Kerry Kramp keeps Sizzler relevant Featured

8:00pm EDT June 25, 2010

Maybe you were staring at the six-panel menu on the wall at a Sizzler restaurant when a 6-foot-2 man sidled up next to you and asked how you were making your meal decision. Maybe he asked why you even chose the fast-casual steak, seafood and salad restaurant chain in the first place.

If so, you’ve met Kerry Kramp, who took over Sizzler USA Restaurants Inc. in June 2008, inheriting sales declining as much as 20 percent year-to-year.

He observed the Los Angeles-based chain — first as a competitor when he helmed HomeTown Buffet Inc. — then more intimately as a Sizzler board member for two and a half years. He came into the role of president and CEO knowing what Sizzler had tried to be.

Now, he needed to determine what Sizzler should be.

He began like an average customer would, and he invited HomeTown Buffet partner Dennis Scott to dinner to the tune of a $52 bill and good-enough food.

“The value-to-what-you-got equation was a little bit off,” Kramp says. “So it began a course of discovery to try to understand what really made Sizzler tick — not so much where the direction had been in the past as much as where the guests wanted Sizzler to be.”

Kramp suspended franchise sales so he could evaluate the company from its core. He melded internal employee opinions with external feedback in an effort to rebuild the brand, keeping Sizzler relevant as customers’ expectations changed and, in many cases, their wallets thinned.

“It was to try to understand the uniqueness of this 50-year-old company,” Kramp says. “Where it had been and, really more so, where everybody wanted it to be and how to make it relevant to the consumers that we would need to be attracting in this new world order with the economy changed the way it has.”

Get close to customers

Kramp learned something standing on the customer’s side of the menu: To discover what customers want, you have to get in their shoes. Seeing your company from the customers’ perspective means, literally, standing where they stand.

So he stood in line with Sizzler patrons, saw the offerings from their vantage point and asked them lots of questions.

“From the guest side, first it was to really understand what was important to them,” he says. “It was looking at: How do the guests want to use us?”

Start by observing as customers use your service and talk to others about it. Kramp watched customers as they examined their 50-plus menu options — often appearing overwhelmed.

“People came in, they ate their food, they might comment on a few things, they’d say it was good and then they’d head out the door,” Kramp says. “So it was a really vanilla kind of experience, which normally would be fine — unless you’re in the worst recession in history, then vanilla doesn’t always work.”

After observing, step in to learn more about the customer’s thought process.

“I would ask them questions about how they were looking at the menu and how they were deciding what they wanted, and then taking that further to see how the menu related to them,” he says. “Were there items on it that they wanted? Did they come for anything in particular? It was back to that discovery about why do people come to Sizzler and does Sizzler offer the things that they want.”

When discovering what customers want, it’s tempting to resort to surveys and focus groups — which Sizzler conducted before Kramp came on board. But don’t limit your research to hypothetical preferences in lieu of actual responses.

“Instead of asking people about what they aspirationally might want, we started feeding them food and then getting responses from them as to what they liked or didn’t like, and kept trying to evolve the recipes and portion sizing and pricing based on their response to stimulus rather than just questions about what they’d like to see,” says Kramp, who appointed Scott as chief of strategic development to test menus. “You have to be true to that consumer and find ways to embrace them: ‘What are you willing to do? If you’re not willing to spend any more money, are you willing to have less portion? Or are you willing to pay a little bit more for better quality?’ If you don’t really engage the guest to be relevant to them, you may think you’ve fixed the problem but actually created a credibility gap.”

You can’t talk to every single customer, so in addition to direct interaction, keep an eye on data like sales volumes. Knowing what and how often they order certain things can keep you attuned to preferences, even if you don’t always have the anecdotal “why.”

“We kept our finger right on the pulse of the guests’ feedback,” Kramp says. “As they gave us indications of what they liked — either verbally or through the product mix, what were they ordering — we kept adapting our business to the direction that they wanted us to head in.”

Keep close to employees

Standing where customers stood was only half of Kramp’s discovery process. He also had to consider 5,500 employees and franchisees.

After just a few weeks in his new role, he held a “GM Get-To-Know-You” meeting with all the general managers. He wanted to hear what they thought of the company so he could start painting a picture of their side of the story.

Then, when he first met with the national franchise advisory group, they questioned him for a positioning paper on what they thought Sizzler should consider.

Kramp was stunned.

“I said, ‘I don’t understand. Why are we putting a positioning paper together? Let’s just talk about it. What’s on your mind?’” he asked.

As with customers, the key to getting employee feedback is getting on their level, not just relying on formalities.

“There’s absolutely a place for consumer surveys and formal methods of getting information — those are the ends of the spectrum,” Kramp says. “But I don’t know of any good decision that was ever made out of a boardroom that wasn’t better made in the dining room or in the kitchen of a restaurant.

