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Recipe for growth Featured

1:09pm EDT July 18, 2002

Dixie Ann Jerdon had faith in herself in 1988 when she risked her job and reputation on a hunch.

Jerdon saw an opportunity for improvement at Yours Truly Restaurants and offered her services as operations manager to help expand the then-four-restaurant chain. She was 26 years old but had the moxie to promise the four sibling owners cost savings equivalent to her salary for a chance to prove her theory was correct.

"Because of my youth and inexperience, I really had no idea what I could do," admits Jerdon.

Today, she is executive director of Shibley Management, which oversees six restaurants that employ 350 people and serve 1,000 meals daily.

But growing from one Beachwood location in 1981 to six scattered across the East Side wasn't an easy transition. In 1988, when there were four restaurants, the owners began to lose focus. Each managed one location in his or her own style, and because they were not aligned to the same mission, further expansion seemed disastrous.

By 1993, however, the owners forged ahead and opened their fifth location in Shaker Square.

"We saw (that) as we grew, we lost the consistency," says co-owner Larry Shibley, explaining why the siblings accepted Jerdon's challenge. She not only made good on her promise, Shibley says, "she saved the company her salary and more."

In 1997, SBN examined how a family that built its business through sweat and soul relinquished day-to-day management to an outsider, going so far as to give her a voting option on the board (SBN February 1997). So how have Jerdon's process improvements helped Yours Truly increase dining room seating volume and its bottom line?

By viewing the six restaurants as one entity rather than six separate islands.

When she joined Yours Truly as its Mayfield Village location manager, Jerdon wasn't planning on sticking around long.

"Honestly, I thought this was a little stopgap while I looked for another job," she says. "But I fell in love with this company. I thought the owners had all the right ideas."

Jerdon had good ideas herself. She believed the best growth path for the restaurant chain was to implement a series of process improvements instead of the typical aggressive marketing strategies many eateries employed. She also recognized that it was possible to strengthen the core of a business by eliminating typical problems that eat profits in the food industry.

From behind a large desk crowded with paperwork, Jerdon's file cabinets are within easy reach. So are boxes of silverware, napkins and other paper goods. With an easy manner, she smiles and pulls out a performance review she prepared when taking over as operations manager. As she pores over the numbers, she explains how she outlined specific areas where it was possible to squeeze out savings.

Beyond the hard numbers, Jerdon had the backing of the four owners, Larry, Art and Jeff Shibley and Darlene Shibley-Ziegenhagen.

Larry and Jeff Shibley agree the focused leadership position has contributed to the overall health of the business. It began in 1989, when Jerdon started implementing her strategy of looking at the four businesses as one and standardizing processes that Jeff Shibley says "provides a unified approach for employees."

One process was aimed at curbing theft. Theft can be a huge drain on profits in any retail establishment, but losses in the restaurant business can add up to 5 percent of profits. Jerdon created a standardized management training program that greatly influences losses by teaching managers what to look for and how to prevent theft.

She also believes in the importance of maintaining the small mom-and-pop atmosphere while creating continuity with shared, fundamental business policies. That included getting employees' hands out of the cookie jar -- in this case, the cash drawer. The restaurants previously lacked control of cash flow and trace-ability from its lax system and hand-written checks.

It was an uphill battle that took nearly a full year to implement, Jerdon says. But it paid off with tangible results -- the computerized system not only tracked revenue but led to significant cost savings. Food expenditures dropped from 34 percent of total sales to 27 percent because the kitchen was not able to prepare a meal without a computer-generated order.

The system also eliminated the freebies and giveaways that gobbled up profits.

Jerdon's efforts weren't aimed only at internal issues. She also targeted vendor relationships and Yours Truly's buying power.

She understood that a trusting relationship with vendor representatives equates to long-term pricing programs. And when your shopping list includes 30,000 pounds of chicken breasts over several months, the savings quickly add up.

On the way to meeting the cost saving goals, Jerdon and Larry Shibley talked about a spin-off company to act as a distributor for the chain's paper products purchases. From those talks, Shibley Management was created.

"It makes sense if I'm paying a distributor to bring it out here," Jerdon explains.

The manufacturer ships products to a centralized location, and Shibley Management distributes them to its various locations. In the process, the management company generates a profit.

Even though food prices have been on a steady increase, the company spends approximately the same amount on food as it did in 1988. Jerdon attributes this effective price freeze to bulk buying and national contracts, rebate programs and the restaurant chain's bid system.

The company has also enjoyed considerable savings from low employee turnover.

"In every store, there are original employees from that original store opening," says Larry Shibley, adding that the amount of money spent on recruiting is negligible.

To continue that trend, managers are trained in the legal side of managing people.

"Costly lawsuits out there are just rampant for a lot of companies that aren't as organized," Jerdon says.

Keeping managers on the floor with employees and customers is one of the biggest advantages a centralized position offers.

"If they (managers) run their shifts and their stores and develop their people, we're a better company for it," Jerdon says.

It's something that's perpetuated the original intent of the four owners.

"In creating the proper environment, you get the proper staff," Jeff Shibley explains. "We're creating an environment that makes restaurant employees seek us out. For our customers, it's comforting to see the same smiling face."

Shibley says if you treat employees right, the bottom line will take care of itself. Employee packages include a 401(k) plan, paid vacation, a scholarship fund and on-the-job fun.

"I think the future is incredibly bright," he says. And while success is always sweet, "there's a real special element to be able to work with your family and succeed." How to reach: Yours Truly Restaurants, (440) 247-8338 or www.ytr.com

Deborah Garofalo (dgarofalo@sbnnet.com) is an associate editor of SBN Magazine.