Checkers
Rallies
by
Bob Andelman
This fast-food chain flips CEOs almost as fast as its burgers,yet
the three-year tenure of Dan Dorsch did infuse the demoralized
company with a fresh vision.Can the next in line expand on
that?.
EDITOR’s
NOTE: This profile was wrapped up, ready for
our June issue when Checkers announced on April 29 Dan Dorsch
now is ‘former’ CEO after an abrupt resignation.
Keith Sirois has since been named CEO and president. Modifications
have been made to reflect this. We presume no more changes
before this is published. Regardless, Checkers offers solid
lessons in untangling some knotty problems. So this is our
story and we’re sticking with it.
 |
| REVVED
UP Keith Sirois, newly named CEO, at the Indianapolis
Speedway, where Checkers and Rally’s restaurants
have begun a major sponsorship program. |
MY FRIEND
TOM HOWLAND WAS THE FIRST PERSON I knew who fell under the
Checkers spell. In 1986, when the chain’s first double
drive-in restaurant opened in downtown Clearwater, Tom was
working nearby in his family’s mathematics textbook
business. He told everyone he knew about this incredible
place selling 99-cent deluxe burgers, hot dogs, fries and
colas in a retro fast-food atmosphere with no dining room
and little overhead. Tom dragged all of us there, one by
one, over and over again.
Tom
couldn’t wait for Herb Brown’s brainchild to go
public. He read everything he could find about the Clearwater-based
company as it took its first baby steps into franchising.
One of the happiest days in his life was when he finally
bought stock in the company. A lot of true believers rode
Checkers Drive-In Restaurants Inc. (www.checkers.com), now
based in Tampa, to great heights and paper profits, but
many stayed with it too long, as the debt-laden company
saw its value plummet in the mid-’90s just as fast
as it once rose.
Even
as its balance sheet became an embarrassment approaching
bankruptcy, Checkers’ food continued delighting the
faithful. Under recently departed CEO Dan Dorsch, the chain’s
steadiest hand since founder Brown threw up his hands and
left in 1996, the brand’s value is once again leaving
the same meaty aftertaste as its burgers.
“We’re
recession-proof,” Dorsch said in an interview the week
before he abruptly – and without any announced reason
– resigned as CEO on April 29. Dorsch, who took the
leadership reins in December 1999, drove the company to
consecutive quarterly profits ever since, including the
first quarter of 2003. “When things get tough, people
come to Checkers. It’s an exciting company.”
Dorsch,
who once operated multiple franchises for KFC, Taco Bell
and ERA Real Estate and who still owns 25 local Papa John’s
Pizza outlets, shook up a depressed, lethargic corporate
culture at Checkers. “I tried to bring a culture that
would turn our workers on,” he said. “I told them,
‘You are the No. 1 thing in our company.’ People
do not wake up in the morning, look in the mirror and say,
‘I’m gonna’ screw up today.’ They say,
‘I want to make a difference and I hope somebody notices.’
That’s
what I demanded.” With profits rising and new franchise
sales on the upswing for the first time in years, the Dorsch
approach appeared to be working. Checkers’ stock sold
for $2.25 a share at YE 1999, when Dorsch took over. It
closed at $6.35 on April 28, the day before his announced
resignation, although a year ago it reached over $13 for
a brief spell.
“ANY
TIME YOU HAVE A TURNAROUND – and we had one of the
most dramatic – when restaurants are worn out and morale
is gone, it takes time to bring it back,” he said.
“This is a 24-hours-a-day, seven-days-a-week leadership
job. Our competitors wonder why our people are so happy.
We celebrate our wins every day and discipline the losses
quickly and get over them.”
The
Checkers franchise community, a long-challenged class, is
seeing value in their investment again. But, Dorsch said,
that will only continue if franchisees have the same principles
that the company does. There are currently 398 Checkers,
operating primarily in the Southeast, and 380 Rally’s,
operating with the same menus and themes but focusing primarily
in the Midwest. Two new franchise restaurants opened in
the first quarter, four more in April alone, with five more
franchise stores and four company-owned planned for the
balance of 2003.
On Dorsch’s
watch, the $179-million company partnered with the Tampa
Bay Buccaneers, St. Louis Rams, New Orleans Saints and Atlanta
Falcons. On May 7, the company signed a three-year deal
for Checkers/Rally’s to be the official burger of the
Brickyard 500 and the Indianapolis 500. The deal includes
putting Checkers/Rally’s on site at the Indianapolis
Speedway. It is the company’s first national sports
sponsorship. It also enjoyed its first-ever successful marketing
campaign, “You Gotta Eat,” which launched in January
2001 and entered its third phase in April.
