At this year’s National Restaurant Association Show, some of the industry’s leading executives stopped by FSR and QSR magazine’s booth to chat about the landscape—what they’re seeing, hearing, and what might be next. We asked everybody the same three questions: One on tariffs and consumer sentiment; their thoughts on value; and lastly, to separate myth from reality with restaurant technology. In the days and weeks to come, we’ll share their answers.
Next up is SPB Hospitality CEO Josh Kern. And keep the conversations going at this year’s QSR Evolution Conference. Registration is now open.
Other interviews:
Freddy’s Coeli Arthur and Rick Petralia
Cheba Hut’s SVP of operations Brian Witte
Sunny Street president Mike Stasko
Give us your take on tariffs and the health of the restaurant consumer these days.
Tariffs, certainly, we were very worried about this pause from China. There were some direct impacts looming over us, but it was more about the uncertainty, which was freaking everybody out. It seemed to slow decisions down, funding down. So that’s been scary. We’re most concerned, and remain so, on packaging. There’s a lot of packaging coming from China. There was about a four-and-half month of supply at the time (of the pause). We were hoping to start talking to some more domestic carriers. It’s more expensive. Produce in general. Avocados. All those things are on our minds.
For us, potentially in response, because we raised prices so much, we’d either take things off the menu or downplay to a certain extent. We’re not out of the water, but I feel better this week (in mid-May) than I did two weeks ago.
We’re shopping brands. Both to buy and to maybe divest on our side. And it just seemed like everyone was like, “yeah, we’re interested, but we’d like to wait and see what happens.” That doesn’t help our situation.
On consumers, it varies all over the place. It’s interesting with our crazy collection of brands, from QSR to casual to upscale. J. Alexander’s, Stoney River Steakhouse and Grill, just do great, they chug along. When that first market crashed and people started looking at it like, “are we OK,” there was a little bit of a downturn. It’s since rebounded. That upper, more affluent guest seems pretty well insulated. I do notice, and I don’t know if it’s value or GLP-1, there’s been a lot more split plates going out at J. Alexander’s. Guests sit at the bar and get a half burger and fries, and share. I think it’s probably a combination of both. But it might be more GLP-1. That’s also having an impact on alcohol. It’s interesting.
People still want the experience. I do think, no matter what happens, restaurants will persevere. But it is more protein and split plates. And then, on the lower end, with (SPB brand) Krystal, customers have definitely pulled back. Whether that’s going to other QSRs, skipping breakfast, that seems to have hurt a little bit. It’s come back in the past couple of weeks. Still, though, overall, it’s a very resilient guest other than they’re not drinking as much. You see that in Logan’s Roadhouse and J. Alexander’s and Stoney. Wine consumption is low. Spirit and beer is eviscerating.
Are you doing anything with mocktails?
We have started to add that. We’re probably a little slower than most. But we’re starting to dial it up. We’ve also tried to do the dirty sodas, because if we have all the ingredients, it’s just merging these things together.
Definition of value, kind of interesting question for you all given all the different types of restaurants SPB directs.
We’ve always been consistent on the size of value. So lots of things for a smaller price. Let’s start with Krystal, because it’s always been known as bundling since its inception 90 something years ago. Having a sack of sliders. A multitude of sliders with fries and a drink and bundling it. That’s always been a part of it, so it’s been easier. You come up a clever handle. That’s probably the most difficult thing of putting it out there.
It is more difficult on J. Alexander’s because we don’t discount. We’ve leaned into keeping the same quality and hospitality. If anything, looking at are there some opportunities with happy hours. Can we put some specials or cocktails on that are a little bit less so there’s that perceived value to it? But on that one, we’ve never done anything like buy an entrée or take one home, which does well for some concepts. We can’t do that. And then, Logan’s, we have our Real Deal program, $11.99, but it’s all about steaks. That’s really what people want. Whatever we put on there, steak is going to be doing well.
Into the tech trends. Let’s separate myth from reality.
I think drive-thru AI technology—it’s just not there yet. People are excited about it, but it’s still very clunky. It’s slowing things down. So AI as a mechanism to interact with guests, I think that’s way out there. We were here (in Chicago) four years ago, and that side of the building had so many plant-based proteins and vegan stuff, and it’s not completely gone away, but it’s gone down pretty quick. A lot of people are getting back to the basics.
There are some AI elements that are working in that arena. Particularly the sophistication of pricing models. That’s really sped up. So knowing the cost of a plate of food, menu, and competition. You can get that so much faster now than you ever could. It’s a good combination between culinary and FP&A teams.
The other one is there are a couple of different companies out there that are chasing third-party delivery on the accounting side. Trying to remedy a missed pick or a missed delivery—who gets charged for that? Is it the guest? DoorDash? Where do we truly collect that from? I think holding them to a higher level of accountability, those systems and programs have been very helpful.
