2006, the company was in poor shape.
Same store sales — one of the most relied-upon measures of
financial health in the restaurant industry — had been falling
steadily for two years. Restaurants were closing. Shareholders
His predecessor, Stewart Owens, had stepped down after profits fell eight out of nine quarters prior to his resignation — and
net income in fiscal 2005 had dropped 48 percent from the previous year.
The only bright spot was sales, which were growing, but at a
lackluster, single-digit pace.
“When I met all the people and looked at the historical performance, I realized these are good people. They just needed a
rudder,” says Davis, chairman and CEO of the nearly $1.7 billion,
Columbus-based company. “They needed somebody to come in
and say, ‘Let’s see what we can do.’”
Find a better course
Davis wasted no time bemoaning the situation at hand when
he accepted the top post of the underperforming restaurant
and food product chain. He knew decisive action was needed
and that he couldn’t turn around the company alone. So he set
out to meet the crew.
“In my first six months on the job, I hit about 100 restaurants,” he
says. “In the first nine months, I visited all of our plants.
“I had to be visible. I talked with managers and asked them
three questions: What do you like about working at Bob
Evans? Where can we improve? And what would you do if you
He got some interesting answers.
“I heard everything from new product ideas to how we
should control our development, to wanting to better understand how to track our business, to what kind of Christmas
party we should have,” Davis says. “Everybody has different
points of emphasis. But it created an environment of really listening to the people closest to the action.”
It also helped him lay the groundwork for some sweeping
First came a change in management compensation.
“You have to be tough-minded about performance and link
your pay to clear metrics that are a stretch for the organization
but are still achievable,” Davis says. “It’s a simple principle:
Things get better; people make more money.”
Davis started by linking officer compensation to specific company
goals and used a cascade process to bring the system to other levels,
including restaurant and plant managers. Individuals eligible for performance-based pay are measured against each metric twice annually — once at a six-month check-in to see how they’re progressing toward each goal, and once to determine if they’ve met each
goal and, thus, qualify for the incentive pay.
“It’s almost like taking the SAT: Here’s the metric; here’s your
score,” Davis says. “That makes it relatively easy to say, ‘Here’s
where I did well, here’s where I didn’t do well and here’s where
I have to do better.’”
Performance metrics are linked directly to the other big change
that Davis instituted in his first few months on the job.
“Within the first 30 days, I said, ‘We don’t have a strategic
architecture,’ so I took that very seriously, and we crafted our
BEST Brand Builders,” Davis says.
The acronym BEST stands for Bob Evans Special Touch, but
essentially, the brand builders are a five-pronged strategy for
rebuilding Bob Evans.
“I’ve worked in large businesses and small businesses and
having clarity of purpose and vision is essential,” Davis says.
“It’s the leader’s job to articulate the vision, but we also have to
say how we’re going to get there. That’s where the Brand
Builders come into play.”
- Win together as a team.
- Consistently drive sales growth.
- Improve margins with an eye on
- Be the BEST at operations
- Increase returns on invested
“It’s hard to argue that these aren’t things you need to do to
build a business,” Davis says. “They’re very clear measures.
And each of the five Brand Builders are tied to incentive pay. I
think everybody bought in to it. It gave us a road map to follow.”
Communicate your plan
Once the direction was clearly set, Davis’ next task was to
“broadly and boldly” communicate the five BEST Brand Builders
to the more than 50,000 employees throughout the Bob Evans
“We’ve got people working in plants, we’ve got people working in restaurants, we’ve got satellite facilities, we’ve got people in California, people in Ohio,” Davis says. “We had to find a
way to connect with all the different constituent groups across
Posters, mouse pads and other assorted paraphernalia were
emblazoned with the five expectations set forth in the Brand
Builders. Davis began hosting departmental lunches and companywide meetings to reinforce the importance of the Brand
“It’s a way to motivate and get people energized around the
Brand Builders,” he says. “They’re the key to our future success.”