“Our
campaign was intended to excite not only external customers
but our franchisees,” said Richard Turer, Checkers
vice president of marketing. “We had 16 markets advertising
on TV in early 2001. This year we’ll have nearly 45
markets on television. The ‘You Gotta Eat’ campaign
motivated franchisees through proven results. Our franchise
community embraced it. Unlike McDonalds and Burger King,
everything we do is local and co-op. If we don’t get
that vote of confidence, they may not participate. To have
45 markets versus 16 speaks volumes. It’s the highest
brand awareness we ever had.”
Not
that all is perfect in franchise land, though. In late March,
according to Restaurant Business magazine, Dorsch told analysts
that his franchisees have much work to do. Checkers
management has its eyes on the franchises, which are visited
by company inspectors at least four times a year. “We’re
getting continuous improvement,” Dorsch told the MADDUX
REPORT.
Yet
getting franchisees to march in lockstep with the company
isn’t easy; as an experienced fast-food franchisee
himself, nobody knows this better than Dorsch. “It’s
about leadership, culture and discipline,” Dorsch said.
“Everybody starts complaining and the easy thing is
to let them do what they want. That’s what happened
at Checkers – a complete mess. But now we’re standardized
and disciplined.”
Keith
Sirois, the man who replaced Dorsch as interim CEO, said
he was unaware of Dorsch’s public criticism of Checkers’
franchisees. He couldn’t say whether the comments contributed
to his predecessor’s sudden departure; in fact, he
didn’t know about the story in Restaurant Business.
“I’m surprised that franchisees hadn’t called
me about (those comments),” Sirois said. “I never
saw it. There’s always a group you want to move up,”
but Sirois does not feel there are as many underperforming
franchises as apparently Dorsch thought.
SO WHO
IS KEITH SIROIS?He has been on Checkers management team
since 1996, most recently as vice president of franchise
operations. Sirois started his career at Denny’s. Since
then, he worked at several restaurant chains.
If outsiders
were surprised by Dorsch’s exit, so was Sirois. He
didn’t expect to be sitting in the catbird seat when
April started. “I was paying attention to franchise
operations,” he said.
What’s
the biggest difference between his new job and his old one?
“As CEO I still retain responsibility for franchise
growth,” he said. “And I’m getting up to
speed on Dan’s duties. The team is intact.”
“The
ups and downs have been tremendous. We
’re in the best of times now.”
–
Keith Sirois, Checkers CEO
Sirois
owns approximately 2,500 shares of Checkers stock that he
purchased for cash, exclusively of options. “I’ve
been here seven years,” he said. “The ups and
downs have been tremendous. We’re in the best of times
now.”
If Sirois
knows why Dorsch left, he’s not telling. “You
have to ask Dan. (Dorsch was not available for comment.)
He had, as part of his agreement, the ability to leave and
he did it. He did what he came to do. His focus was on turnaround,
and this company is quite different than the one he took
over.”
Founder
Herb Brown, who has been out of the picture for years, returned
to speak at the company’s annual franchisee convention
last year. According to Dorsch, Brown said: “I took
Checkers off my resume years ago. The weeds were higher
than the restaurants then … but I never stopped going.
And now I’d like to put Checkers back on my resume.”
| >>Ask
The Experts |
|
What
precautions are currently advisable for traveling
overseas to conduct business? There is no way to guarantee
that you will be protected from acts of terror when
overseas. The following tips, however, will reduce
your chances of becoming a target. Before leaving
the United States, visit the Department of State Web
site at www.state.gov. It includes travel warnings
and links to U.S. embassies and consulates.
 These
Web sites for the U.S. embassies and consulates have
contact information for the U.S. security representative
in that country and more in-depth information about
the country itself.
Maintain
a low profile while traveling. Do not attract attention
with clothing, conduct or mannerisms. Even if the
country appears pro-American, there may be anti-American
groups present. You are less likely to be a target
if terrorists do not notice you. Be unpredictable.
Vary the time, mode of transportation, when possible,
and routes you take when traveling. Plan ahead. Let
family, friends and coworkers know about your activities,
with a complete schedule, if possible.
Be
alert. Watch for anything suspicious or out of place.
Take note of unusual or repeated actions that might
indicate someone is watching you. Immediately report
suspicious actions to law enforcement officials or
the security representative at the nearest U.S. embassy.
Portions
of these comments were drawn
from Department of Defense sources.
Alvin K. Brown, J.D.
Brown Security & Law Group P.A.
St. Petersburg, FL
www.brownsecurity.biz
Alvin K. Brown
|
