John Peyton 0:00 

If you want people to be accountable, you have to actually allow them to do their jobs and not meddle or micromanage, which, by the way, was one of the biggest lessons I had to learn when I started this job as a first time CEO. But in order to hold people accountable, they have to feel accountable for the decisions they make. You

David Novak 0:26 

David, make no mistake about it, the world is changing fast, and if you don't know how to lead through it, it can absolutely tank your team. Welcome to how leaders lead. I'm David Novak, and every week I have conversations with the very best leaders in the world to help you become the best leader that you can be. My guest today is John Payton, the CEO of dine brands, which includes IHOP, Applebee's and fuzzy taco shop. John says something in this conversation today, I think every leader needs to take to heart, and it's this, the world is changing quickly. As a leader, how do you help your team navigate that uncertainty, navigate all that change, instead of feeling overwhelmed by it? Well, this conversation with John will show you how you can help your team stay agile and act with urgency, because the reality is a fast changing world also brings a ton of opportunities if you know how to respond to them, plus John's got some terrific insights into artificial intelligence and social media that I guarantee you will get your wheels turning. So let's dive in. Here's my conversation with my good friend and soon to be yours. John Payton,

I want to talk about how you're leading at dine brands, but first I want to take you back a little bit. John, you know what's a story from your childhood that really shape the kind of leader you are today.

John Peyton 2:02 

This, this is goes. This goes way back. I was a Cub Scout. And remember the pinewood derby from Cub Scouts? And so my I must have been in third grade or fourth grade, and my father was a very handy guy. He built most of the furniture in our house. You know, he built the closets. He actually built a 35 foot sailboat. He did all of the mechanicals, the electric you know, he was, he was one of those guys. And so he helped me with the pinewood derby car. And remember, you used to have to, I don't even remember you had to weight them down. And so you melted like lead, and you put that into the front of the car to weight them down on the track. So my car came in dead last, and I, you know, I said to my dad, how is this possible? You built a 36 foot sailboat, and it turned out the lead stuck down too low and was touching the ground and slowing, you know, the friction was slowing the car down. But he said to me, the next day, let's go down in the basement and build another car. And I said, but it's over. We already lost. There is no more pinewood derby. And he said, Yeah, but we should learn from our mistakes and and try again. And so, you know, I know that's a lesson that everyone's learned often from their fathers, but that was my version of when, when he said, even though there's no race on the horizon, we're going to learn from what we did wrong on the car and try and build another one. Yeah, I

David Novak 3:23 

love the fact that he took you back down here. Let's do it again. That's great. You know, when did you realize, John, that you, you had the PO, you had the potential to be a leader?

John Peyton 3:34 

You know, it was. It came up as a, as an, as an unexpected moment. I was in college at the University of Pennsylvania in Philadelphia. And I used to do in high school and college, a lot of fine art and graphic design. I, you know, I drew and things like that. And I joined the school newspaper and became the Art and Design Director, so responsible for the layout of all the paper, the photography, graphs, charts, illustrations on the editorial page. And back then, everything was very manual, right? You weren't doing it on a Mac. You were literally drawing things and pasting up using tape and things to do charts. And I ended up building a team of 20 designers and artists, and most of them were better artists than I was. And I learned during that in my junior and senior year of college that I was probably better at leading and running the team and developing the people and integrating them into the newspaper than I was doing a lot of the work myself from a talent perspective. And I actually at the awards dinner that year, they made up a new category, which was manager of the year because most of the awards were about editorial and best sports writing and best, you know, investigative reporting, but they gave me manager of the year because of the department I had built and the contributions it made of the newspaper. And that was my aha that, you know, leading the team is not so bad, and maybe I'm maybe I'm good at it. And

David Novak 5:00 

you know you were into design, you were in in art, and I know you've got a marketing background, and you're a creative guy. It seems like, you know, so on the surface, it looks like your right brain, you know, how did you develop the left brain skills it takes to be, you know, a CEO, yeah,

