Kelly Baltes, former President of Maggiano’s Little Italy restaurants, discusses how to create a formula for a successful business and how brand strategy plays an important role in the process.
Kelly began his restaurant career bussing tables. Since then, he has worked in almost every position within the restaurant industry, working his way to positions such as President, CEO and Chairman of the Board for a variety of restaurant groups.
Kelly earned his Executive MBA from Auburn University in 2005 and was later named to the Auburn University Harbert College of Business 40 of 40, an honor recognizing the top 40 alumni to graduate in the first 40 years of the college’s formation.
Kelly Baltes, former President of Maggiano’s Little Italy restaurants, discusses how to create a formula for a successful business and how brand strategy plays an important role in the process.
Kelly began his restaurant career bussing tables. Since then, he has worked in almost every position within the restaurant industry, working his way to positions such as President, CEO and Chairman of the Board for a variety of restaurant groups.
Kelly earned his Executive MBA from Auburn University in 2005 and was later named to the Auburn University Harbert College of Business 40 of 40, an honor recognizing the top 40 alumni to graduate in the first 40 years of the college’s formation.
Narrator:
Welcome to the Harbert College of Business podcast.
Sarah Gascon:
War Eagle, it's your host, Dr. Sarah Gascon and Mr. Currie Dias. Thank you for joining us today on another episode of The Harbert College of Business podcast.
Today, we are joined by our special guest, Mr. Kelly Baltes. Kelly began his restaurant career bussing tables as a teenager, and worked every position in the restaurants while developing his operational and leadership skills. Kelly has played in key roles within the industry, serving at an officer level for the past 25 years, and for the past 13 years in positions as President Chief Executive Officer and Chairman of the Board. In 2005, Kelly earned his Executive MBA from Auburn University. He was later named the Auburn University Harvard College of Business "40 of 40". This honor recognized Kelly as one of the top 40 alumni who graduated in the first four years of Auburn University's Harbert College of Business.
Today, we will discuss the winning formula for businesses, the importance of continuing education and the importance of leadership at every level.
Kelly, it is so great to have you here with us today. Thank you for joining us.
Kelly Baltes:
Oh, my pleasure, War Eagle.
Sarah:
War Eagle. What inspired you to begin your career in the restaurant business?
Kelly Baltes:
I think for many, you first kind of go looking for something where there's a level of interest and maybe some unknown, some intrigue. At a very young age I thought the restaurant business would be something pretty neat, and I kind of stumbled into it and was hired to bus tables at the Longbranch Supper Club in Marion, Iowa. And I guess the rest is, as they say, kind of what happened.
Sarah:
That's awesome. We discussed the winning formula. What is it about the winning formula? How did you develop the winning formula, what does it look like and how do you apply it to the businesses that you've been in?
Kelly Baltes:
I think the restaurant business is not that dissimilar from any business really. It starts with a product or a brand that's either going to solve a problem, or it's going to do something better than the competitive set that's out there. What's the product, what's the brand? From that you really have to pull out the key attributes. That's kind of the secret sauce to the brands that you probably go to and you adore. There are key attributes that are likely well-defined by the founder, by the leaders, and those attributes, the more differentiated they are, the more impactful they're going to be on you. And that's going to cause you to have that connection to that brand.
Those attributes over my career, those are the things that you protect at all costs. You dig a moat around them, you don't let anyone on your turf. Your brand, your product. Again, it's like other businesses too. And I think from that, there's the business model. That's that model that has to work. I've always worked for-profit, but non-profit has a business model as well, but on the profit side, it's all about that formula and that model, so that you get a return on investment. It causes you to want to continue to put capital out there and have it work for you. And then that model has to be sustainable and it has to be scalable depending on what the aspirations for the brand or the product are.
So you've got that brand product, you've got the business model, and then I think something that's really, really important in the restaurant business and others, is having a meaning and a purpose that is behind why you're doing what you're doing each and every day. And if you've ever gone to a restaurant and it kind of rings hollow to you, you don't get it, it may have an issue with the product or the brand, or it could lack that meaning, that purpose. I think of it as that higher calling. When a brand has that higher calling, you feel it. There's this emotional connectivity to you and it compels you to want to use it and to feel great.
