ACUTV proudly presents
On Campus with your host, ACU
vice president and dean of campus life,
Dr. Gary McCaleb.
Here's Gary. On campus today,
we're pleased to welcome Mr. Ed Johnson,
the chairman and co-founder of Grandy's
Country Cooking Restaurants.
Thank you for taking the time to visit
with us today. Thank you.
I think that the story
of Grandy's is an interesting story in
itself.
And probably we ought to begin by just
asking you if you were to tell us
the story of Grandy's, how it all
started, and and then the story
of the growth up to the present time.
OK.
Actually, I'm one half of the team.
My partner and I, Eric Sanders, have
been together since we were teenage boys.
This has been about
a 30 year association.
We we grew up together
in Oak Cliff, part of Dallas, and
we're very interested in the same
things. Rex grew up in orphanages
and came to live at my house during
high school, and he and I were just
very interested
in the restaurant business.
And together,
I guess from the time of 14 years
on plan to be in the restaurant business
together as partners.
And we were blessed and fortunate
that that worked out for
us. We actually started in
the business with
a chain previous to Grandy's.
It was a fried chicken to go concept
that we developed in the late
60s and sold to
host International and became part of
a
division of there's a Jim Dandy
Fried Chicken, which we operated for a
couple of years.
He and I took
a short retirement
at a very early age and decided that
retirement was no way of life
at any age probably,
and decided to go back into
business for ourselves back in the
restaurant business and but to do it
in a different way than than what we
had seen done up to that point in time.
We were looking for a a
new niche in the restaurant business, if
you will.
We looked at the fast food business
really is the growth area.
But we felt that
that they're just at
that time really wasn't a fast
food concept out there that met the needs
and the desires the consumer really had.
Certainly wasn't anyone in the
chicken area that was doing
anything other than
early 60s type concepts.
So all I did was
to, uh, to take
a chicken as
a lead product and to
do some things differently
in a fast food type setting, to have all
the attributes of fast food, which were,
uh, speed and consistency and
cleanliness and price value.
But in addition to doing the typical
fast food type things,
uh, we wanted something that
distinguished us from the, uh,
the larger competitors, the hamburger
guys and the other people in the chicken
business. And so
we.
Came up with a fresh approach
concept where we actually
manufactured and processed all of
our chicken and
bread and various items, gravy
from scratch and all within the
restaurant, which was, uh,
unheard of at that time.
We have a bakery in each unit and
they produce each day
fresh breads, rolls
and biscuits and cinnamon rolls.
And we make, uh,
like I say, gravy from scratch versus
a powdered or
poured out of a can type of gravy.
And we marinate and cut our chickens
right in the store.
And we do this,
we think, to in a more relaxed
surroundings than a typical fast
food concept, not as plasticized
it has
a warmer approach,
softer approach, using,
uh, I think better furniture
and real artifacts.
And we tend
to use a more mature staff
and and
have
used
senior citizen ladies in what we call a
granny hostess program, which
is a real win win situation
all the way around for the for the ladies
as well as for us and for our customers.
And most of these
ladies would tell you that
they would work whether we paid them or
not. The latest enjoy doing
it and that, uh, the
customers really benefit from it.
One of the most frequent comments we get
on our comment cards is
give granny a raise.
And so it sets us sets us apart.
We do a few things different.
We began the self-service
drink bar.
When we started our concept,
we felt that fast food had
a tendency to count French fries and
weigh everything and measure everything
so closely that we wanted to do some
different things. And,
uh, giving free refills
on drinks was one of them and making
people feel at home,
being able to refill their own drinks and
not have everything measured, I think
really helped.
We've over the period
of
the past ten years, we have
built the chain from,
of course, the original store in
Lewisville, Texas.
Now to a little
over one hundred and fifty units in 16
states.
About 50 percent of those are franchised
and the other 50 percent are company
owned.
Now, that's over a ten year period.
Yes. So at the point that
you first began, you said the original
store in Lewisville, uh,
was that was that a one store concept
that you began with or.
Yes. And you were was to a
certain extent. Was that an experimental
or a test or where you were going to try
out some of these guys?
Well, yes, we did the R&D
more or less right there on the scene.
Rex and I designed the building
and where the contractors and built it
and developed the recipes and procedures
and some as we
as we went. And we
refined that system
over a number of years.
And, uh, but from the beginning,
it was always with the plan that this was
going to become a chain.
No, that really wasn't.
It kind of evolved into a chain
or a or a larger chain.
We really went in with the intent
initially of having one
real successful restaurant.
And once we had success
there, then perhaps
two or three or four or five, but
certainly not one hundred and fifty.