John Peyton 5:17 

so I'm a, I'm a CMO turned CEO, and I know we're in a we're in a smaller category, right than most, and I absolutely, you know, the team here will tell you, I definitely have a point of view on color and design and logos and restaurant decor. But I, I, I majored in English in college, David, and I'll tell you a funny story about that. I My father was the first MBA grad at NYU in the 50s. He was like, in the first or second year, and he was a stockbroker in New York. And it's funny how we all have father stories, right, and how they influence us. And, you know, he raised me to have a firm handshake and meet his clients, you know, in the eye. And he was very business oriented. And I went to I went to Penn, and he couldn't believe that I was not in Wharton. It made him crazy that I was in the College of Arts and Sciences and not and not in Wharton. And I as a sophomore, I chose my major, and I called him and I said, Dad, I've chosen my major. It's English, and literally, David 20 seconds of silence, and his response was, but girls major in English, and, you know, you can imagine the therapy and you know, effects that led for me for years, but partly in response to, you know, his ingratiating in my brain for all those years, I joined a program after college. That was an MBA that NYU had exclusively for liberal arts majors. And so they would hire 80 people a year. It was a work study program. So we were divided up amongst a bunch of banks and consulting firms. I was sponsored by PricewaterhouseCoopers, PwC, and so I went right from undergrad to three years of business school for the MBA, which I did in accounting and marketing, and then I went to PwC Consulting and became Six Sigma qualified and eventually a master black belt. So where my, I think, where my genetic comfort zone was on the your right brain literature, you know, art side, I I, in a sense, you know, forced myself to default to what I thought I needed to do for the future, which was, which was learn, you know, math and numbers beyond, when a professor said, Please turn to page 32 which was the extent of my my numbers in college?

David Novak 7:38 

Well, you got out of your comfort zone and certainly work for you, and that's right, as I understand it. John, you spent 18 years in operations and marketing at Starwood Hotels and Resorts, and then you were the president of a division of reality Franchise Group. Tell me what you learned in that job that you carried forward into dime brands.

John Peyton 7:59 

So as the president of Realogy, which was residential real estate, brands like century 21 Coldwell, banker, Better Homes and Gardens, I ran a Franchise Group of 2400 franchisees and 120 countries around the world, and I got to benefit from a couple of things. The first was, I've learned, David, you can learn a lot from really great leaders, and you can learn a lot from less great leaders. And I had the fortune of working for a CEO at Realogy. His name was Ryan Schneider, and you talk about right brain versus left brain. This is a Ryan had a PhD in Economics from Yale, and so you had to know your numbers. You had to know your data. He's highly analytical, but I learned how he I thought, really expertly and thoughtfully managed board of directors, and how he kept them informed about how he engaged the board in helping us and leveraging their expertise. I saw how he ran the investor relations process and how much time he invested in crafting the quarterly message, you know, to investors and analysts. And I came here to dine brands, but it was a first time CEO, three and a half years ago, and I had the benefit of really replicating what I saw as his best practices in areas like IR and, you know, capital management that that I was always adjacent to as a business president, but had never run myself.

David Novak 9:25 

That makes a lot of sense, and give us a snapshot of the business that you now lead at. Dine brands,

John Peyton 9:32 

sure. So dine brands, as you mentioned, we're Applebee's, we're IHOP and we're fuzzy taco shop. We have about 3700 restaurants in total across all three brands, all but 250, of them are in the US. Applebee's competes in the casual dining space, which includes alcohol. IHOP is in family dining, which does not and the great thing about the two brands, number one is the. Are both the largest in terms of their number of units in each of their categories. So they're, you know, they're number one in terms of footprint. They're great, you know, Legacy brands, some would say nostalgia brands. When I was, when I was recruiting for this job, David, I would say to friends or family, I'm thinking about going to work for IHOP and Applebee's. And almost everyone says, Oh my gosh. When I was a kid, you know, my grandfather took me to IHOP every Sunday after church. My Little League went to team, went to Applebee's, and so it was super It was super exciting to me to become part of brands that are every part of people's everyday lives. You know, they all have experiences and memories. We're 100% franchised, so we're both A B to B business and a B to C business in that, you know, those who pay our royalty fees directly are the franchisees who own our restaurants, and so we're, we're partners with them in helping them build their businesses and maintain profitable restaurants, and at the same time, our teams are all about making sure that we attract as many guests as possible into those restaurants. And that's the b to c component of our business. Of our business. That's

David Novak 11:03 

interesting. I've never really heard anybody talk about the franchise business as being B to B makes a lot of sense. I never, never thought of it that way in a pretty, pretty big franchise organization. Well,

