Lead In 30 Podcast

4 Restaurant Companies: How Change Crushed Two & Propelled Two Forward

• Russ Hill

Share episode

You've heard of all four companies. Two of them are battling massive declines. Two are incredible examples of growth. Why the difference? It all came down to their leadership teams' ability to lead through change and disruption. 

This is part two of our series on leading through change with Lone Rock Leadership Co-founder Russ Hill. 

• Pizza Hut and Subway demonstrate the consequences of failing to adapt to changing market conditions
• Both chains failed to return to pre-pandemic revenue levels due to outdated business models
• Chipotle doubled revenue and quadrupled net income by embracing digital innovation
• Chick-fil-A nearly tripled per-store revenue through continuous innovation and future-focused leadership
• The ChangeOS model reveals how organizations move through status quo, mourning, adapting, and innovating phases
• Most struggling companies get stuck in the mourning phase, unable to accept new realities
• Effective change leadership requires validating initial concerns while preventing extended mourning
• Leaders must embody excitement about future possibilities rather than anxiety about disruption
• Your value in the marketplace directly correlates to your ability to lead through change

Share this episode with a colleague, your team or a friend. Tap on the share button and text the link.


--
Get weekly leadership tips delivered to your email inbox:
Subscribe to our leadership email newsletter
https://www.leadin30.com/newsletter

Connect with me on LinkedIn or to send me a DM:
https://www.linkedin.com/in/russleads/

Tap here to check out my first book, Decide to Lead, on Amazon. Thank you so much to the thousands of you who have already purchased it for yourself or your company!

--
About the podcast:
The Lead In 30 Podcast with Russ Hill is for leaders of teams who want to grow and accelerate their results. In each episode, Russ Hill shares what he's learned consulting executives. Subscribe to get two new episodes every week. To connect with Russ message him on LinkedIn!



Speaker 1:

Okay, I'm going to give you four restaurants. You tell me which one, which one of these restaurant change you think has managed, navigated, change the best, because this is part two of our little series here on managing or leading through change. Here are the four restaurants Pizza Hut, chick-fil-a, subway and Chipotle. Oh my gosh, these numbers are going to shock you. This is the Lead in 30 podcast with Russ Hill. You cannot be serious. Strengthen your ability to lead in less than 30 minutes.

Speaker 1:

If you have not listened to the last episode, stop, hit pause on this one. Go back and listen to the previous one, because I talk about, I frame up in that episode why I'm talking about change Now. You shouldn't need a lot of evidence or convincing that this is a timely topic in the world in which we live in, unless you're like stepping out of a cave right now or you've been in a cabin in the woods for the last I don't know six years. But if you've been out in the world for six minutes, you know that this is a timely topic. So go back to the last episode. I'm framing up change. I talk about how the brain works. I talk about status quo, bias versus our need for novelty and the psychological terms that I was using. Go back to that. Okay, this is part two. By the way, welcome into lead. In 30, in less than 30 minutes, we give you a framework, a model, a best practice. In this case, I'm going to give you a ton of financial reports, the data which is just going to stun you, this. You're going to be pulling up this, this in a meeting. The stats I'm going to give you in this. You're going to be pulling up this, this in a meeting. The stats I'm going to give you in this, in this episode, you're going to use in a conversation, in a meeting, a conference, or a dinner, a cocktail hour in the next few the next few days, I promise you, because they're so interesting anyway. So that's what we're doing.

Speaker 1:

In this episode you can find out more about our firm. At loan rock io, we've got an executive consulting coaching company. We work with large companies, the executive teams, helping them with clarity, alignment, movement, being effective, keeping them ahead of the curve. And then we've got another side of our business, which is leadership development. Think of that as what we learn on the consulting side in the room with senior executives. We then step back as a firm and think how do we package that in a way that we can put it on a shelf at your grocery store? You could just walk in and buy that those core models, frameworks, learning, insight and hand that to a manager, a mid-level manager, and give them the learning. And so that's the leadership development side of our business. We've got four courses. You can see all of them right now. Just go over to lonerockio.