So I think throughout my career, that having that solid brand and product, making sure your business model works and then having that higher calling, that true meaning, the purpose behind it, all of those things, those three components really add up to that value creation and it attracts people. That's the culture, that last part, that meaning where people want to be part of it. And if you can't do that, if you can't have a place where people are treated incredibly well, they want to be there, then the other two pieces of the business doesn't matter. I've been able to see it play out successfully in multiple brands and it's really been a blast.
Currie Dyess:
That's really fascinating. I love your take on branding and how to leverage that into a great business and implementing the strategy around it. Would you say that brand is something that is pushed onto the customer, or something that is pooled from the customer?
Kelly Baltes:
Currie, I think it's a little bit of both, but the brand is who you are, and the more holistic that is. If it just simply solves a problem or the food's just a little bit better than the competitive set, there's no emotional connectivity to it. And at that point you may eat there and you might take it or leave it. And I think the really successful brands, if you think about them, they're the ones that have each of these pieces really working hard for them.
I think the brand is something you feel, you have to know what your user group looks like, how they behave and all of that, and do you need to broaden it, do you need to narrow it? All of those things, brands are powerful. Some brands are just one restaurant and that's pretty cool. I've obviously worked with some folks who have been much larger than that.
Sarah:
How has your brand strategy changed over time?
Kelly Baltes:
I think it used to be if we just serve great food and we treat people right, that that's enough. And I would say in a very complex environment, what's changed is people have changed. There's been a macro trend in society for convenience, as well as people wanting what they want, how they want it. So there's unique personalization of food service and all of that. So what I would say starting out many years ago in the business, it's gotten harder and harder and harder. And the competitive set has only increased in size.
The number of restaurants per population is much different today than what it was when I started out, but people want what they want. There's all kinds of different restaurants, you kind of have your pick out there. So in order to win, you've got to have a differentiated brand and you've got to have the ability to execute. It's hard to do. I think the people that do it and do it well, they do amazing things. Whether you're a server or a manager or a vice president of operations, it's really, really hard work. And it's only gotten harder over the years, for sure.
Currie:
Kelly, you obviously don't get to the position you're in and experience the things and have had the jobs that you've had by just shooting in the dark. You talk a lot about brand and a lot about strategy. How did you learn these skills? How did you learn the winning strategy, the winning formula?
Kelly Baltes:
I would say this, first of all, I've made plenty of mistakes over my career for certain. I would go back to that first job that I had bussing tables. I bussed tables for probably a couple months, and I talked to my manager and I asked my manager if I could go and address each server before the shift so that at the end of the shift, maybe they would tip me out, because they only gave me $1, each person at the end of each night. Regardless of how busy we were, how much money they made, I'd get that dollar.
My manager thought I was maybe a little unhinged and I went to each server, I said to them before the shift, "What can I do for you? What can I do more? How can I make your service better so that you make better tips? And if I can do all of that and bust my butt, would you consider giving me $2 at the end of the night instead of $1?" And you know what? It worked, by the way. So at the end of the night, I got $2 instead of one. I did have a holdup who had to work on for a while, but that model of 'I'm willing to work harder than anyone else and I'm going to make adjustments to the need out there, to that environment out there.' And in the restaurant business, you've seen that play out as a consumer, multiple fold over the last several years, and certainly in the current environment.
I think for the restaurant business, it continues to advance and adapt and change. And I think as a leader, I've had the ability to do that throughout my career. And I think I would just say also that a lot of it is what I think about today, which is I've had people help me along the way. I've had people take me under their advisory, I've had them look out for me, I've had them tell me, "Hey, you can do this better over here." Having access to people who care and working in a caring environment, I've just never worked for a bad group of people, I've been lucky. So some of it is, I've been willing to work harder maybe than others, I've been willing to make adjustments and seek adjustments, but I'd also say that there've been amazing people who have helped lift me up along the way. And that's certainly something that I think about and I try to do with people along the way as well.
Sarah:
Is there anything that you've learned from those individuals you just spoke about? Is there anything you learned from them from a character standpoint that you didn't necessarily have in yourself that you have adopted to, or added to your toolbox of leadership?
Kelly Baltes:
I think probably one thing. One of my early managers, when I was an hourly employee, I would just say this was like the best guy in the world. This guy was just a top notch, great person. And I came up through the '80's as an hourly and then a manager. And I guess I surrounded myself with people who were comfortable being them and I didn't get caught up in trying to be a certain model or a certain way.
