Patrick J. McDonnell: Does VOP Apply to Restaurants?

Patrick J. McDonnell is CEO and owner of Restaurant Holdings in Pittsburgh, Pennsylvania. Restaurant Holdings owns and operates seven Atria’s restaurants in and around Pittsburgh and also partners with Mike Ditka in the ownership and operations of three Ditka’s restaurants.

McDonnell earned his bachelor of science with distinction in food service and housing administration from Penn State in 1974. He started with Steak and Ale restaurants as a general manager, and has been with Chi-Chi’s, Chili’s, and Boston Market in various capacities.

He is the son-in-law of Wayne Alderson (see Conversation with Wayne Alderson) and has been implementing the principles of the “Value of the Person” that continue to be developed by Alderson and Patrick’s wife, Nancy McDonnell.

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Ethix: What is the number-one priority in the restaurant business?

Patrick J. McDonnell: Most people would think it is the food, but that is not the case. In any new restaurant I have managed, I do an employee orientation. I will ask for three or four volunteers to share with the group their most memorable restaurant experience, and I know the answer as I am asking the question. It is rare that anyone would ever say it was because of the food. It was rather about their experience. They might have been recognized when they walked through the door, or they had great service, or the restaurant knew about an anniversary or birthday and did something special. They usually did mention the food was good, but what made it most memorable was their experience. People are coming to us for an hour or an hour-and-a-half of comfort, freedom, and peace of mind. What our guests are looking for is for us to provide that time of safety, comfort, and experience.

Don’t get me wrong, you must have good food to be in the business. I’m not a chef, but I am very culinary, and I tend to migrate toward food. I put a lot into the menus and preparation at each of my restaurants. We are always evolving our menus.

But you will never have a chance to have raving fans as guests unless your employees are raving fans. This means we have to pay a great deal of attention to our employees, and that’s where the “Value of the Person” comes into play in our business. If you value your employees, your employees will value the guests. In return, valued guests become loyal and raving fans.

Valuing People

How does the “Value of the Person” get implemented in your restaurants?

Of course it starts with love, dignity, and respect, but you have to be careful how you interpret those words. If you say, “I love you,” nowadays you might get caught for sexual harassment! It is not a love fest, where you say, “I am going to treat you the best you have ever been treated. I am going to pat you on the back for everything, and we all live happily ever after.” Rather, it is about demonstrating value with very high standards, high expectations, and involvement. It is about developing a culture and leadership standard for your managers and employees that is based on valuing the person.

We hire in our restaurants for hospitality and personality, not restaurant experience. The food business can always be taught. Before we hire any individual, we explain the standards by which we operate. People will be held accountable to these standards. They need to know and understand the menu. Their uniform is going to be a professionally laundered white shirt, pressed, pants that have a crease, shoes that are polished. They will be well groomed and act professionally. Part of the value of the person is to hire strong, conscientious employees. Strong employees seek strong leadership that cares about the employee. They don’t want a free-for-all. When you have these disciplines along with a management style that requires you to build relationships, your employees will work together as a team.

Having said this, I will commit to never berate an employee. I say, “I will always treat you with dignity; I will speak to you in a very professional way; and you will be treated fairly.” That is valuing an employee, I believe. For many in business, it is much easier to get rid of someone than it is to work with them and develop them. Employees must be given the dignity to know where they stand and how they are doing. If we must fire somebody and it comes as a surprise to them, then we have not done our job.

We have a rating system for all of our employees, and we rate them workable “W,” replaceable “R,” or promotable “P.” Our goal is to take all of those “Rs” and to develop them into “Ws.” Every employee needs to know where they stand and what they need to do to be successful. It is not easy to sit down and give a poor performance review. It’s unpleasant, but it’s valuing the person when it is done respectfully, clearly, and with a plan for development.

Dealing With the Tough Economy

Now these are really tough economic times. Can you carry this out in the tough times as well? It seems that some regard valuing people as a luxury and it goes away when things get tough.

