The New Checkers

The New Checkers

With value pricing, new menu items and new restaurant designs, Rick Silva

is trying to make Checkers the top choice in quick-serve restaurants.

by Dave Szymanski | Tampa Bay Editor

Rick Silva had a couple of advantages when he became president and chief executive officer of Checkers Drive-In Restaurants in Tampa in February 2007.

First, Silva came from outside the quick-serve restaurant company, so he brought a fresh perspective to the nation's largest double drive-thru restaurant chain.

Second, he came from a competitor, Burger King, so he knew the business.

In the 17 months since his arrival, many new managers from companies such as Friday's and Wendy's joined Checkers and Silva had assembled a new team to take the company into a tough, new phase for the restaurant industry: the hunt for value.

Polite and passionate, Silva, 42, an Ivy League-educated attorney from Miami, has worked to address that, with the company's first value menu, new locations and new menu items.

"People are trying to find value that fits into their way of life," Silva says.

Checkers has 830 restaurants, 490 Checkers and 340 Rally's. Of those, 270 are company-owned and 560 are franchised.

Checkers was founded in Mobile, Ala. In 1986, the company moved to Clearwater. It experienced a lot of growth in the late 1980s and early1990s with a simple menu of hamburgers and fries and went public in 1991. McDonald's and Burger King eventually cut prices in a bid to slow Checkers' growth.

In 1999, Checkers merged with Midwest chain Rally's. And in 2006, Wellspring Capital took it private. Silva arrived in 2007.

New strategies

"Family dining and casual dining are in a real struggle," Silva says. "There needs to be relevance to consumers. We as an industry need to be staying relevant. We have big competitors."

The relevance can be found in people's lifestyles. Years ago, people used to eat three square meals a day at roughly the same times. Today, lifestyles have changed. People work at different times. Lunch at noon doesn't always fit into people's lifestyles. Customers are eating more and smaller meals.

And they are eating later. There are more activities at night. So Checkers extended its hours to 1:30 a.m. during the week and 3 a.m. on Fridays and Saturday.

Another Checkers strategy is different tastes. It uses different seasonings on its French fries, hamburgers and chicken to offer something different to customers.

Although Checkers has kept its menu limited in order to keep production simple, it has added some new sandwiches and offers two of them for $4 as part of its value menu.

Checkers has kept some things the same, such as its double drive-thru windows. It does not build playgrounds or change the restaurant decor.

However, as it looks to grow the brand, it has evaluated construction alternatives to attract new franchisees and enter new markets where it might have previously been excluded because of higher real estate, space constraints or stringent zoning.

For these reasons, it recently introduced prototypes for restaurants with indoor seating. Some examples include the Checkers in the Atlanta airport and the Rally's in the Baldwin Hill Crenshaw Plaza Food Court in California.

Some of its restaurants, primarily in the Snowbelt, have indoor seating, but the vast majority feature two drive-thru lanes, a walk-up window and outdoor patio seating.

Franchises and progress

Checkers has more company-owned locations than its competitors, with about 30% of locations owned by the company. But that is likely to change as the company seeks new markets.

Its pitch to prospective franchisees is a lower cost of investment, smaller property needed (a half or a third of an acre) and the speed of development. Checkers restaurants are made off site and trucked over in one piece to a new location and dropped into place.

Checkers also is not in many growth markets, such as Wesley Chapel. "Our biggest complaint is that there's no restaurant near me," Silva says.

Its menu of primarily hamburgers is in keeping with a third of the industry. About 30% of sales in quick-service restaurants are hamburgers.

Silva says Checkers is growing its revenues and he is pleased with the new initiatives at the company.

"I'm very happy with the progress the business has made in the past year and a half," he says. "We're all very happy with the performance. The top line is moving nicely."

The high cost of fuel has prompted the company to adjust its package sizes and adjust the weight of its paper.

Silva's biggest lesson in restaurant management has been "fire fast and hire slow," he says. Working with the Checkers staff motivates him.

"I love the industry because it's about people," Silva says. "For the foreseeable future, you won't be able to automate food delivery. People still have to make it and deliver it by hand."

SUMMARY

Company: Checkers Drive-In Restaurants Inc.

Industry: Quick-service restaurants

Key: Being different from the competition with unique menu items, offering value at good, convenient locations.