Middleby 4Q16 Earnings Call Notes

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Selim Bassoul

People are focused on labor costs

Tim, we just saw hundreds of changes now from coming, looking for solutions. They were all people I’ve talked to, traditional restaurant and non-traditional which is convenient stores and outlets where they are expanding into menus where it’s movie theaters or non-traditional outlets like air force or stages or country club, they were all feeling good about their business in the future. And literally, what we saw, there was a lot of interest about investing labor costs. That’s I think the biggest theme I saw was labor cost. So as of the end, [indiscernible] there were lots of things about simplifying the menu and looking at solutions to say, how do I simplify my menu, so I can speed up the operation and service my customers faster. So, there was a lot of shrinking the menu.

Our products are about saving seconds and inches

“That’s a biggest thing that was interesting for me on all the people that came and that’s happening not only at the show, but it’s happening for the last 18 months is finally, our customers are doing what we do as if manufacturer, they’re looking at reengineering their kitchen in that process. They are now working the way we work in our factories and make foods at their kitchen or running smoother, then the work flow is doing well and that is something exactly where Middleby and where we position our company in terms of creating this work flow through the kitchen of casual dining, fast casual, because as you can see, you can’t survive today if you don’t optimize your labor and your work flow and we’ve seen that becoming prominent. I’ve been preaching that most probably through the last five years and we put a lot of solution that talks specifically the engineering kitchen. So when you’ve come to our analyst day meeting, and you talk about whether it was in Dallas or here, we talk about specifically how our equipment worked together to create a work flow and I’ve been talking about second and inches, I think it’s been my mantra now for most probably over five years, what makes Middleby unique is we’re about second and inches. That’s our motto and finally it’s resonating.”

How do I make my employees have fun

“I look at it and I say how do I make my customers, my employee have a fun job day in day out and that’s why it goes back to our retention of our employees. Over 90%, almost 98% retention in our employee across the board. Because we empower our people to get the jobs done and they’ve done a great job for us. ”

It’s not worth over-selling

“I don’t mind people that don’t oversell. I remind my sales people, do not oversell, because if we oversell something and it doesn’t work, I will take it back from our customer, I will take it back. And that’s been a commitment from me, morally I’m not here to sell people things they don’t need.”

Residential cooking asthetic is trending towards industrial

“Finally, another interesting thing is if you do lots of cooking home you need to make sure that it is going to heavy do, which is now everybody is going back to this industrial kitchen book. where everybody is going back to a professional looking stove and hood, that looks and made for industrial style kitchen. It has to be constructed of heavy-duty stainless steel. It might come in colors but people are looking for I want to cook to the way my steak ends up being as mostly. I want to be able to look at my griddle and look like the griddle that they have at Five Guys, or Culvers, or Steak Shake, or you name it.”