Pots of gold Featured

8:00pm EDT June 25, 2008

It certainly wasn’t an overnight success story for Bob Johnston and The Melting Pot Restaurants Inc.

Sure, with more than 100 restaurants now open around the country and many more in the works, things look great.

However, when Johnston, president and chief operating officer, and his two older brothers, Mark and Mike, bought the Melting Pot fondue concept and its five restaurants in 1985, they were fighting an uphill battle. Aside from the problem of getting banks to loan them money, they were essentially doing everything themselves.

“Our story is not an instant success story,” Bob Johnston says. “The first 10 years we struggled, and we really failed to thrive.”

Yet, even with the challenges, they grew to 19 locations. “But, it wasn’t the growth that we had projected,” Johnston says.

[See Smart Business' Mike Cottrill interview Bob Johnston
about capturing customer service information.]

That was until 1995 when the trio established their mission, vision and principles as a blueprint on how to achieve their goals.

“We were not certain that this would solve all that ailed us at that time,” he says. “However, we realized that we were rather narrow-minded in how we viewed our business and made decisions.

“We tended to focus on ‘What will this do to the bottom line?’ first, as opposed to considering the impact on our two most important customers: First, our team members and management, and, secondly, our valued guests in the restaurant. The purpose of stating clearly our mission, vision and principles was to help us always put these two groups at the center of our decision-making.”

To create the mission, vision and principles, consultants interviewed team members about what was important to them regarding the business, while Johnston and his brothers discussed ideas for the mission, vision and principles with franchisees and showed them how the changes would help the company grow.

“We felt as, if they had a hand in creating this statement, it would be easier to buy in to it and also teach team members from it as a platform,” Johnston says. “We said, ‘Let’s take a hard look at ourselves. Let’s look at our business practices. Is it a match or is it a mismatch with these things that we say we believe?’ When we found mismatches, we changed things.”

By defining and stating the mission, vision and principles, the company attracts and retains better employees, and it’s easier for Johnston to monitor the company’s progress, which has led to faster growth.

In 2005, the company posted revenue of $160 million, then $194 million in 2006 and $217 million in 2007.

While currently employing approximately 5,000 employees, Johnston and his team continue to grow based on the changes made in 1995 and expect to open 36 additional restaurants by the end of 2009.

“Once we clearly stated mission, vision and principles, the next 10 years kind of tells the rest of the story. We went from 19 to 100 (locations), so you can kind of see what a difference it made,” he says.

Find and keep the best employees

The challenge that stands out most to Johnston in his years with the company is the attraction and retention of talented team members, both in management and service personnel.

The development of the mission, vision and principles has been a major key in reducing the problem. Because there are concrete beliefs set up through the mission, vision and principles, current and potential employees know what is expected of them.

“When that’s clear, you get benefits in two areas,” he says. “It benefits the existing leadership and management, but it also provides this benefit as a recruiting tool. It’s a magnet that kind of draws toward you people that are like-minded.”

Once the mission, vision and principles were clearly identified, Johnston had something that was portable and easily shared with his existing team members, franchisees and management.

“Really, it has served us in many areas and ... this clearer understanding of mission, vision and principles that we use to make our daily decisions became a recruiting tool,” he says. “It was kind of a litmus test of sorts [that] we shared with perspective franchisees and perspective team members and management candidates. We shared with them how we make decisions and the things that we believed. We have found effective ways of testing whether they have a higher likelihood of embracing these principles and using them in their daily decision-making or not. If they do, then they are attracted to the brand and pulled into the organization and help us grow. If they don’t, then, ultimately, it results in turnover, which is very costly in terms of hard dollars and soft dollars, and it takes away from our focus on our customer service mission when we have turnover.”

When hiring, Johnston wants to find flaws in a potential team member or where they might lack in regards to the mission, vision and principles.

“A lot of times, we get into a room with a potential team member and we tend to only see the things that we like about them; this is the one time to deny your human nature,” he says. “Don’t look for the things that you like about this person. Find out what’s wrong with them. Find out what you don’t like about them. What doesn’t fit in this picture?”

