Pandemic purpose: Cousins CEO manages multiple locations

Christine Specht knew what she was getting into when she became CEO of Cousins Subs. Running a multiunit family business was her family’s business but running the sub sandwich franchise during a global pandemic is another thing altogether. Like virtually all business operators, Specht and her organization have been learning and innovating on the fly and given the way e-commerce has been a lifesaver for many businesses, the word virtually is instructive here.

During the national 15-day, flatten-the-curve period, which also featured the start of Safer-at-Home orders by the state of Wisconsin, Cousins' home territory, and in Chicagoland, which is a COVID-19 “hot spot” where Cousins only recently entered the market, the fast-casual food business has taken several steps to keep things afloat until normalcy returns.

Specht is certain the “debriefing and the lessons learned” will start soon and continue through the remainder of 2020. Considering the way things have unfolded so far, she’s particularly grateful that she’s not trying to build a strong team, including a leadership team, right now.

Instead, she’s able to capitalize on her existing team’s strengths to remain viable, and while Cousins has made some salary adjustments, there have been no layoffs yet, even as competitors are closing stores.

With 97 locations in three states (including Indiana), Cousins thus far has been sustained by streamlined communications, prudent budget pruning, vendor relationship maintenance and, as an essential business, curbside pickup service at 80 percent of its stores.

Cutting through clutter

Christine Specht

At a time of email bombardment, Cousins is particularly focused on making communication clear, concise, focused, and transparent. In terms of “global” or enterprise communication, President Jason Westhoff has been designated as the main communicator with franchise owners. Store operators know that if they see an email from Westhoff, it’s an update related to some type of limitation on the business due to government mandates or because of innovations that help Cousins capture sales.

Cousins is trying to ensure that franchisees and their stores have all the resources they need to operate a restaurant in this environment, which includes franchise royalty relief, and generally be responsive and sensitive to the cash flow needs of its franchise community. Their business viability is continually monitored as pandemic plays itself out.

“That communication piece is just critical because our owners, our store operators, don’t have time to sift through every email,” Specht notes. “They are busy running their restaurants. They are working with labor issues and operational changes. We’re trying to keep communication very clear and open for them.”

While Westhoff streamlines communication, Vice President of Development Joe Ferguson is the point man for leveraging relationships that have been built with outside vendors that are dealing with many of the same operational issues. These vendors include Cousins landlords.

“Instead of just simply being reactive by not paying rent or going silent as a tenant, he [Ferguson] is being proactive in saying, ‘Hey, what can we do here? We’re clearly in the middle of a crisis. We want to preserve cash flow. That’s critical to our business. What can we do to help achieve that?’ I think the landlords appreciate that,” Specht states. “We have good relationships with our vendors and our landlords, and we can really build on those during these crisis moments.”

With the workforce, Specht has a special understanding because she grew up in the business. Her father, Bill Specht, founded Cousins, and she has worn a number of hats for the franchise, starting at age 15. When social distancing became the norm, a different level of simpatico kicked in. Interviewed on March 27, the day after competitor Milio's had informed employees it could not make payroll for the week, Specht was grateful that Cousins has not yet had to lay off employees.

However, that’s not to suggest that adjustments haven’t been necessary. The franchise has made salary adjustments at the support-center level, where people are taking between 20 percent and 50 percent salary reductions. “It’s prioritization, right?” Specht notes. “We’re looking at non-staff, nonessential business expenses that are in the budget. What can we cut from there? What can we cut from compensation that we know will impact people, but hopefully are not as extreme as making layoffs? We continue to monitor it closely.”

In the restaurants, Cousins has a number of employees who are not comfortable working with a pandemic under way. Perhaps they have to be home with the children whose schools and daycare facilities have closed, or maybe they are just not comfortable being in the stores and are “self-selecting” to remain home. Management understands their apprehension, and while the corresponding workforce reductions are not perfectly aligned with the decline in sales, the situation is manageable.

Salaried employees can take advantage of paid time off, and thanks to the recently enacted Families First Corona Virus Response Act, which requires some employers to provide paid sick leave or expanded family and medical leave related to COVID-19, hourly employees have some paid time off, as well.

This past week, the federal government followed up on Families First by passing the massive and unprecedented CARES Act , which provides $2.2 trillion in direct relief to individuals, loans and grants to businesses, and aid to states and over-taxed health care systems. Both laws should help businesses and employees, but Specht notes the devil is in the details as employers wait for answers on how the programs will be administered.

“We are in touch with our bank,” she adds, “and we’re anxious to find out our boundaries with that in terms of relief for the business. That [legislation] is good and that’s a comfort, and we will have the appropriate notifications out to the restaurants so that people know there is relief available to them should they find themselves unable to work because of something directly related to the coronavirus.”

Curbing enthusiasm

Curbside pickup is another example of Cousins crisis response. To serve people amid the Coronavirus pandemic, Cousins has introduced curbside pickup at 80 percent of its locations in Illinois, Indiana, and Wisconsin. Customers can place their curbside pickup order online, or through the Cousins Subs mobile app, or by calling a participating Cousins Subs location.

The logistics of curbside pickup service required some thinking. When placing a curbside order, people are prompted to provide their vehicle make, model, and color. They can only pay for curbside orders with their debit or credit card — the “no cash” payment policy was established to ensure the health and safety of customers and employees — and upon arrival, guests are required to call the Cousins Subs location at which they placed their order. When it’s ready, a Cousins crew member walks it out to the customer.

Curbside service was not something Cousins had in play before March 19, and Specht credits a select team of trainers, and information technology, operations, and marketing people, that launched curbside pickup in a 48-hour period. Typically, this type of program would take months to plan, test, and implement, but the luxury of time does not exist during a pandemic.

“All those factions had to come together,” Specht notes. “We had to make sure of our point-of-sale and online ordering, where consumers could go online and see curbside pickup as an option. That needed to get done. Training materials needed to get out. Signage needed to get created and posted. So, again, it’s just a testimony to the team. They really came together to knock this out in lighting fast time and, all the while, not being able to work next to one another. They did this all through conferencing, which is another interesting phenomenon of this crisis.”

At the moment, curbside represents just over 5 percent of Cousins sales; less than two weeks ago, it was a nonentity. Cousins already offers home delivery through DoorDash, a third-party service, at 85 percent of its restaurants, but inviting people to carry out their food without really interacting with an employee is something that could extend beyond the COVID-19 crisis.

“Yes, that’s something to consider where it makes sense, where we’re seeing success, and where it can be executed,” Specht confirms. “We always have looked at what’s on-trend for consumers.”

Cash preservation project

Asked whether Cousins is planning for the day things return to normal, Specht says the company is looking at the next 90 days because there are too many unknowns to look beyond that. “What we’re planning for now, right now, at this very moment, is cash preservation,” she explains. “We are looking at the next 90 days. We’re looking at what we need to do to make sure we can pay the bills that we need to pay, keep people employed, and keep serving subs in our restaurants. While that outlook may be shorter, it’s difficult to look much beyond that because we just don’t know.

“When the curve starts to flatten and we start to see light at the end of the tunnel, then we can start to plan. We do plan for a rebound. People will come out again, but we just don’t know exactly what that will look like. So, for now, in the next 90 days, it’s all about cash.”

Related story: Take Five with Cousins Subs' Christine Specht

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