The pandemic has made one thing clear—adversity and self-preservation certainly tends to accelerate implementation.
That’s how Huddle House COO Troy Tracy views it, especially since only about 30 of the brand’s roughly 340 restaurants had online ordering integrated into their operations prior to the pandemic. Nine months into the crisis, 92 percent of open locations have adapted to offer takeout, delivery, and curbside pickup. Off-premises has increased 69 percent compared to pre-COVID-19 figures. Even with more dining rooms open, sales outside the four walls still account for more than 20 percent of business.
“It’s hard to say you’re doing well, but when you really look at the landscape as a whole, I think we fare very well. And then as far as looking ahead to 2021, generally, we expect our business and really the industry at large to continue its recovery,” Tracy says. “In many ways, I think we’ll emerge stronger, more agile perhaps, and more flexible than maybe we were pre-pandemic.”
One of the major reasons for Tracy’s optimism is the completion of two prototypes with more off-premises capabilities. The goal was to maximize throughput in a smaller, more user-friendly footprint without sacrificing volume or capacity.
“That’s certainly no small task, especially while ensuring we can support the addition of off-premises and the off-premises demand and maintain our ability to not design something that we can’t easily convert or retrofit into nontraditional spaces,” Tracy says.
One version includes a variety of drive-up window options, depending on the characteristics of the site. It has storage dedicated to off-premises, staging for third-party delivery, curbside pickup areas, a redesigned and efficient production space that includes a heated and chilled pass-through area, and new equipment such as induction burners and a kitchen display system. The space offers 70 seats in roughly 2,150 square feet. The building can be expanded to more than 77 seats on the same concrete pad at nearly a neutral cost. The other prototype is a slightly larger building structured to hold 85 or more seats. It has all the same operational improvements and the same off-premises tools.
The advancements are proving crucial as the brand aims to attract new operators and sign 20 franchise agreements next year. Huddle House is sweetening the pot with no franchisee fee and no royalty fees for the first year of operation if the location opens on time. The deal is valid through the end of February.
“We believe those two prototypes are just really in excellent position for application across a lot of different trade areas and many different site characteristics,” Tracy says. “And then from a conversion standpoint, the prototypical kitchen that we’ve designed into these could be converted nearly into any existing space or existing restaurant space.”
Tracy says other off-premises muscles like ghost kitchens and virtual brands could play a role down the line, but he adds that the priority now is to simply grow the channel, which was in its infancy for many operators earlier this year.
“I think the trends are positive, or it makes sense for the brands that are really investing time and resources to go after them,” Tracy says. “And we’ve had some early ideation on both ghost kitchens and on virtual brands, and we think there’s going to be some opportunity for our brand in that space. But again, we’re in the very early stages. We’re expending resources on some high-return initiatives, such as expanding that not-yet-fully-mature off-premise business while frankly helping our system maximize their unit level economics so they can come out of this pandemic stronger than they were going in. But largely we’ll continue ideation on that. We think it makes sense for brands that are in markets that support those initiatives. But again, we operate in some smaller markets. We’re somewhat contained geographically, and we’ll just have to see how that transpires in the future.”
The brand has come a long way in just nine and a half months. Tracy notes that before COVID, Huddle House was beginning to implement online ordering, albeit to a small portion of the system. That included the early stages of integrating third-party delivery, customizing the mobile app, and upgrading the technology stack in restaurants to support those functions. The plan was expected to take about a year, but once the pandemic hit, Huddle House was forced to act creatively and swiftly.
The brand found ways to modify its software to support older technology stacks at the start of COVID. At the same time, Huddle House rapidly advanced the rate at which it rolled out upgraded systems to execute the full version of Olo, the digital engine that powers the chain’s online ordering platform. All of that was cross-functionally supported by marketing, training, and operational departments that designed and distributed the necessary processes and procedures.
To ensure health and safety, Huddle House uses sanitary sealed packaging and QR codes on tables so customers can read menus digitally. Kitchen display systems are out of the testing phase and will be required for all new builds, conversions, and remodels. However, operators are allowed to install them at any time they choose for a relatively low cost.
To market the changes to consumers, Tracy says Huddle House used the typical print, digital and social channels on a national basis. But he regards local operators as having the most significant influence on spreading the word.
“Our franchisees, our company operators, and really, a lot of the general managers in the restaurants use their own social media networks to reach more and more and more people,” Tracy says. “They use their local contacts. We operate in small communities, so a lot of the folks in our restaurants go to the same schools, the same churches, the same grocery stores as everyone else in town, and there’s a lot of grassroots marketing of their own to get the word out in their market.”
Tracy expects off-premises as a percentage of total sales to decline as dining rooms reopen, but he also believes the channel will continue to be much higher than it ever was pre-pandemic.
The COO says that going into COVID, Huddle House was a stout brand with a loyal customer base and talented franchisees. As the chain transitions to a post-COVID world, whenever that may be, he thinks Huddle House will be even stronger with a broader, highly engaged consumer base.
“It’ll be across all revenue channels,” Tracy says. “And off-premise helped us certainly expand that and reach guests more frequently and more conveniently. Then I believe we’ll couple that with an extremely competitive and very enticing franchise investment opportunity, which I think is going to position us for growth long into the future.”