Speaker 1:

Okay, and, by the way, my background is in coaching and consulting senior executive teams at some amazing companies. And I'm Russ Hill if you're new to the podcast, so nice to meet you and I'm one of the founders of our firm and just an absolute junkie for leadership development. I don't care about quantity, I care about quality. Make me a better leader, because if you do that, I'm a better dad, I'm a better husband, I'm a better citizen, I'm a better neighbor, I'm a better executive, I'm a better manager, I'm a better thinker, I make more money, I expand my impact, I have a better influence, I have more legacy, I learn, I grow, I become the best me. Okay. So here we go. Okay.

Speaker 1:

So for companies, think about the restaurant space. You all, has there been? So we're going to talk, we're going to zoom out from restaurants. Has there been any change in the world in the last five, six years? We all agree, yes, you can just start throwing out letters like COVID-19, or phrases, or AI, or tariffs, or hybrid work, or market swings, or customer expectations, or innovate. You can throw out all these terms, and there are some that are specific to your industry, and so there's massive change.

Speaker 1:

And you, if you're going to be a leader whose market share, your market value, your market value is going up, then you got to have a game plan, a strategy for leading through change. And so let's let's just dive into some case studies. Let's talk about executives and let's talk about leadership teams. Let's talk about organizations and if they were well-suited or not well-suited for change. Because if you are, if you have a mindset, a strategy, a game plan for how to lead through change, we're going to see it in your financial, your employee retention, engagement, safety, product launch, innovation, all of these metrics. It's going to be visible. And if you and your team the team that you're on or the team that you lead in an organization, if you're well-suited to lead through change, that's going to be shown in our key business indicators we call them key results and if you're not, that's going to be evident as well.

Speaker 1:

And what's really important is not so much just you but the team around you. So I'm teaching you, I'm sharing with you free of charge in these episodes right, this is episode 369. So we're closing in on 400 times I've sat here and hit record and put out an episode into the world free of charge, just trying to bring value, insight into what we're learning. Okay, and if you implement this. That's awesome. And then I want you to take it to your team and if you don't lead other leaders yet, well crap, let's get you going. Let's move you up the org chart, let's get you promoted. Let's get you, let's get this organization moving. It's not you promoted, let's get you, let's get this organization moving.

Speaker 1:

It's not rocket science, it's just you've got, you've got to learn, you've got to dig in, because they're not going to teach these things to you in business school. They're not going to teach you to it in uh, on Instagram. They're not going to teach it to you out in the world. If you're consuming mostly news where they're yelling at each other and complaining like you can get absorbed in all of that. You'll have nothing to show for it except frustration and exhaustion. So instead, you're investing your time and bettering yourself so that you can. Then you're leading individual contributors right now. Next, you're going to lead leaders. Then you're, instead of leading 10 people, you're going to oversee 50. Then you're going to oversee 500. Then you're going to oversee 5,000. We're going to move you through that. All of that is dependent on your ability to lead.

Speaker 1:

Okay, pizza hut. Have you eaten there any time in like? Raise your hand right now. Let's see, raise your hand if you've eaten at pizza in the last year. Okay, there's one of you and you're kind of weird. I'm just kidding, I don't have any of you all. I'm sure pizza hut has incredible executives. Maybe one of you and you're kind of weird. I'm just kidding, I don't have any of my. You all. I'm sure Pizza Hut has incredible executives. Maybe one of you is listening, maybe someone's forwarding this to someone who's a VP, a director, a senior executive, an EVP at Pizza Hut, a Yum brand, maybe, and that's awesome. I'm sure you're an incredible human being. Most likely, if you're an executive at Pizza Hut today, you weren't five years ago and then another, another company. Well, let's just, let's just stay with Pizza Hut for a minute. So let's talk about so. I know there are incredible human beings and I'm not talking about, I'm just talking about the organization.

Speaker 1:

Overall. It has sucked canal water. It has. You do not want to have been an investor in Pizza Hut these last five years in a pandemic and post pandemic world. And so let me pull up the chart. It's here on my computer and I uh, you can't see me doing.