John Peyton 11:16 

it's always occurred to me that if you're running a franchise business successfully, particularly when it's 100% franchise, percent franchise, the phone only rings when things aren't going well, right? And if the phone's not ringing from your franchisees, then our marketing is working. Our menu innovation is working, our learning and technology is working. And these franchisees range from owner operators who own literally, one or two ihops or fuzzies and, you know, and the whole family works in the business to we've got franchisees that own one franchisee owns over 400 Applebee's, you know, and owns a quarter of the system, you know, which is a huge organization. And so our job is to make sure that that whether you're a large company like that, or an owner operator who owns one restaurant. They've invested their their money in these restaurants, and our job is to make sure their businesses are profitable, and then they're paying us to talk directly to guests, right and have them come to the restaurants and enjoy the

David Novak 12:11 

experience. You mentioned that IHOP and Applebee's are certainly legacy brands, and they've been around for a long time. What kind of potential do you see for, example, for for a brand like Applebee's, that what are you going after that hasn't been tapped into

John Peyton 12:27 

what we're focusing on for both brands, Applebee's and IHOP is is being as a former marketer myself, is to be really clear on what the story is. And every brand has a story to tell, right? Every brand has its core values, and every brand has to be relevant in what I call and what I learned at Starwood, each every brand is going to be different, better and special. And if you can articulate how you're different, better and special, then you're going to win, right? And so Applebee's when it comes to its core menu, right? It's about great burgers, great wings, great margaritas. It's a neighborhood gathering place, and I love the tagline which preceded me eating good in the neighborhood. And as long as you're focused on being local, being relevant and having great food, great beverages, great experience, they're going to win. IHOP is all about putting a smile on your face. It's all about families and leaning into breakfast. You know, even at even at night, 75 80% of what we sell is breakfast items, so they're open. 24/7 but it's all about great pancakes, great omelets, great cup of coffee. And

David Novak 13:39 

this, tell me about fuzzy tacos. I have to admit, I haven't been to Fuzzy tacos. How many, how many restaurants you have, and what do you see as the opportunity there?

John Peyton 13:48 

So there are 140 fuzzies. They were founded about 20 years ago in Texas. Half the restaurants are in Texas, and they've since grown to Oklahoma, Colorado and sort of the middle of the country, north. We love the concept because it's in a high growth category of this, of this, you know, select Service, limited service, and Mexican is also a high growth category. And this is more like, I would say, a caliph Southern California, Baja, you know, avocado and fish and very good for you. Healthy tacos at an accessible price, like all three of our brands, it's the value brand in the category, and we think it's got the potential to become 1000 restaurants the next 10 to 12 years. We bought it because of that growth opportunity to grow east, west and north, and we intend to build it to a national brand.

David Novak 14:39 

We'll be back with the rest of my conversation with John in just a moment. It's the Halloween season, and while we don't do a lot of spooky content on this show, I do think it's the perfect time to revisit my conversation with fame mentalist oz Perlman. This guy can perform some eerie mind reading. Tricks. I mean, just Google owes Perlman Buffalo Bills if you want to spend five minutes being amazed at what he does. But what's just as impressive are his insights into creating memorable moments for his customers. Always kind of look to see the value you deliver to others. I have a profession where it's very focused on me, and it's like, look at the cool things I can do, and look at how I can fool you, and look how people think, Oh, I'm smarter than you, because I can do a tree. Can't I always take that out of the equation. And I want to walk into a room and I want to make it all about my customer, or all about my audience, and know what appeals to them. And my job is not for you to walk out of that room thinking how great I was. It's to create a memorable moment for you to take with you for your life that I hope you will continue to talk about and tell others about. And that's what I focus on, is creating very memorable moments for other people. I'm just a piece of that memory, but

Unknown Speaker 15:55 

that's what it's all about.

David Novak 15:56 

Go back and listen to my entire conversation with those episode 107, here on how leaders lead. You know, I'm a big believer in pattern thinking. You know, looking outside your industry and pulling over the key learnings and then applying them. Tell me about a time that you've done some pattern thinking.

