Father knows best Featured

7:00pm EDT November 24, 2006

See Jane. See Jane run a company. The carefully laminated sign on Jane Abell’s desk stunned her father, Donatos Pizzeria Corp. founder Jim Grote, when he first spotted it nearly seven years ago.

“He said, ‘Really? You would want to do that?’” Abell says.

Abell’s older brother, Tom, was already ascending the ranks to one day assume leadership of the then-$150 million family business. Grote, chairman and CEO, had never really considered Abell for the position.

“I didn’t even know she wanted to do this,” says Grote, who founded Donatos in 1963 and brought all four of his children up through the business in various capacities.

“He never would have thought of me in this role — never, ever, ever,” says Abell, who now serves as chief operating officer for the $171 million pizza chain. “My older brother was the golden boy. He was the 4.2 [grade point average] student. He graduated from Wharton. He’s just incredibly smart. He always was the COO but always kind of wanted to do something else. And I was always in HR.”

In fact, Grote might never have realized Abell’s potential as a business leader had it not been for a fateful decision reached in mid-1999 to sell Donatos to McDonald’s Corp.

“The president, Bill Rose, saw Jane not just as my daughter but as a person,” Grote says. “He put her in charge of development and franchising, plus HR, and really stretched her. He told me, ‘I know this is your daughter, but I don’t think you realize how talented she is.’ I thought about it and said, ‘I might be blinded by that.’ “So I watched during that time and I was somewhat surprised to see how quick she picked up the new responsibilities. She was really just absorbing them like a sponge.”

Abell says it made her father see her in a new way.

“I think that’s when Jim first saw me as a partner,” Abell says. “It was a great, pivotal point for him to see me in another light.”

The rest is history — or, at least, history in the making. Here’s how Abell landed at the top of Donatos, alongside her father, who is no longer surprised that she may one day want to take the reins alone.

All in the family
It’s said that what doesn’t kill you makes you stronger, and the McDonald’s experience might be classified that way for the Grote family. It certainly made the leadership of the company and its family roots stronger than ever.

“My son was in charge of operations when we sold to McDonald’s,” Grote says. “Tom was my righthand guy. He was the oldest son and, well, he probably would, one day, take over the business.”

But things changed. Tom Grote left Donatos to open an upscale restaurant in downtown Columbus called Out On Main. [It folded in 2002.] He is still on the advisory boards for both The Grote Co. and Donatos, and serves as a sounding board for Abell.

“I still bounce things off of him,” Abell says. “He’s my biggest fan. He always was. And I think that’s because he always kind of knew it wasn’t in his heart to do this, and it was in mine.”

Abell’s sister, Kate, who helped build Donatos’ catering business before the McDonald’s buyout, wound up opening a coffee shop on Tamarack Circle called Sips and became an artist. Abell’s other brother, Kyle, who worked in the marketing department at Donatos, launched his own video production business called Enlightenment Studios.

“For me, though, it’s always been this,” Abell says.

That’s why she couldn’t sit idly by when she saw the path McDonald’s was taking Donatos down. Aggressive expansion plans nationally and abroad were stretching the company too thin, and the once-profitable regional chain was quickly mired in red ink. Abell had to do something — and fast.

Fear factor
It didn’t take long for Abell to realize that, under the McDonald’s umbrella, things weren’t as they should be. In addition to the company’s financial problems, Donatos’ culture was changing — and not for the better.

“Our first year went by, and I knew what kind of company we didn’t want to have,” Abell says. “There was a lot of fear, a lot of bureaucracy, a lot of politics, a lot of people positioning themselves in our company in ways that I just never got to experience. We were always a family business. I wouldn’t say we had a perfect culture, but if you felt like you needed to say something to Jim Grote, you could walk into his office and say it. For the first time in my life, I felt fear, which was an interesting experience.”

When McDonald’s shareholders began making noise about the company’s falling stock price and executives talked about cutting off unprofitable arms of the business to set things right, Abell and Grote feared the worst for Donatos.

“The edict was they had to get rid of all these ‘distractions,’” Grote says. “Their stock had gone from $42 to $13. The CEO had left. The new one came in and said, ‘We will have no more losses recorded on our statement.’ So that was his charge. “They were going to break it up pretty much and just get as much money back as they could from profitable markets.”

There was even talk of converting some Donatos locations into sub shops under the McDonald’s brand and shuttering the rest. If that happened, Donatos would cease to exist.

“We’d already been paid, so as far as us being all right [financially] it was OK — except it was like one of your kids being chopped up,” Grote says. “It’s something you’re attached to. So you can see how the idea of splitting it up or selling it off was not sitting very well.”

That’s when Abell stepped up — once again surprising her father — and offered to risk it all to keep the Donatos name alive.

