Q&A with Steve Grossman of Strategic Restaurants, who speaks about being king in the industry.

by Jeff Bizzack

Strategic Restaurants (SRAC) is one of the largest franchise operations in the country with more than 240 Burger King restaurants across eight states. SRAC was formed in March 2005 and has since expanded, purchasing 226 Burger King restaurants. As the third largest Burger King franchisee, it has earned a place as one of the top franchisees in the country. SRAC is committed to operational excellence and in its 20 months of operations, the company has already invested more than $30 million into improving the facilities and operations of its restaurants, significantly increasing customer satisfaction and speed of service. Steve Grossman, CFO of SRAC, recently outlined the process he and his team used to select the best service provider to support SRAC’s aggressive business plan.

JB: What drove you to outsource your accounting, payroll, and benefits administration functions?

SG: Our situation was unique. It was not the typical scenario where a company turns to an outsourcer to solve back-office problems. In contrast, our processes were not broken. Our accounting and HR functions were working very well with experienced and professional staff managing our entire back-office.

However, it was clear that outsourcing these functions would generate significant economic benefits. It would directly reduce our operating costs and need for investments in back-office systems. We knew that if we didn’t outsource, we would have to upgrade our accounting and HR software packages to support our expansion plans. By partnering with an outsourcing firm with sophisticated systems and technology in place already, we expected to achieve important strategic benefits as well. All of these factors combined made a powerful business case, which led us to make our final decision to outsource.

JB: What criteria did you use to select your outsourcing service provider?

SG: We looked for an outsourcing firm who could achieve the economic and strategic benefits we identified as Important. There are many outsourcing firms available, but we wanted to work with a firm that had extensive experience serving larger clients like SRAC. We focused on companies we thought we would be able to work with on a personal level and identified and evaluated two service providers who seemed able to meet our expectations.

JB: Based on your criteria, a service provider must be able to understand your needs and business issues. How important is industry experience?

SG: I think industry experience is essential to a successful engagement. The restaurant industry is unique. It is largely a cash business. You need industry experience to understand the financial controls in place to be able to follow the cash as it moves from transaction to bank deposit. The service provider we selected understands how critical this process is and developed a system designed to achieve maximum results.

JB: You mentioned that relationships are important in selecting a service provider. How do you determine during the interview process that these are the people you want to partner with?

SG: There is a two-step process. The first step is the PowerPoint presentation. We meet with the leadership of the firm and listen closely about their history, visions, resources, and expertise. This is important because it can give us a good understanding of the capabilities of the firm and its commitment. What really counts is determining whether we can build a partnership. In step two, my controller and I spend two days at the outsourcer’s service delivery center. We have team meetings covering the recommended process, professional backgrounds and experiences, and work steps. We also meet on a one-to-one basis with each department personnel we would be dealing with.

JB: How long was the transition period?

SG: The transition took three months. The service provider had a team of people that went through each department to understand and map our processes. They gathered an incredible amount of information during the transition and did simultaneous processes such as payroll with our people.

JB: How do you measure satisfaction with your service provider?
 
SG: If our operations people and leadership team are happy, then we are satisfied. But overall, satisfaction is based on expectations. At the beginning of our relationship we sat down with our service provider and set expectations. We tracked our progress throughout the year and at the end of the first year. The good news is that our expectations have already been met as of our first-year anniversary.

Steve Grossman is the CFO of Strategic Restaurants (SRAC). For more information he can be reached via email at Sgrossman@strategicrestaurants.com