Shop Talk

Golden Corral exec offers 6 secrets to building a powerhouse brand

Dephelia Horton holds her 11-month-old nephew Daybion Mason while dipping a strawberry in the chocolate fountain at Golden Corral on Capital Blvd. in Raleigh Nov. 6. The company got the idea for the fountain from an Asian restaurant in Indianapolis.
Dephelia Horton holds her 11-month-old nephew Daybion Mason while dipping a strawberry in the chocolate fountain at Golden Corral on Capital Blvd. in Raleigh Nov. 6. The company got the idea for the fountain from an Asian restaurant in Indianapolis. vbridges@newsobserver.com

Golden Corral hasn’t always been the master of the plentiful and affordable buffet.

The company started out 41 years ago as a family-friendly, entree-driven steak restaurant in Fayetteville.

By the 1980s, Golden Corral had opened about 500 restaurants similar to that one when competitors started to pull customers away with buffets.

“By the ’90s, we were given up for dead,” said Bob McDevitt, Golden Corral’s senior vice president of franchise development.

The company survived and ultimately thrived after a transformation that created today’s aggressive, buffet-driven brand that brought in more than $1.8 billion in revenue last year.

Last month, McDevitt shared some of the company’s challenges and successes in a keynote speech at the National Franchise Success Summit in Raleigh. Here are his six secrets to building a powerhouse brand.

All strategies ultimately fail, but the right mission can last a lifetime

Golden Corral founders James Maynard and William Carl opened the first restaurant in 1973 and sold steaks that started at $1.99 under the mission of “making pleasurable dining affordable.”

The company initially evolved into a corporate-owned chain of about 500 steakhouses from Virginia to Texas.

The 1980s, however, created a major stumbling block for the brand.

A couple of things were working against the company, said McDevitt, who started working for Golden Corral in 1994. First, Americans were advised by health officials to cut back on red meat, and steak became one of the first foods shunned by nutrition awareness campaigns.

Second, competitor Ryan’s, a restaurant with self-service buffets and large buildings, started popping up.

At first, Golden Corral leaders were hesitant to stray from their original strategy, but closing stores and declining revenues forced them to re-evaluate. They decided to move toward the buffet model with a plan to create restaurants like Ryan’s, but better.

The concept, first tested in 1988 in Lawton, Okla., was more successful than they had hoped. The challenge shifted to how the privately held company with limited capital would pay for the transformation.

“That’s when franchising came in,” McDevitt said.

In 1989, the company started franchising larger, buffet “metro stores,” which were designed to be successful in more populated areas. Golden Corral also sold franchises to people who were running existing, entree-driven locations, which were still doing well in smaller communities.

At the end of 2013, Golden Corral had 377 franchises and 125 corporate-owned restaurants in 40 states.

Ed Manns, 51, is a Charlotte-based co-owner of 17 Golden Corrals in the Carolinas and Pennsylvania. Manns said the company’s mission of making pleasurable dining affordable is reflected in various levels at the modern restaurants, from the price of the food to constant improvements to the layout of the dining rooms and food options.

Steal shamelessly. You don’t have to be cutting edge, but you have to be razor sharp

In other words, McDevitt said, you have to recognize good ideas.

Golden Corral incorporated an $80,000 upgrade at all its locations after Baltimore-based Cactus Willies started to pull customers from Golden Corrals in the area. Market research indicated customers preferred Golden Corral’s food and building, but chose Cactus Willies because it included grilled steak as part of its buffet.

“It was a really big idea, probably the biggest in our industry,” McDevitt said. “Cactus Willies, thank you very much.”

Other examples include a pot roast recipe given to Golden Corral executives by the owner of an independent restaurant in Nebraska and a mashed potatoes recipe that came from a cookbook marking a Texas-based competitor’s anniversary.

The Golden Corral chocolate fountain came about after Chief Operating Officer Lance Trenary passed an Asian buffet in Indianapolis with a line out the door.

“So he did a U-turn,” McDevitt said. “Lance went in and sure enough there were people with a stick and a strawberry waiting in line to dip it in the chocolate fountain.”

“Sacred Cows Make the Best Burgers”

Robert Kriegel and David Brandt’s book with that title focuses on how companies can get rid of outdated and costly business practices.

For McDevitt, this means not letting internal resistance, such as “we have never done it that way” or “it’s too complicated” kill great products or ideas before they get off the ground.

Toot your own horn or someone else is liable to use it as a spittoon

When McDevitt started working for Golden Corral as the senior vice president of marketing in 1994, everybody knew the company’s marketing strategy.

“Your marketing budget is zero,” he said, “and you are fired if you exceed it.”

But as the company reinvented itself, communicating with customers became an integral part of the re-launch. Now the company and franchise owners contribute to an annual $37 million national advertising campaign.

The D in EBITDA (earnings before interest, taxes, depreciation, and amortization) is real in the restaurant business

Depreciation is something that can suck the value out of a business, McDevitt said.

“Simply put,” he said, “a tired old facility is a competitive disadvantage.”

That is one reason Golden Corral requires facility updates every seven years.

The changes reinvigorate locations, arming them with modern benefits they need to stay fresh in the changing marketplace.

“I respect and like the requirement,” said Billy Sewell, 48, a Jacksonville-based franchisee who owns 29 Golden Corrals in six states.

Interiors get worn and tired, he said, and a new, redone space helps it look cleaner and rejuvenated. On average, Sewell sees a 3 to 20 percent increase in business after a remodel.

If two people in the business agree on everything, then one of them is unnecessary

Franchisees can make companies better, if leaders are willing to let them participate in key decisions, McDevitt said.

“They don’t care about your rank,” he said. “They care about, ‘Is this the right thing for their business,’ and boy will they keep you on the straight and narrow.”

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