Brad Richmond, CFO at Darden Restaurants, the $7.2 billion restaurant chain, agrees. “Right now I’m probably not going to make the bigger bets,” he says. “I’m going to play the higher-probability, more-near-term moves, but I’m still going to keep growing the business.”
For example, the company, which owns and operates such brands as Olive Garden, Red Lobster, and The Capital Grille, has begun renovating nearly 700 Red Lobster restaurants at a cost of $350,000 per location. Darden, which is also completing a similar overhaul of its Longhorn Steakhouse chain, rigorously tested different investment levels — high investment in an exterior remodel with low investment in interior design, and vice versa, and all permutations in between — before arriving at the $350,000 solution. The remodel initiative is part of a broader brand positioning to boost same-restaurant sales, a strategy that Richmond says is “the most profitable kind of growth you can have because you don’t have to create a whole new infrastructure.”
For Gary Shell, finance chief at EMS Technologies, a midsize maker of mobile technology for the logistics and aviation industries, growth in the short term will come from a thorough integration of the three businesses the company acquired during a buying binge that began in late 2008. “We’re going to try to wring out every possible thing we can from fitting those businesses together before we invest heavily in some new opportunity,” he says. Increased marketing and sales spending, for example, should help the company cross-sell its broader product line.
The company will also invest in new product development, but Shell plans to watch competitors carefully to determine just how much to spend, and when. “We’re a leader in the aviation market, and as the recovery continues, I expect competitors to try to take share away from us,” he says. “That will spur us to invest more to maintain our competitive edge.”
Pick Your Spots
CFOs have always framed growth in terms of trade-offs — limited resources mean that not every great idea can be pursued — but that balancing act is more delicate in these early days of recovery.
Judy Schmeling, finance chief at HSNi, which sells home goods, apparel, and other products through its television network, Website, and catalog division, says that although the company’s largest division recently closed a record-breaking quarter, she’s still proceeding with caution. “While I want everyone to share in the enthusiasm, you also need to contain it,” she says. “You don’t want spending to get out of control. But we are investing in areas that make sense for us, particularly in innovation.”
Last year the company unveiled an iPhone app and invested in its Website, updating the checkout process and adding product ratings and customer wish lists. HSNi also made a large investment in its television network by upgrading to a high-definition format, and experimented with new marketing efforts such as mailing targeted catalogs, a successful initiative that the company will expand this year.