Recipe for success Featured

8:50am EDT February 27, 2003
Ever thought of Damon's as a great place to get a salad or a grilled panini sandwich? Probably not.

Damon's International Inc. president and CEO Shannon Foust, has led a four-year mission to change that, performing a drastic makeover on nearly every aspect of the restaurant and its offerings, and on some of the basic ways it does business.

When Foust took the reins of the $300 million company in March 1999, its concept appealed to a largely male market. The dimly lit restaurants offered mostly hearty food -- like Damon's well-known ribs and onion loaf -- and a sports bar atmosphere.

Foust admits this concept was a bit limiting.

"I felt our old business model was a barrier to our growth," he says.

After 18 years with the company, he felt the restaurant's core concept was solid, but, "that said, though, there were definitely some things that weren't right," he says.

Foust felt some modifications were in order. The result of these changes was a long overdue, head-to-toe transformation.

"Damon's was not as relevant to consumers as it is today," says Foust.

Food face-lift

One of the first changes was to the restaurant's name, from Damon's Ribs to Damon's Grill, to indicate the wider menu choices available. The logo was also changed, to one which graphically depicts the company's new emphasis on its grilled menu items.

Damon's menu was already well-grounded in grilled foods, so it wasn't straying far from its origins. It was just broadening its appeal in a market where so many other competitors also offer ribs.

"Fifteen years ago, the restaurants that served ribs made up a pretty short list," Foust says. "Today, only a couple of casual theme restaurants don't. Of course, we still have the best ribs in America."

In October 2001, Damon's introduced its revamped dinner menu, with 12 new entrees, salads, sandwiches and desserts. The restaurant strived to put a contemporary twist on its traditional comfort food offerings, introducing items including steak gorgonzola and grilled honey lime chicken salad.

The second phase of this menu makeover took place in July 2002, when the company modernizes its lunch offerings. Not only did Damon's add 14 items -- including a pulled pork quesadilla and a grilled turkey and cheese panini -- it also targeted the working population by promising lunch in 10 minutes or less.

The new items are in stark contrast to items the company eliminated -- like the more traditional prime rib, jumbo shrimp platter and pork chops -- items that were not selling well and didn't fit the new concept.

The last phase of this menu evolution was launched last month when Damon's began offering Tuscan shrimp dip, homemade soups and nightly specials.

Changing spaces

"When you walked in to Damon's, you walked into the bar," says Foust of Damon's original layout.

A great deal of square footage was dedicated to the sports bar, and, "that layout wasn't very comfortable for families," he says.

So the restaurants were redesigned to expand dining room seating and lessen the impact of the bar.

"We are, above all else, a restaurant," says Foust. "Everything else is ancillary. The main reason you come in is for the food, not to play trivia."

Foust felt the restaurant's physical appearance was dated. So under his direction, the company not only changed the division of space, it lightened the color scheme of the restaurants, down to the lighter stain on wood tables and floors, and added windows.

"We lightened and brightened the interior so we are more female-friendly," Foust says.

The biggest change was one not all of Damon's team members were enthusiastic about: an open kitchen.

"When I wanted to open the kitchen, there were some raised eyebrows," says Foust.

Concerns included the fact that kitchen staff members were not always well-groomed, and they played music and talked, not exactly the image Damon's wanted to portray. But Foust says once the kitchen was opened, the chefs shaved and wore better attire, and the music and talk were minimized.

As a matter of fact, he says, an open kitchen has offered numerous benefits.

"For one thing, the kitchen staff isn't shut away like they aren't part of the team," he says. "And they can see the tables and the people walking in the door."

That means, along with the servers, they can pick up the pace and more easily meet customer demand.

Faust also added equipment to the kitchen, which decreases customer wait time.

"When you're asking people to deliver for you, you have to provide them with the tools," he says.

All the changes to the decor and the restaurant design weren't made arbitrarily, Foust says.

"We didn't load our gun and start shooting in the air," says Foust. "We hired professionals to help us with the desicions."

Damon's also abandoned its locations in strip malls to focus solely on freestanding buildings, giving the restaurants a higher degree of visibility.

Business model makeover

Damon's transformation didn't end with the restaurants. Facing a tough, competitive labor market, Faust invested heavily in its people, developing the Learning Center, a place where Damon's employees are trained in a realistic setting.

The center, a building near the company's headquarters which is retrofitted to look like one of Damon's new restaurants, offers role-playing, videos and a full test kitchen.

"Before I took over, our training was not as professional," says Foust.

Before, the company hired promising new managers, then took them into a basement for training, primarily through textbooks.

"Today's young people learn from interaction," Foust says. "The Learning Center will provide us with more value than any other change we've made. We'll use it the next 30 years."

The company is also taking a new look at franchising.

"It comes down to return on investment," Foust says. "Franchisees in the full-service segment have a greater depth and sophistication than in the fast food market."

Franchisees usually agree to open multiple locations in a region, and Damon's has franchise agreements in the works in most of Michigan, the Philadelphia area and for its first unit in the New York City area.

A largely regional operation, Damon's geographical focus remains primarily on its existing markets -- Puerto Rico, Pennsylvania, Ohio, Minnesota, Virginia and Arizona. With the exception of Arizona, these are not necessarily hot spots for the restaurant industry, according to the National Restaurant Association's 2003 forecast. It identifies the Rocky Mountain region, which includes Arizona, as the area that will see the biggest sales growth this year.

Nevertheless, Damon's strategy includes attracting prospective franchisees by opening seed stores -- units in prime real estate locations Faust calls Main and Main -- in targeted cities like Chicago.

"We realized that if we offer high visibility and invest more money, that it pays off," he says.

A franchisee can then purchase that seed store and develop additional locations in the area. Despite the economy, Faust says Damon's plans to open 20 restaurants in 2003.

Foust says he's proud of Damon's new business model, which is the sum of all the changes made in the last four years.

"Everything we did was to change our business model," he says. "We're secure enough to say the old one didn't work."

So far so good?

Have all these changes in menu, physical plant, training and franchising strategy paid off? Foust says if sales are any indication, the answer is yes.

Total system sales have grown from $229 million in 1998 to more than $300 million in 2002. And perhaps a better indicator is a comparison of average store sales. In June 2000, average sales per freestanding store were $2.3 million; by June 2002, that had risen by $100,000 to $2.4 million.

Still, Damon's has its work cut out for it if it expects to become a major national contender and achieve its goal of doubling its size to 300 restaurants by 2008. And it will need to achieve a much higher level of sales growth.

According to Restaurants and Institutions Magazine's annual Top 400 ranking of restaurants by sales volume, even though Damon's has achieved significant sales growth, it slipped in the 2002 rankings by three places (from No. 99 in 2001 to No. 102 in 2002), while competitors like Applebee's and Outback Steakhouse rose.

To help meet its goals, Damon's recently hired former Bob Evans marketing executive Roy Getz to lead its evolving brand strategy.

"Roy will add his own personal touches," Foust says. "I intend to let him have a good time and spread his wings."

The one constant in the process will be change.

"It's a continually evolving process," says Foust. "We are constantly tweaking everything. We want to hold on to our heritage but also expand beyond it." How to reach: Damon's International Inc., (614) 442-7900 or www.damons.com