John Peyton 16:18 

There's so many examples from my 18 years in hotels and hospitality that influenced the way. I think today, I can give you a couple of those examples. One is I was at Starwood back when the online travel agencies, the OTAs, started, and you remember Priceline and William Shatner, Captain Kirk was sort of the original commercials for Priceline, and when the hotel companies first started reacting to the OTAs, we put all our inventory on the OTAs and essentially ended up competing with ourselves. So for example, a business traveler who's going to Chicago would book his or her flight, his or her hotel three months in advance for 300 bucks, and then the week of the of the stay, they would go on Priceline or Expedia and see that the room rate was now $180 and they would cancel the $300 rate and rebook it for 180 and so we were, we were harming ourselves, and we learned back in those days that we had to figure out how to advantage booking on our own sites. Sheraton.com weston.com versus the OTAs and at a hotel, you've got a lot of ways you can do that. Right? If you book with us, you get your points. If you if you book with the TA you don't, if you book with the OTA, you get a crappy room over the over the garbage in the back of the hotel. If you book with us, you get a good rule on the high floor, etc, etc. And so when I came to this, this space, and I'm looking at, you know, the third party delivery options and the door dashes and the Uber Eats, it was sort of the deja vu, right, all over again. And thinking about, how do we make sure that we're not giving away business to third party channels, and how do we bias our guests toward the benefits of booking online, you know? And so that was a really parallel experience for me. I'll give you another example that around innovation and creativity that stuck with me for a long time. So you may remember W hotels, you know? W hotels? Yeah, absolutely. So w hotels didn't exist until the mid 90s, when Barry sternlich, who invented Starwood, invented W, and he came in one day and he said, I have a new idea. We're going to have a new hotel. It's going to be called W. We're going to call the lobby the living room, which really means it's a big bar. And on top of we're going to put some rooms, and we used and then it took off. It became a phenomenon. And we would have Harvard Business School and McKinsey call us and say, we want to do a case study on all the work you did to design and arrive at W hotels. And we want to know the data and the consumer insights and the research. And we would say there was none it. Barry came in one day and and said, This is the idea. He did the same thing with SPG, the loyalty program. Your listeners may know that. You know, Barry sternlich had had a REIT back in the in the late 90s with it, with 70 or 80 hotels in it, and then he bought Sheraton and Weston, within a two year period, created Star Wars hotels. And overnight, there was a competitor to Marriott Hilton and intercontin. And he wanted to stand out, so he had to create a loyalty program. And again, Larry said, Barry said, No blackouts. There'll be no blackout dates. The owner said of the hotel said, that's a ridiculous you're going to bankrupt us. What's a blackout meaning when you with most loyalty programs, when you want to redeem points for nights, they will say, Well, you can't do it. Christmas week, you can't do it New Year's week. Barry said you can redeem points with us 365, days a year, no blackouts, which made the points much more valuable because you could, you could redeem them during the most exciting weeks of the year. No research, no data. I'm not saying that every innovation should be research free or data free, but what it did. Teach me is that sometimes you have to trust your gut when you want to have a big idea that's disruptive moving quickly, you know, being agile and taking some risks is an important thing to do, because you can, you can test and require data until you've, you've missed the opportunity, and that has stuck with me for years and years. And

David Novak 20:21 

years. You know, there's a lot of talk these days about artificial intelligence. How's it making its way into your company? Or is it it

John Peyton 20:29 

is, it is. And, you know, we're all thinking about AI and how to, how to, how to leverage it. You know, our initial approach, which about was about a year, year and a half ago, I would say, was too cautious, and we learned that quickly. We said we're going to give it to a few people. We're going to give them a lot of training. We're going to have lawyers and finance people look over their shoulder and make sure that they're using it correctly, and they're they're not, you know, using data or images that aren't appropriate, and they're not sharing our thoughts in the in the public. And I think that was underthinking it. We were also using it in a limited way, right to write emails faster, write guest responses faster from our customer support centers, draft contracts faster, but we weren't using it to drive the business forward in terms of the core business of serving our guests and our franchisees. And so, you know, we rethought it six months ago. We've now launched the tool, our tool to the entire company, and we have everybody using it with only a 30 minutes of training. And we've also got a core team that's looking at the big ideas. And so one of the things that we're doing with AI is we've take the Applebee's culinary team, and the IHOP culinary teams have taken all of the SKUs, the ingredients, the stock keeping units, everything that they've got in an Applebee's kitchen, and they've said, Okay, invent AI. Tell me three new hamburgers. Ai. Tell me. Tell me. Give me recipes using the ingredients we have at IHOP for a fun, Halloween themed pancake we haven't done before, and so in the past, where we had humans brainstorming the new ideas using the ingredients we have in our restaurants, or maybe one or two fresh ingredients, we now have a machine that can generate hundreds of ideas that humans can then sort through. So it has accelerated innovation and brainstorming exponentially. And by the way, you can then say, Now, give me the recipe, and you get good results. And then you can then say, give me a marketing plan, and you get so so results, because that creativity part is not quite there

