4. Thompson Hospitality, Reston, Va., 67 units
Some of Warren Thompson’s fondest memories from growing up in rural Virginia in the segregated 1960s were going out to eat with his family at Shoney’s. During a recent interview, he recalled sitting in a Shoney’s one time when he was 12 and telling his parents, “I’d like to own one of these someday.”
“From that point on, I was focused on getting into the restaurant business,” he said.
Thompson put in the work behind that focus. After earning his bachelor’s degree, he interned as an assistant manager at a Roy Rogers unit within the Marriott Corporation as part of an MBA program at the University of Virginia’s Darden School of Business.
“My plan was to learn from the ground up. I stayed until I was 32,” Thompson said.
He then acquired dozens of Big Boy restaurants from Marriott and converted most of them to Shoney’s, which laid the foundation for what is now Thompson Hospitality, the largest minority-owned foodservice and one of the largest retail food and facilities management companies in the country. The company started with restaurants in 1992, then moved into contract services and is now in hotels as well. On the restaurant side, Thompson predicts the company will end up with around 72 units at the end of this year, making up about 15-20% of its total revenue.
“We’re still very much a contract foodservice company, but restaurants are our fastest growing area,” he said.
Thompson Hospitality counts 18 proprietary restaurants, while also operating franchised brands like Chick-fil-A, Tropical Smoothie and Pizza Hut on college campuses, in train stations and other contracted markets. On the proprietary side, the company’s strategy is simple. “We want to try to penetrate markets, starting with D.C. as our homebase. We will have about 60 restaurants in D.C. this year, and if I can end up with 150-200 in the D.C. market in the next three to five years, that will be great,” Thompson said. “And the reason is efficiency.”
For instance, Thompson concepts Matchbox, Wiseguy Pizza and Makers Union are all about a block from each other in the D.C. market. The company is looking to soon fit The Rub and Big Buns restaurants within that vicinity as well.
“If I can end up with five restaurants within a three-block radius, then when maintenance crews pull up, they can do all their work without moving much. Inspections, training, development can do their jobs without having to run all over town or the country,” Thompson said. “Also, when we bring in people, we can offer them a career path without them having to relocate. You can move up in our organization and know your kids won’t have to change schools. We think that’s a competitive advantage.”
In addition to scaling with contiguity in mind, Thompson Hospitality is also focused on an updated marketing strategy; for example, developing a Thompson Restaurant Group Card that customers can use to accumulate points across all its brands.
“The same customer can go to Matchbox one day, Big Buns another and Milk and Honey another. Or they can go to Big Buns for lunch and Matchbox for dinner. I don’t look at them as a Matchbox customer, but rather a Thompson Restaurant Group customer, especially when we have restaurants adjoining each other,” he said.
The company is also working on bringing its maintenance work in house and is testing a new operating partner model. For the maintenance piece, which will be in place before next year, Thompson believes the company can cut costs in half and save about $4 million annually.
“It’s a tremendous opportunity for us that I think will be fleshed out based on having more restaurants open close to each other,” he said.
On the operating partner side, Thompson believes having one such partner run two restaurants, rather than having two general managers for each restaurant, will allow the company to pay them more and offer a bigger compensation package, which is also tied to the performance of the business. The company is targeting a 5% ownership-after-5-years incentive program for the OP position that Thompson believes will attract more talented GMs who want to get promoted to that role.
“Overseeing two restaurants with larger volumes creates a bigger opportunity. From there, that person can move into a director of operations or district manager role. What we want to do with all of our brands is identify a champion who helps develop those brands and ultimately takes ownership,” he said.
These new strategies are part of Thompson Hospitality Corporation's bigger goal, which is to hit the $1 billion sales mark. Thompson believes that will be achieved in 2025.
“Then we’ll come up with another growth target,” he said.
Thompson is full of advice for other restaurant groups striving to hit big targets themselves, including keeping an eye out for strategic partnerships, like his company’s joint venture with foodservice and facilities services company Compass Group, formed 25 years ago.
“Had we not developed that partnership with Compass, we wouldn’t be where we are today,” he said.
Also, don’t overthink things from a menu perspective.
“Some of the most successful restaurant groups out there have perfected the art of differentiation without being too different,” he said. “We have a crab cake in the majority of our brands that is the same crab cake. Once we’ve perfected the product, we keep it consistent because it helps with procurement and execution.”
His final piece of advice is to not be afraid to fail.
“Failure is part of the game in the restaurant business,” he said. “Be conservative with your balance sheet. Don’t take risks you can’t afford — keep your cash position strong — but don’t be afraid to try new things.”