From Compliance to Performance: Tyler Kraemer on how leading brands turn standards into results

Hey everybody. Very, very excited for today's, conversation. Today. We have Tyler Kraemer on, and for those who don't know, Tyler Kraemer is just an franchise operations wiz. He's grown from area management to business consulting into senior SVP of leadership, all on the, operation side of multi-unit restaurant brands.

And his background cuts across training and operations services, and really what we asked him to. Today to talk to us about is this idea of standards, right? This idea of when you have standards, the end goal should be performance and tying the thread and doing that at scale. So Tyler, so glad to have you on.

Thanks for joining us. If you're okay with it, I'd love to start with just a little bit more of an intro For the folks that don't know you yet.

Yeah, sure. And thank you for having me on, Gary. I really appreciate the opportunity. To share, all about what we've been focusing on for the last, six, nine months here, from a standard standpoint. So yeah, I, you know, going back, probably going 30 years ago now, I got into the, to the restaurant business, kind of into the QSR but I've experienced every area of the restaurant business from, you know, the QSR, up to full service dining. Spent some time as kind of in the kitchen as a working chef, for a, for a full service establishment. I've had this great experience from being behind the counter, on food, hands on service, it's really evolved to something now where. I feel really confident that I'm seeing everything from an operator's perspective and really taking it now through technology and, and training and in the technology.

Part of it really kind of came later, know, in my career here where, at one point I was handed a POS platform. And, just needed to implement it and that was the direction I was given. So that's really grown. So, now kind of full circle, I'm able to kind of bring all of those components together and, and that's really the position I'm in now here at, at Penn Station, for the last four years has been really about bringing operations, training and technology,

That's really just about scale, right? I mean, when you're talking about operations, the technology, it's meant to scale. So maybe an interesting place to start would be that transition, right? You said you started in the kitchen in some ways, right? Kinda, but thinking about a location, and then at some point you shifted to that.

Coaching level or that operations level where you're now expected to do things at scale? What was that switch like? To go from, I'm thinking about one location to, I'm thinking about standardization and systems across a whole collection of them.

Yeah, I mean, that's it. It goes to you. You have to start with what your experience has been and where you've seen success and where you've seen failure, and where that opportunity lies. And, and this is as much about, restaurants are so much about the people, I think that's really where it begins is. When you're taking what you've done in a single instance, in moving it scale, and, and I remember my first step into working with franchisees, they're not your employees. Right? And so there's, there's a, there's a level of, salesmanship to it. There's a level of, of creating the reason why, you can take your experiences. And how do you relate those to the next franchisee? How do you take a single system and, and, and make it scalable? And that starts with really, focusing on what those standards are, right? It's about the people and the process and how you make that, you replicate that through, through all of it.

But it's, it's about understanding where they're at, where there's opportunity. Ensuring that those systems are, are put in place and you take baby steps. If, if, what I've learned probably more than anything is that if you try to make too many changes too quick, if you go three steps forward, you, you have a, a much lower chance of success rather than taking that half step and then that next full step and then maybe two steps and you build on and you build on that momentum moving forward. But if you try to change behaviors, if you try to change one thing too quickly, it just doesn't have the same level of success.

Yeah. That's fascinating. It sounds like you know, whether they're doing wholesale change management, it sounds like there's a priority, right? You start with. Top order tweak, and I'm sure that's a, you know, there's a concert of both effort and impact there. It's not just the highest impact, but what can you reasonably do and then working up towards that broader change management, how do you think about focus there?

Because I mean, I interact with coaching teams all the time and you know, they have technology and then somehow there ends up being, it moves away from focus to. Check boxes and, and making sure. And how do you maintain when you have processes that span, you know, hundreds of locations and thousands of line items, how do you bake focus into that to say that they're not all the same, some are gonna have a higher order impact than something else.

Yeah, I, I think if it, you know, we, we break our, you know, if you take our evaluation as the example, we have, essentially eight different areas. That, that we look at when we work with our franchisees and our operational standards and, and many of those, it is no special sauce there about what those are.

Right? Quality service, cleanliness on the cornerstone of, of every restaurant brand out

Absolutely. Yeah.

