#258: Paul Brown, Cofounder and CEO of Inspire Brands – Sell what you sell

24:36So the brands that are doing well get less of my time and attention and the brands that may be doing a little less well. I spend a little bit more time on them. And so they get the benefit of that. Yeah. What does that say? The autonomy is earned right. Exactly. Exactly. So that creates an extra incentive to actually do well. So I get out of their business. And then I obviously am spending a lot of time managing the balance sheet, managing the financials, and also the shared services platform that we're building. Because we are as much a technology company when it comes to the number of people in the support center as we are a restaurant company in many ways.

25:14That's interesting. I want to talk a little bit about that because, you know, you said you saw this opportunity to buy more brands, bring them into the fold, create a common platform, leverage the commonalities of the brands, but still provide their independence. How have you managed through the process of saying, this is going to be centralized? This is where I know we can drive efficiency and effectiveness versus the decentralized nature of the brands. Because, you know, when you run an Arby's, if somebody came in and said, I'm going to run this or that for you, I'm sure the hackles kind of went up, you know, and that's pretty true.

25:47Yeah, well, that's part of what was on that napkin. And so we drew a two by two, basically looking at every single capability that goes into making a restaurant company a restaurant company and said what should be centralized versus what should be brand specific. And what do we think we actually will drive outsized competitive advantage and what? So that leads to the investment. And at the end of the day, we start with anything that makes a brand a brand in the eyes of the customer, in the eyes of the franchisee, stays brand specific. So in the restaurant industry, that is the food you serve, the beverage, so culinary, the marketing, the messaging teams, franchise operations, brand standards.

26:24All that stays at the brand level and rolls up to the brand president. Obviously, it's a push-pull. If all you're trying to do is take cost out, then you go more centralized. And I saw that in my other experiences at Expedia and Hilton, which were also multi-brand companies, to where we went back and forth and finally found that right balance. The challenge is not getting too enamored with the, we could take more cost out if we centralized more and go too far. And so we've really tried to draw the line hard. How we always looked at it, and I'm not saying it was the only way to look at it, but in terms of driving shareholder value or value for all your investors, it was critical you drive same-store sales growth, add new units, and you always have a high return on invested capital.

27:09You do those three things, basically your share price would grow. How do you think about that, and how do you communicate the keys to everybody's success to the rest of the organization? Well, it is very clear in this business that it's all about the top line. If the top line is not moving, there's not enough levers anywhere else in the P &L, particularly in a franchise business, to actually drive that. So we really talk a lot about that. In fact, we have a weekly stand-up on Friday mornings of the leaders that are responsible for driving the top line. I call it the top liners. And we actually just share and talk about the top line all the time.

27:46That doesn't mean the other levers don't matter. But ultimately, that's what our job is as a franchise or is to drive the top line on behalf of our franchisees. And so that's just part of the conversation all the time and conversation. Even if we're going to add a dollar of cost, is that dollar of cost going to generate ultimately more on the top line on behalf of our franchisees? If not, then we have a really hard discussion on whether we're going to add that dollar of cost. Yeah, in the restaurant business, if your sales go south, you get tremendous deleverage as an operator, and you can't have that as a franchisor.

28:22And you make your money from the franchise fees, which come from the sales moving forward. So that makes a lot of sense. And how do you, as the leader of the overall company, how do you think about target setting for each of your businesses? Tell us your thought process behind that. We have a real process where we go through and do a lot of analytics around what is going on in the marketplace, how our brands are actually working versus the competitors. And we start with the top line and work our way down. I really try to have the businesses own that as much as possible. But as you can imagine, the CEO, there's a little bit of a pushing for just a little bit more in the right areas going forward.

29:06And then obviously holding everybody accountable for that. Now, from an incentive standpoint, over the past several years, we've chosen from the senior leadership team to have everybody, all their incentives on Inspire's overall performance, less on the individual brand performance. And the reason we did that was because we're in the process of integrating these businesses, and we want to encourage everybody to share capabilities and work together. We'll probably pivot over the next several years back a little bit more toward pushing the incentive down on the individual brands. Because my belief is how you incentivize individuals actually is a factor of where that business happens to be at that moment in time.

29:42And when you're trying to centralize the number of functions, you're kind of swimming uphill when you're dealing with the decentralized brands. And so you got to get, I think Jack Wells told me once, he says, nobody makes it to shore unless the Queen Mary does. I think that's kind of your approach here. That has the approach. And culturally, it's very difficult, particularly when you're buying individual businesses that have been standalone. And not only do they have to think of themselves as part of a brand portfolio, but they have to think about them sharing services with each other. That has taken several years.