Speaker 1:

2019, $5.7 billion 5.7. Pandemic hits 2020. What's the revenue? 5.6. They slide back $100 million. So 5.7 to 5.6. Then 2021, 5.7. They get back to a pre-pandemic level, barely barely growing. When I show you some of these other numbers from 2021, their numbers should have been dramatically higher. 2022, they're at 6.6. 2023, so they grow a little bit Now.

Speaker 1:

The market overall, the restaurant market over the last five years has exploded. It's grown dramatically. We've been eating out way more, we've been ordering food way more, right as families, as individuals. So the industry overall it has. You should be growing pretty healthily if you're a decent company. Pizza Hut has not. And so they went to 6.6 and 20, and then it's here. The last three years, 6.6, 6.8, 6.8. So no growth, 0% the last from 2023 to 2024. And then operating profit they went backwards this last 12 months. Their growth was 0% from a profit standpoint in 2023. And then in 2024, they went backwards 5%.

Speaker 1:

Pizza Hut was not positioned for change. They were an in dining restaurant. Maybe you remember, if you're my age or somewhere around there. If you're under 30, I would think you've never been to a Pizza Hut. If you're over 30, I think once in your life, maybe at a, at a T-ball team celebration dinner.

Speaker 1:

You went into pizza and they had a buffet and and you could get different pizza slices and you could get whatever. And they had a couple of arcade games or pinball machines and you went in there and it was a nice environment and that was literally 20 years ago. There are a few exceptions. Are like three of you who are listening that it's an exception? The rest of us? This is all true. You don't order from them. They don't. You haven't used an app. They didn't really have an app. They weren't really in the delivery business. Yes, they delivered some, but it was secondary.

Speaker 1:

Where these other chains, like Papa John's, like Domino's, have grown dramatically Insane growth. Why? Because they were well positioned for the trends that were coming. Pizza Hut was behind. If you listen to the last episode, they were stuck in the past. Their model was great for 1980. It wasn't great for 2025. When people want Uber Eats or DoorDash or whatever, want you to deliver or curbside pickup or whatever else, pizza Hut's not there Now. They're spending a ton of money on marketing right now, as I understand it, and hopefully they'll turn it around. I don't love anything more. There's nothing I love more than a turnaround. Insanely good. The final chapter has never been written, and so that's awesome. Hopefully they'll be able to get that going. But they were not well positioned and it shows in revenue.

Speaker 1:

I'm going to give you another example Subway. Subway has been terrible these last few years. Let me give you some stats here. Where the crap is it? 3,000 stores closed, right, 3,000 stores closed between 2020 and 2023. Talk about a kick to the stomach during the pandemic that, like they weren't positioned.

Speaker 1:

Did you ever order like takeout, like hey, let's get on the app and order some Subway sandwiches delivered to our home? No, not a chance. Jersey Mike's. What are the other ones? Um, firehouse subs? There's a, there's a gosh, there's a bunch of them, right? These change. You think of Subway? Not, they're not viewed as innovative. That's not their brand. So they uh, their peak was 27 seven thousand locations in 2015. And and now last year it was, it was twenty thousand. So over the last kind of 10 years, they've lost seven thousand. They're shrinking. Why? They weren't well positioned for change. That's the point of these last two episodes. They they did not have an executive team that was leading through change.

Speaker 1:

So let's look at let's look at revenue for subway. Now I'm going to two amazing examples. After that, subway in 2019 did $10.8 billion in revenue. Okay, let me say it slow, cause some of you are on the treadmill and you're barely breathing and we're cheering you on. Okay, so 2019, $10.8 billion, 2024, last year, five years later 10.2. They aren't even back to pre-pandemic levels, to pre-pandemic levels. So every year of the last four years 2023, 2022, 2021, 2020, the year of the pandemic they went backwards $9 billion. They are struggling to. There's no growth. If you're an investor, you're going to put your money in subway stock Not a chance.

