The Balancing Act of Cost and Revenue in Hospitality with Tim Murphy

Speaker 1: 0:00

Welcome to another edition of Give an Ovation, the restaurant guest experience podcast, where I talk to industry experts to get their strategies and tactics you can use to create a five-star guest experience. This podcast is sponsored by Ovation, an operations and guest recovery platform for multi-unit restaurants that gives all the answers without annoying guests with all the questions. Learn more at OvationUpcom. And today we have someone who has such a rap sheet. I am really excited to have him on. His name is Tim Murphy, the CEO of Boomer Parks and Big Kahunas. It's an incredible company doing 50 million in sales right now.

Speaker 1: 0:38

But he didn't get a start there. He has had stints at Walt Disney World, darden, denny's, applebee's, sonny's, barbecue, family Entertainment Centers. He's been involved with dozens of turnarounds and M&A work. He is a, as I like to call it, a recovering finance guy. Tim, welcome to the podcast. Well, zach, thanks for having me, and you have quite the rap sheet of experiences, and I know that we were kind of joking right before this about the importance of understanding the financials, even if it could be a little bit boring sometimes, but the numbers are what drives everything, which makes it exciting, right, tim?

Speaker 2: 1:19

Absolutely. It's what tells the story. So it paints the picture of what's going on in the business and you can't determine the numbers or what's moving the levers that are moving the needle, then well, you probably need to find another career path. But you've got to have that piece to understand the business charge on.

Speaker 1: 1:35

It seems like there is a fundamental thing, like when you take over a business, you're able to go in there and, lower cost, raise revenue. Like turn things that are losing money into things that are making money. What is it that people don't understand about financials that you do? What makes you really good at doing that turnaround work?

Speaker 2: 2:04

Well, I think you've got to understand one thing Fundamentally, there's always cost to be cut, but then there's only so far you can go. Otherwise you've got to raise a top line and get it moving in the right direction. So it's a fine balancing act that you've got to do, looking at cost first and say what can I really do here and do I know what the industry standards are Like? If we're dealing with restaurants, you know what food costs predominantly should be in a restaurant. Okay, well, also if you're in a family entertainment center, I also know you're in my four walls and I can charge a little bit more and do different portioning sizes and I can get my food costs down a little bit lower than maybe a typical restaurant. When a restaurant's running 25, 35% food cost, I can push down a little bit further in my FECs or amusement park and probably get in the 20% range and frankly, today we're at 21%. So it's a matter of knowing what the levers are. But I also know I can't push it much more right, so there's a little thing.

Speaker 2: 2:58

fine, tuning, tweaking you can do along the way. Next step has got to be how do I raise it? How do I raise the revenue In my case? Okay, next step has got to be how do I raise it? How do I raise the revenue?

Speaker 2: 3:07

In my case, unlike a restaurant, because there's a close parallel to entertainment and restaurants the only thing that's different with restaurants is I'm selling time. Excuse me, with a family entertainment center, I'm selling time. Versus a restaurant. You're not right. You're trying to get table turns, you're trying to get them in and out and get more people through there, but in a family entertainment center business, you're trying to sell time. So I want them to stay longer and I want them to. Then hopefully they'll spend more. They're going to have another turn at the restaurant piece of it but if I keep my food costs low, then the rest of it I'm just selling time. So in my case, I'm 79 percent of my revenue is selling time. There are 21. Well, yeah, 22, shoot, it's 20,. 78% is selling time, 22% is selling food, but I got my food cost under 21%.

Speaker 1: 3:50

That's really interesting because you know, in the restaurant space and I'm sure this was probably a change in mindset for you when you went more like the entertainment centers and theme parks is because it really is about table turns. Right, how do we, how do we create the best experience in the shortest amount of time and get them to pay the maximum amount in that time? But you make your money in doing a turn, you know.

Speaker 2: 4:14

Correct the next person, unless I can sell them more and suggestively sell them more. So that's kind of the goal. If I'm gonna have, if they're gonna be there for a period of time, well, what's my next step to get more out of them? I mean, in a good, nice, fine dining steak restaurant, you know you're going to have you know the appetizers and maybe a salad. Then you've got your meal and hopefully a dessert, and you know it could be after. You know, coffee or brandy, it could be wine in the beginning, whatever it ends up being.