“Leaders have to be directly engaged in the business to the point where they can really understand that the decisions they make are affecting the business — the employees, the profitability as well as the guests. You can’t lead from a corner office. You’ve got to lead from being out there where the business is actually done.”

So Kramp ventured to the kitchen to see whether cooks had access to all of the ingredients that they needed as they prepared meals. He noticed they had trouble keeping up with orders from such a diverse menu. Then, he observed how dishwashers handled the flow of dirtied dinnerware. He noticed cups piling up because servers delivered fresh refills after guests took a few sips of the first drink.

“It was really just finding out, ‘Do you have the tools? Do you have the understanding? Do you have the know-how, the training?’” Kramp says. “Is there a way to make their life better?”

Gauging what employees need to do their jobs should be ongoing and continually balanced with customer feedback. Kramp regularly tours stores to ask whether employees have tools to connect with customers, based on their own perceptions of what they think patrons want.

Kramp also engaged employees with daily food bars, where all employees gather around the salad bar before openi ng to go over the selections, discussing how it’s made and why.

“All of a sudden, whether you’re the cashier, the dishwasher or the server, you knew the food,” he says. “You knew what ingredients were in it, you knew why we did what we did. If you know that the ladle’s supposed to be upright and it’s not, you stop and make sure that the ladle’s upright. The employees began to take real ownership of the way that things were done.”

You start to empower employees by simply requesting their input and — regardless of their contact with customers — giving them an understanding of what your company offers customers and why. Once they’re empowered, they’ll be more committed participants in moving the company forward.

Stay in the middle

Thanks to the time he spent in the field, Kramp received input across the board. The challenge was deciding which ideas would work.

“If the guests would have wanted something that we didn’t have to offer — and we couldn’t execute it — then it doesn’t mean that you make your operation inefficient to chase after a guest,” Kramp says. “You go to the least common denominator of what’s the consumer coming to us for and what can we deliver at an exceptional basis. Surround yourself with things that fall within that sphere of influence.”

Sometimes, those intersections are obvious. Kramp knew customers had trouble deciding what to order from such a broad menu and cooks had trouble delivering, so it was an easy decision to eliminate 22 low-selling, hard-to-prepare items and re-engineer the quality of the rest. He had seen dishwashers struggle to keep up with extra cups while servers rushed to bring refills customers said they didn’t need. So he created refill stations where thirsty guests could top off their drinks.

But it’s not always that clear, so to rein in workable ideas, Kramp had employees visualize a golf course.

“I like to get my money’s worth in golf, so I use almost the whole fairway,” he jokes. “I go from the left to the right to the left — I just stop counting somewhere along the way.”

That translated to a safety zone for new ideas.

“We decided that we wanted Sizzler to be in the fairway,” Kramp says. “If you play the fairway, you always get from the tee box to the hole. You may not get there in the least amount of strokes. You may not get there as fast as somebody who takes shots over the sand traps or over the water hazard or over the trees. But we wanted to be safe in that we were consistent in what we delivered.

“If there was a way to shorten the route without taking too much risk against the business, then we were willing to take some of those deviations. We’re really open to movement from side to side within that fairway to try ideas.”

The measuring stick was long-term success through customer satisfaction. Kramp didn’t want employees taking drastic measures to earn extra profit this quarter if it wouldn’t align with the company’s core in 50 years.

Changes should encapsulate what customers want and what employees can deliver with quality. Still, results aren’t always predictable. So if franchisees brought ideas that didn’t seem too far off-course, Kramp tested it.

“We’ve got [184] restaurants, and to us, there’s [184] different places you can test things,” he says. “We would say, ‘OK, let’s take a couple of stores. Let’s do a product mix evaluation before you put it in. Let’s do it for four to six weeks and see what happens with guest counts and the profitability and the product mix.’ That began to show them where we were headed with respect to where the consumers were, and then they could buy in to what we were looking at.”

The key is to not prescribe a single solution.

“We created an environment that was really collaborative,” Kramp says. “We just wanted it to be right — not our way, not their way, but the way that the guest wanted it to be. We began to build credibility with our franchisees; they understood that we were in this for their interests.”

By building changes around customer feedback and employee input, Kramp overhauled the Sizzler brand, unleashing a value-priced menu with 35 refashioned dishes made fresh and often including the salad bar — previously a $3.99 add-on. Within three months, sales turned around, totaling $311 million in 2009. In February, he relaunched the franchise program, and he’s seen same-store sales increases in 14 of the past 18 periods.

Still, Kramp continues monitoring feedback to keep the company relevant.

“One of the biggest things that we learned is that you couldn’t go back to things that you had tried before that had worked at a different time,” he says. “It was really a time to look at things and break the rules from the past. But don’t do it in a vacuum, that you think you know what the guests want. Do it in a collaborative method to find out what makes you relevant in their life.”

How to reach: Sizzler USA Restaurants Inc., (310) 846-8750 or www.sizzler.com