Uh, but the demand for
for the concept and for the food that
we served was, uh,
was very good.
It was well received and we had
many, many inquiries for franchises.
And so we just felt
that, uh, expansion
was appropriate and things were going
very well for us.
And so as we were able to
obtain and train people,
uh, and see
the results of our initial units, it gave
us the incentive to then go on and
continue moving forward.
We've always been very conservative and
really felt that, uh,
that
the incentive to expand really has
to be based upon what you're
the kind of results that you're achieving
presently. And, uh, uh,
so we weren't wanting so
much to have a Grandy's restaurant on
every corner, but have a real high
quality one, wherever it was, and
and to generate a lot of positive
results. And we've been blessed to.
Really have a great experience,
do you have to change anything
conceptually when you're
thinking in terms of one or two or three
stores like yours and
and then in order to multiply
that into the hundred stores,
can you do everything in one hundred
stores that you could do in two or three
stores? Or did you have to start
at least making minor adjustments?
And in some of that, you're.
That's a good question.
And one we ask ourselves all the time,
every year in strategic planning and
certainly
just all the time in a day to day
operation.
Certainly we don't want to do anything
that would jeopardize the quality of the
product.
It's a constant evolutionary process
that you have to evolve
your management people
and systems in order to
continue to generate the same quality
control and end product.
So and I think that's part of the
exciting part of it.
And the fun part of it is that you
you're never staying
exactly the same.
You're you're constantly evolving and
growing and stretching yourself.
You mentioned awhile ago that you wanted
to try to create a little bit different
niche in the market, but, uh.
Basically, you came in with a
basic menu that was dependent upon
fried chicken and there were already
several fried chicken
franchises and chains in
operation at the time.
Uh, how did you go about thinking you
could differentiate Grandy's fried
chicken from the rest of the fried
chicken places already?
Well, basically,
and not hopefully don't sound
too braggadocios on this.
I am proud of what we've done, but we
felt like we could do a lot of things
that the large chains
couldn't or wouldn't do and
that those things were really oriented
towards what the customer really wanted.
Up until the time that we went in the
business, there was no one
really filling that niche between fast
food and coffee shop or a
light dinner house
or our cafeteria.
And we're kind of a bridge concept
between those two.
Hopefully the better of both worlds.
Uh, most of chicken
up to that point and even still today
is to go product.
It's 80, 90 percent to go,
whereas in Grandy's will do 50
to 60 percent inside seating because we
have a better, more relaxed
dining room. We have a full meal concept
versus a chicken in a box.
And and I
think we do some unique things with
recipes and with homemade bread,
salad bar and a full
breakfast line country breakfast line
that the competitors don't do.
So it's a really an expanded
concept, isn't
it?
Is it is there
any truth to the fact that
food items or meat items like chicken
are taking away part of the
market from what might have previously
been more oriented toward beef and steaks
and things like that?
Well, absolutely.
That's certainly the the red meat
as a protein has been on the decline for
seven or so years
massively.
And I don't
think maybe so much dictated by
the fact that that it isn't quality or
that the quality is slipped, but just the
fact that people's health consciousness
is has advanced
and certainly
the two proteins that have benefited from
that or our chicken and fish.
And there's a tremendous
demand for chicken.
As a matter of fact, there's predictions
statistically that, uh, chicken
and beef consumption per capita
will probably cross somewhere in
the early 90s, that the
consumption of chicken will be equal
to that of beef, which is
nobody could have predicted that 15 years
ago.
You mentioned that part of it at least,
could be attributed to the health
consciousness of moving.
Right. You know, there's also a health
consciousness and not in
any way try to put you on the
spot, but about fried foods exposed
to other ways of preparing meats.
Or are you considering
anything about alternatives
to fried chicken?
Yes,
we constantly think that
our position as a company is
and one of the reasons we're called
Grandy's and not Grandy's fried chicken
is that we use that as an overall
banner that we can evolve
under.
Grandy's has expanded itself
several times over a period of years
into a full fresh
line salad bar into
a breakfast program.
We now have barbeque ribs
that are not fried product,
and we're certainly looking in
our R&D kitchens at
a non fried chicken product.
What we wish to do is to
not be the
the absolute pioneer out
on the cutting edge.
We want to see that the demand is there
and our goal is to fulfill
that in the highest quality manner
and differentiate ourselves from the
typical fast food company.
And we think that we can do that.
We think we're good at that.
So as that
desire increases, you bet we're going
to be there and serve it well.
We don't want to be pioneers serving
tofu or our bean sprouts
and that sort of thing.
But unless it's a massively
acceptable and desirable, we need to take
a break here for just a second.
We're visiting today with Ed Johnson.
