Southern Smiles
By Frederick Burger

Benny LaRussa says down-home hospitality has kept his Jack’s Restaurants burger chain going alongside the big players.

Before there was any other quick-service food in Alabama, there was Jack’s, a walk-up hamburger chain begun in suburban Birmingham in November 1960 by an enterprising businessman named Jack Caddell. For 15 cents you could buy a hamburger or french fries. A Coke set you back 10 cents.

Caddell gradually expanded the business, and within a few years he had ventured into franchising. One franchisee was Benny M. LaRussa, who bought a lone store in 1968, though his primary occupation was revitalizing marginal grocery stores for the locally owned Bruno’s chain. (LaRussa’s wife is the daughter of Bruno’s founder.)

LaRussa’s Jack’s Family Restaurants, Inc., is still based in Birmingham, but now there are sixty-two stores, sixty of which are in North Alabama, one each in Mississippi and Tennessee. The company has one franchisee, who dates back to the company’s early days and owns seven stores.

Jack’s staged a gala fortieth anniversary celebration last November in Birmingham. And LaRussa, sixty-two, the owner and CEO of the privately held company, continues to guide his company, though he has brought in experienced management to ensure its long-range future. He and his youthful management team are gradually, methodically growing the company by adding about five new stores a year. LaRussa met with QSR to explain how his chain has thrived in the industry’s most competitve category.

How does Jack’s survive amid the onslaught of quick-service restaurants?

LaRussa: We feel like there’s a point of difference in us and them. And that point of difference is a different philosophy of doing business: smiling faces, friendly service, a different attitude. We have a hostess in every store that goes around and greets you, refills your coffee cup, gets you another soft drink, or whatever. It makes a different feeling, ambiance in that restaurant. We have a [faux] fireplace in just about every restaurant–a different feel, a warmth that you don’t see. How many times do you go into a place and they don’t even acknowledge you’re there? That, to me, is a point of difference.

LaRussa on differentiation: "I challenge you to go here in town tomorrow to my Homewood store for breakfast and then go up the street to the McDonald’s and see what the difference is."

And we’ve got a great marketing department, a great operations department that are right on top of that service level. We’ve put drive-thru timers in for the drive-thru window. In our business, we’re still quick service, and people want their food quickly. We’ve tried to do some unique things as far as product is concerned. We did the sourdough sandwich first, and that was a challenge because you’re doing that to order for that customer, and it’s got to be quick. So we put those drive-thru timers on those windows so when that customer places that order, it makes employees more aware that this has to be quick. The timers tell us how many seconds have gone by since that order has been placed. And that’s recorded. Each week that report comes in–it’s kind of like your report card. But again, that’s important to us. We’ve spent that money to give them a vehicle to keep up with how long it takes. It’s important to us, it’s important to them. If customers don’t feel like we care, then why should they care? That’s the thing.

But aren’t all quick-service restaurants trying to reach that kind of goal? They may not actually succeed.

LaRussa: Trying is a word, but doing it is something else. Today, with as tight a labor market as you’ve got, we’ve developed a whole training department. That’s how important we feel that is, to bring in managers and assistant managers in and teach these things. This is important. This is the way you’re going to grow your business. You as a customer, sometimes, you’ll take mediocre food if the service is good and you feel welcome. Now, I’m not saying food quality is not priority, but I’m just saying that as a customer, if you’ve felt welcomed and the service is good, the food may not be as hot as you wanted it to be, but you’re satisfied. This is not a chef cooking. A lot of times, these are minimum-wage people. But if you see the effort of trying, it makes you think, O.K., that’s acceptable.

You’ve been in this business for a long time. How has it changed from your perspective?

LaRussa: The basics haven’t changed. The basic thing that makes you successful–I saw Bruno’s grow and run A&P out of business in Birmingham. We ran Kroger out of business here. We ran Colonial out of business here. The difference was that friendly service, making the customer feel welcome, calling them by name. You’re going to go back. It’s family. It becomes friendly, and that’s the same thing in this business here. This business is where the grocery business was thirty years ago, and if you can meet and exceed the customer’s expectations, they’re going to come back.