That’s a great question. It is difficult, but we have been fortunate as to the category we find ourselves in within the restaurant business. We are not casual dining, and we are not fine dining. Our restaurants are upscale casual. This part of the industry has held up pretty well, though we are starting to feel it more now. To begin with, the restaurant business has very tight margins. We carry a lot of overhead. So to position us right, I began about a year ago developing strategies that we would need for 2009 to face what I felt was coming in the economy.

Strong employees seek strong leadership that cares about the employee.

My role is to make sure our business stays healthy for our employees and their families. I need to save jobs and also protect our business. This means that we all need to work together in the good times and bad. If every single one of us does their part then we’ll be able to weather what is to come, because people will fight hard for what they understand, sacrifice for, and believe in. We eliminated most parking passes, including mine. We took away employee discounts at the restaurants. I got office staff together and charged them to look at every single line that they manage, whether it be office supplies or whatever. We did put a freeze on our salary and raises, and bonuses are gone. We can’t pay bonuses when we are not making money because a bonus is a bonus. In my 35 years, it is as tough as I have ever seen it. I have never missed a payroll, and I plan on never missing a payroll!

On top of the tough economic times, we were faced with another hardship and near tragedy. On November 25 of last year, we had a meeting at our home conducting brainstorming sessions with our senior people. Sometimes, I just like to get away from the office, get more casual. I got a phone call that one of our restaurants outside of town had been drenched in gasoline. There was a pipeline running near the restaurant from one of the major oil companies, and they were changing a valve when it blew. For 45 minutes, gallons of gasoline rained right on top of our restaurant. This is at 9 a.m. and our kitchens are fully going, all the prepping stoves and ovens were on. We were very fortunate that none of our employees were injured.

Of course we were forced to close and had to keep our doors closed until the Tuesday before Christmas. Since December is the biggest month of the year for most retailers, canceling all of our holiday parties and banquets was devastating for the business and for our employees. But through the hardship that we all incurred, it was a testimony to our culture and organization to see that we have become stronger.

Gaining Employee Involvement

We valued our people by bringing them together and letting them be part of the solution. Norman Brinker, my first boss in the restaurant business, once told me, “There are four words that people enjoy hearing from you: ‘I need your help.’” The accident and economic crisis has touched everyone, but I believe all of our employees feel like they are doing their part. Our people have taken ownership, pulled together and we have become a family.

Employees must be given the dignity to know where they stand and how they are doing.

Why don’t more organizations get the idea of valuing people? It seems so obvious.

Most organizations understand the need to value employees. It is just that they don’t know what to do. It is really hard to make it part of your culture. Wayne is the best at training the Value of the Person and living it. He is the least busy of any busy guy I know because he always makes time for people. I’d say, “Wayne, I need to get together for lunch some time.” He would say, “When? Let’s set it up right now.” This is what I mean by dealing with the little things and always following up. He is relentless, and that’s what it takes.

The words, value of the person, sound easy, but to manage with this style is difficult. It is a more hands-on style of leadership. Some people resort to email and texting today, but that is so impersonal. It saves time and that’s why people do it. But if you are going to value people, you have to take time for people.

Personal Background

How did you get into the restaurant business?

I got into a very competitive program in architecture at Penn State, and just decided it was not what I wanted to do. We had no family history in the restaurant business, but I had an older brother majoring in hotel and restaurant management and he seemed to like it, so I followed his lead.

After college, I went to work for the restaurant chain Steak and Ale. The restaurant scene was very different 30 years ago, where Steak and Ale was a pioneer in casual dining. Norman Brinker was the founder and owner of Steak and Ale and turned out to be a major influence in our industry, probably the most highly regarded leader, professional change- maker over the last 40 years. I was fortunate to get to know Norman rather well. What I learned from him was leadership, integrity, and relationships. He had an incredible ability to create teams. Many of today’s restaurant leaders “graduated” from Steak and Ale between 1974 and1980, including the presidents of Fridays, Metromedia, and Outback Steakhouse.