Has their different versions of that. But we worked really hard to look at what is the root cause. What is the, what do you have to do first? So when you're setting focus and you're setting these standards, what are the basic building blocks that you need to do really, really well?

And that's consistency of products. So when we go through and our, our heaviest weighted items from an evaluation standpoint is quality of food, right? How is it prepared? Is it prepared fresh? Are we meeting the, the, the standard in the morning of how we prep bread? How are our fresh cut fries, So you start with the very smallest procedure that has the biggest impact to that guest moving forward to ensure consistency the way through from the moment that the first team member walks in to the first guest that walks in all the way to the end of the day. So you're setting those on. On the most important details that have the biggest impact, and you stay hyper-focused on those areas. And when we don't feel like we're hitting it, when we're having a coaching conversation with a franchisee, Hey, we're falling shy of the standards, how can we get back to operating at the standard level? We will go through and I, you know, I've spent time with our, we have our, our operations team, you know, we have monthly calls and, and we have, you know, weekly meetings with our, our senior operators, team. But we bring everybody into the office, you know, once a year for a big get together. Last year we went through this process, you know, kind of going through the five why's, and that's not a new practice. But it was. Eyeopening for myself. It was eyeopening for our team that in order to get back to the basics, in order to really find fundamental, reason why something isn't working the way it should, got into the five why's conversation.

So we had a fun little kind of, you know, demonstration and some, role doing some role play. On getting through the five why's, and it is amazing when you get down to that fifth why or as many as it takes that you actually get to the root cause of, of the problem and you get back to that focus and you can get back to put focus on what that standard is and you get back to that standard, you meet and exceed that standard in, in no time.

That's interesting and may maybe actually help me unpack that. Why a little bit because. You know, we talked about compliance, right? You're talking about, you know, the eight operational cornerstones, right? And it may, it might make sense to us all that, of course you have to maintain compliance to keep standards, and that's really important.

But I'm trying to channel my inner, you know, 12-year-old with my mom saying, clean your room. Right? I'm like, why? Why clean my room? Right? And I imagine a franchisee in a, in a similar way, it's like, well, you know, maybe it costs more money to maintain those standards, so I don't want to, and, and they're making those trade offs.

How do you. Explain the why for them. Right. Tying the thread of staying in compliance is good for you beyond, you know, a, a fee or whatever. You know, I, I know no one wants to use that. Right? It's the reason for compliance isn't because there's a repercussion. It's 'cause it actually benefits them because do you, how do you explain that to a franchisee?

How do you get them to wrap their heads around that?

Yeah, it's a great, and it, it's a great question and it is different for individual franchisees, because their motivation is gonna be a little bit different. A single unit operator is different than a, a larger operator. And so it, you, you have to find what that. What that in is to have that conversation.

So, so what is the motivation? If I keep my facilities in excellent condition, less ongoing maintenance, I have a higher guest satisfaction score. A higher guest satisfaction score leads to loyalty by a guest, a loyal guest returns to the restaurant more often. Higher profitability, lifetime value of the guest. They tell people and it just grows and grows. And next thing you know, know, you've, you've got a, a store that has loyal guest because you were doing the basics first. And so the loyal guest and, and for, for an operator wants to grow, right, they're increasing revenue. They see those repeat guests that's multiplied. They're opening more stores. They're more profitable. Our, our job is to make a franchisee is, is help them be as profitable as possible. At the, at the end of the day, that's what we're trying to get to is all the little details that we're doing leads to profitability. We can negotiate contracts all day long and we're pretty good at it. We do an excellent job of that we can, we can manage cost as well as we can to help a franchisee to be profitable. But it's what they have to do in the four walls. Ultimately that's gonna lead to them being most profitable. And so it goes down to the cove base, it goes down to the little details every single day, how well did we greet that guest?

How well did we engage? Do we do our suggestive selling in a hospitable way? So it's, it's really about kind of telling that story all the way through. To get them from the littlest detail and how that really rolls forward. That's, that becomes the motivation. Aside from just they want to be very, proud of what they're doing in the four walls of the restaurant.

They wanna be proud of the food that they're serving. So ensuring that those standards are there through the quality service, cleanliness, training, you know, that, that bleeds through to that return on investment.

