Q&A with Kelly Roddy of Schlotzsky's

Q&A with Kelly Roddy of Schlotzsky's

Food & Drink

Q&A with Kelly Roddy of Schlotzsky's

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Kelly Roddy was named president of Schlotzsky’s in December of 2007, the same month the ‘great recession’ began. Since taking the helm of the sandwich chain, Roddy has led the company to strong financial results through strategic changes and strong marketing. Prior to Schlotzsky’s, Roddy was with H-E-B Grocery Company, a 102-year old retailer with more than 300 locations throughout Texas and Mexico. Roddy also worked in business development for Scholastic Corporation, the national book publisher and he also spent eight years with Wal-Mart stores. He currently serves on several boards including Baylor University’s Marketing board, Hankamer School of Business board and the Caritas board.

PROFILE:
Name: Kelly Roddy
Title: President of Schlotzsky’s
Concept, headquarters location: Austin, TX
Check Averages: $9-$10
Number of Units: 360+
States: 35 states 7 Countries
Newest Ventures: Brand re-invention. New proto type and Cinnabon Co-Branding
Hometown: Ada, OK
First Restaurant Job: Schlotzsky’s is my first job in the restaurant industry however I have worked with food in the grocery business for years. I started in retail as a bicycle assembler for Wal-Mart at the age of 14.
Favorite TV, movie, music: Who has time for TV? I do however love the nostalgia and the time period and props etc. of Mad Men. I have an odd sense of humor so I think The Office is a hoot.
Favorite part of the job: I especially enjoy working with our franchise partners and helping them reach their goals and be successful.
Career Highlights: Now is the highlight of my career. I am part of a great organization with great people serving great food to the most loyal customers.
Best Advice Ever Received: I was given this advice from Drayton McClane (Owner of the Houston Astros) years ago. Dare to dream — it’s free. Operate out of your imagination not your memory — your memory contains failures. Seek adversity — the lines are shorter. Walk with elephants — they really shake things up when they walk around, or in other words, surround yourself with great people who are movers and shakers.
Best Advice Ever Given: Make decisions with integrity. Don’t do anything that would keep you from sleeping well at night.
Favorite Book: Anything Motivational. As far as fiction goes, I still love the classics like To Kill a Mockingbird.
Hobbies: I started flying and earned my pilot’s license many years ago. I have always loved to fly.
Personal: Married, 3 kids

You joined Schlotzsky’s in December of 2007, just as the “great recession” started. How did you deal with the poor economic conditions as you tried to move the concept forward?
We made the decision to Zig when everyone else Zagged. At that time, many companies were setting up a defensive position, trying to brace themselves for the recession. We have charged full speed ahead on a major brand reinvention. We worked on our company culture, strengthened our business model with the advent of Cinnabon Express, we launched a new brand position, ‘Lotz Better’, and redesigned all of our packaging and launched more aggressive marketing. We also developed a new prototype and we put in place a very aggressive development plan to grow the company. Instead of focusing on the poor economy, we focused on what we could do to provide more value to our guests by moving to a table delivery model. We have done all of this and had positive comps for 2007 through 2010 so far. Some have said to me that I should walk before I run. I say to them, see you in the rearview mirror.

What have been the biggest challenges that you have faced during your time with the brand?
We have been in a constant state of change since 2007. Change is difficult for some but we have made it part of our culture. Everyone now understands that if we are not in a constant state of evolution then we will become extinct.

How optimistic are you for 2011 and 2012?
I am very optimistic for Schlotzsky’s. We have great strategies in place that are working and we will work those strategies hard. When executed at a high level these strategies will carry us through 2011 and 2012. We have a strong growth strategy in place, which will set us up with between 600 and 700 locations by 2015. While I am not comfortable with the current economy, I do feel confident that Schlotzsky’s is in a position to succeed regardless of the climate.

Your career has been in a variety of retail businesses. How has that helped your stewardship at Schlotzsky’s?
I have been extremely fortunate to work for some very successful companies like H-E-B® Grocery Company and Wal-Mart. During those years, I learned a lot about how to think big and to do things the right way. I also had the opportunity to be mentored by some of the top leaders in the country.

Schlotzsky’s Original Sandwich

What is your marketing philosophy at Schlotzsky’s?
We are not in the ‘low price’ game. We are in the ‘provide a great value’ game. We have a high quality, fresh from scratch product and have improved the customer experience so much with very little if any price increase. We have considerably improved the value proposition at Schlotzsky’s and we market a great product and a great experience. We will leave the price wars to those who are selling gut-buster food.

You recently rolled out some new sandwiches in your Route 66 line? What else is coming up on your menu?
Our Route 66 promotion has been a blast. We have tied in some fun online games and we are giving away a 2011 Camaro to a lucky customer this fall. We have stretched this promotion over the summer and fall and featured six really unique sandwiches. We’ve been really pleased with the response from both our franchise partners and our guests about those sandwiches. I’m also really excited about some additions we have coming soon. There’s a phenomenal new steak sandwich that will rock your world. We are also working on some new pizzas and salads that I think will be a big hit.