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Not only that, I learned a lot from some
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four. Two thousand.
Two seconds.
We're back on campus and continuing to
visit with Ed Johnson, chairman, chairman
and co-founder of Grandy's Country
Cooking Restaurants, you're talking
about differentiating yourself.
I'm wondering if there is
is there been any study done about
the life cycle of a
franchise or a chain operation?
You were mentioning while ago that
there had been fried chicken operations
in existence before.
And and then here you
came in with a fresh new approach
to it. Is there is
there any possibility that a concept
in franchising or in fast food
marketing will last a certain number of
years with the clientele
before it becomes a little old and tired
and people move on to something else?
Well, absolutely.
I think that's that's one of the
marketing issues, is to
and companies live and die on that
and other businesses other than
just the fast food business, but
certainly those that don't evolve
and don't, uh, I
think stay in very
close touch with the consumer, with who
they're serving, with, what their desires
are and where those trends
are moving will
not have a very long lifecycle,
particularly now that
the competition is
so intense. And saturation
in this industry is paramount.
It's higher than it's ever been.
We have been in the industry
and the restaurant industry
is a, uh,
maturing that has
occurred where the
restaurant chains now have
exceeded the growth
of the consumer market, which
happened within the last three to five
years.
Prior to that time, the consumers,
the food away from home is growing far
faster than the chains were filling.
The the, uh,
uh, the scene with,
uh, with new restaurants.
But that is change now in the last five
years. And so there are more restaurants
out there and there are certainly
a lot more
types of restaurants.
It used to be, of course, that,
uh, you had chicken and hamburgers
and pizza and you had cafeterias
and you had coffee shops
and you had pretty clear lines of
distinction between segments.
But as any category matures
in, what you have is, uh, niches
that are being filled between
those and you're hitting specific
markets of people,
specific desires.
And so that's you're seeing a
proliferation of many
new concepts that nobody even thought of
or heard of or dreamed would ever
be successful.
And in
ten years past,
when you talk about differentiating
yourself in the market, is it
is it the approach that when you began
Grandy's, did you develop a profile
of the kind of consumer
you thought you were going after in the
market? In other words, was there either
an income level and
age range, anything
that you felt like this is the
profile of the Grandy's customer?
Well, we like to look back on that
and say we were smart enough to to think
about all that back when we started
it thirteen years
ago.
But I don't think we were
I think really what we said from a
basic instinctive
feel was that we
saw that fast food
segment really growing.
But we we felt intuitively
that there was a desire for a much higher
quality fast food presentation.
We believed that between
fast food and
coffee shops and light dinner house,
that if you could combine those markets,
you're going to get the major
portion of
the market at large.
And in fact, that's what is what
has happened in fast food
research.
You'll find that most of the fast
food cuts off at about a age
forty four and don't
do well with seniors at all
because of the presentation and
et cetera, various reasons,
whereas in coffee shops and
cafeterias kind of pick up from there and
have a huge skew towards
the older age group.
Well, in Grandy's we were fortunate
to hit both those really well
and we do the typical fast
food
demographic profile,
the most fast food places do.
But then in addition to that, we also
have a great attraction and do
very well in that, uh,
middle age and. A senior citizen area
that fast food doesn't do well,
consequently, it it
allows you to achieve maximum
volume out of each unit.
Recently, you were
purchased by Soga Foods.
Is that correct? Yes.
I can see why
Grandy's would be a very attractive
prospect to Saga along
the lines of diversification.
If nothing else, that saga
primarily being a
cafeteria type operation.
And in the
industry and education market, uh,
this gives them an opportunity to
diversify themselves within the food.
But on the other hand, does it concern
you in any way that, uh,
uh, an operation like Grandy's
might now be under a
managerial strategy
or mode of thinking that
is more geared to conventional
cafeteria type approaches?
Well, certainly this
was a major concern for us.
And having had done this earlier
in our career, we
were very conservative about
the company that we would do this with
is, as a matter of fact, a little bit of
background on that.
Uh, we saw
Grandy's future
growth, uh, one of
three ways, either being
a privately held company as we were or
going public or being acquired.
We decided strategically that we
needed to grow faster.
And so we either needed to be acquired
or go public. And we began
four years ago to raise our profile
and
do some financial presentations
in the east and various places.
And in that process,
we had a number of companies
that were interested in us, and we had
our investment banker do
an in-depth study and, uh,
profile on each of these companies.
And we established a
criteria by which we would,
um, more or less judge these companies,
uh, as to who we would be
acquired by. Should we go that route.
And one of the and one of the chief
concerns was a company that would allow
us the maximum amount of autonomy
to run the company
and continue to make it successful.