Speaker 1:

Not a chance why? Companies are led by people, right. There are executives who are affecting this Power of one Massively right, and so all kinds of examples of that. So what these numbers tell me? I don't even have to know the players, I don't need to read any stories, I don't need to dig through AI. Tell me the story of the leadership teams or whatever. I can already tell you. I can predict it right now that executive team, great people, I'm sure, wonderful, probably incredible human beings, not well positioned to lead through change, not innovative, no game plan for how they're going to lead through all the disruption happening in the market. The numbers show it.

Speaker 1:

Now let's go to an example that many of you know. How many of you raise your hand if you've eaten at Chipotle in the last three months, wow, look at that, everybody's hand is up, except for like two of you and your vegetarians. Well, actually, they have a veggie bowl. So, yeah, you probably eat there too. So, chipotle, unbelievable. You want to? Let's just go right to their performance 2019, $5.5 billion. In Last year, 11.3, 5.5, 11.3 net income. Listen to this net income number, you people Listen. 2019 Chipotle net income $350 million. This blows my mind. Chipotle, little restaurant chain. They sell like, like burritos, and you've been there. All right, we all just raised our hands. We've been there in the last three months. Some of you have been there in the last three hours. 2019 billion, 350 million to 1.5 billion. Now do you know why the Chipotle CEO in the last six months was recruited over to lead Starbucks through their turnaround that they need right now Unbelievable growth? Why it's burritos people. Everybody sells burritos. It's burritos people. Everybody sells burritos. Everybody's got a rice bowl, everybody's got the veggies.

Speaker 1:

Chipotle was their culture, their mindset, their leadership team was all about innovation, was all about leaning into the future. On that continuum that I drew for you last week, in the last episode. Go back and listen to it if you haven't Past present future, leaning into the future. They developed an app. The percentage of their revenue and sales coming off of their app was very high, was higher than the industry norm pre-pandemic.

Speaker 1:

Then, in the pandemic, they leaned into it. They already had all these things in motion, by the way, they'd had a big health scare. You remember your history of Chipotle? That really damaged their brand, threatened to kill it a few years before the pandemic. So what did they do? They put all these sanitizing stations, all this employee. They changed the venting system in the restaurants. So guess who was incredibly well positioned for a health scare? A pandemic. Incredibly well positioned for a health scare? A pandemic Chipotle. The very crisis that threatened their existence ended up positioning them. The pain that they went through, the adapting they went through, the innovation, the changes they went through led them to be the best, one of the best positioned restaurant chains for the pandemic.

Speaker 1:

The lesson in life? About that too, about our setbacks, isn't it? It looks like an insane setback. It's so painful right now and yet it could be positioning us for explosive growth. So I'm going to drink this medicine, I'm going to endure this. I'm going to push through this setback, our first lead in 30 webinar. A thousand leaders showed up, thousand leaders showed. No one bought. Not one single manager anywhere in this freaking world bought from us in lead in 30. Setback Hello, embarrassing, totally humiliating, yeah, pretty much paralyzing. Not a chance, not a chance. And paralyzing, not a chance, not a chance Ended up teaching us, making us go back to the drawing board reworking some things, figuring out how to do it differently to where now we were able to launch a leadership, a leadership to training company. The setback was the ticket, was the door opener to the market, the market opportunity. Without it, we couldn't have done it.

Speaker 1:

Same thing I'd argue with Chipotle anyway. So, chipotle, then they open these Chipotle lanes right, they opened hundreds of them during the pandemic. It's not a dry, it's like a drive-through lane, but they don't have a, a speaker to order at. It's just for app, app pickups I use it all the time and a super convenient. You just go there, you order on the app, they tell you what time you pull up in the lane, boom, they hand it out the window and you're on your way. Beautiful, Love it.

Speaker 1:

So, chipotle, their leadership team. Go dig through chat, gpt, search through grok, go to perplexity, whatever your AI tool, ask them, tell me the story about Chipotle, tell me about their CEO. You'll get all the details. They were so well positioned because they were leaning into change. Okay, one more example.

