Growth | September 2014 | By Mary Avant

Old Brand, New Tricks

Roast beef chain Arby’s is celebrating its 50th anniversary with a major revitalization effort that gives the classic concept a fresh twist.
Quick service restaurant company Arbys honors milestone with big changes.
After 50 years in the business, Arby’s is revamping its dining rooms and other parts of the business in an effort to keep up with the times. Arby’s
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One would imagine that many things change in the course of five decades in the restaurant business. And in terms of the limited-service landscape, consumer habits, and technology, they certainly have.

But when it comes to the Arby’s brand, things have largely stayed the same in its 50-year history. In fact, the concept has stuck so closely to its identity as the limited-service industry’s roast beef leader that it’s failed to do the evolving necessary to keep it fresh and competitive in the market, says Arby’s brand president and CMO Rob Lynch, who oversees both marketing and product development and innovation at the quick-service chain.

“Less than 1 percent of all [quick-service] occasions are roast beef, so if we want to carve out a stake and continue to grow, we need to stand for something more than just great roast beef sandwiches in the hearts and minds of our customers and potential future customers,” he says.

Add to this the struggles the brand has faced over the last several years—which include flagging sales and being sold by parent company Wendy’s in 2011—and the situation for Arby’s was looking bleak just a short while ago.

Enter Roark Capital, a private equity firm that has a proven track record for turning around struggling concepts. Purchasing the brand in 2011 for $430 million, Arby’s new ownership has given the 3,400-unit-plus chain a fresh lease on life, encouraging Arby’s to inject new blood into the executive team—with additions like Lynch, CEO Paul Brown, and president and COO George Condos—and launch a revitalization effort that Lynch calls not just a brand evolution, but a brand revolution.

The launching point for Arby’s rebranding: a new prototype. Taking inspiration from “the great delis of the world,” Brown says, the brand remodel revolves around a forward-looking design that creates an organic and warm environment for the Atlanta-based chain’s customers. The result is a clean, crisp, uncluttered design that Brown says is higher scale than what most quick-service customers are used to seeing at Arby’s or in the broader limited-service segment at large.

Thanks to new elements like wood tones, warm tiles, communal tables, WiFi, white countertops, and a cooler case behind the counter that displays meats before they’re sliced, Brown says, the new prototype is one that invites guests to stick around and stay a while.

But it doesn’t stop at the store’s interior. Exterior enhancements include a new awning that circles the restaurant, illuminated signage, wood and white-brick materials, enhanced lighting, and an upgraded landscaping package.

Arby’s unit renovation was much needed, says David Kincheloe, president of National Restaurant Consultants, as the five-decade-old brand was beginning to look and feel a little tired to consumers. “Most restaurants reinvent themselves every five to seven years just to keep themselves relevant,” he says. “As the demographics change, they need to focus in on the ambience in the restaurant in addition to their menu.”

Arby’s began testing its new prototype in 2013, starting with the remodel of 14 units in Greensboro, North Carolina, and

Erie, Pennsylvania. “We assessed what worked well and where improvements were needed, and while we were very pleased with the sales improvements and the return on investment, we believed we had to work further on the building modification—the design of the building—to better align with our brand positioning and also to more aggressively take costs out of the building itself,” Condos says. After tweaking the prototype, Arby’s has been able to reduce the cost of a remodel by about $75,000, targeting the low $300,000s for a typical renovation, he adds.

With an estimated 30 corporate restaurant remodels completed this year—with plans to renovate between 80 and 100 company units in 2015—the redesign will begin rolling out to franchisees, Condos says, with the goal of remodeling more than 100 franchised stores next year.

Arby’s franchisees are already excited about the changes going on at Arby’s and are eager to bring the revitalization efforts into their own units, Lynch says. They likely crave a slice of the results that company-owned remodeled units have experienced—results that include an average 20 percent sales increase for renovated units. “There will be some restaurants that do a little better and some that may not quite reach that same target,” Condos says. “But on average, we’re looking for performance very close to 20 percent.”

Though a new look and feel play a big part in these sales increases, growth may also be a result of the efforts Arby’s has put into training its team members. In fact, emphasizing the brand’s focus on customer service was key to its revitalization efforts—just one reason Arby’s decided to work a “Brand Camp” initiative into the remodel program. “We are doing a lot of major changes to the brand, and we wanted to make sure the team members were in the position to deliver that experience consistently,” Brown says. “The best way to do this is kind of reboot the brand and service experience from scratch.”

That’s why, at all company-operated restaurants—as well as franchised units in the near future—each employee participates in a half-day, off-site session to discuss topics like what a brand is, what “quality” means, Arby’s specific brand values, and its service promise to “make it right every time.” More than 19,000 team members have been through training to date, finishing their Brand Camp experience with a goal-setting session and, on some occasions, a community service project.

This idea of giving back to the community has been close to Arby’s heart from the start, so much so that it created the Arby’s Foundation in 1986. Founded with the goal of serving the communities it operates in around the globe, the organization has donated more than $60 million over a span of two decades to youth-related causes around the country.

Over the last three years in particular, the brand has made a major commitment to the Share Our Strength organization to help the nonprofit end childhood hunger in the U.S.

“We have a unique opportunity to give back and help our system give back in all of their local communities, while also gathering up to a larger overall objective of ending childhood hunger in America,” says Lynch, who serves as chairman of the Arby’s Foundation.

In partnership with Share Our Strength, the Arby’s team visits more than 45 markets throughout the summer, going into local communities alongside franchisees and employees to raise awareness of the fact that one in five children in the U.S. struggles with hunger. To date, the brand has raised more than $11 million for Share Our Strength, $3 million of which has been raised just this year. “It’s really something we take a lot of pride in,” Lynch says. “We don’t make a lot of noise about it; it’s not something we put in our commercials. It’s something we do because we feel like it’s the right thing to do.”

Unit design, employee training, and a renewed emphasis on charitable giving aside, Arby’s brand revitalization extends to all areas of the business, menu development included. Despite the fact that Arby’s has long menued items other than the classic roast beef sandwich, Lynch says, consumers continue to view the brand as a roast-beef-only offering.

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