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.

Don’t be afraid of risk

Any time you’re taking a company in a new direction, there is risk involved. The Habit had experienced steady growth over a long period of time when Bendel arrived. It would have been easy for him to step in and simply maintain the status quo.

When you consider a plan that involves change, you have to consider each group that will be affected.

“What you are managing is the strategic direction of the company and the risk-reward relationship,” Bendel says. “How much risk are you willing to take for what reward? That really depends on balancing the needs of three different constituencies. You need to balance the needs of your customers, your employees or associates, and your investors.

“While you may lean a little harder at any one time on one of those or two of those, at the end of the day, it has to be a three-legged stool that is pretty balanced. We work hard at keeping those three constituencies in check.”

There was one change that Bendel made fairly recently that he had been thinking about almost since the moment he arrived at The Habit. That would be the fact that ever since the company opened in 1969, employees did not answer the phone in the restaurant.

“We put it on a recording and it said, ‘Thanks for your call, but we’re busy taking care of our customers and are not able to answer the phone,’” Bendel says. “When I first got here, I said this is the craziest thing I’ve ever seen.”

As he learned more about the reasoning behind the policy, Bendel no longer thought it was crazy. It can be very frustrating for a customer to walk into a business and be forced to wait for service by someone who is talking on the phone, even if they are providing service by doing so.

“But it was still a point of frustration for customers that we wouldn’t answer the phone,” Bendel says. “So about a year ago, as we got more scale and more infrastructure, we engaged a call center. Now when you call any of the restaurants, it’s answered by someone at the call center.”

There are still logistics being worked out as far as questions that can’t be answered by the call center, but Bendel is pleased with the way it’s working and the added service it provides to customers who previously weren’t able to reach anyone.

It also allows that service to be provided without distracting employees working in the restaurants.

“What we work hard at staying focused on, no matter how large we get, is making sure our managers and frontline employees are really able to take care of each other and our customers,” Bendel says. “We don’t want them to be distracted by too many administrative requirements or other things that are necessary, but really can be done by other people at other times.”

Bendel is proud of what his team has been able to create at The Habit and the growth plan continues to evolve.

“If we continue to do the right thing, there’s no reason why we won’t have locations in a lot of places,” Bendel says. “We focus on one restaurant at a time and our ability to execute and operate at a high level will afford us the opportunity to do more.”

He says those who achieve success in business have a plan, but are willing to adjust it along the way.

“Companies, brands, concepts, people who are willing to incrementally make things better and are always looking to do so have much more sustainable long-term success,” Bendel says.

How to reach: The Habit Restaurants LLC, (949) 851-8881 or www.habitburger.com

Takeaways:

  • Find ways to take what you have and make it better.
  • Give your employees opportunities to grow.
  • Be open to big change where it fits.

The Bendel File

Name: Russ Bendel
Title: President and CEO
Company: The Habit Restaurants LLC

Born: Philadelphia

Education: Bachelor’s degree in hotel administration, Florida International University.

What restaurants did you like growing up? I was born in the 50s, we didn’t go out to eat as a family a lot. I worked in restaurants as a kid and my very first job was at McDonald’s.

Who has been the biggest influence on your life? There was a person I worked for with Host Marriott, Jim Moore, who was a very seasoned, but aggressive leader for his time. My wife, Judy, has also been a great influence on my life. She has always been the rock and the CEO of our family.

What is your favorite menu item at The Habit? The Santa Barbara Style, a double cheeseburger served with avocado on grilled sourdough.

What one person would you like to meet? Norman Brinker. He’s someone I never spent any time with, but I know a lot of people who I worked for in the past have. He’s kind of an icon of our industry, very progressive. He always looked for the best in people and was able to not only inspire, but encourage and develop a lot of strong leaders in our industry.
Bendel on influence vs. control: You get more done with influence than control. At times, you need to exercise control. But in the long term, influence is a much stronger, more lasting and more effective tool. If you’re not comfortable with it, you need to work at somehow becoming more comfortable if you’re going to be as effective as you possibly can as a leader.