That's interesting and it's kind of the, the drawing, the parallel from. Things in the field to their bottom line and saying that all of this impacts your bottom line. I'm curious, you know how on a, a, a great coach, right? They walk into a restaurant and they would see things inherently, right? And, and there might be as.

You know, it might be as small as like, there's a couple of napkins laying out. Nobody cleaned them up all the way to, you know, there's rats in the kitchen, which obviously doesn't have for you guys, but, you know, that's kind of the Yeah, yeah. Like, I'm just kind of trying to, I'm trying to say the scale of the whole thing, right?

And how does a great coach think about translating all the, the variety of things that could be done, and translating that into profitability to say, highest order, lowest order, somewhere in between.

Sure. So, you know, our, when, when we visit a store, our area representatives visit a store, the way that we. Kind of start at the end of the notes and work our way backwards. So, when we leave a restaurant after a, a full day visit, we have a consultation with the manager in charge, is kind of the first, thing that we do.

The last thing we do before we leave the restaurant. Then we, of course pass notes along to the leadership teams, from the franchisee and then internally as well. But leading up to that, these, these. Evaluation visit and notes that we do, they really start out with that vision of walking in the door.

What do I first see? What is my impression walking in the door? That's what the guest impression is. And so it's a general kind of vibe and feel of what's going on. Oh, I can see that they did a good job with the trash boxes and they got that counter wiped down. That's a better feeling than I had the last time I walked in the door. But we have different areas that we focus on with different visits. So, you know, product quality may be the focus. How are the, how are the items being built, that visit, how is the customer service that visit? So we might

So

Emphasis on what we do, we really approach this as a trending type of visit.

So, are we doing better than we did the visit before? Yes or no. Here's why. Here's where you're improving. Here's how we can tweak this and make it better. And, and these are detailed sets of

You.

This isn't just a checkbox and a bullet point and a one line. Is a paragraph describing. And when we see the area of opportunity, we then pull out our training tools.

We pull out the training reference, we. Put it into our notes and then we, follow it with, here's the action steps, right? Here's the standard you're meeting, exceeding, or falling shy of that standard. Here's the information, help you get better, and here's what you need to do to utilize this information to get better. So it's very actionable. And when you look at, you know, store sales profitability. Against what we'd call our performance evaluation scores. There is a direct correlation to all of those things together. So when you tie all of the data components together, when you tie, you know, kind of the, the, the, the, the PE scores, the profitability, the labor, the food cost, social scores, you know. Advertising costs. All of these things have a direct correlation to the overall performance of the business. And we can show that trend over time, throughout the year and trimesters, trimester through the year, through a course a year. So we, we take all of those details and roll 'em up. Here's how you're doing in comparison, here's how you're doing better to paint that overall picture.

Right. Cool. I actually wanna double click on something you said, around, and it kind of, you really painted a picture of the area rep walking in and stepping into the shoes of a hungry guest, right. Who's there to get, to get a meal and, and empathizing, which is the word that came to mind there.

It's interesting because it sounds like a, a strong empath. A coach that's very empathetic is gonna be able to articulate better, identify needs better, and therefore impact profitability better. But then my thought was, well, empathy, there's a range there, right? I mean, everybody's, they're super empaths.

There's people that are bad at it, right? And like, it is just a skill. Just like any other, and I'm curious, do you see a range between, I wanna say a seasoned coach and really maybe not like a, a good versus bad, but I'll say kind of somebody that has done and is very proven at it versus somebody that might be you, right?

You, is kind of that green, do you have any kind of quantification or understanding? Of how those skills at the coach level impact profitability and sales at the location level.

Yeah, I mean it, there's certainly, you know, a seasoned pro's been through different operators. They have a little bit of a different perspective and everyone has their own unique style in how they, they communicate. And you know, success breeds success. So if you have an area rep that is with a well-seasoned, experienced operator, they tend to feed off of each other and, and you get momentum. So there's certainly an advantage with a well seasoned operator, however, you know, having the tools and systems in place so that whether it's your, area rep doing their first visit or their area rep doing their 2000th visit or, or more, the information is all the same. It's really about how it's being communicated. And so we have kind of that comprehensive list, financials, we, that the area reps have at their fingertips to be able to pull out and put in these performance evaluation notes. So we can see trend of performance, we can see how they are matching against their peers. We do everything in these tier groups.