30:17It always takes a few years for kind of that to start clicking with individuals. And you mentioned earlier just the power of culture and how important it is. When you think about the Inspire culture, what would be the single most important behavior you're trying to drive and reinforce across all of Inspire? I'll give you two, Mavericks and Allies. So those are two of the top two core behaviors. Mavericks because we really want to push the envelope and do things differently. But if you don't do that in an ally type of environment. Also, in a franchise environment, you think you have to have a culture of being an ally.

30:56You have to work together because we have to win together, right? There's not a franchisor wins if the franchisee loses or vice versa. And so those two, particularly allies, is the real culture, the values that we push the most. I love your top line meeting on Friday. It's where you have all your top line leaders stand up and talk about what they're doing. It's a process to share best practices, I imagine. And, you know, how do you see leveraging Inspire's know-how across these brands? Well, we always talk about the fact that before these were part of a portfolio, each individual brand president would have liked nothing better than to be able to compare notes with the other brand presidents, right?

31:36You just weren't able to do that when they're competitors. So we're like, let's play into that. So we're constantly saying, what's working over here? What's, you know, what worked? What didn't work? What lesson can we learn? What are some things that we may have looked at doing at Arby's that don't make as much sense for Arby's, whether it be culinary or marketing, that we can actually do that in another brand? We share media as we think about, again, demand generation activities. What's working? So a lot of it's just really sharing best practices and doing it in a real-time way. And in fact, because we have that stand-up on Friday and everybody knows it's coming, when we first started doing it, people were sharing a lot of these practices for the first time in that meeting.

32:12It's funny now that most of that has already been shared ahead of time. So there's kind of less of that real-time surprise happening in that meeting itself with me in the room. We'll be back with the rest of my conversation with Paul Brown in just a moment. But as my fellow golf fans know, the Ryder Cup is this weekend. And one of this year's captain's picks is Justin Thomas. I think leaders can learn a lot from athletes because of their incredible mentality. and Justin has so much wisdom on that front, especially this bit about learning from mistakes. It's tough. I mean, it's something I think, at least me personally, I just go in waves.

32:52You know, there's times where it seems easy to, when you get done maybe from a bad week, it's okay, well, you know, this week I did a lot of good things, but I maybe just got a little bit ahead of myself there in the end of that Friday round and I was too aggressive in the start of the back nine on Saturday and I took a couple of chances that I shouldn't have taken and if I don't do any of those things, I have a chance to win versus there's some weeks you might do the exact same thing and you get done and all you can think about was how dumb those mistakes you made were and why did you do them and always just looking at the negative side of it.

33:28But the sooner that I realized that I have those opportunities to learn from the mistakes that I made, definitely the sooner off I started playing better golf and having a lot better things happen for me. So it's really just trying to, I mean, it's the same as everything. It doesn't matter whether you're David Novak, Justin Thomas, or Tiger Woods, Rory Mack, or whatever it is. It's like if you just wake up some days and you're just not in it. Whether you don't get good sleep, your swing doesn't feel good, or you maybe don't like the golf course as much, it's just you're irritable, whatever it is.

34:03But those are the days I think that separates the good and the great players is managing those days and weeks the best he can. Go back and listen to my entire conversation with JT. Episode 135 here on How Leaders Lead. Great leaders always have truth tellers around them and they want the whole truth and nothing but the truth. You know, what do you do to show that you want to get the real skinny? What's really happening out there? But to be honest, I found that that is getting harder and harder the longer I've been CEO. I'm going into my 13th year as CEO. And I found that people assume incorrectly that I have more of the answers than I do.

34:44And so I have really tried to go out of my way, to your point of actually having people around me, encouraging people to kind of tell me the truth. But it's been a lesson I've had to learn. I've had to change my style a little bit because my style, I can come sometimes, be honest, come across as, you know, I know the answers or, you know, I have the path, I have the plan and trying to making myself a little bit more vulnerable to the team and making it very clear that I want to have the contrarian idea is really important. I love the fact that you have that self-awareness and you admit that these are things that you're working on.

