Finance | June 2015 | By Julie Knudson

The New-Age CFO

Financial expertise, brand awareness, and even IT familiarity make CFOs powerful brand executives.
QSR brands hire company financial officers with range of business skills.
CFOs can help emerging concepts like Blaze Pizza gear up for rapid growth and franchising. Blaze Pizza

Chief financial officers (CFO) do more than count dollars and prepare financial reports. They evaluate financing options, monitor industry metrics, improve operational efficiencies, and identify where risks and opportunities exist. And in recent years, the evolution of the CFO role has given brands new ways to maximize their resources.

Financing and growth options are perennial CFO concerns. As organizations seek to boost revenue, they must also be aware of what’s happening in the markets. Alexis Becker, CPA and co-leader of the national restaurant practice at the firm BDO USA’s Cincinnati offices, says whether CFOs are seeking funding solutions or are considering taking on an equity partner, the considerations increasingly go beyond the numbers.

“It’s important to [understand] what comes with the money. What strings are going to come with it?” she says. With debt often come covenants that a brand must comply with, she says.

CFOs also monitor how other financial experts are feeling about the stock market, which has been favorable to the limited-service industry the last two years. A recent survey conducted by BDO, however, found that just 5 percent of CFOs expect the restaurant industry to see the most initial public offerings this year compared with other sectors.

“There are clear advantages to the IPO route,” Becker says. “[But] if you do this, there’s a lot of other scrutiny.” There are also expenses associated with an IPO, including legal and accounting costs, filing fees, and increased insurance costs. CFOs must look at their own brand’s situation, read what the market research is telling them, and then work with the board to determine how to move forward, she says.

In addition, a range of external metrics is routinely monitored by quick-service CFOs as they advise their companies on everything from food purchases to new store locations. Consumer sentiment, the health of the stock market, and even gasoline prices are among the benchmarks that Allen Arroyo, CFO at Pasadena, California–based Blaze Pizza, says are important.

Commodity pricing may be another obvious item on a CFO’s radar, but the benchmarking data used in the quick-service industry goes much deeper than that. “In our segment, cheese is a big factor,” Arroyo says. As a result, dairy prices can greatly influence the financial picture.

Those upstream numbers are important metrics for CFOs. Because the quick-service sector does not operate with large margins, CFOs have to spend wisely, Becker says. As they work to maximize resources, CFOs increasingly find themselves delving into other areas like marketing and human resources. It’s also common for CFOs to work with the legal team on vendor contracts for POS systems or to partner with internal groups to evaluate activities impacting revenue.

One area CFOs are much more involved in today is information technology. Arroyo says it’s always been a consideration, but he adds that the attention has intensified in recent years as cloud computing and other platforms have expanded.

“That umbrella of IT goes from accounting systems to sales analytical systems to now mobile apps,” he says. Other tech advancements within the limited-service space include new payment components in mobile offerings, platforms interfacing with POS systems, and new integration capabilities.

Blake Bailey, CFO at Athens, Georgia–based Zaxby’s Franchising, says many of the functions overseen by the CFO have also become more thoughtful and deliberate. Rather than mandating a budget, CFOs gather input from the various disciplines, he says.

“It’s a much more collaborative process in how you develop a vision of where the company wants to be in, say, three years,” Bailey says. “You get input from all the key leadership on down to the staff.” He adds that this is a more effective approach since people can become emotionally vested in their vision for the company.

The work of CFOs goes beyond budgeting into several facets of the company. It’s not uncommon for a CFO to help with planning media initiatives. A strong partnering with the marketing group gives CFOs greater opportunity to collaborate and make data-driven decisions around what’s working and what’s not working with regard to media strategy, Bailey says.

The decision to hire or promote someone to the CFO role can be complex. Bailey says the determination is often made based on what’s coming down the pipeline. For a smaller brand with plans to franchise, the CFO would fill a number of roles, including franchising, development, and other functions. For a concept not planning for rapid growth, a high-salary CFO may not be the right route.

Most brands need a controller-level person to manage the books, oversee basic reporting, and handle other day-to-day financial tasks. The trigger point for developing a CFO position is often linked to the type of expertise the organization needs.

For Blaze, Arroyo says, there was an imminent growth component. “You would need that skill set that’s going to be able to put in systems, scale things for growth, and then also have the tools to handle those other areas like purchasing and possibly legal and insurance,” he says.

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