Speaker 1:

And then I got to go to a framework that I want to teach him some takeaways. Then the last example is Chick-fil-A. This is the no brainer, and I know there are a few of you out there, like three of you who are listening, that think Chipotle is the devil incarnate and that's fine. And that dates back to some of the, the, the founders, political views. I would argue get over it. Um, companies, whatever, every company has got stains. Disney, um, papa John, I mean all these companies that they're led by, yeah, whatever. And and so we're just talking business case. So for the rest of us, we can't get enough of the chicken sandwich or the nuggets or whatever the crap is that you want to eat there. And so Chick-fil-A's growth is dramatic. I'm just going to give you there just real quick.

Speaker 1:

I did an episode about this, maybe a year ago, six months ago, I don't know when it was. Let me just find it on my screen here. Here it is the amount of sales per restaurant. If you owned a Chick-fil-A franchise in 2019, your store on average generated $3.5 million in revenue. In 2019, say it slow for the people on the treadmill. In 2019, $3.5 million per location revenue. Last year, that same store delivered $9.3 million nearly not quite well, more than more than doubled, nearly tripled 25, 25.7% growth last year alone.

Speaker 1:

Chick-fil-a is a company on the move. They're growing dramatically and, um, you can search their newest prototype store in Atlanta with four drive-through lanes the restaurants on the second floor. There's no in dining experience. They're trying out different models. I did a whole episode on it.

Speaker 1:

Why has Chick-fil-A grown so much? Because their executive team believed in innovation. Because their executive team was not mourning the past, because they were bucking the trim of status quo. They were leaning into the future. So, while you've got all those people in the restaurant making a chicken sandwich and the waffle fries, you've got an executive team that's thinking about next year and six months from now, and we show a video with the executive teams that we consult that takes you inside the innovation lab at Chick-fil-A. Every executive team we show it to loves watching this video. It just shows about how? I mean, it's unbelievable. They build this inside of a warehouse and they they're fine tuning and fine tuning and thinking ahead and thinking ahead and innovating.

Speaker 1:

So here's, here's what I want you to think about my last 10 minutes with you. Let's go into. Okay. Well, thanks for us. Those are great examples. Now, what do I do? This is what you do, and I'm going to build off of the last episode what you understand. This is what you do and I'm going to build off of the last episode what you understand. This is part of your strategy. What I would suggest to you. You adjust it. However you want Part of your understanding or strategy or mindset as a leader who is well positioned to lead through change. That has to be your identity. You all. That has to be something that you're good at. Your identity you all. That has to be something that you're good at. Okay, if your value in the marketplace is going to increase in the current conditions and with what's coming ahead, especially in this age of AI, okay. So this is what you know.

Speaker 1:

You know that the brain defaults on wanting status quo. Last episode, we dug deep on that. So people don't want change and when change happens, or disruption to them personally in their department, to their career in the industry. They go into threat detection mode. They're worried about survival. They never will say those words out loud, but that's what they're subconsciously thinking. I'm less safe today than I was yesterday. If the world didn't change, I was okay. But it did change. Tariffs came on, ai came on, this came on market all these changes Okay.

Speaker 1:

So we know that status quo is constantly disrupted and when status quo is disrupted, the natural inclination is to mourn. You mourn what used to be. I've talked about this a little bit in previous episodes. Some of you who are listening in I've walked through this, or our team, someone from our firm, has led you through a discussion around this. This is the basis of what we sell in our course at LoneRockio about. We call it Adapt in 30, adapt in 30. You can find it on our website around courses. It's exactly what I'm teaching right now in a more concise way, that we certify internal folks in, or our faculty teaches it.

Speaker 1:

So you mourn. You mourn the change. You want yesterday to be here. You want grandma to not have passed away. You want that divorce to not have happened. You want that leader to not have quit. You want that restructuring to not have taken place. You want the customer to not have canceled or not change their order. You want the market to not have shifted. You don't want a pandemic, you don't want tariffs, you don't want a threats from AI. You don't want you. You don't want this disruption. We don't want it on one hand. And so when it happens, we mourn, and that is a spiral.