35:20Do you have a personal process you use to assess where you're at as a leader and how you're going to sharpen your axe? Or does it just happen day to day? A lot of it happens day to day. But I'm fortunate to have a lot of really good friends that are in business themselves. And, you know, I spend a lot of time sharing things with them. And, you know, they're pretty good at calling me out and saying, you could have done that one differently. Or you could have handled that situation a little bit differently. and in a way that it's hard for your employees or people that work for you directly to call you out.

35:53And so I think they have been really instrumental in helping me continue to grow as a leader. Do you ever just take a formal look at yourself and say, this is what I need to do? Or is that iterative as well? Periodically, in fact, a few years ago, I did an assessment, a leadership assessment, a 360. We did that across the whole leadership team, including me. And we're going to probably do that again. I think that is a useful exercise to do. periodically, I think not every year. And it was eye-opening. And I've made some adjustments because of it. Well, good, good. You know, and you mentioned earlier the importance of having this common technological technology platform that you can leverage across the brands.

36:34And in almost every conversation I'm having today with leaders, AI is impacting the way they're thinking about their business. Has it changed your thinking and your strategy? How are you looking at AI in the restaurant business? Well, I'm looking at a couple of, you know, several buckets. The first is just productivity gains. So there are a lot of activities that are very repetitive activities. If you think about in the multi-unit business with thousands and hundreds of thousands of team members. So automating those tasks, anything that was asked of a service desk, for example, where people are having to get information, that can be much more efficiently done.

37:11Tasks like obviously a technology. So there's a lot of productivity that we're getting just from using AI in a better way. The second is making better decisions. It's really, really fascinating around how from a product testing, from an idea testing, that you can actually do these through personas in a way that you had to go in the old way. You had to go out and obviously talk to customers and spend all the time. And you can do a lot of that up front. Doesn't substitute, obviously, from actually getting in front of customers, but it kind of helps you kind of at the top of the funnel of idea generation to go a lot faster.

37:45And then obviously, you know, customizing marketing messages and just doing a better job of talking to the individual customer the way they want to be talked to. And ultimately even targeting promotions and pricing to a certain extent at an individual level. You know, that one's a little further along, but it's changed very rapidly. What are you doing with AI to help enhance your leadership and how you approach your job every day? Do you have any tricks of the trade that you could pass on to us? Because, you know, everybody's trying to do this. Everybody's trying to get up to speed. I mean, to be honest, I'm still getting comfortable as a tool for myself.

38:22I am, we use Copilot and we have that. And so I have access to that. And I've been using that as a tool to kind of help me ask a set of questions that quite honestly, I might've walked down the hall and asked an analyst first, but I can actually get that first round of let's looking into this. And it helps me ask better questions, right? And at the end of the day, I think from a benefit from AI on leadership, it just helps you answer questions faster, which helps you ask the next one in even a more effective way. You know, this has been so much fun, and I love how you're attacking this business.

38:56It's fun to talk to somebody who's actually running a business that I used to have a little fun with them myself. But I want to have some more fun with you with my lightning round of questions. So are you ready for this? I'm ready. Okay, here we go. The three words to best describe you. Curious, strategic, and maverick. If you could be one person for a day besides yourself, who would it be? I'd like to be a classical pianist. I always wished I hadn't stopped lessons, and just to be able to sit down and entertain a room would just be a lot of fun. Your biggest pet peeve? People making excuses, particularly leaders not owning the issue but making excuses.

39:29Who would play you in a movie? Matt Damon. Speaking of movies, Ben Affleck was in Duncan's Super Bowl ads. if the two of you swapped jobs for a day, what role would you give him at Inspire? I would probably put him in the ideation, the culinary. He's a very creative person. So he's come up with some pretty interesting product ideas. And he still works with us today on the advertising side. So I think he would come up with some pretty interesting product ideas for Duncan. That's cool that you haven't worked with you on the marketing side. That's great. What's the best and worst parts about living in Atlanta?

40:06The best part is the friends we have and generally the weather most of the months. The worst part is the weather in the middle of the summer and the traffic. You get two tickets to anything you want. Where are you going and who are you going to take with you? Two tickets would be to the World Cup finals. I've been several times and I think that is by far the most exciting sporting event and it's just great. And I would take my wife and my two kids. Oh, two kids. I only get one. Well, I'll let you take three. We're not going to cut anybody out here. What's the one thing you do just for you? I like to go on long walks with my dogs.

