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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Mina Hawk, the CEO of the international restaurant chain Tony Romas, writes,

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Speaker 2: low confidence and sticky price perceptions are influencing dine in

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Speaker 2: frequency and check size. Mina joins us now, Mina, thank

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Speaker 2: you so much for joining us, especially on this Christmas Eve.

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Speaker 2: Give us a sense of what you've seen change with

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Speaker 2: the consumer this year.

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Speaker 3: Thank you for having me for consumers at Tony Romas.

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Speaker 3: As you know, we are located all over the world

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Speaker 3: and the United States. While there is a perceived value

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Speaker 3: because of the macroeconomic factors of where we get reviews

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Speaker 3: of people showing frustration about the price of the menu. However,

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Speaker 3: when I look at the sales data over the last

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Speaker 3: four years, I am seeing system wide we are progressively

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Speaker 3: seeing a sharp increase.

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Speaker 2: So when it comes to what does that mean when

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Speaker 2: consumers are at the actual restaurant, are they still coming

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Speaker 2: in and just going for less options, potentially ordering less

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Speaker 2: off the menu? Are they looking for days when potentially

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Speaker 2: I don't know, if you run any sort of promos,

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Speaker 2: how are you actually weathering this storm?

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Speaker 3: So from a consumer point of view, what happened is

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Speaker 3: if you Let's say they like our ribs right, and

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Speaker 3: they try to compare the data maybe from a year

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Speaker 3: or do ago. However, in our system, we try to

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Speaker 3: keep the pricing stable. We don't try to pass any

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Speaker 3: difference to consumers because of any macroeconomic factors. But when

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Speaker 3: it comes to pricing, yes, we do run promos. There

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Speaker 3: are deals. There are limited time offers where our franchise partners,

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Speaker 3: if they want, they can participate in it. In units

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Speaker 3: where they are participating in this promo, they are seeing

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Speaker 3: a very sharp increase in consumer demand.

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Speaker 1: Let's talk a little bit about beef prices, because that's

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Speaker 1: something that's obviously featuring prominently on your menus. We've seen

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Speaker 1: beef prices go up up two point one percent for

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Speaker 1: ground beef in September. That is up from fifteen That

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Speaker 1: is up fifteen percent from a year ago. How is

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Speaker 1: that being folded into your menu offerings and menu pricing.

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Speaker 1: I know that you say you don't want to be

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Speaker 1: raising prices, but at some point the margins on that,

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Speaker 1: the costs on that become kind of onerous.

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Speaker 3: Yes, I agree with you. There are many macroeconomic headwinds

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Speaker 3: out there right now, but this also give us the

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Speaker 3: opportunity you look into the microeconomics off our unit and

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Speaker 3: see what we can do when it comes to pricing.

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Speaker 3: Our initial reaction is not to pass those difference to consumers.

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Speaker 3: But are we feeling pressure? Yes, we are. The margins

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Speaker 3: are thin. Restaurant industry overall operates on a very thin margin.

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Speaker 3: But in my opinion, what I am seeing is the

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Speaker 3: macroeconomic factors are actually allowing us to look into the

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Speaker 3: restaurant systems overall and see where are opportunities to cut

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Speaker 3: back on cost. While the food costs it is high

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Speaker 3: because of various reasons, but are there many options? Are

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Speaker 3: there enough suppliers? How can we diversify our supply ecosystem?

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Speaker 3: These are the questions we are asking internally. While before

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Speaker 3: maybe the restaurants operated on a status GOP for many years.

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Speaker 1: And I appreciate your saying that, So can you give

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Speaker 1: us some more specific examples of your cutting back on

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Speaker 1: cost set in a way that might be visible to

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Speaker 1: your customer.

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Speaker 3: For example, one of the biggest areas of cost is labor.

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Speaker 3: While we like to protect the jobs and make sure

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Speaker 3: that our workforce remains competitive due to AI and the

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Speaker 3: technological innovation that is one area where we can see

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Speaker 3: some more opportunities to be far more efficient. Our corporate

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Speaker 3: staff size have reduced drastically, but we are much more

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Speaker 3: efficient due to the technological advancements.

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Speaker 2: So are you basically saying that because of AI you

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Speaker 2: were able to shed some employees.

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Speaker 3: We're not setting employees. What we're doing is, let's say

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Speaker 3: if there were five employees at the corporate level doing

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Speaker 3: of work. Because of AI, the turnaround of projects, the

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Speaker 3: data integration have become much faster. We have robotic server

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Speaker 3: in some of our select locations. But we are not

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Speaker 3: cutting back on employees. But what we are becoming is

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Speaker 3: much more efficient the work of each and every employee.

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Speaker 3: Where I see it as because of AI and the

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Speaker 3: data integration will become a lot easier and the operation

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Speaker 3: will be much more efficient.

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Speaker 2: When you're looking for twenty twenty six, anything you can

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Speaker 2: tell us on maybe expansion plans or any changes in

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Speaker 2: the menu.

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Speaker 3: In terms of expansion plan, we just reopened in Guam.

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Speaker 3: We had presence in Guam for a very long time.

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Speaker 3: A local military couple just recently last week reopened our

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Speaker 3: Guam unit and with the very remodeled and it's modern

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Speaker 3: and the local military community is extremely enjoying the Tony

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Speaker 3: Romas over there. We are going back to Calgary. The

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Speaker 3: energy sector over there is doing a comeback, and Calgary

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Speaker 3: is a very vital market for us. We anticipating an

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Speaker 3: opening in the quatter two. We are growing in Asia Pacific.

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Speaker 3: We are looking into the Middle East as well.

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Speaker 1: Okay, so even as you undergo this expansion, we know

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Speaker 1: that Tony Roma's is a fifty year old restaurant brand.

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Speaker 1: There's a certain brand legacy that you need to protect

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Speaker 1: even as you adapt it for the twenty twenties, and

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Speaker 1: even the slightest tweak can backfire. Sometimes. I think about

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Speaker 1: the backlash to Cracker Barrels logo change. How do you

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Speaker 1: ees the Tony Roma's look and experience without alienating customers

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Speaker 1: in the process.

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Speaker 3: When we are modernizing it, we are not, you know,

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Speaker 3: changing our logo, our brand palette, because that's how our

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Speaker 3: customers identify with us. What we're doing is internally, we

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Speaker 3: are trying to see where are the areas of improvement.

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Speaker 2: Thank you so much, Mina for spending your Christmas Eve

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Speaker 2: morning with us. That, of course is Tony Roma's CEO,

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Speaker 2: Mina Hawk