“I was ready to do whatever it took,” Abell says. “I told my Dad, ‘I will sell the house I just built. I’ll sell everything I have. I’ll do whatever it takes.’ But I knew I couldn’t do it alone. “I needed his money. I joke about it a lot, but I really needed his leadership. He’s an incredible, inspirational leader, but he’s also an intuitively smart entrepreneur. He just knows. I needed to work with him side-by-side to absorb some of that from him.”

Leader in the making
It took Abell and Grote about eight months and a reported $50 million to buy back Donatos from McDonald’s. The deal was finalized in December 2003.

By that time, Donatos had grown to 182 stores in seven states, but it was operating at a $7 million loss, Grote says.

“Jane’s first challenge was, Can we stabilize and get the morale back to where it was as a family business?” Grote says. “The culture took a hit because of the large company that owned it, even though Jane and I were still very much involved. There seemed to be a lack of connection with what we were all about. So when we took it back, she took over operations. That was really important. She spent most of her time going to the stores and talking to the managers and supervisors and market managers. She was the face of Donatos, and she was a family member.

“The scary part was what had happened during those four years. Internally, it seemed chaotic. We were growing like crazy, then we stopped. But in the field, our old-time pizza makers were still out there plugging away making the best pizza they could make, just like before. Fortunately, we didn’t lose the core group of people who knew how to run Donatos.”

Within a year, Donatos was profitable again.

“We had a $10.5 million turnaround that first year,” Abell says.

“I thought that was a pretty good achievement considering the chaos we were in and what could have happened,” Grote says. “Jane was the catalyst that actually made this second phase of this business happen.”

Still, Abell won’t take credit for the rapid return to profitability.

“It wasn’t me,” she says. “It wasn’t even Jim. It was our people who rallied around the spirit of who we are and were excited about getting it back. “I just knew we had a destiny,” she says.

And she wanted to see Donatos reach it.

Becoming a team
Grote’s growing confidence in Abell’s leadership is clear by the number and complexity of tasks he’s delegated to her in the past three years. She now oversees most of the day-to-day tactical duties, and Grote says she understands all the financial aspects of the business.

The one area Grote has not yet relinquished to Abell, however, is product development.

“Product is his passion,” Abell says. “We always joke that when we can’t find Jim, it’s ‘Oh no! He’s down in the test kitchen.’ “Of course we irritate each other sometimes. Any true great partnership does. But you’ve got to have the courage to talk about it.”

Abell and Grote often talk about their differing personalities and how to embrace each other’s vastly different — one might even say polar opposite — approaches to decision-making.

“There are moments when it’s hard for us to be in the same room because I would come at a decision very differently than he would, even though we would come to the same decision,” Abell says. “He has an incredible sense of urgency. He’s always about tomorrow. But sometimes implementing quickly isn’t always the best way to do it. I like to have a plan. I like order. I like structure.”

Still, Abell says she is learning to appreciate the need to move more quickly on some decisions. And Grote is starting to lean on Abell to help him think through scenarios — even if sometimes it’s in hindsight.

“He’ll come to me and say, ‘OK. What should I have done differently in that situation?’” Abell says. “He’s 63 years old and still aspiring to be a better leader.”

Abell no longer worries about being seen as the boss’s daughter, either.

“I’ve fought very hard against that my whole life, probably to the point that I would argue with Jim on purpose just because of it,” she says. “I don’t think anybody in the company today feels as though I’m in this position because I’m Jim’s daughter.”

That includes Grote himself.

“I have respect for her not just as a daughter but as a full-blown partner, as a peer.” Grote says. “I’m always going to be the dad and she’s always going to be the daughter, but in business, she’s a peer.”

What’s ahead
Abell’s sights are still set on growing Donatos, but doing so slowly and methodically.

“The reason I bought it back is because I do believe our destiny is much bigger than being a regional player,” she says. “We’ve stabilized for the past three years. Now we need to take it up a notch.”

She says that means expanding nationally first, and then, perhaps, globally.

Would Donatos ever consider selling to another company again to make that happen?

“I never say never,” Abell says. “I never would have thought we’d sell in the first place, to be honest. It wasn’t on our plan. It wasn’t on our radar. But I would say that we really see growth through franchising right now. That’s where we’re headed. When you have a franchise, you have people who are invested in the business financially, emotionally, and they’re doing it for the right reasons. It’s a different attitude and a different feeling.”

And what about Grote? Is he thinking of retirement?

“I never used to see myself not being daily involved,” Grote says. “But with the team and with Jane’s energy, I could see that happening. ... But I would still probably hang around the kitchen.”

HOW TO REACH: Donatos Pizzeria, (614) 416-7700 or www.donatos.com