David Novak 22:39 

yet. And I also understand, I read somewhere that you have this incredible IHOP app that triggers your your your staff, to recommend to a customer, to add an item, and it's gotten phenomenal results.

John Peyton 22:50 

That's right now, that's another example of we're using AI, and now it's, it's in practice, it's been in place for about a year. It's only on, it's on our our app. So it's on, you know, ihop.com and our app, and just like where Netflix recommends what movie or TV show you should watch based upon your past usage or customers like you, and I think the statistic is something like 70% of what we watch on Netflix is recommended to us by Netflix, and the same thing on Amazon, you know, half of what we buy is recommended to us. We're now recommending to guests. Do you want to add this? Do you want to put this on your order based upon their past history? And we're seeing great success and strong, you know, additional sales as a result of that.

David Novak 23:33 

You know, with how quickly things are moving, John and they are, they're moving and changing all the time. How do you set the pace as CEO to keep your team from getting lapped by competition or just just not being up with up up on what's really happening right now. So,

John Peyton 23:48 

you know, there's a there's a phrase we use here about where we're living in and working in an age of great change. And I think it's really important for team members in any organization you know, specifically here at Dine, to really understand context, right? And the context and the age in which we are now all living and working is things have never come at us so quickly, right? Whether it's the end in such volume, the availability of data, all of the, you know, the social and digital channels that one has to manage, the way in which running a restaurant has transformed pre COVID. For example, Applebee's and IHOP had seven 8% off premise sales. Now they both have over 20% you know, so running a restaurant's become more complicated. And so we've really talked about a mindset, right? A mindset about being agile, a mindset about being comfortable making mistakes and learning from them. We've talked about a mindset of setting big, hairy, audacious goals bee hags that sort of put a pit in your stomach. But you can't think outside the box unless you've got goals that are, you know, outside of the box. And. So for me, David, it's less about saying to our team members or our executives here, make sure you go to three days of adult learning. Take this innovation class from McKinsey or Harvard, and it's more about the ongoing, everyday mindset of being flexible, changing your mind, and, you know, thinking differently, at the same time that you're a sponge and absorbing information that's available to us outside. You know, you

David Novak 25:29 

could tell people to do these kinds of things, to be flexible, to be open, to go for change, to, you know, re take risks. But you know, people don't like change. They don't like doing this stuff. So how do you practically get people comfortable doing it? I'll

John Peyton 25:45 

give you an example, and I tell the story with permission from the team member involved. So for the last six or nine months, one of my messages to the team, like we've been talking about, particularly the top 80 people in our company, the VPs and above, has been that we need to act with urgency, right? We need to act with urgency because our competitors are putting good ideas in place, because the economy, particularly for our guests, is putting some stress, you know, on our guests wallets. And like I said, the world is changing quickly, and they got the message that we need to act with urgency. What I learned was they didn't know how to make decisions urgently. And I'll give you an example. I I walked into a meeting of the IHOP beverage team, and they were, they were making a decision about coffee mugs. The current coffee mug at IHOP is fairly small and it's thin. It doesn't keep the coffee hot enough, long enough. And if you have a large hand, it's even hard to squeeze it between the, you know, the hand, the the coffee handle, and the mug. And that's one of the number one pieces of feedback we get from our IHOP guests. And so they had selected a new coffee mug, which is a big, thick, heavy mug, like you'd buy for your own home. It was perfect. And I said, I love it. This was two months ago. When will it be in the restaurants? End of 2025 and I said, Wow, that seems like a long time. Is it the same manufacturer and it was the exact same mug, looked exactly like the other mug, but just like going from a small to a medium or medium to a large, same manufacturer, same process. This larger mug is in 1000s of restaurants for years and years and years. Why does it need to take so long? Well, we need to test it in 100 restaurants. It needs to be washed 2000 times, you know. And, and, and I said, it seems to me this is a low risk decision relative to other things we might do, and not every decision requires the same level of risk mitigation. We can put the mugs in faster, given the fact that we've got their little brothers already in the in the stores. And so what I'm doing is using stories like that, because I have found David that when you use the platitudes right, when you say what we've been saying for years. Team, we need to have be more accountable. Team, we need to work with urgency. Team, we need to be more agile. It's hard to know what that looks and feels like as an everyday decision maker, but when you then tell the story about the mugs, and it shouldn't take a year and a half of testing to put the new mug in place, it makes it concrete. And so I'm looking for and always sharing examples like that of where we acted with urgency and what that looks like, or that we didn't as a way to make it concrete for people. Well,

