Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Mina Hawk, the CEO of the international restaurant chain Tony Romas, writes,
Speaker 2: low confidence and sticky price perceptions are influencing dine in
Speaker 2: frequency and check size. Mina joins us now, Mina, thank
Speaker 2: you so much for joining us, especially on this Christmas Eve.
Speaker 2: Give us a sense of what you've seen change with
Speaker 2: the consumer this year.
Speaker 3: Thank you for having me for consumers at Tony Romas.
Speaker 3: As you know, we are located all over the world
Speaker 3: and the United States. While there is a perceived value
Speaker 3: because of the macroeconomic factors of where we get reviews
Speaker 3: of people showing frustration about the price of the menu. However,
Speaker 3: when I look at the sales data over the last
Speaker 3: four years, I am seeing system wide we are progressively
Speaker 3: seeing a sharp increase.
Speaker 2: So when it comes to what does that mean when
Speaker 2: consumers are at the actual restaurant, are they still coming
Speaker 2: in and just going for less options, potentially ordering less
Speaker 2: off the menu? Are they looking for days when potentially
Speaker 2: I don't know, if you run any sort of promos,
Speaker 2: how are you actually weathering this storm?
Speaker 3: So from a consumer point of view, what happened is
Speaker 3: if you Let's say they like our ribs right, and
Speaker 3: they try to compare the data maybe from a year
Speaker 3: or do ago. However, in our system, we try to
Speaker 3: keep the pricing stable. We don't try to pass any
Speaker 3: difference to consumers because of any macroeconomic factors. But when
Speaker 3: it comes to pricing, yes, we do run promos. There
Speaker 3: are deals. There are limited time offers where our franchise partners,
Speaker 3: if they want, they can participate in it. In units
Speaker 3: where they are participating in this promo, they are seeing
Speaker 3: a very sharp increase in consumer demand.
Speaker 1: Let's talk a little bit about beef prices, because that's
Speaker 1: something that's obviously featuring prominently on your menus. We've seen
Speaker 1: beef prices go up up two point one percent for
Speaker 1: ground beef in September. That is up from fifteen That
Speaker 1: is up fifteen percent from a year ago. How is
Speaker 1: that being folded into your menu offerings and menu pricing.
Speaker 1: I know that you say you don't want to be
Speaker 1: raising prices, but at some point the margins on that,
Speaker 1: the costs on that become kind of onerous.
Speaker 3: Yes, I agree with you. There are many macroeconomic headwinds
Speaker 3: out there right now, but this also give us the
Speaker 3: opportunity you look into the microeconomics off our unit and
Speaker 3: see what we can do when it comes to pricing.
Speaker 3: Our initial reaction is not to pass those difference to consumers.
Speaker 3: But are we feeling pressure? Yes, we are. The margins
Speaker 3: are thin. Restaurant industry overall operates on a very thin margin.
Speaker 3: But in my opinion, what I am seeing is the
Speaker 3: macroeconomic factors are actually allowing us to look into the
Speaker 3: restaurant systems overall and see where are opportunities to cut
Speaker 3: back on cost. While the food costs it is high
Speaker 3: because of various reasons, but are there many options? Are
Speaker 3: there enough suppliers? How can we diversify our supply ecosystem?
Speaker 3: These are the questions we are asking internally. While before
Speaker 3: maybe the restaurants operated on a status GOP for many years.
Speaker 1: And I appreciate your saying that, So can you give
Speaker 1: us some more specific examples of your cutting back on
Speaker 1: cost set in a way that might be visible to
Speaker 1: your customer.
Speaker 3: For example, one of the biggest areas of cost is labor.
Speaker 3: While we like to protect the jobs and make sure
Speaker 3: that our workforce remains competitive due to AI and the
Speaker 3: technological innovation that is one area where we can see
Speaker 3: some more opportunities to be far more efficient. Our corporate
Speaker 3: staff size have reduced drastically, but we are much more
Speaker 3: efficient due to the technological advancements.
Speaker 2: So are you basically saying that because of AI you
Speaker 2: were able to shed some employees.
Speaker 3: We're not setting employees. What we're doing is, let's say
Speaker 3: if there were five employees at the corporate level doing
Speaker 3: of work. Because of AI, the turnaround of projects, the
Speaker 3: data integration have become much faster. We have robotic server
Speaker 3: in some of our select locations. But we are not
Speaker 3: cutting back on employees. But what we are becoming is
Speaker 3: much more efficient the work of each and every employee.
Speaker 3: Where I see it as because of AI and the
Speaker 3: data integration will become a lot easier and the operation
Speaker 3: will be much more efficient.
Speaker 2: When you're looking for twenty twenty six, anything you can
Speaker 2: tell us on maybe expansion plans or any changes in
Speaker 2: the menu.
Speaker 3: In terms of expansion plan, we just reopened in Guam.
Speaker 3: We had presence in Guam for a very long time.
Speaker 3: A local military couple just recently last week reopened our
Speaker 3: Guam unit and with the very remodeled and it's modern
Speaker 3: and the local military community is extremely enjoying the Tony
Speaker 3: Romas over there. We are going back to Calgary. The
Speaker 3: energy sector over there is doing a comeback, and Calgary
Speaker 3: is a very vital market for us. We anticipating an
Speaker 3: opening in the quatter two. We are growing in Asia Pacific.
Speaker 3: We are looking into the Middle East as well.
Speaker 1: Okay, so even as you undergo this expansion, we know
Speaker 1: that Tony Roma's is a fifty year old restaurant brand.
Speaker 1: There's a certain brand legacy that you need to protect
Speaker 1: even as you adapt it for the twenty twenties, and
Speaker 1: even the slightest tweak can backfire. Sometimes. I think about
Speaker 1: the backlash to Cracker Barrels logo change. How do you
Speaker 1: ees the Tony Roma's look and experience without alienating customers
Speaker 1: in the process.
Speaker 3: When we are modernizing it, we are not, you know,
Speaker 3: changing our logo, our brand palette, because that's how our
Speaker 3: customers identify with us. What we're doing is internally, we
Speaker 3: are trying to see where are the areas of improvement.
Speaker 2: Thank you so much, Mina for spending your Christmas Eve
Speaker 2: morning with us. That, of course is Tony Roma's CEO,
Speaker 2: Mina Hawk