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Checking in with Checkers

Checkers CEO Rick Silva, shown this month in the company’s headquarters in Tampa, said flexibility and customer feedback will drive success.

EDMUND D. FOUNTAIN | Times

Checkers CEO Rick Silva, shown this month in the company’s headquarters in Tampa, said flexibility and customer feedback will drive success.

Founded in 1986 in Mobile, Ala., quirky Checkers Drive-In Restaurants Inc. didn't become a national player until moving its headquarters to Tampa Bay a few years later and merging with Rally's. But it has been plagued by sluggish performance. • The chain's trademark double-drive-through restaurants — down from more than 50 to only 15 in the bay area — are promoted in ads as "little place. BIG TASTE." Wellspring Capital, a private equity firm that bought Checkers in 2006, installed Rick Silva, a 44-year-old veteran Burger King executive, as chief executive in 2007. After a top-level housecleaning, he set up systems to restore consistency, understand customers and invigorate store growth. Sales are up slightly, but more than the industry average in 2009, at a chain that did $660 million in business in 2008, up $11 million from 2006. • Here are some excerpts from a recent conversation the Times had with Silva.

Q: Did you start out in fast food in high school?

No. My parents are Cuban immigrants, so I grew up humble. I learned English in school. My father was a banker in Cuba who learned to be a jeweler here. My mother is a pharmacist who still runs her own store in Miami. I worked there all hours of the day, seven days a week, because child labor laws don't apply to parents. A fast food job probably would have been a break.

I love business, so I got an accounting degree, then a law degree from Penn. I figured I would get into corporate law. That turned out too much like being a CPA. I got into real estate at Burger King headquarters after answering an ad in the paper and loved it. I learned about fast food there.

Did customer feedback lead to a business opportunity?

We learned our customer is out a lot later than we were. So we pushed closing time from 11 p.m. up to 1 a.m. on weeknights and 3 to 4 a.m. or later on weekends. It's become a whole new day part, responsible for about 20 percent of sales, a third in some markets. People don't eat just three meals a day anymore. They snack.

In a world with 24-hour drugstores and Wal-Mart, it's beyond the bar crowd. Our customers work nights or second jobs to make ends meet or just stay up late. We're perfect for it because our stores are a small fortress that serves 85 percent of the business through the drive-in window. We found crime no worse than daytime. In fact, all the incidents I'm aware of were the result of employees not following rules: Keep the door locked and don't leave the restaurant.

With 840 stores, this would have been Checkers' first year of net growth in a long time had it not been for your biggest franchisee's bankruptcy, a 30-store operator in St. Louis. How did Checkers get store growth on track?

It used to be if we couldn't put in a double drive-through, we didn't go there. Now we can go in strip centers with a single-lane drive-through, stand-alone buildings or kiosks with dining rooms for pedestrian oriented markets. It's gotten us in places like New York City that we never could before.

We converted a half-dozen former Starbucks, Taco Bells, a carwash in Brooklyn and a clothing store in the New York financial district. We're in college student union food courts, airports and replacing Burger Kings in some Florida Turnpike rest areas.

Who is Checkers' customer and how has that affected sales?

Sales improved a minor amount by people trading down, but the bigger factor was adjusting to our customers who have been hit by tough times. Our people are the construction workers who lost their jobs. The average household income is $35,000 or less. Because of our locations, we skew urban, lower income. We're an indulgence, so we instituted a value menu of $1 items: a burger, fries, a drink. We just had our Big Buford sandwich at two for $3. It's tough making money doing that, but people usually buy two or three other items.

How did research guide menu choices?

When we launched our first chicken wings, customers were clear that real wings are not breaded. They want jumbo size and five sauce choices.

What big taste is next?

Spicy queso melts: two beef patties in sourdough bread with spicy pepper jack cheese, yellow American cheese sauce and fried onion rings and crispy fried jalapenos inside. It's going to be drippy and have a nice kick.

Checkers refused to post nutritional content. With your 970 calorie banana shake, I can see why. Did that change?

We now post nutritional content on our Web site. It's on the store menu board where required by law, like New York. We don't do it everywhere because it makes the menu board incredibly busy and hard to read. We're happy to do it. But we're about indulgent flavors. If you want a salad, go somewhere else.

Where will Checkers be in five years?

Within five years, we'll probably be twice as big, with 1,500 stores.

Will Rally's, still about a third of your stores, disappear as a brand and become Checkers?

Someday. But that's a long way off, and Rally's is a strong brand in many markets.

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

Checking in with Checkers 10/23/09 [Last modified: Saturday, October 24, 2009 12:23am]

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