Ted’s Montana Grill chief executive and co-founder George McKerrow attributes the 46-unit, upscale-casual chain’s growth in same-store sales, average check and guest counts to its shift since 2008 from a casual-dining chain to a more premium concept.
McKerrow was already a well-entrenched restaurant industry veteran 12 years ago, when he founded Ted’s Montana Grill with media mogul and bison rancher Ted Turner.
McKerrow founded LongHorn Steakhouse, which he grew into Rare Hospitality International with that chain and The Capital Grille. It was sold to Darden Restaurants in 2007.
He discussed Ted’s evolution, along with the evolving tastes of customers, with Nation’s Restaurant News.
Ted’s started in 2002. By 2007 we had 56 units in 19 states and found ourselves saying, “We’ve grown way too fast.”
We had no culture, no long-term management. We were turning over managers, we were inconsistent. That just doesn’t work in the restaurant business.
We also were trying to introduce a new product to the table in the United States, and bison was harder to introduce than we anticipated. Lots of people thought it was like ostrich, emu or rattlesnake meat. Women said, “That’s something my husband drug out of the woods,” and, “Isn’t it an endangered species?”
Fast-forward to 2008. We do some research and basically this is what I got back from our consumers: The folks that [were accustomed to casual dining restaurants] said, “You know what? I like the atmosphere, [but] it’s more expensive. I don’t care about 40 lemons in fresh lemonade, steroid-, hormone- and antibiotic-free food, or that it’s all fresh, and I’m perfectly happy with the lower price for my cheeseburger at Chili’s and my steak at LongHorn. But we’ll come here on special occasions.” In 2008 they weren’t nearly as interested in the environment or sustainability.
The upscale guests who came to us from sort of “different drummer” restaurants — Cheesecake Factory, P.F. Chang’s, [California Pizza Kitchen] — plus the prime steakhouses and local chef-driven restaurants, those folks loved the atmosphere, cared tremendously about the environment … loved the fresh food, loved the chef-driven approach to casual dining food. They wanted the fresh-squeezed lemonade, they loved that we didn’t microwave, they loved that we don’t have a freezer, but they weren’t satisfied with the level of service and hospitality and the consistency of the food.
We found that our [core] guests had over $100,000 incomes, were dual educated, dual working families as well as singles. We’re really predominantly from 28 on up into the aging baby boomers, where money isn’t the issue.
So I said, “We’re going to lose some of our customer base by moving out of casual dining pricing. But we’re going to enhance wine service, we’re going to enhance menu options, we’re going to enhance our overall concept,” which you’ve seen us do over time. We’ve added more of the gourmet burgers, the arugula, those kinds of things. We’ve enhanced salads, wine offerings and the bar.
That has paid off since 2010, with per capita spending going from $17 to close to $23. Last month we had 2 percent guest count growth and 10 percent same-store sales growth.
One of your moves has been to use more local purveyors, both with craft beers and local spirits at the bar, and by using local produce. Alcohol is something I’m sure you can get locally and consistently, but is local produce hard for the people in your kitchens to handle?
Consistency doesn’t bother me. What I’ve tried to do is marry a chef-driven restaurant with a casual dining concept — Classic American grill, familiar foods that are totally fresh, made from scratch every day — so I don’t really care if the chili is exactly the same in all 46 of our restaurants. We have a recipe and we’re going to follow the recipe, but [the need for] consistency is how chain operators get to commissary, boil-in-a-bag, microwave food. They deem that as having cost control and quality assurance. I deem it as not really letting your managers manage and be restaurateurs. We try to monitor consistent, high-quality products through our specifications, but I know the tomatoes that come out of Colorado are going to taste a little bit different than the tomatoes that come out of Georgia, and they might even be sized a little bit differently, but that doesn’t really bother me.
Shifting consumer trends
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Ted Turner owns most of the bison that you sell. Has that helped you in the face of ongoing commodity price inflation?
Three years ago we had seven price increases in bison in one year. We’ve stabilized now and we’ve seen a price increase, but we’ve been able to take it at the consumer level.
But 42 percent of all the people who dine at Ted’s eat bison — combined pot roast, meat loaf, burgers and the rest of it. Bison cheeseburgers outsell beef cheeseburgers two to one, but they are our No. 1 and No. 2 top sellers. Of the top 10, we also have a salmon dish and a beef filet, and the rest is all bison.
Absolutely. We have seven or eight different vegetables on the menu. Veggie burgers have gone over extremely well. We put on a salt-and-pepper trout in 2012 — just trout sautéed in olive oil with salt, pepper and lemon on it. The only place in our restaurant where we haven’t seen a big upswing [in sales] where I thought we would have, was in chicken. People do come to Ted’s for bison and red meat, primarily.
So they’re ordering more fish, but not more chicken? It sounds like they’re treating Ted’s as more of a special-occasion restaurant and they see chicken as too ordinary.
We have half a roasted chicken, which is delicious, and we have seen sales in that go up, but primarily at dinner. The big thing has been fish, and we’ve also seen the salad side grow. The new farmhouse salad has been a great introduction. We have a seasonal salad right now with fresh strawberries and pulled chicken that sells very well. So we’ve seen the consumer eat healthier. Though we haven’t seen that much of a shift in calorie counts in New York [where calorie information is posted on menus compared with] the rest of the country.
So they’re either not reading that information or they don’t care?
Exactly. But the restaurant industry’s not supposed to be the food police. The fact is people come here to indulge. I [have a burger] at least once a week. I’m trying to stay healthy, but I indulge and I don’t feel guilty about it. I have a milkshake with it too.
Contact Bret Thorn at [email protected].
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