Former Dunkin CEO on the state of the restaurant industry
Yahoo Finance Video
Updated
Former Dunkin CEO Nigel Travis joins Yahoo Finance Live to discuss the state of the restaurant industry amid the coronavirus pandemic, and why he still continues to see the power of the franchise business.
Video Transcript
BRIAN SOZZI: With indoor dining restrictions kicking in again across the country, including today in New York City, and no stimulus in sight, the restaurant industry is headed even further into a dark place. Nigel Travis is the current Chairman of Dunkin' Brands and its former CEO, and he joins us now. Good to talk with you, Nigel, as always here. No stimulus plan or-- for restaurants as it appears in the latest bipartisan bill. As a veteran of the restaurant industry, can you believe what's going on here?
NIGEL TRAVIS: Well, it's actually my last day, firstly, as chairman of Dunkin', because we have new owners as from tomorrow, Inspire Brands. Wish them good luck. Yeah, it is strange, Brian.
I thought a stimulus just before Christmas would have been something that everyone wants. Certainly, the restaurant industry has been looking for extra help for several months. The National Restaurant Association has made continued pleas. And I would have thought that people would be listening in Washington. So it is disappointing.
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JULIE HYMAN: Nigel, it's Julie here. So what kinds of conversations have you been having with the folks in Washington? And what do you think the problem is? Is it just politics getting in the way of what small businesses might need?
NIGEL TRAVIS: Well, small businesses really does personify the restaurant industry. And I think all the various associations, the NRA, the restaurant one, has clearly done a very good job. But I don't think people in Washington have been-- I think they understand the message, but the politics, as you suggest, Julie, seems to have got in the way.
I hope the latest plan of splitting the bill from what I read and saw on TV this morning, I hope that works, because certainly we do need stimulus. I mean, I talk to a lot of small restaurateurs. A lot of them are right on the cusp, a lot of them have gone out of business already. The restaurant industry desperately needs help.
Now, I see the various numbers, 100,000 restaurants have already gone out of business. I would have thought that would have indicated that help is needed. We've now got the vaccine. The vaccine is coming.
It slow-- it's rolling out already in the UK. And obviously, I have businesses over in the UK with my Football Club, so a little bit ahead of the US. So I think the vaccine plus stimulus will give some hope back to the industry, and hope is what's needed.
BRIAN SOZZI: Nigel, the National Restaurant Association put out, I believe a week ago, saying that another 10,000 restaurants can close over the next few weeks. Just based on your conversations with those smaller restaurant owners, does that sound about right to you?
NIGEL TRAVIS: Probably sounds a bit light, actually, Brian. So I think the issue they say is they've-- they've fought a very good fight to keep going, how much longer can they keep going? Now, I think to be fair, some of them haven't been particularly creative.
A lot of the smaller restaurants have done a great job, but some haven't. I think they haven't embraced some of the big trends in the industry, as well as some of the bigger trends like curbside. Curbside's a great indicator. This was founded in the restaurant industry, has now moved to retail. It's very big in retail.
And I say that sitting on two retail boards, Abercrombie and Advanced Auto, both of which are doing it extremely well. I think, also, they haven't embraced the digital world as strongly as some of the chains which, obviously, has been a real changemaker over the last 10, 15 years. So I think the fault for some of these independent businesses goes both ways, both support from government and their own initiative, but definitely help is needed.
JULIE HYMAN: I also want to ask you about the franchisee's, because they, of course, are small businesses who kind of are in between, right, because they have a relationship with a large chain. Do you think that they are more insulated because they have the support? Or do you think that they are just as vulnerable as, you know, individual mom and pops?
NIGEL TRAVIS: Well, certainly during my time at Dunkin' and then when I gave up being CEO, Dave Hoffmann's time as CEO, certainly at Dunkin' we gave a lot of support to the franchisees. And I think the benefit of a franchising business is that franchisees have someone to talk to. They can learn about best practice.
I mentioned just now about digital. That's one of the huge benefits of being in the franchise business. You see best practice not only in Dunkin', using that as an example, or my prior employer before that, Papa John's, but you also see what other franchisees are doing, which means that you can really learn from the best in the same situation.
So the franchising business, not many people talk about. It's a fantastic business. I happen to be the chairman of Servpro now, which is owned by Blackstone. And again, I see the power of the franchise business. And I think as a result-- result of the pandemic, the fact that people will realize that in a very fast-changing world they need more and more guidance, more and more support, I think you see franchise continue to be very strong for investors and very strong for people looking to be entrepreneurs, but with the support of a strong infrastructure that a franchise system brings.
BRIAN SOZZI: Nigel, before I let you go, I mean, do you think one of the end games here is post-pandemic we're just essentially left with big restaurant chain-- chains, Dunkin' Brands, McDonald's, you name it? These are going to be some of the most powerful companies in the United States.
NIGEL TRAVIS: There's no doubt that that is a fear. And clearly, before the pandemic everyone in the industry was saying that the restaurant industry was over-restauranted, in other words, too many restaurants. It's probably gone the other way now. It does give a lot of white space for chains to grow into.
Since I've retired as CEO, I've spent a lot of time looking at other chains within the industry. A lot of them have, in my view, a lot of opportunity. I think the restaurant space for investors is a very interesting space. As I just said, the franchise space is absolutely one that needs to be supported from an investment point of view.
But clearly, the losers could be the mom and pops. And as I said before, it's not just the government's fault, it's not industry fault, I think a lot of them haven't embraced new ideas. Now, having said that, I've got some friends who have small restaurant chain.
Not only do they have great cuisine, not only have they adapted to, say, outdoor seating when you can do that, not only have they adapted to delivery and digital, but they've also started doing ghost kitchens, in other words, you can do more than one brand from a kitchen. That's a great way of leveraging your assets. So that is part of the answer.
BRIAN SOZZI: I'll leave it there. Nigel Travis, always good to see you. And personally, I can't believe today is your last day as Dunkin' chairman. I've only known you as Mr. Dunkin'. We've been talking for about over seven-plus years. So good luck in your next-- in your next path.
NIGEL TRAVIS: Thank you very much, Brian. Good luck to you too.