So, you know, whether it's sales performance, pix performance. We do everything within peer groups. And so how do you, how are you performing as a, as an operator

You'd like

Your

To go,

And, and we do rack and stack those right here. We're very transparent with

Yeah.

So the area reps then in turn have this tool at their fingertips to be able to go to the franchisees and say, here's how you're performing against a, like, franchisee at a like volume in a similar type of market. Here's how they're performing. Here's where we're seeing success with them. Here's what we think maybe that you should try doing in order to have success there. So while the delivery may be a little bit different and their experiences may lead them to get to that conclusion faster, the information is there. For everyone to have that same conversation. Our regional franchise consultants, Have all of these tools and they're focusing on kind of that business level conversation with the operators and they have their operators of focus, which then, different reasons and needs, become their operator of focus. And we have additional resources for those individuals. And the area reps take that right to the field, and, and are able to use those same resources. Specifically in individual stores.

Very cool. And maybe one last question. I know, 'cause I know, we're running on time here. One last question around. Building those teams. Right? You're talking about area reps and field reps, and it seems like as you reach scale, as you have more people and there's, you know, people retire, you bring new people in.

How do you maintain that culture of focusing on progress rather than compliance? And I know that kind, you set up the systems to measure the things and get it to, but there is that cultural aspect of always rooting and the communication rooting the franchisee experience in their success. How do you.

Make that a constant across scale and all kinds of people that come into the.

Sure. Well first I'll say we're very fortunate that our, We've had, folks in the area rep ranks, you know, going on 22, 25 years, we don't have much turnover, in that area rep role. So we're very fortunate in that, respect. We have a great ratio of, area reps, field support to our franchise community. And so I think that gives us the right balance of being able to spend the right amount of attention and time with the franchisee. So that we can form kind of that trend over time. We have enough visits. We, not just within one year, but over a course of years, to really keep that momentum and that trend of communication going. So if we do bring in a new area representative, they spend, the same amount of time at our corporate training location. That a franchisee would to be, a managing owner. And so we start with, with the fundamentals. We start with the, the, the of this is how I make a sandwich. This is how I finish it.

This is how I weigh, this is how I ring. They can do it from beginning to end before they even touch another store. We have a full transition period with our area representatives. To where they go and they repeat, they follow along with another area representative and the regional franchise consultant, to do parallel visits, at the same time, at least a couple of full cycles within the stores that they're taking over.

So they understand the trends. They've read all the notes, they understand the themes. Getting hands-on experience. They start by observing, then they go to writing the notes, verifying the notes, and then they finally transition into kind of taking over those stores. So, all in all, it's, you know, we look for really about a six month process where we're bringing in a new area representative, into the system before we feel that they're kind of fully ready to. To take the reins. And of course sometimes that's a little, little less, sometimes it's more, look for opportunities within the organization as well. Where, where that might exist, for somebody to step up into a new role. And now we actually have a senior area rep position as well that we've developed this last year. To kind of take that group of, of area reps to the next level, and continue that development, and, look for, for success in the future.

Yeah.

Certainly a lot of opportunity, a big transition. And we have, you know, what we call our area rep guidelines, which really give the, our team, the ability to, evaluate consistently and fairly across all stores. Our regional franchise consultants, consistency visits. So, of, the area rep, provide notes and feedback and they do that across their entire team so we can ensure that from operator, operator, store to store, we're delivering a very consistent visit. The same type of notes, giving feedback on something's trending better, or otherwise. We're, we're very consistent about that through.

That's awesome. I love the intentionality around taking, an area rep and molding them and kind of that growth path. It's pretty unique. I love that. Cool. So Tyler, I know we're at time. Always our final question. If people have follow ups, they want to get in touch, double click on anything you've said.

What's the best way to get in touch?

Sure. Yeah. Shoot me an email. Tyler, T-Y-L-E-R, dot Kraemer, K-R-A-E-M-E-R, pen-station.com.

Awesome. Tyler, thank you so much for your time. This was awesome.

You bet. Thank you so much. Appreciate the opportunity.