner in North Carolina. His market partners had been selling Family Packs for some time—a collection of four steaks/chicken/ribs, two sides, and rolls for a kick-ass price. I called Greg, listened, and asked him to flip his 15-store market right away to to-go and family packs and then be prepared to show the rest of us how it should be done. He was all in.

“I had worked for Bennigan’s for seven years prior to Texas Roadhouse and it was miserable going to work every day,” said Beckel. “Whenever you asked for anything, the answer was always, ‘It’s not in our budget.’ With Roadhouse, the answer is, ‘Yes. What’s the question?’

“When the virus started, it was the most depressing thing I’ve been through. I literally had a store do $18,000 that first week, 80 percent negative sales. Kent called and we talked about how we could adapt. He asked, ‘What do you think about this or that?’ He wants to learn but he also wants to influence.

“We’d had success with Family Packs in the past, so we created six of them starting at $19.99 to feed a family of four. Kent always wants to provide this incredible meal that you take home because there’s a crazy amount of food. The next big deal he wanted me to try was this ready-to-grill thing. He says, ‘Let’s sell raw steaks.’ We argued about price; it was lower than I wanted to charge, and we agreed somewhere in the middle. He wanted me to call two of my crazies and give it a shot that weekend. We marketed it just with social media, and hell if those two stores didn’t make more selling refrigerated raw steaks in one day than my other stores did all week. The next thing you know, my whole market was doing ready-to-grill. Those are the kinds of things he encourages, outside-the-box thinking in the most difficult times. And the crazier the idea, the more excited he gets.”

Next I called Steve Miller, a market partner in Denver, because I knew he’d be “flying like an eagle.” He was selling drive-up $5 sliders in an adjacent parking lot. Steve was doing decent sales. ‘Amen, brother,’ I said. I filled him in on Greg’s Family Pack idea and asked him to give that a shot, too.

Next up was Neal Niklaus, one of our five regional market partners, who oversees more than 125 restaurants. I said, ‘What’s up? What kinda crazy shit are your folks up to?’ Don’t let the formal, professional tone throw you, I’m typically much more casual than that. Neal told me the out-there stuff his folks were doing, and I told him about the things I’d been hearing from the other crazies. He agreed to incorporate them. ‘We’re on it,”’he said.

With our management team focused on bank financing, messaging, procuring to-go supplies, developing capacity plans, sanitizing stores, and worrying about how to equitably reduce hours for our workforce, I felt it was important for me to communicate my thoughts at the moment to our Roadies. The world was changing fast and what I said one week might be obsolete the next, but they still needed to hear regular messages of hope.

On Wednesday, Travis Doster, our VP of communications, started working the politicians. He sent out pictures I’d taken of empty grocery shelves to every local official, state officials, and a few senators and congressmen we knew to let them know that we were here, staffed up, stocked up with supplies, and ready to feed America safely. We wanted them to give us a chance to help, and not shut down our to-go, curbside business.

That day I also sent a plane we rented to North Carolina to fetch home a group of our Bubba’s 33 trainers who had been stranded in Gastonia, North Carolina, training staff at a new location. Flying commercial was beginning to freak people out, and our trainers, their parents, and our headquarters staff had been trying to figure out how to get them safely back to their homes in Texas and Colorado. The picture of relief they sent me when they landed was worth a thousand words.

What normally would have been a three-month to six-month test for a new store became a three-day cram session, but hey: Crisis times call for crisis training.

The weekend coming would be a full-on push to let family meals fly. Late on the night of Thursday, March 19, I sent out a motivational video to all our folks and included the song “America” by Lee Greenwood. My group of secret rule breakers got a message with Prince’s “Let’s Go Crazy.”

By the weekend, new crazies were signing up. A farmers market that sprang up in the parking lot at one of our stores crushed it. The fresh meat ready-to-grill idea for his area had come from Hilliard, Ohio, thanks to new crazy rising star, managing partner Tonya Bosher.

When I called back, I learned some of the other innovative ideas Tonya had implemented in her store—from Taco Saturdays to the Golden Roadie awards—which were, I quickly realized, reasons her people stepped up for her in such a big way during the pandemic.

That week I sat in on a call with many of the major restaurant chains’ CEOs. The bulk of the discussion was about putting together a request for the federal government to set aside a portion of the upcoming business-loan package to assist chain restaurants in staying afloat during the crisis and provide assistance to employees. When they asked, I told them how many employees we had, but that I wasn’t interested in taking taxpayer money. We were already working on our own employee stimulus package that would roll out the following week for our hourly folks—many of whom weren’t working as many hours a

s they had before the pandemic. That slowdown in hours wouldn’t last too long, but it was affecting them in the pocketbook right now and we needed to help our own.

By March 22, we locked down our financing from JPMorgan and prepared to roll out millions in extra bonus money to our frontline employees. We were two weeks into the crisis, and there were glimmers of good news: Our people were going to get some more money in the bank, we were geared up to sell to-go and Family Packs, and crazies all around the system were trying anything and everything to find a way to save this company they loved.

Excerpted from Made From Scratch. Copyright © 2021 by Kent Taylor. Reprinted by permission of Simon & Schuster, Inc. All rights reserved.

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