Nov 4, 2014 11:27 AM

Arby's CEO on customized orders, quality meats

The Associated Press

NEW YORK (AP) Arby's, the chain known for its roast beef sandwiches, is trying to stand out in the crowded fast-food industry. It's marketing its meats as being of superior quality and pushing to let customers know they can order sandwiches sans onions or mayo.

It launched TV ads this summer featuring close-ups of its meats on a carving board. Actor Ving Rhames provides a voiceover: "We have the meats!" And next week, it's introducing a line of steak sandwiches for the suggested price of $5.49.

The efforts come after the struggling chain was jettisoned by Wendy's in 2011 and acquired by private equity firm Roark Capital Group. The year before, Arby's had said sales tumbled 9 percent, following a 6 percent drop the previous year. Deteriorating franchisee finances led to the closure of many locations.

The Atlanta-based chain, which now has U.S. 3,200 locations, no longer has to disclose sales figures as a privately held company. But CEO Paul Brown says it's on a streak of 16 straight quarters of sales growth at established locations.

Arby's may nevertheless face challenges positioning itself as a premium fast-food chain, given rising customer expectations. Its roast beef, for instance, is a made up of various beef pieces, rather than a single muscle cut that many see as being of higher quality.

Brown sat down with The Associated Press to talk about Arby's changes. Here are excerpts from the interview:

Q: Why do you think some fast-food chains are struggling to boost sales?

A: We're seeing a lot of innovation in this space. We can get food now that we couldn't get even five years ago in a fast environment.

That's waking people up to what you can get for a good price. And I think that's creating challenges for some companies that have been in a more traditional place.

Q: Arby's has been around since 1964. What makes it better suited to innovate than other chains?

A: Part of it is our production, the fact that we are already set up to do a lot of different combinations in a made-to-order environment. A lot of fast-food chains are set up around a fixed set of products. Their whole kitchen is set up to do one thing over and over. That's hard to change.

Also you have people who define themselves as burgers or define themselves as chicken or they define themselves as pizza, and that can be limiting.

Q: You're positioning Arby's as serving more premium fast food. How much more do people spend on average at Arby's?

A: Our average check is in the mid-$8, so $8.30. The traditional (fast-food) chains will be in the high $6 to $7 range.

Q: Isn't the rising price of beef hurting your profit margins?

A: Certainly it's putting some challenges on the margin. We're being very, very conservative on raising prices. What's helped us is that we're seeing huge sales growth. So they're almost canceling each other out right now.

We're looking at opportunities to do more in chicken.

Q: Customization seems like the big trend in fast food. How important is that to Arby's?

A: It is the direction of the industry. You can customize your way to being healthy.

We're not going the way of "build your own as you go." But we give the ability to say without onions, without mayonnaise or whole wheat instead of a regular bun.

Q: How often do people request a customized order?

A: It's less than 1 percent. We don't believe enough people know you can, which is one of the reasons we're working on our marketing to make that a lot clearer.


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