At this year’s National Restaurant Association Show, some of the industry’s leading executives stopped by 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, WOWorks CEO Kelly Roddy (listen to more of group’s story on this episode of QSR Uncut). And join us in Atlanta at the QSR Evolution Conference, where Roddy will be speaking on what it takes to secure a restaurant investment.
Other conversations:
Sunny Street president Mike Stasko
Your thoughts on the consumer, now, the rest of the year, and are you thinking about tariffs?
Let’s start with tariffs. All the vendors immediately jumped on and said, ‘Oh, we’re going to raise your prices.’ And our response was, you don’t even know what tariffs are going to be. But they were immediately talking about it. I’m always skeptical and I think if they can find a reason to raise prices, they’re going to do so without even knowing what they’re going to be at. My opinion is, it’s all a game and we will probably see some tariff increases, but all we’re doing is trying to get other people to reduce their tariffs. We’re following it all very closely.
Years ago, (RTM Restaurant Group founder) Russ Umphenour, one of my mentors, he used to talk about, ‘there’s always something’—whether it’s the housing crisis or recession or pandemic or tariffs or political unrest. Whatever it might be. But you have to just focus on the business. Very seldomly everything is going to go your way. So focus on the things you can control every day. It’s really good advice. He was our boss during the housing crisis. Consumer confidence was low. People didn’t have as much cash. All the QSR guys were throwing value out there. Yet it was about focusing on what we can focus on. And it worked. We sailed through it.
As for consumers, I think people have less money in their bank accounts right now. Everything is higher. People have started taking price. And it’s not just restaurants. Actually, I think restaurants haven’t taken that much in comparison. We at WOWorks haven’t. Retail has. I mean, to fly here cost more than it did a year ago. The hotels are more. Everything is more and we all have a little less money in our pocket.
For us, our check is pretty high. So most of our guests have money and it’s affecting the lower 10 percent. For those people, we’re more of a treat. They’re coming less often. We have six brands. Three of them are positive traffic, which is highly unusual these days, and three are negative. Nobody is terrible. The three that are negative aren’t bad—they’re just 1 or 2 percent. We’re feeling pretty good compared to what I’m hearing.
A quick follow-up: do you think tariffs might be as much a consumer confidence concern as an operational one?
I don’t know. We import a lot of packaging, so that comes in. But the biggest immediate thing for us are avocados. We have guacamole in our burrito brand. Avocados in our salad brand. And it’s all avocados from Mexico. They’ve gone through the roof.
Moving on, how is value defined at a multi-brand platform like WOWorks?
It is price. So it’s the experience, right? What kind of experience are they getting. We stuck to our guns on clean food and clean food costs more than non-clean food. No antibiotics ever on our chicken, which Chick-fil-A can’t say. They don’t do that anymore. We do. Most brands don’t. Chipotle can’t do it anymore. There’s just not enough supply. So we’ve stuck to our guns on that and spent a little bit more. Food costs are fine for us. They’re in line with our business model.
Some people don’t care [about clean food]. The greens fees today are flavor profiles have to be good. The food has to be good. If it’s not, they’re not going to come anyway. But people who seek out clean food, they know we serve it. We don’t talk about it enough and it’s difficult to cut through the clutter. I believe, though, if we stick to it, the people who care will know. Maybe it’s 10 percent. But they’ll know we’re sticking to it.
I think it’s a value that we’re staying at or below everyone competitive on price. Our burrito brand— Barberitos—we’re a little bit below Chipotle and Moe’s and we serve a cleaner product than both of them. And our same burrito, same ounces, same builds, are 200 calories less.
Most guests don’t care, but the ones who do, do.
What tech trend is more myth than reality? And the opposite?
I don’t know about the guest data platform. The guest data platform is supposed to be where I’m able to market directly to you based on your purchasing habits, based on your credit card data, and theoretically we can track you and know you come to our restaurants. We know where else you shop. Supposedly we can target you and lookalikes like you. To me, that’s not proven out yet. And people, by the way, have been saying this for 20 years—that they can do this. But can you? I don’t know. We’re leaning into it and we’re still in the getting-things-set-up stage. I haven’t really heard anyone say we had a 20 percent increase because of our CDP. I don’t know if it’s going to work or not, but we’re going to invest in it because we’re always trying.
And loyalty, only so many of your guests are going to be loyal. The restaurant industry has this big, giant leaky bucket of people who only visit one time a year.
On the other side, I’m hopeful for AI because we use it so much already. It’s very manual right now. And so, the cool part about AI is if you want to know if something is vegan, or gluten free, you just type in whatever you want, and it will show you all our menu items. That wouldn’t have happened without AI. All of our menus have that now. If you’re a guest and you’re online, and you’re vegan-only, boom, you click the vegan button and it shows you every item we have that’s vegan.
The real estate modeling that AI does is phenomenal, too. And it’s all free, basically. Also, with writing content, if you want to target specific Gen Alpha or Gen Z or millennials, it will change the language. That’s pretty cool to be able to speak to people that way.
