Prudent investments
Stretching and growing isn’t limited to employees; a company needs to invest in itself before it can stretch and grow into new markets.
Recently, White Castle started rebuilding existing restaurants.
“We have a lot of castles built in the 1980s. They just need to be replaced. They look old. They look tired,” Ingram says. “We’ve had lots of success with our new look — a reimaged dinning room, a more open kitchen — because we want to display to our customers a level of transparency so they can see how the food is being cooked.”
Investing in the existing infrastructure was critical for the brand image. It also benefits the employees and customers.
“It’s definitely an investment that we have seen a return in, but that costs money,” she says. “We are all company owned, so there are some economics to that that we have to work through.”
White Castle has two bakeries and three plants that make the meat patties for its restaurants and frozen products. In fact, the company’s retail sliders, developed more than 25 years ago, account for 20 percent of sales. With lots of places that need capital, growth is slower.
Investment decisions are presented to White Castle’s fiduciary board of three family members and five independent directors. The board gets quarterly updates on capital expenditures, with a deep dive once or twice a year to keep strategic planning on track.
White Castle has always been financially conservative and for many years it had no debt. Ingram says they have some debt now, but it’s appropriate to their size.
“We’ve always been very conservative. You won’t see us going after something and risking the whole company to be able to do it, which has made us successful for 96 years,” she says. “Being prudent doesn’t mean you don’t take advantage of opportunities; it just means that you’re very thoughtful about the opportunities that you go after.”
It’s only after your ship is in order that you can look out to grow, Ingram says.
“We’re now at that point, and excited to be able to not only continue to invest in where we already are, but look at places where we are not and find other spots that might want to have a White Castle,” she says.
For example, in 2015, White Castle signed a licensing agreement for a restaurant in a Las Vegas casino, going west of the Mississippi River for the first time.
Diversify around the core
The effort to update restaurants partly came from new products that added requirements on the kitchens. There’s a rigorous process before a new product shows up on White Castle’s permanent menu, though.
First, the company tests the idea with an online panel. Then it develops a spec and takes the item out to a few castles. With some customer feedback, a team of marketers, trainers, operations personnel and chefs ensures the product works for customers and with operations.
From there, the product is put into a market with media and marketing behind it. If it works, White Castle may roll it out across the whole system as a limited time offer. If it’s really great, it stays on the menu.
Ingram wants to continue this trend.
“We are now looking at doing more product development for the retail side — taking existing products on the restaurant side and seeing if those would be applicable products in retail or specifically developing products for retail,” she says.
While some new products have been successful, not all new ideas have worked. In 2010, the company developed three new brands: a sandwich concept, a barbecue concept and a noddle concept. After about 18 months, Ingram says White Castle closed them down.
But how does she balance innovation against customers who get married at White Castle or are inducted into the Craver Hall of Fame?
