Josh Kern.
SPB Hospitality

Josh Kern has spent more than 25 years in the restaurant industry.

Josh Kern Lays Out his People-First Vision for SPB Hospitality

The multi-brand company's new interim CEO is getting down to basics.

Josh Kern views SPB Hospitality as “one of the more interesting companies in the country.” There are 18 concepts under the umbrella, which stands for “Steak, Pizza, Beer,” ranging from 140-unit Logan’s Roadhouse to a dueling pianos bar.

Each, though, is like a fingerprint, Kern says. They need to be approached individually and understood from the trenches, without the clutter that often gets in the way of running great restaurants. And yet, still find a way to leverage collective scale.

“That combination is really why I’m in this seat right now,” Kern says.

On August 22, SPB appointed Kern interim CEO. He was serving as president of concepts at the group, overseeing marketing, culinary, beverage, supply chain, and information technology. Before, he was SPB’s marketing chief for close to three years, a role that began in December 2018. Previous stops included four-plus years as CMO of Smashburger, the same role at American Blue Ribbon Holdings, and VP of marketing at Quiznos from February 2002 to March 2007—a span that saw the sandwich chain scale from 1,800 units to nearly 5,000 (there are fewer than 200 today). Kern also clocked time at Cerca Trova Restaurant Concepts and began his restaurant path working on White Castle with advertising agency J. Walter Thompson.

Kern’s hope, ultimately, is to shed his interim status at SPB. And it’s an effort that’s going to start by looking inside the company’s unique footprint.

SPB is the evolution of CraftWorks, the former and now defunct parent company of Logan’s, Old Chicago, and several other brands that declared bankruptcy and shuttered 37 underperforming units in March 2020. The company went from 18,000 or so employers to fewer than 25 at one point.

That May, Fortress Investment Group, which also owns quick-serve Krystal, used a $93 million credit bid, or $45 million less than an original March agreement of $138 million, to buy 261 locations (77 franchised units were omitted) and form SPB Hospitality. As Kern noted, it’s as diverse a company as there is in the sector, including brands like Rock Bottom Restaurant & Brewery, Gordon Biersch Brewery Restaurants, Big River Grille & Brewing Works, ChopHouse & Brewery, A1A Ale Works, Ragtime Tavern Seafood & Grill, Seven Bridges Grille & Brewery, and Sing Sing.

The lineup became even more interesting last July when SPB brought J. Alexander’s into the fold for $220 million. If anything, the move signaled one of the industry’s more remarkable flips of the pandemic era—from considering “mothballing” stores to acquiring a publicly traded chain.

But as far as SPB has progressed and all the success it reported—Logan’s, for one, appreciated 45 straight weeks above 2019 sales in 2021—Kern says there’s work to be done.

“Where I think a lot of time was just spent in terms of diving into overall strategy [previously] and kind of missing the No. 1 focus,” he says. “And that’s focusing on our people.”

Kern says his background as a marketer has always centered on communication. That’s where he’ll go first. “It sounds very simplistic but I think we lost sight a little bit just in terms of the people that we have, from dishwashers, back of the house to shift leads, chefs, bartenders, managers—that’s really where I believe this focus needs to be on,” he says.

In addition to the myriad brands, SPB has a fairly large franchise community, mostly in regard to Logan’s and Old Chicago. According to its website, there are 56 franchised stores (22 at Logan’s and 34 for Old Chicago) and 16 partners (14 of those in Old Chicago, a brand generating AUVs of $3.1 million).

Old Chicago Pizza & Taproom

Old Chicago is generating AUVs of $3.1 million.

Kern’s time at Smashburger and California-based Outback franchisee Cerca Trova, he says, taught him the value of checking in systemwide. He’s currently on a listening tour, making calls, visiting venues, and trying to gauge the temperature of the system.

“Is there a greater opportunity to franchise? That’s something that’s certainly worth a discussion,” he says. “There’s just a lot that’s out there. But I do owe it to the teams out there to travel, get in restaurant, and just listen to what needs to be fixed. And the list, I could say it’s a scroll and there’s a lot of things that I might think are out there, but you can only digest so much. Is it three or four things and how do we stabilize some of our restaurant support center so that they’re truly servicing the field folks out there?”

The result might sound cliché but it’s also not meant to be complex. The growth and broader vision of SPB needs to also align with what’s happening at the store level, he says. “And that’s running really great restaurants,” Kern reiterates. “When you start to grow and look at all the things moving—a corporate office into a new place—there’s lots of things that come along with that and sometimes you’ll lose sight of what’s the reality.”

Kern says he’ll begin by surrounding himself with “the best and the brightest.” One concurrent move being the appointment of CFO Jessica Hagler, former VP, CFO, treasurer, and secretary of J. Alexander’s. Kern says Hagler “knows the tenets of keeping everything above board and really being able to manage the insights and being transparent to everybody within the organization.”

“That’s really part of that people focus,” he adds. “Get the right people that are experts in what they do and it benefits the entire organization, and it particularly benefits each one of the concepts that we have.”

This nuanced vision of SPB as parts of whole, but pieces that pull from a center of power, is core to Kern’s vision. It’s going to flash in coming weeks as consumer sentiment rides whatever chapter comes next. SPB operates value-centric brands and it runs upscale ones.

