Profits on the farm Featured

7:00pm EDT December 10, 2003
No successful company can remain so without continually changing to meet its customer needs. Bob Evans Farms Inc. know that, and has done its consumer homework and changed accordingly while remaining true to its founder's original vision.

"We're very focused on execution," says Chairman and CEO Stewart Owens. "We provide high-quality food and great service on a consistent basis."

Owens' family and business roots are in Owens Country Sausage, a nine-location family owned business based in Richardson, Texas, which was acquired by Bob Evans in 1987. Like its parent company Bob Evans, Owens, headquartered in Texas, makes sausage and operates restaurants.

For Bob Evans, what started as a sausage-making company and 12-stool convenience restaurant on founder Bob Evans' farm in Gallipolis, Ohio, has evolved into a 539-unit restaurant and retail giant, reporting $1.1 billion in sales in 2003.

"It's a big responsibility," Owens says.

Owens says what keeps the chain successful is its focus on consistency.

"We own and operate all our restaurants," he says. "We do not franchise. We like to have control of the quality of the food, the quality of the staff and to enforce our standards."

That philosophy creates a difference from its competitors -- Bob Evans can't use franchising to generate expansion capital. Says Owens, "If you want to grow faster, you can franchise or use your own capital. We have a strong balance sheet; we can fund our growth."

That ability contributes to Bob Evans' drive to build more units at a rapid rate.

"We can achieve a 10 percent growth rate," Owens says. "Eight percent of that comes from new restaurants, while 2 percent of the growth comes from same store sales."

And while the retail food side of the business -- flavored sausages, biscuits, home fries and bacon sold in grocery stores -- continues to produce solid results, the restaurant side is far more promising for the company's growth.

"The restaurant grows through adding units," says Owens. "The food side grows in big part by adding new products or being in more categories in the grocery store."

But adding products requires extensive development and testing, so it takes longer to introduce them to the consumer market. It's far easier -- and more profitable -- to open a new restaurant and generate immediate new revenue.

 

Customer-driven changes

Consistency may be the key to Bob Evans' restaurant growth, but that doesn't mean the company isn't willing to tweak its menu and delivery systems to meet changing customer needs.

"If you look at our menus over the last five to 10 years, you'll notice we've changed the concept quite a bit" as customers search for healthier food choices, says Owens.

"Twelve years ago, we had few salads on the menu," he says. "We had the dinner salad, a Cobb salad and taco salad."

Today, there are eight entrée salads.

"People are looking for more variety and spicier flavor profiles," Owens says.

And when it comes to healthier choices, he says consumers' concerns often are cyclical.

"We went from wanting to decrease fat and cholesterol to looking for higher protein foods and fewer carbohydrates," he says.

To respond to consumer needs, Owens formed a task force to look at the issue of how to communicate the menu choices consumers have available to fit their particular dietary needs or concerns.

"You'll see the changes on the March menu," says Owens. "We'll be giving hints and tips on how customers can make choices that fit their dietary guidelines."

Owens says the company's Web site will also play a significant role in communicating dietary and nutritional information.

"Regulators have been talking about requiring restaurants to post the nutritional information on all items on the menu," Owens says. "But nothing has passed yet."

Bob Evans isn't waiting; it's being proactive with its posting of this information on its Web site.

"It's another service we're offering to the customer," Owens says.

Bob Evans stays in touch with its customers in a number of ways, including a silent shopper program which monitors service received at the restaurants.

"The silent shoppers visit the restaurants four or five times a month," says Owens. "Then they complete an extensive survey."

The survey covers th total experience, asking how long they had to wait in line, how quickly the server came to the table once they were seated and whether the server offered them dessert.

Another system to measure customer service was in-store kiosks with electric keypads which asked customers 12 to 15 questions similar to those asked of the silent shoppers. The kiosk appeared in various locations for two weeks, twice a year, but are being replaced with a phone-in system.

Every 20th customer will get a message printed on the receipt offering a small incentive -- a free dessert or $2 off the next meal -- for phoning in and taking the survey. The new system will provide more feedback more consistently.

To date, Owens says customer feedback in general has been positive.

"The companies we used for the silent shopper and kiosk tell us that our scores are high and consistently improving," he says.

To better serve its customers, Bob Evans restaurants launched a carryout service a few years ago, designed to make ordering more convenient. And it made the new service clearly visible in the stores, with a separate cash register, dessert display case, separate food preparation area and phone lines.

"All of this increased the visibility of the service," says Owens. "We installed 400 carryout service areas in 90 days."

The carryout service has been successful from Day One.

"It's grown from less than 2 percent of our sales to 6 percent and growing," he says. "I expect it to reach 15 to 20 percent in the next few years."

Bob Evans is also testing a curbside pick-up service in its New Albany location.

"When the customer places a phone order for pick-up, we ask for the color, make and model of his car," says Owens.

The company installed television cameras and monitors so that when the customer parks in a designated pick-up space, the staff can see him and take his order to the car.

Owens says it's too early to say whether this service will spread to other locations.

"There's an excellent chance it will be expanded, but I don't know if it will be effective everywhere; there's not an insignificant cost associated with it," he says. "We'll see how it goes."

 

Growing the farm

Owens is confident the company will continue to grow as long as it sticks to its successful formula of consistency and meeting changing consumer needs. It's hard to argue this success, based on the publication Restaurants and Institutions 2003 Top 400 Rankings.

Bob Evans is the fourth-largest family dining segment restaurant chain in the country, and ranked 36th overall. And its expansion plans remain aggressive.

"We target defined market areas," Owens says. "We look for media markets that will support a critical mass of restaurants that allow us to advertise."

Expect to see new Bob Evans locations filling in the gap between its restaurants in the upper half of the eastern seaboard and Florida. Meanwhile, the company constantly works to improve itself.

"We redesigned the restaurant building and took $150,000 out of the cost while increasing the number of seats," Owens says.

Bob Evans also built a state-of-the-art processing plant for its retail products and is launching an e-learning employee training program and replacing its point of sale (POS) system.

"There are meaningful improvements to accomplish every year," he says. "And we are good at getting those done."

Owens admits that running the ever-growing, nearly $1 billion company can be daunting.

"I never expected to be in a job like this," he says. "It takes some getting used to the size and scale, compared to what I grew up in."

But, says Owens, the company's successful business model keeps it simple.

"I stepped into leading a company that already had the fundamentals in place," says Owens. "And they've been here for a long time. That makes it easy.

"Quality and service never go out of style. They're our biggest strengths." How to reach: Bob Evans Farms Inc., (800) 272-7675 or www.bobevans.com

 


The Top 10 family dining restaurants

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Denny's Spartanburg, S.C. 2,217.8 1,676

Cracker Barrel Lebanon, Tenn. 1,825.7 466

International House of Pancakes Glendale, Calif. 1,479.6 1,103

Bob Evans Columbus 900.8 507

Perkins Itasca, Ill. 818.6 498

Waffle House Norcross, Ga. 700 1,403

Boston Market Golden, Colo. 655 662

Friendly's Wilbraham, Mass. 645 549

Big Boy Warren, Mich. 591 400

Coco's Bakery Irvine, Calif. 575 490