When he first bought his Hardee’s restaurants, franchisee Jack Kemp of Phase Three Star, now with 80 locations, told the story of how two weeks after he closed on the acquisition of the restaurants, he got a call that their biscuit maker at their highest volume location had called in sick—and it was 5:00 a.m.
Kemp said he rushed to the restaurant and “I just started making biscuits. I was head down making biscuits.” The restaurant got through the morning rush, and later in the day the district manager introduced Kemp to the store manager for the first time as the new owner.
The manager “had a wave of relief wash over her face,” recalled Kemp. “She said, ‘Oh, thank God. I thought he was the new biscuit maker, and I was really worried.’”
Of course, fast forward to 2020, and he had to manage the crisis of covid: When he learned that he and his team had to work around varying degrees of municipal and state mandated shutdowns over three Southeastern states, tracking that ever-changing information became onerous, to say the least.
“So we eventually just had to kind of give up on that tracking and go just to drive-thru. Let's mask everyone up, and just kind of make those higher-level decisions because the tactical tracking was getting overwhelming,” he said.
“You know, the first couple of weeks of the pandemic were touch and go,” said Dan Holland, EVP for the Cadence Bank, and the head of their restaurant group, who was also interviewed during the episode. “And Jack really pivoted to this off-premise model: Not just the drive-thru, it's curbside, it's utilizing the third-party delivery companies more regularly. We're at Def Con One, right? So, Jack reacted very, very quickly to the changes that were taking place daily. That in and of itself, and his ability to basically reposition his operating model, so to speak, that was huge to manage through this.”
Sales dipped 45 precent right away, and some vendors were calling in immediate payments for projects not yet finished. Cadence Bank, among other vendors, understood the situation and “You know, a lot of lenders, I’d venture to say almost all lenders, allowed folks to go to an interest-only mode for a little bit, but Cadence also allowed us to preserve cash in our operating entity and not pay rent to our real estate entity because they knew us well. And they knew that we had cash reserves in the real estate entity… they trusted us that we were going to continue to make those payments. Those are things that can only happen when you have the right partners.”
Plus, he said trusting the other stakeholders in the business was key, too.
The franchisor got them the products they needed to do business when supply chain issues got untenable—remember toilet paper?—and store-level managers, who were closest to the community, were the leads on when dining rooms should open back up for their stores when covid waned.
He did say there was a silver lining: That covid accelerated their response to trends like third-party delivery, digital engagements with customers and labor shortages.
“The challenges are still there, but the operators, our restaurant clients, are so much better prepared today,” said Holland. “They were initially, but all the changes that they implemented are so relevant today because of this lingering effect of the pandemic and COVID, that's going to probably be with us for a while. But they're not having to make those same adjustments that they did early on in the pandemic.”
The Good Companies podcast sponsored by Cadence Bank is available for listening at https://www.audible.com/pd/I-Will-Survive-COVID-19-and-Crisis-Management-Podcast/B09T2R8X8C?pf_rd_p=625c212d-b95a-47db-8d56-d35a359de6e9&pf_rd_r=B3NGWDDN6Z80WNTZENPE&ref=a_pd_Podcas_c3_lAsin_0_2