During the past six years, Cheddar’s Casual Cafe has more than doubled in size to about 130 restaurants and recorded two 20-percent surges in U.S. systemwide sales in 2012 and 2011. During those same six years, the casual-dining chain well-loved for its scratch cooking and value pricing has been led by chairman and chief executive Kelly C. Baltes, who said the Cheddar’s journey is about achieving greatness.
Baltes joined Cheddar’s after years with Darden Restaurants, Uno Chicago Grill and McDonald’s, where, he said, his general manager Roy Clayton showed him how
attitude can overcome almost any obstacle.
Baltes spoke with industry veteran Philip J. Hickey Jr., current chairman of the National Restaurant Association, and, separately, the casual-dining Miller’s Ale House chain. Hickey won a Golden Chain Award in 2005 when leading Rare Hospitality International Inc. An excerpt from their conversation follows:
Phil Hickey: It was a big transition from the structure at Darden to Cheddar’s. Describe what that was like, and what were your early thoughts and strategies?
Kelly Baltes: It was a significant change. You know Darden — great organization, highly structured, heavily matrixed and heavily resourced. Coming to Cheddar’s, it was good old-fashioned restaurant running, and that was certainly one of the attractions for me. … But what you have to do is find ways to preserve that while also appropriately investing in infrastructure and building a team around you to be able to, again, preserve but also to grow and start to scale the people and the business. … It was definitely very, very different, but the level of engagement by the people here was at a level, frankly, that surpassed anything I had experienced before. It was a lot of fun, and it’s been fun for the last six years.
PH: It feels to me what you’re describing is the heart and soul of entrepreneurialism.
KB: It is the dedication and commitment to operating the four walls, leading the employees, taking care of them and taking care of the guest. And we really, traditionally, have not done much beyond that. … To me, that’s how I grew up in the restaurant business. In my journey, it wasn’t any more complicated than that. You take care of people, give them a great product, a great experience at a great value, and they’ll come back.
PH: When you look at the casual-dining pie of demand, it basically has been flattish for a number of years. Clearly, anyone who is gaining share is taking share from somebody else. The same people that you have been taking share from on paper say the same things. They say, “We try to have a great culture, try to take care of our people, try to serve great food.” They’re all espousing the same thing, but you are actualizing it. How do you do that?
KB: The first thing I’d say is we make mistakes every day and screw things up on a regular basis, so we don’t have it all figured out, for sure. That’s my disclaimer and definitely the truth. … The level of success we’re at is not due to me; it’s due to an amazing brand proposition that has been built and trusted over the long term. I think the people at Cheddar’s are very committed and dedicated to, I think, greatness. Our employees, our [operations] leaders, the support team, the e-team, they are all exceptional. … What makes it different? … We organize our business around the things that are most important. … We do try to have [the business] live and breathe, we try to have things not be corporate or feel corporate — I have a little bit of a distaste for that. I want people to feel a part of something special. … I don’t think you could find a better group of people who are dedicated to our journey, and our journey is to achieve greatness in everything we do personally and professionally.
PH: When I canvassed people that have worked for you, I said, “Give me [his] top three leadership qualities.” ... Kelly, in your own self-assessment, what do you think they said?
KB: Well, boy, I’m more interested in the ones I need to get better at, to be honest with you. But I am guessing that positive attitude is one of those qualities that I hope they feel I possess. That’s connected back to an area in life when I was employed at McDonald’s. I think one of the other qualities is what we refer to here as “all in.” I usually try to give everything I’ve got and try to do so minute to minute, hour to hour and on a day-to-day basis. … I think the other thing that may be a quality, it’s certainly one I aspire to, is what I would refer to as “personal alignment” — doing what we say we’re going to do.
PH: Well, a prize is coming your way because you got pretty close. … So let’s talk about 2018. The headline says, “Cheddar’s 2018.” Tell me, what does that look like? And what are your fears or the obstacles in achieving that dream?
KB: I need to answer that by saying I’m really not motivated by the number of restaurants that we have at that point. We certainly have plans and things like that, but I think the best thing that could be said about Cheddar’s in 2018 is that Cheddar’s has successfully built an organization that takes care of [its own] — takes care of their employees, their guests and is operating the best restaurants in the country. … That would be the most thrilling for me. … Number of restaurants, compound annual growth rate, all of those things, they are important, they matter, but if we are to do those things and not be great, that’s just not a compromise I’m interested in. That’s what it looks like to me — that we would be closer to living in a state of greatness.
What can get in the way of that happening? I would say it’s all dependent on having the right people around us and then us taking this opportunity to lead people the right way — this obligation to take people by the hand and to get them and all of us to perform to what we’re capable of doing. When you do that over and over and over, it allows you to open up exponentially with your potential. … It all depends on the people. If we have the people and we lead them right, we’ll get to greatness. It’s not regulation or capital or anything like that; it’s all about the people. The rest is somewhat academic, to be figured out and worked out.
Philip J. Hickey Jr. won a Golden Chain Award in 2005 for his leadership at Rare Hospitality International Inc., former parent to The Capital Grille and LongHorn Steakhouse. He is currently chairman at both the National Restaurant Association and Miller’s Ale House.