Johnston says he has trouble in this area and has a tendency to only want to be friendly with job candidates. That’s why he depends on others to help him in the interviewing process.

“We give them over to our existing team members and let them spend time together because some real interesting things happen during that interaction,” he says. “They step out of the interview mode and really, all of a sudden, become themselves alongside people who they think are going to be their peers, and they might be their peers. That’s where some real great learning takes place about the individual.”

The mission, vision and principles are now in print on trifold business cards that all team members carry with them to help guide them when faced with a decision. Though the card is a guide, the employee has the power to make a decision, instead of waiting for someone else to make the call. That empowerment develops employees who want to stay and grow with the company.

“So, what this whole clear understating of our principles and mission and vision, what it really results in is independence,” he says. “Team members are made more self-reliant, and they are able to make decisions on their own without having hand-

holding going on. And, the decisions they make tend to mirror the decisions of the principles, of the company and the top-level management, and that’s real power. When you have that in an organization, you have real power and now you are ready to grow.”

Monitor progress

Though the mission, vision and principles points the company in the right direction, Johnston still has to monitor if the company is meeting its goals and where it can improve.

To do that, Johnston manages by objective and not micro-management.

“My role, any leader’s role within an organization, is to share the top-line vision and have a clear understanding of what the objectives of the organization are,” he says. “The team members’ role is to develop the strategies and the tact ics to bring the organization to that objective and achieve it. My role is to set the objective and make sure they’re clear and, when necessary, help remove roadblocks for team members. Maybe they need more resources or they need to be kind of nudged in a different direction, occasionally, but that’s it. Their role is to get us to that result.”

Because one of the organization’s principles is learning, the company relies on that data to know where they are succeeding and where they are coming up short.

“You have to have your clear objective,” he says. “They have to be measurable. You have to have budgets and metrics for measuring results. You have to force yourself to face the music, look at performance against expectation and budget, and when it’s out of line, talk about it, make adjustments. We do that on a monthly basis with the entire leadership team.”

The company has an open format where all of the restaurant operators share all of their sales and data with every franchisee and operator, so they can learn from one another.

There are also franchise business consultants who work with restaurant franchisees, managers and employees and conduct topto-bottom assessments of how each unit is running. A third-party consultant company then monitors the customer feedback and reports on the results.

“I sit on the edge of my seat every Sunday waiting for that report to be e-mailed to me so I can see what the customers’ attitudes are toward the service and the experience we are providing,” he says.

When you get results, you have to use your own judgment when deciding what information will have the greatest impact upon your customer.

“It’s fairly obvious where the opportunities are,” he says. “We don’t overreact. We look for trends. We look for validation. If this feedback is an anomaly, then we might, I wouldn’t say we disregard, but we’ll come back and look at it later. If it’s something that we’re seeing continual feedback of the same sort, then we huddle up with our leadership team ... and look at that and examine it further, drill down and go to our operators and managers, talk to them about the challenges that we think we are seeing and get their input.”

While, ideally, Johnston wants his people to identify a problem and work through it themselves, there are times when they need help.

When there is a roadblock, Johnston wants the troubled team member to come to him with the problem. In order for that to happen and for him to monitor effectively, he needs to establish an environment where a team member will admit to a mistake.

“It’s something you work on every day,” he says. “The bottom line is that comes as a result of the team members monitoring your behavior, your actions. You can say it all you want — ‘If you need help, let me know.’ But, if your actions say something different, trust me, they aren’t going to come to you. They’ll sweep it under a mat.”

When Johnston experiences a customer defect while dining out, he knows that if a manager doesn’t visit him, it isn’t because the front-line employee doesn’t care enough to tell the manager.

“It’s because they’re worried about the repercussion of going to management and saying, ‘Hey, we dropped the ball here,’” he says.

That’s why the company preaches to the managers at the restaurant level that the ball will be dropped from time to time, and, when it does, don’t read the guilty party the riot act.

“You think they’re going to come see you again?” Johnston says. “Would you rather have problems and know about it so you can do something about it or rather not know you have problems?”

HOW TO REACH: The Melting Pot Restaurants Inc., (800) 783-0867 or www.meltingpot.com