40:45And I put in my AirPods and listen to either music or a podcast. It just lets me get away for just a little while. Besides your family, what's your most prized possession? It is probably my 1982 Toyota FJ. I just love driving it around It's the one car that I get everybody waving and smiling I think it makes everybody happy around me as well as myself What's something about you that few people would know? There's a lot of things that people don't know I've tried to stay a fairly private person In fact, a lot of things I said today I've never said before Good, let's hear another one

41:21I was a failed piano player and a failed singer In my old age, my younger age What's one of your daily rituals besides drinking Dunkin' Donuts coffee or Dunkin', something that you never miss? I try to get some form of exercise every day. When I'm in town, several days a week, I get up very early and work out with the trainer. And when I'm out of town, I just try to find, at a minimum, get outside and walk around. Great stuff. And you're out of the lightning round. Great job, you know? Thank you. I want to come back to Ben Affleck. He helps you with your advertising and your marketing. How did that start?

41:55Well, he and Matt Damon created an agency several years ago, and we were, Duncan was their first client. And so they kind of came to us. He did come to us and said, we think we have some good ideas for the brand, and we'd like to actually see if you could become a client. And that was where the first Super Bowl commercial came from for Duncan. I don't think you should do this. Last year, she came to my work. Now I got to show her what I can do. He's here. Affleck on the track. What up, Bronx? For your consideration, here comes the Boston Massacre. The Dunk Kings. Touchdown, Tommy, on the keys.

42:35Play a coach. Got it. I'm open. And need no interaction, my partner. It's really hard to be your friend, man. You said you were going to support me. Dunk Kings. Don't, don't go right. My heart. Why you dunking me, girl? Why you dunking? Dunk Kings. My heart. How do you like them donuts? I'm so sorry. You had to see it, but I forgive you. Lay us on the track. Are we going to be on the album? We talked about this. Let's go. You're blinded by them pinstripes. Wrap it up. Here goes Babe Ruth. Tom, you can stay. You remember when I told you I'd do anything for you? This is anything. Chill. Then name it a drink after us.

43:14They are now still part of our AGC lineup, and they do a lot of great things for us, so we're very, very happy with them. And, you know, we talked a little bit earlier. You started out as a consultant at McKinsey. You had this meeting with Barry Diller where he gave you the 30-minute one-on-one in terms of marketing. And what have you learned about inspiring creative people? Because in your business, you've got to have great ideas. And you've got to have great marketing. You've got to keep those sales going. That comes from creativity and innovation. What have you learned about managing that part of the business, those kinds of people that are creative?

43:53I think it's setting a view of what could be possible, the art of the possible, stretching the view, challenging them to tell a story that hadn't been told before and breaking through, which, by the way, is harder and harder these days to break through in any kind of messaging, actually challenging them and giving them tough feedback when they need tough feedback to kind of try to stretch a little bit more. In the past, there was that 30-second TV commercial that would really drive the sales. And I know it has huge impact even today when people think people aren't watching TV. It's hard to believe when you see what happens when you put advertising on the air.

44:29How are you thinking about media this day in terms of mainstream television versus the TikToks and, you know, everything else that's available to you? Mainstream media effectiveness has been declining very, very rapidly. Linear TV outside of live sports. Live sports and streaming has been holding. But just we're taking that down less and less. What was working more and more is just influencers and social. It is absolutely fascinating how quickly that can move the needle. And we like that because we think we have great products. And so if you have good products, then that works very, very well.

45:06And it also works well for some smaller brands. But we continue to dial back linear, dial up social, dial up of influencers. And it's working for us. really, really well. And how have you restructured or organized to really go after the influencers and being, you know, world-class at social? Yeah, so we have our demand generation group centralized. The brands have influence in that. And so, and then we have a group that actually manages influencers with people within that group dedicated to the brand. So what that lets us do, particularly now, is share learnings across. And we're using a few different influencer agencies And so right now we're testing which one works best.

45:49And that's part of the top liner meeting on Friday. A lot of the conversation is we did this last week with these group of influencers and it worked or vice versa. It didn't work. And so you should try that. And what's great about that is you can kind of turn on a dime, if you will, from an influencer standpoint. Whereas, you know, you know, the big old fashioned marketing campaigns, if it wasn't working, you kind of had to wait until next month to change it. Right. Yeah, absolutely. Yeah, it's the speed is everything now. And how much is just speed and sense of urgency something that you work hard at driving?

46:22We talk a lot about that. Got to be able to pivot very, very quickly, particularly over the past several years, right? This has been a very, very dynamic business environment, particularly coming out of COVID. And things that used to work aren't necessarily working the same way anymore. So we've got to set ourselves up in a way to pivot, not be throwing stuff against the wall necessarily to see what six, but be able to pivot very quickly. That means sometimes shooting various options on marketing campaigns. That means working with franchisees to say, we're going to run this for a couple of weeks, but here's the backup plan.

