This post is part of the On the Margin blog.
This hasn’t been a great year for female restaurant CEOs.
Sally Smith’s decision to retire as CEO of Buffalo Wild Wings Inc. on Friday represented the third departure by a female CEO of a publicly traded restaurant chain. Earlier this year, DineEquity Inc. CEO Julia Stewart, and Popeyes Louisiana Kitchen CEO Cheryl Bachelder both stepped down from their positions.
In just a few short months, the number of female CEOs of publicly traded restaurants was cut in half, from six to three. The three remaining are Bloomin’ Brands Inc. CEO Liz Smith, Cracker Barrel Old Country Store Inc. CEO Sandra Cochran, and Red Robin Gourmet Burgers Inc. CEO Denny Marie Post.
In other words, the percentage of women-led public restaurant companies fell to 5 percent of the 56 companies we track from nearly 11 percent. The 5 percent, however, was in line with companies in the S&P 500 — 5 percent of which were female-led as of September.
Smith, Stewart and Bachelder all left under different circumstances. DineEquity’s Applebee’s concept was struggling, with same-store sales falling by more than 7 percent.
Popeyes, meanwhile, was offered a can’t-refuse purchase offer from Restaurant Brands International Inc., representing a major victory for Bachelder — who helped turn Popeyes from a struggling regional chain into a chicken powerhouse.
Smith, meanwhile, faced a difficult proxy battle after weakening performance over the past couple of years.
Yet all three have been relative giants in their positions and have been among the most highly respected CEOs in the industry.
They’ve been frequent speakers at industry events. All have been routine members of Nation’s Restaurant News’ annual Power List ranking of the most powerful people in the industry. And they’ve all won several awards for their work. Smith and Bachelder are NRN Norman Award winners; all three have won Golden Chain awards — with Stewart having won twice, including one Operator of the Year Award.
But CEO tenure is notoriously short. Median CEO tenure at S&P 500 companies was six years in 2014, according to a study last year by Equilar. And Bachelder, Smith and Stewart were long-tenured executives. Smith had been with the company more than 20 years. Stewart more than 16. Bachelder 10.
Publicly traded CEOs have to deal with a wealth of challenges, notably quarterly reporting requirements that force them to push short-term performance over long-term strategies. So a company can have a good, long-term strategy, but a few bad quarters can put investors ill at ease, putting pressure on the board and its CEO.
And this has been a tough year for restaurant CEOs regardless of gender or tenure. Smith isn’t even the only publicly traded CEO to announce a resignation this week — Potbelly Corp. CEO Aylwin Lewis announced retirement plans on Tuesday, for instance. Numerous restaurant chains, both public and private, have opted to change CEOs over the past year amid weak sales and profitability fears.
In many cases, this environment is taking down CEOs even when they’ve known nothing but success until recently.
Buffalo Wild Wings, which enjoyed a long string of same-store sales and unit growth, but began struggling when traffic weakened in 2015 and then same-store sales turned south in 2016.
Smith’s departure, in fact, was probably solidified the moment Marcato Capital Management decided to nominate four people to the Buffalo Wild Wings board: Proxy fights with activist investors almost always lead to a change in CEO, either during the campaign or shortly afterward.
But the simple fact that Smith is a woman means she was a far more likely target of activist investors, at least according to one study. An Arizona State University study last year, which analyzed shareholder proposals from 2003 through 2013, found that female CEOs had a 27 percent likelihood of being targeted by an activist. For men, the study said, the likelihood was “near zero.”
Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company.
Correction: June 16, 2016 An earlier version of this blog misspelled Sandra Cochran's name. It has been updated.
Contact Jonathan Maze at [email protected]
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