Speaker 1:

We, some people, get stuck in mourning perpetually. They never get out of it. They're constantly now their, their brain, their emotion just goes to the past and they find a seat in the past theater and they just get comfortable there and they can't wait to tell you constantly about the way it used to be, the way that it was. And we, as leaders who manage well through change, we allow that. We give space for mourning, we validate the pain, we validate the way that it used to be and that, yep, we thrived in that and yep. And so we validate it and then we push through it. We push through it and we get to the next stage. We call this model change, os. And so it's status quo. It's disrupted. Think about this just visually status quo. We put this in kind of a circle, so status quo is up at the top. It's disrupted. So look at kind of a rip through the circle. And then the next stage is morning.

Speaker 1:

Most organizations Pizza Hut got stuck in mourning. I promise you they did. I promise you there were debates inside their boardrooms about, well, we were the number one or we've got this brand. Or just look at this market research. I swear there was somebody marketing saying there's nothing wrong here. Look at our brand identity People think about. Everybody knows Pizza Hut. We're a household name. People think about they. Everybody knows pizza hut. We're a household name. Those other brands wish they had our name recognition morning. That's what it sounds like. This is the way we do it. This is how it happens. I've spent 15 years doing it. I know what works. I've got the relationships. This is like that's morning.

Speaker 1:

Yes, that gave you your ticket to the current market, but that doesn't get you onto the stage to take the trophy. That just allows you admittance into the venue. All right, cool, you're here. You're in the market. That got you here. Now do you want to win here or you just want to be here?

Speaker 1:

So we've got to push ourselves and our team from mourning into adapting. I don't care whether you like tariffs. Maybe they'll go away, maybe they'll stay, maybe they'll be higher, maybe they'll be lower, doesn't matter. We're going to win. Period. An AI doesn't matter whether you like it or not. The robots or this or the whatever, I would embrace it. You know who's going to win in the age of AI? We are, we're going to figure it out. We lead to change. We embrace the future. It's going to make us more competitive. So you lead to adapt. So, instead of mourning, you're adapting.

Speaker 1:

Adapting is acknowledging, accepting that reality has changed. Yesterday was yesterday. It's not tomorrow, okay. So if you've got an organization, a team or even yourself that's just stuck in mourning, it's okay for a day, for a week, for a little bit. That's totally normal. We validate it because we're human. But now let's move on. No more discussion about that. Let's move on. This is the world. It's exciting. Do you embody excitement or do you embody mourning? I'm thrilled with the future. Politicians do whatever the crap you want to do while the rest of the world debates whether it's good, bad or whatever. I'm adapting, we're adapting. We're going to lead through it while you have a hissy fit over it, and if it changes back or change it. We're going to keep leading through it. You go get on Twitter, you go watch the news, you engage in the six hour time waste over there. We're adapting and then adapting.

Speaker 1:

Adapting is when you start to gain market share in a changing environment and then the ultimate step you want to get your organization to is not just adapting, because adapting by itself is reactionary. You're reacting to the disruption or the changes in the market, which is fantastic. Well, the rest are mourning. Your organization, your team, you, you're adapting, which it means you're reacting. The final stage that we introduce in ChangeOS, in this model, is innovate. Innovate is proactive. Innovate takes this organization and this team from reacting and adapting, which is huge. That means we're going to grow this year because we've got the organization, we've got our leaders, we've got our executives, we've got our mid-level managers leaning into the change. They're adapting to it, they're acknowledging reality. Now, if I can get them over to innovate, which means that as a senior team, we're looking even further into the future.

Speaker 1:

So where do we think this is going to go? We become less tactical at the top of the org chart, more strategic at the top of the org chart. What does that do? It creates an organization that innovates. We lean into change. We anticipate it, we're ready for it. We are agile, we are resilient, we are ready for disruption. We're built for it. That's what Chick-fil-A is, that's what Chipotle is. At the time of this recording, that's not what Subway was, and it sure wasn't what Pizza Hut is. So my question is what do you look like? What does your company look like? Have I given you something to think about? I hope so, man. I love talking about this, I love having you think about it, and I hope that you position yourself, your team and your organization to innovate and lead through change.

Speaker 2:

Share this episode with a colleague, your team or a friend. Tap on the share button and text the link. Thanks for listening to the Lead in 30 podcast with Russ Hill.