Red Robin: Case Study

 

Red Robin, the national family restaurant chain, was facing a great challenge – how could they get their new restaurants to become profitable faster than anyone assumed possible? They were able to overcome this challenge using John Kotter’s 8-Step Process for Leading Change. It helped them meet their transformation goals, by helping overcome the resistance to change along the way.

When Red Robin first began opening new restaurants, they made the industry standard assumption that it would take 3 years for a restaurant to “normalize” – that is, to achieve normal rates of return, profitability and productivity. Red Robin’s CEO quickly realized that this was costing the company too much over the long term, and established down a new goal – get new restaurants to “normalization” within 6 months instead of 36. This directive from the top helped provide the big opportunity that created a foundation for the sense of urgency needed inside the organization to move quickly to transform its approach to expansion.

Naturally, this plan faced some initial skepticism and opposition, as people in every department questioned whether or not such an audacious goal could really be accomplished. But as time went on, a guiding coalition of a few key people in every department was tasked with attacking the problems standing in the way of achieving this goal. The coalition was made up of people committed to solving the problem, and they believed strongly that a solution could be found and they had the full commitment of leadership to support them.

Over time, a vision came into view – initially from the guiding coalition, and then fully supported by the executives – namely, that besides achieving the 6 month normalization goal, all restaurants would also “give guests what they ordered, when they ordered it, in a timely respectful manner.” While this may seem an overly simple vision for a restaurant, without it, Red Robin might have lost focus on what was truly important – giving its customers the best experience possible. This vision was communicated far and wide and was much easier to accept and understand at all levels of the organization than a vague concept like return on investment.

The coalition continued its investigation into how restaurants behaved when and after they opened, and later, a key finding was made. When examining what made a restaurant successful, the coalition members found high performing restaurants needed at least 140 “proficiencies” present in their operations and staff. Without these proficiencies, something would always go wrong – orders would be wrong or slow, waits for tables would lengthen, and people would have an inferior overall restaurant experience. Upon taking inventory of how many of these proficiencies were present, most of the existing restaurants fell far short. To the guiding coalition, this evidence suggested that further action and training were needed in existing as well as new restaurants to enhance performance and the overall customer experience.

Many felt that their restaurants were doing just fine and resisted changing their training procedures, citing that, “we have the best training procedures in the restaurant industry.” While this was true to some extent, it was not good enough to achieve the new vision. So, after many more communication efforts, the coalition empowered to prove its theory in one restaurant.

Within a few months of re-engineering at that unit, performance had improved markedly. Not only that, employee turnover had dropped dramatically. Why? Employees said the new training procedures, which stressed proficiencies rather than just procedures, made them feel as though the organization “really cared about them.” They felt happier in their jobs because they felt they were being listened to, not just ordered around. Job rotation was also introduced to give people a range of skills across the restaurant, not just in one particular area. As a result, turnover dropped, and the need to train more employees was reduced, allowing an even quicker path to profitability.

Word of this rapid success spread quickly in the company, as the guiding coalition had created their own newsletter to track the effects of the change initiative. With solid results in hand, the coalition could report immediately the improvements the new training had wrought. After the first re-engineering was complete, the coalition was able to get the period of “normalization” down to a period of just four months, all while improving the customer experience by “giving guests what they ordered, when they ordered it, in a timely respectful manner.”

You might think that they were more than satisfied with this result; however, the guiding coalition didn’t let up. They brought their approach of assessing proficiencies to other parts of the organization, including administrative functions such as finance and accounting. In addition, the New Restaurant Department was given more power and authority in the company and allowed to operate independently. They were then able to replicate their performance at the trial restaurant to all new restaurants, and improve upon their methods as they expanded. Today, it is part of the culture and a standard way of doing business for Red Robin. In fact, the approach is continuing to be improved upon and still exists today “on steroids,” according to one former executive.

Given that there are about 2,000 steps involved in opening a new restaurant, the fact that Red Robin’s guiding coalition could achieve such dramatic, rapid change in making their new restaurants profitable is a testament to how powerful change can be when the proper groundwork is laid in advance. By coalescing around a shared vision and using a committed team of people to help see the change through, the guiding coalition at Red Robin was able to achieve phenomenal success in a seemingly intractable area.