Paul Brown was hired as Arby’s CEO in 2013 and given the mission of revitalizing a tired, 50-year-old brand.
In 2011, the Wendy’s/Arby’s group split Arby’s off and sold a majority stake (while retaining 18.5% of its shares) to the private equity firm Roark Capital Group in 2011, after the sandwich chain posted a year with a $US350 million loss.
Under the direction of CEO Hala Moddelmog, Arby’s closed underperforming stores around the world, began developing new menu items, and got onto a path of recovery. But Roark needed to see more.
Brown told Business Insider that although he had prepared extensively for his first day on the job, in May 2013, he was reticent about joining as an outsider. He was not only from outside of Arby’s, he was from outside the fast food industry — Roark hired him from the hotel group Hilton Worldwide. And on top of that, instability in the C-suite lowered employee morale and confused the brand’s direction — from 2006 to 2013, there were two CEOs, three CMOs, and three COOs.
Brown had predicted that it would be difficult to win the trust of the leadership team as well as franchisees across the United States, but he said that his position as an outsider was actually an advantage in this context.
He said that “the real advantage of coming from outside the industry is it gives you the degrees of freedom, the excuse to ask a lot of questions,” even those that initially appear “silly” to industry insiders.
Brown told us he believed that the difference between a successful and unsuccessful CEO parachuting into a new company and industry comes down to how they approach the transition. The ones who fail “come in telling you, ‘I know better. Everything that you have been doing before my arrival is incorrect and this is where we need to go.'”
Using this approach, Brown spent the first six months of his new job asking more than directing, and spent half of his time for the first three months out in the field, visiting Arby’s store managers and their employees.
Some examples of the “ask questions no one else is” approach that arose out of his experience in the hospitality industry and his conversations with Arby’s employees included: Can we change the size of the kitchens? Can we be making more use of our existing supply chain? What does Arby’s stand for?
The answers led to revamped restaurant kitchens, more than 20 new menu items (many of them premium and image-boosting despite not putting a burden on restaurants or suppliers), and a cohesive brand identity that employees could finally rally behind.
The approach paid off. Last year, Arby’s had its best year ever with $US3.7 billion in sales, with an average of $US1.1 million in sales-per-store in the US, up 20% from 2013.
“If you’ve been in the industry for 20 years and you come in as the CEO, you may not feel as comfortable asking broader questions because people expect you to know the answers,” Brown said.
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