In addition, Davis now has his own corporate blog within
“I have a blog where people can go online and ask me anything,” he says. “People want to know what’s going on in their
Despite all the improvements in internal communications,
what probably speaks the loudest to employees is seeing actual results.
“The first half [of fiscal 2007] was pretty rough,” he says. “But
the second half was really strong. That’s when the business
started to turn and cash flow started getting better, and we
started being smarter in where we were spending and investing our money.”
For example, when Davis promoted Mike Townsley to executive vice president of food products, he immediately combined the corporately owned but separately branded Bob
Evans Farms and Owens Foods product lines into a single unit,
helping reduce overhead, streamline operations and maximize
buying power. In addition, Davis’ Brand-Builder-inspired
stance that business segments now had to “earn” capital
investment by meeting sales and profitability expectations
helped send a message of fiscal responsibility throughout the
company and stave off losses.
“We went from restaurant openings as a birthright to
whomever has the best return on investment will get new capital in the future,” Davis says. “If we want to improve shareholder value and drive stock price, we have to be great at
return on value.
“I think the majority of people understood what we were trying to do [with the Brand Builders]. But we started really hitting our stride when we started getting results. When that happens, people start to realize these Brand Builders really do
Get buy-in at the top
Communicating with shareholders and board members was
also a vital part of Davis’ turnaround plan for Bob Evans. After
all, measurable change was going to take time and shareholders had already run out of patience with Davis’ predecessor.
“One of the first things I did was visit some of the top shareholders,” Davis says. “I said, ‘Here are my thoughts on the business. Give us time to craft a strategic plan.’ When we came back
with the Brand Builders, I think they saw we were serious
about performing. Then, when the results came, that spoke
“The best way to earn the support of shareholders is to show
progress in operating results, and our Brand Builders generated improvements shortly after we implemented them.”
As for the Bob Evans board of directors, Davis was careful to
get alignment with them on the direction he was sailing before
he got too far.
“You have to make sure you have a direct line with the
board,” Davis says. “Change starts at the top.”
Board members were very receptive of the Brand Builders
concept, and together with Davis, they crafted a five-year
strategic plan to further solidify Bob Evans’ course.
“Everybody rallied around it,” Davis says. “We are headed in
the right direction today.”
So where would Bob Evans be today if Davis had not taken
control and set a clear, performance-centered direction for the
“It’s hard to speculate,” Davis says. “The business didn’t get
to where it was overnight. I kept reminding myself of that. I’m
just proud of our team and our company for galvanizing as
quickly as we did and moving in a better direction.”
The clearly humble Davis says what he has done with Bob
Evans isn’t so extraordinary. It’s basic change management.
“You start with a plan, you communicate it, you get alignment
from your key stakeholders and your board, and then you don’t
waiver,” he says. “You have to keep driving it.”
There is, after all, still a long way to go.
Although sales and net income are still plodding along, same-store sales have rebounded into the positive column and cash
flow has improved dramatically. So much so, in fact, that the
board of directors has authorized the repurchase of up to 3 million shares during fiscal 2008 on top of the 2 million shares
repurchased in fiscal 2007.
Shareholders are regaining confidence in the brand, and
employees seem to be encouraged, too.
“I’m seeing people smiling a lot more,” Davis says. “It’s a reaffirmation that we’re at least trying to move in the right direction.”
But it’s just the beginning.
“I’m one of those happy-but-never-satisfied guys,” Davis
says. “You can never rest on your laurels and think your turnaround is complete. There’s a fine line between positive and
negative sales, so you can’t become the least bit complacent.
There are a lot of external factors out there. You have to
always be on your game.”
Still, the progress he’s seen is encouraging.
“When you see it work, it’s so rewarding,” Davis says. “When
you sit in a meeting, we’re not challenging which direction
we’re going anymore, we’re challenging the best way to get
HOW TO REACH: Bob Evans Farms Inc., (800) 272-7675 or www.bobevans.com