Speaker 2: 4:40

You can get more out of it if you structure correctly, unlike, you know, family entertainment or fast food. You know it's boom. It's an interchange in and out and I've had both sides of that as well. Kind of, my family entertainment center is a bit of like a fast food restaurant. They're in and out, but can I keep them there longer? And they're going to go back. And they're going to go now, get that dessert, now go, maybe, and go back and get an appetizer, or they're going to get a drink at the bar. So you know I can get more out of them. But that's not the only thing I'm selling. I am selling time on arcades and attractions.

Speaker 2: 5:09

Right right and you know they're playing for redemption items, that they can win products and things and maybe they'll buy retail. So it's getting them busy, keeping them happy, giving a great guest experience. But you should know all of your revenue drivers, no matter what business you are, so that you can extend and suggestively sell. So many companies I've been with in the restaurant space that just don't suggestively sell, they're just order takers.

Speaker 2: 5:34

What do you want? You want to cope with that. They don't have something off the top of their lips saying no, would you like this great refreshing drink that we've got and it and it tastes like X, y, z. And you know, all of a sudden you just made another quick, nice sale, added probably a good, friendly food cost item. You know one thing I learned at Applebee's and Sonny's when I was there is most people, don't most managers at our restaurants didn't understand what the food cost was or what they were pushing.

Speaker 2: 6:01

In the case of, say, what's the food cost item on that? Do you guys know what it is? Well, we just, we're just supposed to sell that. I'm like, yeah, but that's not going to help you with food cost friendly items. So how come you're not pushing the salads or lower food cost items? That's what's going to get your food costs down, even though there's promotion coming out because they want top line sale. You got to make your budget, you know. You got to get your food costs down. So let's push the numbers down, let's go for food cost-friendly items. So that's what I ended up doing was going out and teaching a lot of the managers this is you want to make bonus. This is what you need to do. You need to be able to push food cost-friendly items, and you'll be much better off with that.

Speaker 1: 6:43

And and I think that's a you know, when my wife worked at a nice steak restaurant, some of the times what they would do is it was also about expiration right. If they over-ordered something, they would do promotions to make sure that it wasn't gonna go to waste and get certain cuts out.

Speaker 1: 6:58

But to your point about food costs. I don't know if it's too soon, but I mean let's talk about the red lobster in the room, the unlimited shrimp, that I thought it was interesting that the new CEO, the interim CEO, just kind of like called them straight out on that.

Speaker 2: 7:17

Oh yeah, it's funny Side tangent. When I was at Darden Restaurants I did the Red Lobster, North America financial statements and Japan. Until they saw Japan, this is well before where we're at today. So, looking at it today, I take a very close pay attention to the news that's there. But well, if you got the supplier that's the owner, pushing the product which is what they had, pushing the product to sell more shrimp, well, guess what? They're going to sell more shrimp right at the end of the day and it wasn't friendly to the business, they were just trying to push more of their seafood. That's all they wanted to do was get through more seafood because that's their business, their main business have to do is get through more seafood because that's their business, their main business. This is an investment vehicle. They thought, hey, this is going to be great, we can push more onto them.

Speaker 2: 7:58

But the food costs went up and then it's overpriced and at the end of the day, what are you going to do when your food costs through the roof and you can't control it and you're upside down? Well then you don't pay. You know you don't. You don't fix things, you don't maintain them, you don't remodel them. There's a lot of things that they didn't do and that's why they're in bankruptcy.

Speaker 2: 8:16

No different than when I just took over with Boomers Parks, with our boomers in family entertainment centers. I took over from a bankrupt company. They spent better part of four years pushing seasonal passes or annual passes at an FEC. It makes absolutely no sense because what was doing, what was happening is it was just kind of that Ponzi scheme. It's like I got to rob Peter to pay Paul. I got to keep doing this every day, I got to get more and more people through, but they never fixed the rest. They never fixed the parks, they never took care of things. They didn't maintain things. Their ACs were broken and ripped floors and horrible bathrooms and equipment wasn't working properly.

Speaker 2: 8:55

No different than what happened with Red Lobster. You know you took away their advantage to be profitable and you pushed it down their throat and you know, at the end of the day, this is not something that should have ever been done. But the business, just, you know I don't know what they were thinking. You know where was this going to come from? Additional add-on sales, If they push the shrimp this way?

