VOL. 129 | NO. 81 | Friday, April 25, 2014
Memphis Remains Key for Back Yard Burgers Turnaround
By Andy Meek
More than a year after coming out of bankruptcy protection, Nashville-based Back Yard Burgers is a different restaurant company – one that enjoyed a 10.6 percent increase in same-store sales in the first quarter as well as 12 straight months of increased revenue.
Nashville-based Back Yard Burgers is a different restaurant company after coming out of bankruptcy protection. The chain, which says Memphis is a key market, enjoyed a 10.6 percent increase in same-store sales in the first quarter.
CEO David McDougall, who joined the company in January 2013 to help set a new direction for the brand, said Memphis is not only a core market for the company. 2014 will be about building on improvements started in 2013, and from there Back Yard Burgers will set its sights on growth again, and “I personally see Memphis as a market where I would be willing” to invest in growth, McDougall said.
McDougall, leading a turnaround that also includes the company’s chief marketing officer Monte Jump, spoke about the chain’s turnaround, which has focused on a few areas of improvement. The leadership has paid particular attention to unit-level economics, better franchise relations and a return to the chain’s roots in terms of food quality and product mix.
Doing that has involved developing a new brand architecture and stabilizing the company’s support team, as well as adding new items like hand-dipped banana milk shakes and the Chipotle Burger.
McDougall met with Lattimore Michael, the brand’s founder, visited every franchisee and general manager, and embarked on a kind of listening tour at the company’s restaurants.
“One of the things we’d been faced with was that revenues were declining, expenses were increasing and we definitely had to get that ship righted,” McDougall said. “We’d been losing customers in many of our core markets, including Memphis, and I set out to try to understand why.”
One way he and the company’s CMO did that is by commissioning a third party to help with a brand architecture study.
“I felt it was critical to in a formal fashion get in front of our customers, and in Memphis and elsewhere try to figure out why people had stopped coming,” McDougall said. “The results were sobering, but they helped us formulate an effective strategic plan. And it’s been working. We’re seeing more customers in our restaurants, we’re definitely seeing better sales, and we’ve had 12 straight months of increasing revenue. And Memphis has really been one of our shining stars.”
The company has 15 restaurants in the Memphis area, fewer than before the bankruptcy. At roughly the same time the chain filed for bankruptcy in late 2012, it also closed about half a dozen locations in the Memphis area for underperformance.
The chain came out of bankruptcy protection in January 2013, and the judge closed the bankruptcy case in December.
Today, Memphis is basically a company-owned market for the chain. It owns and operates most of the stores here. And it’s also in the process of investing dollars back into its restaurants with painting, equipment replacement and the like.
Among other things the company has done, it put in place an incentive program for general managers to reward them for their monthly performance, driven by top-line sales and their store’s profit-and-loss statement.
McDougall said the company also reached out to the Greater Memphis Chamber after having not been actively involved with the organization “for quite some time.” The chamber met with the chain about ways it could get involved again, and McDougall said he cites that “as one of the things that’s been very helpful to us.”
“It’s very critical to the company’s future success that Memphis continues to be successful,” McDougall said. “You know, the hamburger space is a very crowded category in the food service industry. It does something like upwards of $75 billion in the U.S. There’s a lot of different versions of hamburgers, but the good news is people still love a good hamburger – and we rank right up there.
“This last year and this year has been all about getting the company back on proper footing and getting our revenue growing again. That had to start with baseline sales and going back to our roots. From there, it’s about setting our sights on growing again.”