Smokey Bones CEO James O’Reilly is bullish about the future of the brand, and there’s reason for that.
The casual-dining chain kicked off July by announcing that all 60 restaurants had reopened dining rooms across more than a dozen states in accordance with state-guided restrictions.
O’Reilly says the process required a balance of protecting the health and safety of employees and customers, ensuring culinary execution meets brand standards, and guaranteeing workers can deliver an effective and efficient guest experience both on-premises and off-premises.
The pursuit of all three objectives limited the pace of Smokey Bones’ reopening, but the details couldn’t be overlooked.
“We want to bring our employees back to work,” O’Reilly says. “Our employees want to come back to work, and we of course want to stimulate the growth of the company and participate in the rebounding economy, which motivates us to open restaurants.”
The chain’s journey toward systemwide reopening was typical of many other brands in the industry—curbside pickup, pop-up drive-thrus, and third-party delivery.
The pivot to off-premises led to furloughs as Smokey Bones adjusted staffing to execute the new operation.
During the furlough, leadership communicated directly with workers through text and weekly video town hall meetings. The brand provided continual support, like assistance with unemployment forms and rent negotiations.
Many operators have voiced concerns about competition with enhanced unemployment insurance under the CARES Act, which gives workers an extra $600 in weekly benefits. But O’Reilly says that hasn’t been a major issue for Smokey Bones.
“Most of our employees were eager to come back to work—our hourly employees and our managers,” O’Reilly says. “We keep in direct constant communication with all of our employees through real-time text channels, and so I can see the sentiment in the management population and the employee population, and we could see that our employees and managers were very, very eager to come back to work. With that being said, there were some employees that chose not to for various reasons. Some for the unemployment benefits and others for other personal reasons. We respect that, and we are in some cases rehiring and have employment opportunities for both hourly employees and managers in different parts of the country.”
In the midst of reopening dining rooms and rehiring employees, Smokey Bones also turned its attention toward the future of the industry by opening its first ghost kitchen in Chicago about a month ago.
The ghost kitchen offers items not available at traditional stores, including a wedge salad and Idaho Burnt Ends, or potato ends topped with cheddar jack cheese, bacon, chipotle mayo, sweet barbecue glaze, and green onions.
“I’m very encouraged by its performance and I’m excited about the potential of this strategy for this brand,” O’Reilly says. “We have been focused on off-premise technology, on virtual restaurants, and ghost kitchens strategically before the pandemic. And of course, through this experience we have accelerated our thinking, our planning, and attentionality around ghost kitchens and virtual restaurants and the off-premise business.”
The opening of the ghost kitchen coincided with the launch of two delivery-only brands—the Wing Experience and the Burger Experience. They are housed in 15 restaurants across the country and are offered through a partnership with Uber Eats.
The Wing Experience is offered at the ghost kitchen and comprises three new sauces that aren’t available at a regular Smokey Bones—Maple Bacon, Peach Bourbon, and a hotter flavor called The Experienced Wings.
“We are very proud and bullish about our burger and wing products. When consumers are searching for burgers and wings, Smokey Bones is not the first brand that will come to their mind even though we’re very proud of our products,” O’Reilly says. “And so we created these virtual brands so that they we could put more emphasis on these aspects of our menu for people who are looking for great burgers and great wings because of our expertise not only in ribs and pulled pork and fire-grilled steaks, but also in fire-grilled burgers and our smoked wings.”
When O’Reilly was hired in November, one of his goals was to improve restaurant operations and the customer experience by investing in technology and restaurant development. Within that strategy, off-premises became a growth priority.
Navigating the pandemic has only accelerated Smokey Bones’ commitment to that channel.
“We had already redesigned our dine-in assets and our continuing to do that because we expect that the Smokey Bones restaurant of the future will be more off-premise centric than the ones we’re currently operating today with respect to takeout areas and use of technology, curbside pickup, and things like that,” O’Reilly says.
Although O’Reilly is optimistic about Smokey Bones’ outlook, he does acknowledge that the environment is dynamic, considering the rise in COVID cases across the country. According to the NPD Group, Nationwide transactions for the week ending June 28 were down 25 percent year-over-year, a slight dip from the decline of 24 percent during the prior week. Some states saw bigger drops than others. South Carolina, North Carolina, and Georgia—states where Smokey Bones resides—were among the highest declines, ranging from a drop of 6 to 9 percentage points compared to the previous week.
The Smokey Bones CEO says at the moment, business is steady, but he wouldn’t be surprised if things were to change.
“If it does we will change with it, and we will follow the guidance of state governments and the local counties that we’re operating in,” O’Reilly says. “So the next couple of weeks and months are still uncertain depending upon what happens in the environment and what decisions the regulatory authorities make.”
In the meantime, the restaurant is following safety and sanitation measures informed by the CDC, OSHA, and local and state authorities. Employees have their temperature taken prior to work and are required to wear masks and gloves. Tables are spaced to ensure social distancing and customers are offered single-use menus and cutlery. The brand is constantly monitoring training procedures and feedback from employees and consumers about additional learnings it can apply to the dining experience.
Whatever is thrown its way, Smokey Bones will bounce back, O’Reilly says.
“Smokey Bones is a very resilient company,” he says. “Our people are strong and proud.”
Smokey Bones was on the comeback trail before COVID-19. It saw its revenue dip from $181.5 million in 2016 to $176.8 million the following year and $170.2 million in 2018. CEO Ryan Esko left in May 2019 and was replaced by O’Reilly, a former Long John’s Silver and Sonic Drive-In executive.
Smokey Bones was originally founded by Darden in September 2009. It opened nine restaurants in eight different markets throughout Florida, the Midwest, and Northeast before deciding to try its hand at national expansion. Headed up by Bob Mock, a long-time company vet who previously served as EVP of operations at Olive Garden, Smokey Bones positioned itself as a sports-centric hangout, with outlets for laptops (not a common occurrence back then) and multiple TVs.
It expanded to 129 locations but struggled to generate consistent results. By 2007, Darden closed 56 units and put the rest up for sale. Sun Capital scooped in and took over for about $80 million.
All of Smokey Bones’ units are corporate run under Sun Capital. The concept opened one store and closed four in 2019 and was positioned to add three to five in 2020 before the pandemic.