I think when you join a company, when things turn out right, you become a little bit like them and they become a little bit like you, so you have that influence. So I think what I would say is I've been surrounded by people who are comfortable and confident with who they are, how they are, they didn't have an expectation on me to be like them, they just encouraged me to have my voice and find my voice so that I could be the most comfortable I could and so that I could lead in my way. A lot of encouraging, probably some reprimanding along the way in all of that, but I worked with some amazing people.
Currie:
To be a successful leader you also have to be a great visionary. And what do you see heading our direction in 2021 for the restaurant industry?
Kelly Baltes:
First of all, we certainly hope that the vaccine and therapeutics with COVID have a positive impact so that the restaurants can, broadly across the country and beyond, re-open dining rooms fully. I think that's really going to be kind of the key unknown at this point. We know we're going to get there, what that timeline looks like, we don't know. What I would say is there's not going to be that moment when the pandemic is declared over and we go back to the way we were, there's going to be longstanding tail to this in a couple of ways. There's not going to be that declaration it's over, everybody go back to it was. Spending habits have adjusted, so some of that is going to stick and it's going to require businesses to be adaptive in that model. You might hold the brand, that part of it, and you may adapt your business models.
I think delivery and convenience is going to continue to play a large role. And I think probably the bigger part for the restaurant industry is it's going to be can the independent operators and the upstarts out there that were un-great, maybe initial trajectory, they were high growth before this hit, maybe somebody that has five, six restaurants that was just ready to kind of break out, and then this set in. I think the large restaurants, they've got the resources, they've got the ability to come back quicker, but I think it's going to be how can the independents find a right way to come back and to give the guests what they need, which is going to be a little bit different on the other side.
And the last thing I would say is just on the COVID part, I hope everyone can do everything they can to support the service and culinary teams out there that truly live often paycheck to paycheck, and they're out there either out of work or their hours have been adjusted.
Sarah:
Yeah, definitely. You had a number of years of experience and then you decided to go back to school. Earning your executive MBA from Auburn University, why would you go back to school?
Kelly Baltes:
You know, you go back to the opening comments, which is, you've got this product or brand, you've got this model and then you've got this meaning, this purpose. And I think each of us have that same thing. What I would say is I had a certain brand, there were ways that people felt about me, they believed about me. And my business model was really my behaviors. I had kind of a way to get after things and to activate. And what I would say is continuing to learn and find different ways to open new doors and new methods, I thought the opportunity to get my executive MBA from Auburn was a great opportunity for me to invest in my brand, not for a line on my resume, but to truly broaden my approach, to have a wider perspective about people and about business and how to accomplish things. And ultimately I knew I've always been driven, but if I could find an amplifier for that, and I was successful at the time, I joined when I was a senior vice president, running a hundred restaurants across eight States when I joined Auburn for the executive MBA journey. Again, I wasn't looking for a line on the resume, I wanted to truly get better. And I think that parallel with a life career and the business model that we've talked about, I do think there's a parallel, and Auburn was truly a life-changing experience for me.
Currie:
Kelly, you talk a lot about the winning formula, and I think that we could actually have an entire discussion just on your winning formula. But when you talk about it, it sounds almost like the same framework you created your winning formula on is the framework of a motivational speaker, and these things are applicable to everyone. How can the winning formula that you created be applied to other Auburn alum or current Auburn students? How can they create their own formula?
Kelly Baltes:
It's happening whether people believe it or not. We may change the words, someone may view it a little bit different than maybe how I frame it or how I articulate it, but everybody has a formula going on. The question is, what's the level of awareness? If you've got awareness and you know your position in the marketplace, that's your brand. Whether you're an entrepreneur working for yourself where you're not punching the clock, or you're a manager or a director or a VP, you've got a brand and a position in the marketplace. And the question is your model, your activation, if you're a student or an alumni, you have to know what your behaviors are that are adding up to create value. And the question is, are you willing to take a look in the mirror to really know what you have and then make adjustments and make improvements?
I mean, I got to tell you, anybody who is probably a student at Auburn today, they are all in so much better of a position than I ever was. I started out without my undergrad. I went back and finished my undergrad when I was a Vice President of Operations down the road. I've played catch-up a little bit, but what I have done along the way is I've tried to find perspective and I've tried to find people around me who would tell me what I wasn't good at. And I'll digress, but I worked for a COO who gave me my performance review and I love this guy, he's awesome, he was very influential in my career, but he gave me, it was a scale of one to five, he gave me a five on everything. He told me I was awesome and he told me how much more money I could get for each paycheck.
