Racks on the right track

IT'S A WONDERFUL LIFE - Rod Nepomuceno () - November 15, 2010 - 12:00am

I love stories that delve into redemption, recovery, resurgence, revitalization and resurrection. Whether it’s fact or fiction, I like reading about people, companies, brands or organizations that manage to turn a bad situation into a good situation, who manage to turn things around, avoid the claws of death and defeat, and come out as winners.  And I think it’s human nature a lot of people enjoy these stories, too. That’s why movies like Die Hard, Rocky, and Star Wars were such big hits. These movies chronicle the struggle of a person or group of people, how they found themselves in seemingly hopeless situations, and how they fought adversity and eventually came out victorious. Of course, Rocky eventually became a brain-damaged widower who, at 65 years old, was still trying to relive his old glory days, but you get my drift.   I like stories about winning. 

In business, I like reading “turnaround” stories companies or brands that initially start out successfully, then after a couple of years, the world changes, and the very existence of the company and brand is challenged. Then, some group or person comes in, institutes some changes, and eventually turns the company around and makes it successful again.

In the 1960s and ’70s, IBM epitomized corporate America at its finest. There was even a saying that went, “Nobody gets fired by buying an IBM.” But IBM missed out on two things: the rise of the personal computer and the market power of Microsoft’s operating system. Soon IBM was losing billions of dollars. In came Lou Gerstner, who led American Express and Nabisco. He refocused IBM from a hardware company into a business solutions and consultancy service company. Today, IBM is still very much around, and as strong as ever. IBM is considered one of the best business comeback stories in history.

Locally, I think the RC Cola story is another great example of a fantastic brand turnaround. RC was a popular soft-drink brand in the ’70s together with Teem, Lem-o-lime, and Fress Gusto. But it kind of faded for a number of decades until it got resurrected recently. Industry sources tell me RC is rocking these days.

Recently, I had a chance to encounter another feel-good, “return to the world of the living” story. I had lunch with Chukri Prieto, the baby-faced, boy-next-door-looking head of operations of Racks. Yes, that Racks that great baby-back-ribs restaurant that was a big hit in the ’90s. Racks was started by auto king Wellington “Willy” Soong (a good friend of mine, actually), the exclusive distributor of the best high-end car brands: Jaguar, Land Rover and Maserati. I remember when Racks was launched. It was an instant hit. Everyone loved Willy’s great baby back rib recipe, and the fried chicken was the best. The all-white, country-style ambience was also new, fresh, and different.   It didn’t take long for Racks to grow in number. At some point, the number of branches reached almost 40.

But sometimes, you can be a victim of your own success. With the many branches, it was more difficult to maintain the quality of both the product offerings and the service.   As a result, Racks saw a decline in patronage. A change was needed.

A number of years ago, Chukri’s father who runs the restaurant group that owns Shakey’s, Tia Maria, and Cowboy Grill, among others started talking to Willy about Racks. Chukri’s father, together with other business partners, agreed that Racks was a good brand and had something good to offer. But they all agreed that the backroom system (in other words, the whole operation) had to be streamlined and improved. Since Chukri’s family has been in the restaurant business for decades, they felt that they were in a good position to get Racks back on track. With the full support of Willy, Chukri’s family and their partners worked on a deal. By the time they finally brought Racks, there was one branch left: the El Pueblo branch.   It was at this point that the turnaround story began.   I talked to Chukri about the reemergence of Racks.

THE PHILIPPINE STAR: When you took over Racks, were you starting from zero or a negative position?

CHUKRI PRIETO: I would say a negative position, because when we came in, there were so many things in the operations and in the system that were not efficiently done.   Willy had a great recipe for sure, but there’s a certain way of running a restaurant in a more efficient way. Plus, the whole culture in the business was not very good. The store managers were used to saying, “Oh, sorry, that’s not available,” and they weren’t very meticulous in the quality of the service. They were slow, and it didn’t sit well with customers. So while Racks had great brand recall, the perception of the operational system was negative.

What did you do to turn things around?

We started first with pinpointing what was wrong. That’s always the first thing to do when you want to turn things around admit there’s something wrong and find out what it is. Fortunately, our family has been in the restaurant business for a long time. We pioneered some of the best practices in the restaurant business. So we knew immediately what was wrong with the existing system of Racks. Not a lot of people know that smoking a rib is not a simple process. There’s a right way of doing it efficiently and without compromising quality. So we checked out their system, pinpointed what we could improve on, and just implemented those changes immediately.

Was it just the operational system that you changed?

No, we also changed the look as well.   The Racks restaurants before were all white, supposedly to give it a country kind of feel. There’s nothing wrong with that. White is nice. But unfortunately, here in Manila, nothing stays white for long. White walls become dirty in a few months. And white walls with dirty smudges are not appealing when you’re eating. So what we did was add more colors pastel colors to make it more homey and cozy. That change in ambience has helped a lot in bringing customers back.

You started with one branch, and now you’re at eight. I’d say you’re on the way to a complete turnaround. What was the mindset within the company in trying to achieve this turnaround?

I would say it was all about confidence. It’s all about being confident in what you do best. We’re pretty confident with our restaurant operational systems and processes. We’ve been successful with them. So all we had to do was apply the proven principles and implement. 

Second, we hired the right people: people who know the business. The restaurant business is very complicated. You need the right people with the right skills. 

And third, we really improved on the menu. We added more dishes, salads and soups. We have more compelling product offerings. Ultimately, we’re a restaurant. And people go to restaurants for the quality of the food. We focused exactly on that. No bands. No Friday events. We’re all about food: good quality, great-tasting food.

What is your vision for Racks?

We want to be the No. 1 American-style casual dining restaurant chain. And I think we can do it. We’re not cheap, but our prices are very competitive because of the value we offer. And in the end, that’s what people go for: quality and value for money.

Well, looks like you’re on your way. By the way, can I have the rest of your baby back ribs? 

Ha, ha, only if you promise to come back.

* * *

Thanks for your letters, folks! You may e-mail me at rodhnepo@yahoo.com.

By the way, my column, “It’s a Wonderful Life,” is now a radio show. Catch it at 9 p.m. on Mondays, Tuesdays, and Thursdays at DZRJ 810 AM, the first and only all-English news and lifestyle station on the AM band. You can also catch it via online streaming at www.rjplanet.com.

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