How Arby's CEO Is Pulling Off An Unlikely Turnaround?

Discussion started by Sunil Dutt Jha 4 weeks ago

When the financial crisis hit, Arby’s suffered badly. Sales and margins shrank for three straight years, from 2008 through 2010. The company began offering more promotional deals to dig itself out of a deep hole, but the recovery was slow. In 2010 a JPMorgan analyst said, “Arby's performance is amongst the worst in modern restaurant history."

In 2013, two years after Wendy’s had sold Arby’s to a private equity firm, Paul Brown, former president of Hilton Worldwide, was brought in to attempt a turnaround. Since he became CEO, the chain has grown same-store sales for 14 straight quarters. Top-line sales have jumped by 16% to $3.6 billion, and Arby’s restaurants now have average revenue of $1.1 million, 25% higher than before Brown arrived. 


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Sunil Dutt Jha
Sunil Dutt Jha
New product launch strategy

Today Arby’s typically launches new products at a discount, and those items often make up 10 to 15% of the company’s sales, says Brown. Then Arby’s turns off the promotional pricing, sits and waits. If the item can hold steady at 3 - 6% of sales, it earns a permanent place on the menu. Otherwise it’s gone. Of the 25 to 30 new products Arby’s has launched under Brown’s watch, he says about four have earned that distinction. Arby’s now launches 12 new products a year. Before Brown, it released about two a year.

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