“A Logan’s guest was being squeezed by earlier, mid this year, of gas prices. It’s just a much different way of talking about a [J. Alexander’s] consumer who’s coming in that door,” he says. “I think it’s mostly recognizing that all of these brands are different. There’s going to be different strategies and tactics to weather the storm, or take advantage of hey, revenue is strong on the J’s side, let’s remodel and reenergize where we can when we’ve got some cash flow coming in so we’re reinvesting in those concepts so we’re constantly set up for the future.”

Kern’s leadership has been inspired over the past 25 years by mentors such as Smashburger co-founder Tom Ryan, who helped developed Pizza Hut’s stuffed crust. That’s where he learned to meld flavors and put F&B center to development, Kern says.

His people-first approach looks to former Red Robin CEO Denny Post, now co-president of Nextbite, who also came up through the marketing ranks.

And you can see the influence taking root at Logan’s. Earlier in the year, the brand simplified its menu and enhanced value. It also rolled multiple ghost concepts as carryout and delivery bumped to more than 20 percent of sales and launched a new loyalty program and app.

These upgrades are still in motion, but the focus, Kern says, needs to zero in on the quality within each unit. “That food, and making sure that this menu is absolutely the best and not trim it back in terms of quality and yes, we’re always focused on food costs,” he says. “But it can’t come at the expense of why people come into Logan’s. That’s certainly getting back to a menu and an LTO and getting a little bit more news and energy around that is vital.”

Kern says Logan’s will refocus branding and energy and amplify the bar. “And then,” he adds, “truly trying to understand and bring to life what a roadhouse is.”

One thing that could help is an upcoming reboot of the 1989 “Road House,” which will star Jake Gyllenhaal.

“How do you get that Patrick Swayze attitude turned to 2022 and beyond?” Kern says of the original. “The energy, I think, is something that you’re starting to see is coming back to Logan’s. You want to have a destination where people are having a good time. Food is a little bit of that. Certainly remodeling. But not a full changing of what it is. Focusing on the bar, shining it up, making sure our signage packages are all accurate and are turned on and we’ve got landscaping. Just the basic things.”

Logan’s Roadhouse

Logan's Roadhouse is embracing its branding and energy in an effort to resonate with customers.

In September 2021, Logan’s remodeled a flagship in Houston with real mesquite wood (what the steaks are cooked over), signage that honors its made-from-scratch rolls, oversized beer can flags and license plate artwork, and homages to Texas, like neon-themed displays. “I think over the years, it had started to kind of fade away,” Kern says.

Virtual brands will play a key role going forward, too, as long as they provide a backbone to the business and don’t interfere with what happens inside the four walls. One example being Leo’s Italian, which Kern says met a demand in the market for authentic Italian food, delivered (something Olive Garden doesn’t generally do for small orders). “We’ve got so many made-from-scratch items from Logan’s it was an easy and natural extension,” he says.

Just like many full-serves, there’s a right-sizing taking place with virtual brands as dining rooms ramp up and kitchen capacity refills. Kern adds SPB is following delivery trends as Amazon and its alignment with Grubhub enters the equation as a potential “game-changer.”

Yet pulling trends out further, running restaurants today feels as much a reaction game as one where predictions have any chance of holding. Kern says supply chain pricing has come down “slightly” but it’s been “weird” throughout as commodities swap places surging and leveling out. With broader notions like gas prices, those consumer pressures, even if they result in just one fewer trip for a family dining out, can impact restaurants greatly, Kern says.

However, the vibe is optimistic headed into Q4 as consumers appear to be following seasonal trends for the first time in a good while, as brands like Texas Roadhouse have witnessed. “We have a lot of large restaurants and we depend on group sales,” Kern says. “We’ve seen bookings increase, which we’re very happy about that. And I do think the one thing that’s changed significantly is catering.”

Especially in the lunch daypart, he adds, there’s been movement with offices enticing workers back. Whether they’re hybrid or full-time, companies “are using kind of the bait of OK, we’re going to have lunches on Tuesdays and Wednesdays or whatever,” Kern says. “We do see across the country that catering element starting to pick up.”

That’s clear across the sector as well. Outback launched its catering program four months ago. This week, sister concept Bonefish Grill announced plans to do the same. Carrabba’s saw 46 percent growth in catering sales last year versus 2019.

And then there’s the redrawing of  category lines. “There’s certainly some pressure in terms of casual dining and how people are used to eating now,” Kern says. “The drive-thrus, time, I think people have realized time is much more valuable in how they’re going about their day. And casual dining, some concepts have done a great job. And that’s embracing technology, getting the handhelds, tap your card, and we need to get there. So our big challenge is continuing to embrace technology without breaking the bank and see how we can help our guest get in and out faster.” Lunch at Old Chicago is an area for growth.

Kern notes late night has bounced back, especially with delivery. The younger generation is “ordering all sorts of things from 10 p.m. to 1 a.m.” How can SPB take advantage and balance with labor?

Meanwhile, in-store, liquor, beer, and wind is still “screaming” in terms of people experimenting with drinks they can’t recreate easily at home, Kern says. Tequila and rum have been especially popular. Wine at J. Alexander’s. Craft beer also appears to be swinging back after hitting the floor a bit in recent years.

It’s a lot to take in, Kern says. “Like I said earlier, these brands all operate differently and you do you have to juggle your mind to stay focused on what the challenges are on one, and then not lose sight of what’s happening on one of the other ones, too,” he says. “It’s an exciting time.”