And I actually stood up, I took my copy and as I'm about to leave, I go, "Oh, crap, don't do this Kelly", but I did it anyway. And I was like, "Hey, thank you, thank you so much, but what can I get better at?" And he said, "No man, you're killing it, you're awesome. You know, just keep doing what you're doing." I was like, "Yeah, I'm going to need something." And we had a coffee a couple of days later and he said, "You really made me think." And then I'll tell you what, this guy opened up. And this guy jumped me hard with all kinds of things that I could get better at. If you're a student alumni, man, there's things that you're killing, you're so awesome at, but there's other things that are below the surface, that if you can find a way to get better, whether it's reading or who you surround yourself with, or taking a class or going to Auburn and, you know, going back and getting your executive MBA, it's not about one thing, it's about that journey that we're all on, which is I think, to be the best version of what we're capable of being.
Sarah:
Was there anything that you learned in the executive MBA program that you could've never learned on your own?
Kelly Baltes:
I would say this, when you're in a career and you've kind of got your head down a little bit, you're surrounded by people in the industry that you work in and maybe the business that you work in. And maybe outside of that, depending on where you're at in your life cycle, you may be married and have neighbor friends, or friends that have kids that your kids go to school with, and maybe church, but outside of that, you don't know a lot of people maybe. So what I would say is what Auburn did for me was it opened my eyes and provided this collection of people from across the country, every different kind of business, and it was this unbelievable sharing, which provided this richness.
So, it wasn't just having the curriculum, which was amazing and great and the professors, the faculty, everybody was amazing, but it was enriched by this group of people who got together with a common interest of getting better. And it was unbelievable. It was really one of the highlights of my life and the friends that I've made out of it, wow, unbelievable people. We're close today and I graduated back in '05.
Currie:
How do you know what your non-negotiables are? You mentioned this earlier when talking about branding. How does one identify those?
Kelly Baltes:
If we're talking about a product or a brand, what I would say is do enough research, whether it's just kind of independent research and talking to the people that use your product and how they use their product, they'll tell you what's most important. And I would also say, they'll also tell you what's not important. Having worked in founder transitions throughout my career, I would say sometimes when you're a founder, and I've never been one, and there's probably a reason for that, but a founder might pay attention to a thousand details about their brand, their product.
I may come in and say, "What are the top 10 things? What are the things that are truly differentiated so that we can defend them at all costs?" The other things maybe we can be flexible on, and maybe that's where we have to adapt and improve and make adjustments. So, I think as far as a restaurant, a brand, how do you figure it out? Well, you do the research and ultimately it's the dollar that tells you, right? People are willing to reach into their wallet or purse and they're willing to spend the money, and how they spend their money, when they spend their money, there's all kinds of data that's available, I use a lot of demographic and psychographic analysis to make sure that I know how people are spending their money and why.
Sarah:
With all of your experience and the things that you've done in the past, what's next for you? What's your next step? Where are you going?
Kelly Baltes:
I'm hopeful that if I can help any alumni or student, I hope that they'll reach out to me. I'm on LinkedIn and all of that, so I'll help anybody I can. And that's certainly something that I love, but I have been an investor with a couple of private equity transactions, and throughout my career I've been blessed to have some time right now to look at some options out there, I'm actively doing that. And I can tell you that I'm only going to do something if I can get really, really excited about it as I have been throughout my career. I've been blessed to be where I've been and I don't know, I'm open and I'm seeing what's out there right now a little bit.
Sarah:
Well, it's been an absolute pleasure having you here. How can our audience contact you?
Kelly Baltes:
Well, they can certainly ping me on LinkedIn. You can probably find me at a Auburn game, hopefully sometime in the near future. Any of my friends there at the Harbert Business School, they know how to track me down too. It's been a pleasure to be on. I appreciate you guys and your podcast very much.
Sarah:
On behalf of Auburn University's Harvard College of Business, we would like to thank you for joining us today, it's been a great conversation. War Eagle.
Kelly Baltes:
War Eagle, thank you very much.
Narrator:
Harbert, Inspiring Business.