Speaker 2: 9:17

Well, apparently that didn't take place. They didn't train them or whatever it may have been, they didn't get the other things to compensate the high food cost of the shrimp, so you've got to be able to push really low food cost items. But apparently they just kept pushing the high food cost items and they're in a spot where they're at now, unfortunately and it's hard to see because I also know the former CEO that just retired. He's a good friend and it's unfortunate to see that this is what took place. That's probably why Kelly from Denny's didn't stay there long enough. She probably saw the handwriting on the wall and said I don't know, this is probably not a good deal.

Speaker 1: 9:51

I'm speculating, of course.

Speaker 1: 9:53

I don't know but that would be my thought process if I was that executive in that place. Well, you know, and we work with a brand that kind of has gone through the other side of this, which is Friendly's right, they're one of our customers and they've and that actually was my first job was working at Friendly's in New Jersey and now coming full circle to work with them is pretty fun. But seeing them go from like 800 stores to a hundred and getting getting just pillaged by, uh, pe groups and people stopped investing in, in making it better, and you just can't do that and I think about. But the upsells, that's one of the beauties of kiosks. You know, like I was talking with one of my friends, ceo of Byte, brandon Barton, and he was talking about how, with the kiosks, sometimes your 10, 11% order increase because they're upselling on every single order automatically and we know. We know that our people aren't doing that, especially in the fast food, fast casual space, right. But all of this really boils down to Tim and I love how you brought this in and, especially being a finance guy, I appreciate you bringing this up.

Speaker 1: 11:05

Is the guest experience, right? I think someone. I don't know if you ended up working with him there, but a good friend of mine, george Kalogridis, who was at Walt Disney World for a long time and the Disney company. He put such an emphasis on the guest experience right, and what you were saying there was, yeah, let's do all of that, but you can't cut the fat so much that you're down to bone, right, there's got to be some meat left for the guests. And so I think what do you think is the most important aspect of guest experience nowadays? And talk to us about not just guest experience but social experience. I know you posted about that on LinkedIn recently.

Speaker 2: 11:45

So you know there's a lot of pieces to the guest experience. I mean part of it is you know they're not just a number, they're a guest, they're not a customer. You know how do you treat a guest when you come to your home. Do you take care of them, offer them something eat, drink, whatever it is, you're doing something comfortable whatever it is that you're doing and are you taking care of the guest?

Speaker 2: 12:07

You know, that's one thing that I take from my Disney days, when I was there for six and a half years, although it was a peon in foods and operations, ultimately in the finance, but it's what do you give to the guests at the end of the day? Are they having a great experience? What moves the needle? You know there's a lot of little aspects to that. Is the place clean? Are people smiling? Are they engaging with the guests? Are they just going by their day looking at their phones and not paying attention to what's going on engaging with the guest? Or they're just going by their day looking at their phones and not paying attention to what's going on? When you start saying, okay, how do I make the guest's experience better? That's a fundamental culture change, really, and that's what it comes down to. You can preach it all day long. This is what we want you to do. Please do these things. But if you're not displaying that as leadership managers, teaching it from orientation to following up with trainings these are things that's got to take place to make that change.

Speaker 2: 12:59

When I took over this company for four years, I didn't ever really see corporate. I mean it's. You know, I heard that from managers. Well, when's the last time you saw the CEO? I've never seen the CEO. You're the first time I've ever met the CEO. It's like, really, How'd that happen? You know, how does someone not get out to their own parks? You know, at the end of the day and it was funny because this is a 17 year veteran of the company and she said you know, I've been here for 17 years and I've never met the CEO. I've seen corporate once in two years.

Speaker 2: 13:27

You know, granted, it's not the easiest park to get to, but you've got to go out and engage. You've got to talk to your team members. You've got to tell them what the story is. What do you believe in? And it's your core values that you're running by. Yes, safety is like number one, but we're also inclusive and we have integrity, meaning we're honest and transparent. We know what's going on and we want you to know what's going on and we share that with you, the good and the bad.

Speaker 2: 13:50

When you start doing that, you start buying in and believing those are the good things you need to do, and that's not what a lot of companies do. They just, you know, in my case, family entertainment and in some restaurant chains too that I've been with, let's just put it in there, you know, throw it in the box and let's see what happens, versus saying no, no I think it comes down to the actual individuals of our team members is going to make that guest experience different. How do we take care of them? How do we, how do we provide for them? Yeah, be competitive, pay, Sure, you know all those things. But like we're giving free meals, free snacks, to our team members why, I mean, it's not that hard to give that much away, Unlike a lot of restaurants don't do that.