When I was 28 years old, I left Steak and Ale to help develop the Chi-Chi’s Mexican restaurant chain. I became vice president of operations and opened 80 restaurants in four years. It was a very exciting time, and Norman was the first to congratulate me for the opportunity. But this is where I began to understand the importance of leadership and integrity in business when I experienced the very different environment and culture at Chi-Chi’s.

However, it was a great stepping stone for me. With 125 restaurants, I experienced big business. The people for whom I worked knew what they were doing. The problem for me was the way they went about getting their bottom line. The difference was in our philosophy. I just didn’t like what they stood for — a lot of arrogance, a lot of intimidation, a lot of greed. Had that been my first job, I may have never found my way out of it. My management style had already been set.

I decided to leave Chi-Chi’s and ended up back with Norman Brinker, who had just started the Chili’s franchise. It was a great opportunity for me. I built four restaurants in the Pittsburgh area with the prospect of 300 more when I was approached by a good friend of mine from my Steak and Ale days. He offered me the opportunity to be part of the development of the Boston Market Company. In 1994, I sold my restaurants and went with Boston Market to help them develop their new concept and ended up running 135 restaurants.

Boston Market was another experience entirely, and I once again was able to experience firsthand, a lack of integrity in business — from how they managed the company, to the product, reported numbers, everything.

Integrity in a Tough Place?

How do you operate with integrity in an environment that doesn’t operate with integrity?

You need to control what you can control. We could still operate with integrity within each of my stores — the standards, the style of leadership, our culture, how we treated the people. We could not control what corporate was doing with the food. We could not control how they were reporting numbers to the public. So I focused on doing my best with my people. My struggle was in the guilt by association with how they were managing the business. On the corporate side, the whole agenda was to drive the stock price. They would do anything to cash in on their options. They were making hundreds of millions of dollars while we were working on behalf of them. It was just a convoluted situation that went against everything I stood for. It became more and more difficult to work in this environment. I told my wife, Nancy, that I had a knot in my stomach every time I got on an airplane to go visit the stores.

In November 1997, as I sat on yet another airplane, I decided that I was going to call the CEO of Boston Market and resign. When I got off the plane, I made the call to say I would be in his office on Monday to work out an exit strategy. Boston Market filed for bankruptcy in 1999. It was a very difficult time, but yet I never felt so free. What I stand for is far more important than the security I left behind. I once again counseled with Norman Brinker and he said to me, “Don’t worry. Let’s figure out how we can do something with you.”

But you didn’t go back to his business?

With his counsel, I decided that if I was ever going to do anything on my own in the restaurant business, now would be the time. Prior to leaving Boston Market, I bought Atria’s, a great, local bar/restaurant in Pittsburgh. It had been in business since 1930 and was your typical “Cheers”-type establishment. My wife, Nancy, encouraged me to create a new concept and turn Atria’s into a true neighborhood restaurant and tavern. Since our son, Patrick, was 2 years old, and I was tired of traveling, we decided to make this new venture our focus. Atria’s would now be our livelihood, not just an investment. We gutted the basement to create a proper kitchen and we created upstairs seating in what used to be apartments. From the day we opened, it was truly a success. Not just because of the food, but because of the culture.

There are four words that people enjoy hearing from you: “I need your help.”

I was committed to develop not just a concept known for great food but to develop a restaurant company built on the Value of the Person, and the core principles that I learned from Norman Brinker of leadership, integrity, and relationship. I called on my wife, Nancy, and my father-in-law, Wayne Alderson, to help me develop training that would be cutting edge for the restaurant industry. That not only focuses on operations but also on people.

Since then, that one flagship restaurant has grown to seven locations throughout the Pittsburgh area. In 2003, I was given the opportunity to partner with former NFL player and coach, Mike Ditka, to operate his restaurants in Chicago and Pittsburgh. In both concepts, we are committed to valuing our employees and creating a great dining experience for our guests.

Norman Brinker gave me a great start and played a very important role in my leadership style. Wayne Alderson was another. With Norman, the leadership role was quiet, certainly valuing and respecting people. With Wayne, it’s right in your face, valuing people, making time for people and being accountable for it. It’s the only way to run a business.