46:55If that's not working, let's get that pre-approved so we don't have to actually sit and go through the standard approval processes to pivot midpoint during the window. And it's a muscle that we learned pretty well over the past several years. You know, one of the things that, you know, when people talk about leadership, it's one thing when you have control and power over somebody per se, okay, to be able to lead them. It's another when you don't have all the power. You have to have indirect influence. And you deal with these huge franchise networks where they run their business and they're paying you a fee.

47:34And that fee is expected to drive the top line. And, you know, how do you what have you learned about leading teams that you don't have the direct influence on? It's more of an indirect influence. How do you think about that? I think you have to be a really good listener. I think you have to start by understanding their perspective, listening to them. By the way, they have a lot of great ideas. Right. And so and if you come in and I've seen people fail in this business, where you come in just telling people what it is, or you walk into the room at the franchisee advisory meeting and you throw it up and say, here's the plan for next month versus starting out and having a conversation.

48:17You may end up ultimately still getting to the same place, right, or with a few tweaks. But a lot of it is just the style. And because these individuals are very successful at their business and they probably know the frontline a lot better, what's happening on the frontline better than I do, certainly, right? And so I've got to take that into account. You mentioned earlier, if you had the World Cup, you'd take your wife and your two kids. What's something that you've picked up at work that you've taken into your personal life that's helped you become an even more effective leader at home? Well, one thing I've learned is that I am definitely not the CEO of my home.

48:55And so if I go home acting like the CEO of a home, that's not going to go over very well. Quite honestly, I've learned as you have to in business around what can you influence and spend the time and energy on things that you can influence, and what are others better at doing than you, and let them actually manage it. So that's a kind of division. I tend to like to control things like a lot of people, so I've had to learn not to necessarily approach it that way. And I'm sure your wife is a very good truth teller every now and then, right? And the kids are even better. Absolutely. Well, you're lucky to have such a great family.

49:35You know, what do you see as your unfinished business? I think there's still opportunity for Inspire to grow, certainly organically, but even inorganically over time. I think we are building something very special here. And I think there's a lot of opportunity in this industry for continued change. And we want to be at the forefront of it. The timing of that is probably very variable, but we think that I feel really good about the fact that we've built something that is very sustainable and very differentiated and will add lots of value over time. And that will obviously turn into increased shareholder value as well.

50:10So, you know, I've been at this for a while, but I still feel like we're very early in the journey. A lot of exciting things ahead of us. And I have one last question for you here. It's what's one piece of advice you'd give to anyone who wants to be a better leader? It's all about the people. It's all about attracting the right people. It's about retaining the right people, and it's helping set them up for success. And sometimes, hopefully not frequently, making the hard decisions about people that are not part of the team. And it's not just about the individuals, but it's about getting those individuals to work together as a team in a collaborative way.

50:46And that second part, I think, oftentimes is harder than the first part, right? Finding great people is hard, but getting those great individuals to work together and be better together than they are individually, I think actually is harder. Yeah, that's some tough sledding. And particularly when you've got a business like yours, where you've got these independent brands, independent franchisees, and you're trying to find that balance between the centralization and decentralization. centralization. But I have to tell you, you're obviously doing it very well because you're winning in the marketplace and you've got a great approach that I admire and respect.

51:23And I want to thank you for sharing your insights on this show and wish you continued success. Thank you again. It means so much coming from you, David. Appreciate it.

51:37like paul learned early in his career it's easy to over complicate your marketing but the best messages get right to the point just like we have the meats does for arby's paul said it himself it's getting harder and harder to break through the noise that's why leaders have to know how to sell what they sell clearly directly and with confidence this week take a fresh look at a recent piece of marketing. Together with your team, ask if it clearly sells what you sell. And if not, how could you sharpen it to be even more direct about what makes your brand special? So do you want to know how leaders lead?

52:14Well, we learned today is the great leaders know how to sell what they sell. Coming up next on how leaders lead is Sarah Gibson Tuttle, founder and CEO of the popular nail polish brand, Olive and June. So be sure to subscribe on YouTube or wherever you get your podcasts so you don't miss it. Thanks again for tuning in to another episode of How Leaders Lead, where every Thursday you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you'll become the best leader you can be.