Paul Brown’s Balancing Act at Inspire Brands

The deal with Buffalo Wild Wings is done, and now Paul Brown has begun his balancing act at the helm at Inspire Brands.

Inspire Brands, the new multi-concept operator encompassing Arby’s, Buffalo Wild Wings and R Taco, is now one of the largest owner-operators of restaurants out there with 1,700 company restaurants and 4,600 locations when including franchise operations. Global sales in 2017 across the brands topped $7.6 billion.

Brown, who oversaw the masterful turnaround of Arby’s, said the multi-brand strategy is something he and Roark founder and managing partner Neal Aronson had been talking about.

"Neal and I had been talking about this for a couple years around a few things: the timing and dynamics in the restaurant industry. Things that weren’t important five years ago are now important today to be competitive, whether it’s delivery or technology," Brown told sister publication The Restaurant Finance Monitor. "In order to make those investments having a scale business is important."

This strategic body is something Brown certainly looked at back in his McKinsey days, and something he saw firsthand in the hotel industry when he was a president in the Hilton system.

"This is where my experience in the hotel industry will prove a little helpful. This is quite a bit more similar to how hotel companies have sorted out where you have very distinct brands, very complimentary brands that span a broad price or occasion spectrum. Sharing capabilities where it makes sense, but making sure they each remain distinct brands," said Brown. "The trick is that balance, if you go too far and share everything it can lead to the dilution of the integrity of the brands."

Activists especially have been calling for focus, eschewing multi-brand setups and company operations, which Brown says Inspire will maintain. Lucky for Brown (and R Taco), he doesn’t have to deal with activists for the time being. He said it’s time for strong multi-brand organizations, not just because of the consolidation phase of the cycle, but because of all the new challenges.

"I think it’s less about the cycle and more to do with the evolution of the industry itself. If you look at the restaurant industry and compare it to other sectors out there, it’s not the most fragmented, but it is one of the most fragmented $600 billion industries in existence," said Brown. "So there is a lot of focus around the need to make some pretty substantial investments in infrastructure to remain competitive and be competitive in the future. Those two things together generally can lead to some consolidation. The big question is obviously how quickly and what the right type of consolidation is."

One of the benefits of Inspire’s network of brands is they have scale, but they also have room to grow. That will hold true on any future investments from the company.

"We do like brands that are distinct and established with still some growth opportunity in front of them, large but not so large that they’ve maxed out their opportunity to expand," said Brown. "Arby’s could be twice as large in the U.S., not to mention international. Same with Buffalo Wild Wings—a lot of room for growth domestically and outside of the U.S. but established. There’s a lot of potential companies that fit that description."

Beyond that, Brown said he doesn’t have specific metrics around what those future acquisitions might be.

"They don’t all have to be in the same segment, it’s not wrong, all the rest of the companies have generally picked a segment to play in. But we think there is an opportunity to think a little more broadly," said Brown.

For the next several months, he’ll be working closely with the Buffalo Wild Wings team and "bringing some of the approach we took with the Arby’s business to the Buffalo Wild Wings brand as well. Obviously the answers will be different but the approach will be fairly similar," said Brown.

He highlighted two big areas of wisdom within the two segments Inspire now touches that he thinks will be especially helpful across the organization.

"Various brands may be at different stages of things. The classic example is because takeout and delivery and digital ordering is more important now for causal dining than it is with a drive-thru. So Buffalo Wild Wings is a couple years ahead of Arby’s in those areas and Arby’s will learn firsthand," said Brown. "And if you look at QSR, it’s a much more product development business. We think we can bring some of those leanings to Buffalo Wild Wings."

As for future plans, there’s not a playbook etched in stone. He said that’s what’s great about working with a financial sponsor like Roark, which is known for long-term investments instead of the alternative pump-and-dump private equity play.

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