Speaker 2: 14:30

But we want to be different. We want to be different. We want them to be employer of choice. We want our team members to feel like they're taken care of. We also reward them when they do above and beyond with rewarding them with points they can earn for gift cards and gifts and trips and things like that that they can do. And, of course, we're in a place of fun. So please come back and play the arcade games and all of our attractions and so forth, or water slides if they're in a, but we want to make sure that they feel like they're not just a number. You know they're a team member. I love it. In Disney's case they're a cast member.

Speaker 1: 15:00

You know they're going on stage and performing.

Speaker 2: 15:02

You know and I still remember that to this day it's like you know everything that my problem is behind the door. You know, when I go out through that gate or I go out through a door, you know my problems are gone. I'm focused on the guest to have a good time, because they're there to escape, no different than going to a restaurant. They're there to escape, for a good time, for a meal, whatever it might be. And those are the things that you have to be able to instill, the only way you can still change the culture to live that to be that. You know we're. We have pillars of entertainment, accountability. You're going to do what you say you're going to do. We're going to follow through on those things when you say you're going to do it, by the way, right, right, right, look, we all miss deadlines.

Speaker 2: 15:42

But it's like are we honest? Are we upfront? Are we telling people what's going on? We make sure they're aware. We give them every bit of the doubt, but what we really try to do, instead of dictating when things need to be done, we ask can you get this done by this date? Are you committing to this? If you can't, you tell me I can't get by this date, but they got to be honest enough to tell us that, right.

Speaker 2: 16:01

So honesty is part of that. So if they're honest and they say no, I can get to it three days from now. Okay, great, that's the deadline. Boom, let's make it that deadline, because you agree to what that is. But having them accountable and having them follow through Look, I've been up many times during the middle of the night working on things to make sure I did what I said I was going to do by a certain day. You know it's not fun, especially when you're traveling. It's like, oh OK, I got to get this done before I go to sleep, you know. But at the end of the day, if you get them accountable, they get focused on it. Then they start buying in. The Gen Z's, millennials want to know that they're bought into what you're focused on.

Speaker 1: 16:37

When.

Speaker 2: 16:37

I started this company when I took over Boomers and Big Kahunas. It was my beliefs. Now it's my entire team's beliefs. You know what they're physically going through, and so I see that when I go out to the parks, you see the difference and change in attitude and team members smiling and wanting more training and really appreciative of the things that we've done. Are we perfect? Absolutely not. But you know, one thing is a benchmark for me is reviews. When I look at reviews, what has come across to the guests and this is another benchmark. You know when they were low twos and low threes when I took over the company. Now we're high threes, just almost four and high fours. Well, that's pretty good.

Speaker 2: 17:13

You know, that tells me that they're getting out to the team members. The month of April was a 4.7 overall, so I was happy with that. But the bottom line is I think they're gravitating, they're pulling it in, they're understanding this, but that's part of culture. Are you flexible enough? Are you just going to sit in an ivory tower and dictate? No, my thing is go out to the parks. I do one-on-ones with team members. Now I pick the brain, you know, like what's going on? What do you like, what don't you like? What would you change about this park? That doesn't mean I'm going to go do whatever they say, but I think about maybe the best benefit.

Speaker 2: 17:52

We could change things. We could do this at the ticket counter. We could do this in operations. Could we do things differently? And you never know until you ask. But it took a little bit of time for them to have a trust, because the previous company you couldn't trust. You know at the end of the day. So they're never coming out and talking to you. How could you trust them? You don't know what they're thinking or doing. So get on their level, talk to them, find out about them, tell a little about you. You know, be a little vulnerable. And if you do that, then they start buying into with what their overall culture is.

Speaker 1: 18:21

And it's just like a guest. I mean, we find it so often the reason that people leave negative reviews isn't because humans are inherently jerks. You have the 1% short that are jerks that want to see the world burn right and they'll leave their one-star Yelp review to make sure that happens. But most people aren't like that. Most people, the reason they don't give you feedback is because one, they don't think it's going to be helpful or two, it's too much work. Right. And if you can show your guests, if you can make it easy for them to give feedback and then show them that you care, it's the same thing. Because the only difference between the employees and the guests I like to call guests humans, because I think oftentimes even guest has connotations. Guests, it's just a name, badge, right. And so if you can just always remember that we're all humans, we all are dealing with stuff, everyone's having a tough time, and if you could treat people with respect and make sure that they feel important, everything else falls into place.

