Web Exclusive: Farm Aid
Chairman and CEO Steven A. Davis builds on Bob Evans’ home-style roots.
By David Farkas, Senior Editor -- Chain Leader, 5/1/2007
Steven A. Davis, chairman and CEO of Columbus, Ohio-based Bob Evans Farms, talked to Chain Leader in May about how he is turning around Bob Evans restaurants (See Cover Story: Home-Style Hero). In this Web exclusive, he elaborates on where the company went wrong and how he plans to revive the aging brand by playing up a “home of home-style” positioning.
On why Bob Evans restaurants are not growing:
Here’s why we slowed down. We have 208 restaurants in Ohio. If we are to become a growth company, we have to learn how to expand outside of Ohio. Sure, there’s a fill-in opportunity here or there. But certainly you won’t see us growing by 25 to 30 restaurants a year.
We started cannibalizing and not getting adequate return on investment. So we have slowed down growth considerably and put the emphasis back on growing same-store sales. Any model you have must look out 10 to20 years, and you have to see same-store sales going up to make the numbers.
[The problem] was self-inflicted. We weren’t growing sales. We went on a path of aggressive discounting. That brought plenty of customers in, but it didn’t do much for the P&L. It was that and unclear positioning.
On new products:
We challenged the marketing group to get back to our [original] positioning: “home of home-style.” We also came up with the mantra “the Bob Evans twist.”
I had the chance to visit the Bob Evans museum [the Homestead Museum] in Gallipolis [Ohio]. What impressed me were the TV commercials that [founder] Bob Evans made. He said it was food made on a farm by a farmer. That spoke to authenticity. Bob talked about his sausage sandwich. I was impressed by this.
One challenge we gave the ad agency was, “OK, if Bob is in the kitchen making things up, what would he do?” So now every time we’re around the table someone says, “What is the twist?” Every new product has to have the Bob Evans twist. That really brings home-style to life.
The twist on our stir-fry is Bob Evans smoked sausage and shrimp. Who else has great smoked sausage? Let’s not just bring back spaghetti, let’s put a Bob Evans twist in it—smoked sausage. You can taste the difference.
Where there is opportunity:
For a concept with this many units, you’d think the restaurant footprint would be pretty consistent. But you’d be amazed at the number of permutations among the 591 restaurants. When you ask why so many, you don’t get a good answer. Somebody always tried to do something different. It wasn’t because, “Hey, Steve, I’ve got a heavy carryout business here. Or I have a heavy dinner business.”
One thing I learned quickly in QSR is that if you want to make unit economics work, you don’t make little changes that customers won’t give you credit for because you take your cost up. That’s one thing Yum taught you: Here’s the building and here’s the design. They pushed that really hard.
On management structure:
One major structural change was to put real estate, development and construction under the chief financial officer.
Having worked with franchisees, I know they have to go to a bank and put together a business case to get a loan to finance their restaurant. I’m not sure how allocation decisions were made in the past, but I said [CFO Don Radkoski] is your banker, and you have to act like you’re a franchisee and have to compete with other people for capital. The money will be invested where it gets the best return.
On why he kept the same management:
I approach every situation differently. In my career, there have been times I have built a team from scratch, times I’ve taken people from jobs and brought them into another position, and times when I leave people in place and they rise to the occasion.
I’ve got to tell you, I was shocked and amazed how quickly [the team] came together. People got around Brand Builders [Davis’s five-point strategy to improve sales, margins and return on invested capital] in the first 90 days. I expected it to take six to nine months.
To read more about how Chairman and CEO Steven A. Davis is boosting momentum at Bob Evans restaurants, read Cover Story: Home-Style Hero.
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