The quick-service business is very competitive.

LaRussa: It’s very competitive. How do I entice you to come to me and not these other people? There has to be a point of difference. We all sell hamburgers and a variety of other products. So how do I entice you to come to me and not one of these other ten? That’s the challenge. Good marketing can bring ’em in. But it takes good operations to please you and get you to come back. Nothing will put you out of business quicker than good marketing, because if you don’t execute and we don’t please you, and I don’t care how many times I send you a message through radio or television or the newspaper, if your experience is not any good, you turn that off. The key to it is getting you to come in, and when I do get you to come in, I please you. From the start of your hunger pain, there’s an awareness of where you can go to feel good about spending your money.

So there’s no secret to being successful in the quick-service business?

LaRussa on franchisees: "If I’m going to have you as a franchisee, my customer doesn’t know you’re a franchisee. All she knows is you’re Jack’s. And if she doesn’t get the service at your stores that she gets in mine, then the franchise fee you’re paying me is hurting me."

LaRussa: There’s no secret to being successful in any business. To me, the key still gets back to basics. If I please you and give you what you’ve come in to buy, you’re going to come back, whether it’s a suit of clothes, a pair of shoes, whatever. When you go in to buy a new suit, you don’t want to see one suit on that rack and have only that to choose from. You want six or eight or ten, and you want somebody to help you with it to make sure it fits right.

Same thing in our business. Service. Most of our stores are targeted to the small markets, but we’ve attacked the big cities, too. Strategically, you’ve got to have the best location. How do you pick a location? What are you looking for? When you figure that 35 to 40 percent of our business is breakfast, you go to a quick-service restaurant because it’s convenient. So where are you going to put the store? You’re going to put it on the going-to-work side of the road, because you want it to be convenient.

What is the gross income of Jack’s a year?

LaRussa: We did over $50 million last year. That was about 9 percent growth. I think for the last five or six years, we’ve grown 9 to 12 percent every year. That’s no barn burner, but it’s consistent. It’s healthy.

And you’re satisfied with it?

LaRussa: I’m satisfied with it. Who else have I got to prove it to? Our bankers are willing to lend us all we want to borrow. And, again, what gets you in trouble–how many companies have you seen over-expand, get leveraged too far out there, hit a little bump in the road? What’s going to happen this year? You’ve had a great eight-to-ten years. Now you’ve had a struggle with an election. Mr. Clinton doesn’t want to say this downturn happened during his watch, but I think it has. Where’s it going? How wise is it to get too many stores going at one time?

You’ve been in the business a long time. Have there been significant blunders?

LaRussa: There definitely have been. Until I was knowledgeable enough about locations, some of the locations we picked did not pan out as good as I had hoped they would. Or maybe the location was good but we didn’t do a very good job of executing operationally, or maybe we moved too far away from home base. How often did you get out there to visit it? You can expect what you inspect. If you don’t inspect it very often, what can you expect?

This idea of remaining relatively close to the home base–by its nature that limits your growth potential, doesn’t it?

LaRussa: Well, what is close to home base? Two hundred fifty miles? Five hundred miles? What you do at that point is create an area manager who lives there. So then you’ve got another reach as far as where home base is. Our area managers are scattered out. We have people who live in Muscle Shoals, Alabama [about one hundred miles northwest of corporate offices in Birmingham].

What would you expect Jack’s to be ten years from now?

LaRussa: Very successful.

Would you expect it to be a very different looking company?

LaRussa: I would think that you would probably have 150 or two hundred stores, but hopefully it would have the same philosophy of doing business, taking care of your customers, taking care of your employees. If you take care of your employees and instill in them what they need to do to take care of the customer, the continuity will be right there. You can be conservative and keep your philosophy of business, and you can hold your head up and compete with anybody. It all depends on what you want to be. Do you want to be a national chain? Or do you want to be a strong regional chain that’s very successful?