Don Fox is chief executive officer of Firehouse of America, where he leads the strategic growth of Firehouse Subs, one of America’s leading fast casual restaurant brands. Under his leadership, the brand has grown to more than 700 restaurants in 36 states and Puerto Rico, and it is recognized as one of the best franchises in the country. Don sits on various boards of influence in the restaurant community, and he is a respected speaker, commentator and published author. He was recognized by Nation’s Restaurant News as 2011’s Operator of the Year. In 2013, he received the prestigious Silver Plate Award from the International Food Manufacturers Association (IFMA), and he was recognized by FastCasual.com as the No.1 Executive in the fast casual restaurant community.
What was the greatest challenge for restaurants in 2013? How did they overcome it?
Two significant factors have challenged the restaurant industry ever since the Great Recession: declining household incomes and low levels of consumer confidence. These two factors have suppressed restaurant usage, holding back a full-blown recovery for the industry. 2013 presented a greater challenge than the preceding post-recession years, due to the end of the payroll tax holiday, which only steepened the decline in household income. To overcome this, restaurants had to clarify their value position and better communicate the benefits associated with their brand. In some cases, this meant reinforcing the key strengths they carried into 2013. For others, it meant refining brand positions to keep pace with changing consumer expectations. If I could sum it up on one word: Successful brands in 2013 were relevant.
How will the Affordable Care Act continue to affect the industry in the coming year?
The one-year delay in the employer mandate was viewed as a blessing by some. But this may backfire on operators who do not take advantage of 2014 to fully implement the business practices it will take to successfully manage the ACA regulations commencing in 2015. If you don't have your plan in place on January 1, 2014, you are in a dangerous position.
Restaurant companies will assess the pluses and minuses of "play or pay” and adopt the practices that they feel are best for their business. But the most critical impact I believe the ACA will have on the restaurant industry is the effect on the consumer. Millions of Americans are going to be spending much more of their hard-earned money to cover the increased cost of insurance (not to mention the increased cost of their actual medical expenses). My concern is that the net effect on the industry of these diverted dollars … dollars that could be used for dining away from home … may be a much greater burden for us to deal with than the costs associated with the implementation of the law for our industry.
What’s your best advice for restaurant owners and managers in 2014?
Never forget that your business lives or dies based upon the customer's willingness to walk through your doors and order your food. Treat every guest as though the life of your business depends upon it … because it does. And remember: To do that, you need great, motivated, well-trained employees. Without them, you will never deliver a superior guest experience.
More and more restaurants are investing in technology to boost their business. What is the most important piece of technology in which you think restaurants should invest in 2014?
Given the variety of service models and cuisines, it is impossible to name a single piece of technology that is the best one for all brands to pursue. My advice would be to ensure that the technology you are considering is, above all else, intended to enhance the customer experience. Some of the technology currently being pitched is met with indifference on the part of the consumer; we are sometimes trying to force a customer down a certain road for our convenience, not theirs. And if your efforts don't pass that litmus test, you are probably better off redirecting your efforts.
What trends do you think will have the biggest impact on the restaurant business in the coming year, and what trends will have the biggest impact on Firehouse?
The consumer is placing more importance on the quality, taste and flavor of food than ever before. These attributes recently rose to the No. 1 ranking for relative importance, and I believe this will continue to be the case in 2014. Brands that can meet and exceed their guest's expectations in this area will continue to thrive. This has been a sweet spot for Firehouse Subs and a key factor behind our success. With that in mind, we feel we are in a solid position heading into 2014.
Another important trend is that we seem to have reached a point where the consumer is doing more than just talking about health and wellness. The obesity epidemic is real, and the consumer is placing greater emphasis on this area in their daily lives. The restaurant industry, while fully supportive of consumer choice, should also realize that we have a lot to gain from a healthier population. Having my customers live a longer, healthier life also means the potential for more business! With this in mind, Firehouse Subs has some very exciting initiatives in the works for 2014 that will meet the needs of all of our customers, without a single compromise in terms of the taste, flavor and heartiness of our food. I cannot wait to get these products into the hands of our guests!
Last but not least is the economic situation our country faces, which is driven in large part by the impact of government regulation, taxation and other policies. While not an industry trend, these elements are indeed a trend that needs to be reversed. Unless our government adopts logical, pro-growth policies, coupled with sensible decreases in regulation that lower the cost of doing business, our industry (and obviously, the nation itself) will not reach its true potential. Operators within our industry should not lose sight of the fact that, through your involvement in advocacy, you can make a difference. Through whatever means you can, get involved. If you are not sure how, the National Restaurant Association is a superb resource that can help point you in the right direction.
This interview first appeared in the 2013 Best Of Edition of the Restaurant SmartBrief.