And that's exactly what happened.
Soga operates 11 divisions.
They operate very autonomously in their
very quality oriented and people
oriented, and they really serve
as our banker.
We, uh, we still
do our own strategic plans or our
own financial plans.
Our own, uh, we run our
own headquarters and training
schools and everything.
Nothing's changed other than it's a whole
lot easier to get money.
Now, when
when I was reading something about
Grandy's and your operation that
it mentioned, one sentence mentioned
that, uh, three areas
which had gotten your attention, food
preparation, customer service
and the art of managing people,
uh, assuming for a minute that those
are if it's fair to assume that those
are three important segments, as you
look at the business,
once you you get away from
that first level of one
or two or three stores, it seems to me
when you start having, uh,
stores and all in several different
states, you
are going to
give up a certain level of managerial
control that you would always be able to
know you had.
If there's just two or three stores in
the Dallas area that you can personally
supervise or at least give some attention
to, what what
kind of thinking do you go through in
order to feel like you are maintaining
some degree of that, uh,
same type of managerial
strategy and approach
once you have spread your operation
that widely?
I think that that that
is the job of management for sure.
That's that's your charge.
As you evolve at the various stages
of growth in a company,
you're constantly,
uh, at least we were finding
ourselves growing
faster than the organization,
uh, was growing.
So you have the constant challenge of
building a team
of people, developing a team
of people that can
grow the company and maintain
all the standards.
And in order to do that, I think
there's there's a lot of approaches to do
it. But the way we did it was to plan
to plan our structure and
to.
Really be very selective in the people
that we hired and to make sure that we
instill within them the principles,
things your company
can evolve and it can change and so on,
but your principles shouldn't change.
And if if you have a team of
people together, men and women that
buy into the
the principles that you believe in,
then you can pretty well
disseminate that throughout a chain
as long as you keep your structure
growing.
Obviously, in the growth posture
that we were in, my partner and I did
everything from the beginning and love
that reluctantly give up any of those
tasks. But as we grew
and could afford it, we brought in top
professionals in all the various
management disciplines, which we really
don't have any training in any of
it other than experience.
So we're basically chicken cooks
when when you when you
think about what happens within a
franchise or a chain operation,
if one store that
isn't a particularly
key area population area
suddenly goes sour
and for some reason begins to do
less than the quality
level that you would expect
to questions one.
To what extent is is the reputation
of the X or the experience of the people
in that store going to affect
their likelihood of eating at any other
Grandy's in the future
because they assume they must all be like
this one? And secondly, what can
you do about it if one store goes?
Well, it's it's absolutely devastating.
And it's we we
have a saying we're only as good as our
last meal, no matter what Grandy's it was
in the you can be good for ten years in
one location. If the last meal a
customer had was bad, you're bad.
And so we have to have
a very tight
quality control and we
we really leave nothing to happenstance.
Everything is planned to happen
scheduled.
And we have quality control supervisors,
one for each four stores,
and we have independent
research people from the outside that are
constantly looking and talking to
customers.
We have this tremendous scrutiny
on the units all the time and we still
make mistakes.
And they're
all restaurants do.
There's no excuse for any of them.
And we try to minimize ours.
We try to pay attention to details.
Sometimes in operating
organizations like this, uh,
you hear a man at the top
talking about what he feels like are the
absolute keys to maintaining success
in their business, or are there any
particular keys that you feel like
have to be done and done right
all the time if Grandy's is going to
maintain its quality reputation?
Well, I think the key
thing is, uh, first of
all, is to be very attuned
to the customer where they are and what
really is satisfying them.
And not to be tempted,
as many chains are, into doing things
for their own convenience and for
expediency versus what
the consumer really wants.
The other thing, of course, is, uh,
is the motivation of the people that you
have in the units
and at every level we consider ourselves
corporately as servants to
the people that are operating the stores.
That's what really happens out there.
And everything we do is
an organizational chart.
For us. It's kind of an inverse
triangle that the top of the triangle
is the unit and the bottom is all us guys
and gals that are supporting
that and how you incentivize
the people, how you communicate
with them, uh, what they believe
in that they're doing out there has
everything to do with how successful that
unit will be. And they have to be
successful on each and
every individual unit basis.
We try not to think of them as one
hundred and fifty stores.
We try to think of them as one store,
uh, on Buffalo Gap and Abilene
or what have you,
because each one of them has to be
independently successful.
It's not a mass sort of thing.
We're out of time, but thank you so much
for taking the time to visit.
Has been a most interesting visit and
continued best wishes for granted.
Thank you.
Thank you for being with us as we visited
with Ed Johnson.