Speaker 1: 19:31

And someone told me this one time and you know, I know Murphy's Law. What is it Like? If something can go wrong, it will go wrong, or something. I feel like we need to have a tim murphy's law right. Tim murphy's law is the guest experience could never exceed the employee experience, right, and I and I think that's kind of like summarizing what you're saying- if you take team member, at the end of the day they're going to take care of your guests.

Speaker 1: 19:55

There we go. That's Murphy's law. Murphy's law right there.

Speaker 2: 19:58

Yeah.

Speaker 1: 19:58

So, and again. What does that mean?

Speaker 2: 20:01

You know some people, oh, I don't want to give away too much. It's like what are you really giving away? I mean for a few dollars, for a meal and a soda. If I'm giving them a meal, this might be the only meal. High school kid who knows what their home life is. But we all have a story that I love that with Chick-fil-A. We all have a story right. So we got to remember that that we don't know like coming into our parks, hey, is this the first time that? Maybe the dad is now with his kids and they're out. They're divorced, you know. He's now bringing a kid to her father, you know, and they want to have a good time. They're there to escape. Or maybe the person just lost their job or broke up with the boyfriend girlfriend whatever it is you know they have a story a father died, mother died, whatever it is.

Speaker 2: 20:46

We got to remember that and we know, as our own team members can feel that as well. We got to remember that as managers, leaders of these teams, to say, hey, they've got a story that doesn. Managers and leaders of these teams to say, hey, they've got a story that doesn't mean we want them to walk all over us.

Speaker 2: 21:00

We understand that there are certain roles and things we've got to follow, but we also got to remember that about the guest. So they're escaping. I don't care if you're coming to a restaurant, I don't care if you're in a retail shop, whatever that might be, how many, when you say that to them. But it's like, you know, look, at the end of the day we got to just remember that, that everyone has a story, what's going on in their life, what's going on in the world. And we got to, you know, just let that out. You know, kind of like going back to the whole disney going on stage, everyone's got a story. I'm there to entertain, or if I'm in a restaurant, I'm there to serve, and we don't always remember that and we've got to just block that out. It's hard sometimes when we've got those things going on in our mind. I've got things going on all the time, but at the end of the day it's like I can't be that way.

Speaker 2: 21:52

And I'll take a little reference from Deion Sanders that he said wherever you are, be where your feet are. If your feet are there, be engaged. You know, if you're in his case, he's a coach from the University of Colorado. You know. Be there with your team members, be there with your family, be there with your friends. And when it's time to work, you work. When it's time to play, you play, but be there where your feet are your work. When it's time to play, you play, but be there where your feet are.

Speaker 2: 22:18

And if you're there when I'm there talking to team members, I want to know what makes them tick. What do they think about? I do ask them questions because they're not going to be readily giving me something. They might be scared of the CEO. I don't know why, but they are. I do the same thing, but one leg in the pan at a time, like just they do. But at the end of the day it's no different. But you gotta be willing to say, hey, I'm willing to listen and understand, and maybe it'll make a difference, maybe it'll make a change. But we gotta do the same thing with our guests.

Speaker 1: 22:46

Man. I love that, Tim. Where can people go to learn more? Where can they go to see your posts on social media or learn more about Boomers?

Speaker 2: 22:53

I'm on a few different social media accounts, but if you look up a Tim Murphy CEO, it's pretty much under LinkedIn or Facebook or Instagram or X, so you'll find things on me. You can go to boomers with an S dot parks with an S dot com, so boomers parks dot com. You can see about us and see about boomers parks and what we're doing and, frankly, we've just gotten ourselves into franchising. So we're going to franchise our Boomers brand. So that's something else that we're working on. Oh, fantastic.

Speaker 1: 23:19

Well, tim, for helping us be penny wise but not pound foolish. Today's ovation goes to you. Thank you for joining us on Give an Ovation. Thanks for joining us today. If you liked this episode, leave us a review on Apple Podcasts or your favorite place to listen. We're all about feedback here. Again, this episode was sponsored by Ovation, a two-question, sms-based actionable guest feedback platform built for multi-unit restaurants. If you'd like to learn how we can help you measure and create a better guest experience, visit us at OvationUpcom.