How Our Biggest Crisis Brought Our Company Together Again
Jim Creel, Taco John's International, Inc.
June 05, 2017
In the franchise business, trust and respect are paramount. If your franchisees stop trusting you, they’ll stop caring for their customers, and the business risks falling apart.
This is something we’ve always known at Taco John’s, the 382-restaurant franchise where I am now president. But in 2013, we became dangerously distracted by profits and sales and almost lost that connection to our franchisees that, for me, has always made Taco John’s so special.
James Woodson and Harold W. Holmes franchised their Midwestern-based Mexican fast-food eatery in 1969. Many franchising companies own a majority of their restaurants, but we have only 10 company restaurants; the rest are all franchisees. I started here in 2000 as the director of technology.
In 2013, in an attempt to boost sales and grow the number of restaurants, we brought in a new CEO who applied a strict profit-focused strategy. While we didn’t see it at the time, this turned out to be a serious mistake.
Rather than consulting the franchisees and getting their buy-in as we always had, we started making changes straight from the top. We removed items from the menu, even when those items made up 8% of a restaurant’s annual sales. We dismissed our franchisee operations committee. We changed worktables from steam to dry heat, which was devastating to owners who love their old equipment. And we pushed franchisees to buy precooked taco meat rather than make it themselves—at an annual profit loss of $15,000 per restaurant.
By 2016, more and more of the franchisees were disillusioned and almost combative. We dropped from 405 to 382. We lost 57 employees from our Cheyenne, Wyoming, headquarters from 2013 to 2016. As a company, we felt we had been violently shaken. Our culture was in tatters. We realized we had to get back to our roots and that meant that as a company, we had come together.
I took over as president and chief executive officer in August 2016 and made it my goal to get back to our corporate culture of being more collaborative with our franchisees. I was lucky enough that our former head of human resources, who had 30 years of experience with the company, came back to help us regroup. Any time there’s a big change at the top, employees panic that they are going to be the next to go. She met with people and put an open-door policy in place to make sure that our 70 corporate employees felt safe and cared for and ready to work more closely with our franchisees.
Our vice president of finance and in-house general counsel stepped in to help keep the day-to-day business of our corporate headquarters going while I hit the road to visit, in person, as many of our franchisees as I could. I wanted to reassure them that we were once again going to be a company that listened to them and took their needs into consideration.
Our leadership team worked hard to reconstitute our committee system, which had always been the heart of Taco John’s culture but had broken down over a growing “us vs. them” mentality. Our committees are made up mostly of franchisees managers with our corporate personnel providing leadership. The committees make important decisions about matters such as menu changes, advertising and who will supply our restaurants. We made sure we had the right people on each committee to foster an atmosphere of cooperation.
We are also now planning to meet twice per year with the Association of Taco John’s Franchisees Board to ensure that we are all in alignment on brand priorities.
The effort is starting to pay off. A few weeks ago we had our annual national convention. I took the time to write every franchisee a hand-written invitation, and as a result, we had more people attending than for any conference in the last five years. For the first time in a long time, it felt like we were a family, who trusted one another again.
In his opening remarks, our franchisee association president said: “A new era of trust and cooperation has begun. We have a new leader who is working to rebuild relationships with shared ideas and a respect for the franchisees.” That’s more than I could have hoped for.
We are now at 382 franchises and expect to be back to 405 by the end of this year. Our team effort is paying off.
Jim Creel is the President & CEO of Taco John's International, Inc.