How involved do you get with menu R&D?
We have a really talented executive chef. He inspires us with lots of really creative recipes. I really like to be hands-on when it comes to R&D. I like to be highly involved in the process, everything from ideation of recipe development to tastings to testing in our restaurants. I feel like I have a good grasp on what our guests enjoy and want to make sure I’m involved from start to finish. We also involve our franchise advisory council and test, test, test before we roll to our customers.

What were the steps you took as you rebranded Schlotzsky’s?
At the start of the process, I spent six months visiting more than 300 of our restaurants across the country. I met in person with as many franchise partners as I could to learn exactly what they were looking for on a personal level, for their own businesses, and on a system level. It was a top priority to understand exactly what was needed across the system. I learned that if something didn’t make sense to our franchise partners, then we are not going to do it. We put a strategy in place that attacked every part of our business to make it better. We started with making our culture stronger, then the business model, then marketing, then the prototype and finally an aggressive growth strategy. We worked on one or more at a time and it is all now coming together to make a Lotz Better Schlotzsky’s.

What are the plans for the 40th anniversary?
You know, I’m not sure how much customers care about someone’s 40th anniversary. I assume they think, ‘40th anniversary, who cares, I just want my great Schlotzsky’s sandwich, pizza, salad, etc.’ That’s okay. We’re going to celebrate anyway. I don’t want to give away too much here, but there are a lot of exciting things planned for 2011. I’m very proud of the fact that Schlotzsky’s has been around for 40 years and we’re going to throw a great party and celebrate our brand all year long.

What have been the positives for Schlotzsky’s in the recession?
We have had so many positives during this time. We have touched and improved every part of our business. I am proud to say that we have improved our business model in a time when other company’s business models have gotten weaker due to higher costs and less consumer spending. Just as important, we’ve had positive comp sales when many of our competitors have not. That says a lot about the quality of our franchise system and the strength of the brand. We were also able to spend a lot of valuable time working on our re-image and updating the Schlotzsky’s brand. The acceptance of all of this change has exceeded my expectations.

How will you grow Schlotzsky’s going forward?
When we started researching our brand and developing our current ‘Lotz Better’ look and feel, we created a brand filter. When it comes to a decision about the future of the brand, we put it through the ‘Lotz Better’ brand filter. This is how it works. You put an idea, process, product, etc. through the filter. If it is not truly ‘Lotz Better’ than the way we do it, the way our competitors do it, then that idea or item goes back to the drawing board until it comes out of the filter ‘Lotz Better.’ This includes everything from store interiors, to location sites, to menu items, to packaging, to marketing materials and so much more. If it’s not ‘Lotz Better,’ then it’s not good enough. By applying that filter, we’re searching for only the very best franchise partners, the very best restaurant sites, the very best trade areas, and so on. To ensure successful growth, it’s important we be selective and only choose the best of the best moving forward.

How much co-branding with other concepts do you think makes sense for Schlotzsky’s?
We are only developing new Schlotzsky’s with co-brands. It has really strengthened our business model. Our partnership with a great national brand like Cinnabon has had such a positive impact. Cinnabon and Schlotzsky’s complement each other very well and adding Cinnabon to our restaurants has really helped contribute to our growth. We also have some co-brands with iconic Carvel Ice Cream that have been successful. In light of how successful co-branding has been for Schlotzsky’s, I would be open to expanding that as long as it makes sense for us.

Which markets that your restaurants are in are doing well in this tough economy?
Our core markets in the central part of the country, as well as many of our west coast markets are faring very well.

What are your priorities and goals for 2011?
My number one priority is to stay focused on continual improvement of the business model. We will not be successful unless our franchise partners are successful. In 2011, we want to continue moving forward on our strategic development plan by incorporating the Cinnabon co-branding offering into all of our locations. We will also continue to introduce our remodel look in markets all over the country.

What has been the biggest surprise about getting so involved in the restaurant industry?
There are more similarities than differences in retail and restaurants. The biggest surprise is a pleasant one. There are so many passionate entrepreneurs working for the benefit of the system and the industry.

How does your brand use social media?
We find social media to be a very valuable tool. We have an active presence on both Facebook and Twitter and we monitor these sites for direct feedback from our guests. We interact with them, take comments and suggestions from them and it’s important to maintain that relationship because it’s a direct connection between us, and our most devoted guests.

How will your company deal with the federal healthcare legislation?
We will comply with all laws and direction in the healthcare legislation. The key will be to educate our franchise partners of all of the changes.

What other legislative threats concern you at this juncture?
I am very concerned about card check or other legislation that could jeopardize the way our small business owners conduct business.

How much traveling do you do for Schlotzsky’s?
I travel a lot and I consider it to be an important part of my job. My philosophy is that my time is much better spent being out with our franchise partners and customers, as opposed to sitting in meetings all day.

What do you consider your biggest success to date at Schlotzsky’s?
Schlotzsky’s is a terrific brand, and will always be a great brand. This brand just needed honest, courageous and strong leadership. I feel like I have been able to assemble and build a very strong team and we have been able to provide honest, courageous leadership, which in turn is making our system stronger. A stronger system will improve the lives of our franchise partners each day. I take great pride in that.

Do you see credit loosening up at all for franchisees?
We are seeing our franchise partners have success in finding the necessary financing, but things are still very tight.

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