It’s about evolution, not revolution at The Habit Restaurants

Russ Bendel had never heard of The Habit Burger Grill when a private equity firm approached him about investing in the Orange County-based chain of restaurants in 2007.

Bendel had grown up in the restaurant industry, working previously as president and COO at The Cheesecake Factory and as president and CEO of Mimi’s Cafe.
“I’m a restaurant guy,” Bendel says. “I’ve only done restaurants my whole life, so that’s who I am.”

Bendel was intrigued by The Habit, which opened as a single restaurant in 1969 just outside of Santa Barbara and didn’t open a second location until 1997.

“Then from 1997 through 2007, it opened one or two restaurants a year until our group arrived in 2008,” Bendel says. “It was a small, very entrepreneurial, founder-driven organization. All the restaurants were relatively close together. It had never grown at a fast or accelerated rate, but it was a great business.”

Bendel quickly grew fond of the people who worked at The Habit and the genuine enthusiasm they brought to their work.

There wasn’t a lot of infrastructure or process in place that was common to larger restaurant chains, primarily because The Habit had not been operated that way. It took some time for Bendel to adapt to a different type of restaurant operation.

“Fast casual was really new to me,” Bendel says. “I had just come off being with The Cheesecake Factory, which has some of the highest volumes in the industry with a big footprint and a lot of moving parts. This was a whole different check average and economic model.”

Bendel respected the deliberate approach to growth that The Habit had taken. But he also believed that the company could take a more ambitious approach while still staying true to its foundational values.

“It’s about evolution, not revolution,” says Bendel, who became president and CEO at The Habit Restaurants LLC in June 2008. “What were the things we would need to invest in so that we could, at the appropriate time, be able to accelerate growth based on the opportunities ahead of us? That was step No. 1.”

Here’s a look at how The Habit grew from a private company with fewer than 20 locations in California when Bendel arrived to a company that made an initial public offering late last year and now has 111 locations across four states and 4,000 employees.

Make learning a priority

As the economy began its plunge in 2008, Bendel decided it might be a good time to get into a business that was at a different place on the cost spectrum.

“The economy was softening, so the higher check average and more traditional casual dining was being affected, especially those concepts that were maybe a little bit tired,” Bendel says. “They had not evolved as the consumer had evolved. I’m not really sure I knew what fast casual or better burger really meant, but I saw it as a business that was positioned and aligned with the consumer in a very favorable way. I felt in the ensuing years, it would become even more so aligned. That was the attraction.”

What The Habit needed to capitalize on this opportunity was an investment in process and infrastructure that would create a framework for growth.

“What we needed was more discipline to process and investments in today’s kind of technology, not only for capturing business information, but for communicating with customers,” Bendel says.

“Having more advanced relevant training methodology would allow more good people to join our organization and be able to come up to speed and understand what was really special about The Habit and to reinforce that through training and role modeling so that they would develop those behaviors and emulate people who had been in the system for an extended period,” he says.

It was not uncommon for new general managers in the company to bring a lot of prior leadership experience to the table.

“As you continue to grow more aggressively, you don’t always have the luxury of having people in position for four or five years,” Bendel says. “You need to be able to accelerate that learning curve without compromising any of the things that make the brand special to the employees and special to all of our customers.”

The prior training and development system at The Habit “was very pen to paper,” Bendel says. In addition, it didn’t have the kind of depth that Bendel believed it needed.

“Most successful restaurant companies, and there are a lot of them, are good at initial technical training,” Bendel says. “You come in and go through an orientation program, you go through a six- or eight-week training program and then you’re assigned. Most restaurant companies do a good job at that. Where the industry struggles at times is having a commitment to the ongoing professional development of the workforce and being able to monitor, track and evaluate the success that it has.”

Fortunately for Bendel, he had a good team in place. But he adds that there aren’t many businesses where the employees don’t want to be the best they can be.

“Employees want to be able to bring their brains to work with them,” Bendel says. “They want to have input and be able to participate in the work environment. So you need to set people up for success. You need to be able to prepare them for additional responsibility. They want rules and discipline and want to know what the boundaries are.”

Bendel tries to spend a lot of time explaining what’s important and why it’s important and being clear about what the boundaries are.

“Once that’s done, it’s a matter of letting them do their thing and working the boundary lines as opposed to being in everybody’s business every second of every day,” Bendel says.