David Novak 28:28 

that's great. And so tell me a story of how you give people ownership and hold them accountable.

John Peyton 28:35 

So we're we are here. So at dine brands, it's probably helpful to understand the structure each of our four businesses, Applebee's IHOP fuzzies and the international business are our business units with a president, a P and L at the business unit level, a CMO coo a head of development that supports that business. And from my perspective, the Presidents run their business right? My job is to help at the beginning of the year, set a budget, right, set goals, work with them on their strategy. It's not my job to decide each and every person they they hire. It's not my job to review commercials for Applebee's even though I'm a former CMO. And if you want people to be accountable, you have to actually allow them to do their jobs and not meddle or micromanage, which, by the way, was one of the biggest lessons I had to learn when I started this job as a first time CEO. But in order to hold people accountable, they have to feel accountable for the decisions they make, and they have to they have to be able to be able to point to decisions they made that worked well, and they need to be able to understand decisions they made that didn't. And if someone is interfering, then they're truly not running their business. So if the President, in my mind, doesn't feel like he or she runs their business, then they're never going to feel accountable.

David Novak 29:58 

You know, you mentioned earlier. 100% franchise business, and that's your business to business, Part, Part of your your company. What's the biggest challenge you've had to work through with the franchisees that's really tested your leadership? So

John Peyton 30:12 

franchisees, who you know, who own our restaurants and franchisor, and it's really got nothing to do with restaurants in specific, right? The nature of a franchising business, whether it's, in my experience, hotels, residential real estate or restaurants or mobile dog grooming or or, you know, EF Hutton, or any sort of franchise, your your your interests are 80% aligned, right? They when they succeed, we succeed, but there are differences among franchisees, right? What's helpful for a franchisee that owns hundreds of restaurants may not be helpful for a franchisee that owns one or two or vice versa. And so the biggest challenges with franchisees is getting a system to agree to a to agree to agree to a change, particularly a change that will cost them money, right? Because most ideas cost money, and the money is spent by the franchisees, for the most part, not us. So it's really important to have a great ROI. I'll give you an example from from my hotel days. So remember when the bed spreads in hotels sort of looked like your grandmother's curtains. They were all sorts of different colors of Maroon and orange and swirly. And then about in the mid 90s, they became white, and now most hotels have white beds. Weston hotels, which is a Starwood hotel, was the first hotel to go to all white linens. And by the way, that's another example of Barry stern look coming in one day and saying the linens will be white. And we all said, we all said it should look residential, and, you know, a high thread count. And we all said, that's crazy. It's going to look dirty. And he said, No, people want to feel like they live. They're sleeping in their bed at home. And we turn the beds white? The western owners, the people who own the Western hotels, had to invest in all of those new mattresses and new linens, and we couldn't get them to do it. I was the brand leader at the time, and the idea we came up with it was about skin in the game, right? When we realized that they weren't going to buy into white beds. So we said, we will suspend your marketing fee for a year, and you can use that money to put in the beds. And that broke it through. They did it. And you know, our belief was the beds themselves are more than any marketing we could do online or on television. And before you knew it, the whole industry went to white beds. So it was a way of thinking about a different way of motivating this in this case, financial relief, versus being able to convince them in advance that it was a good

Koula Callahan 32:47 

idea. Hey, everyone, it's cool. We'll get back to the interview in just a second before we do though, I have a question for you. Have you downloaded the how leaders lead app on your iPhone? If you haven't take 20 seconds right now, go to the App Store, search for how leaders lead and download the how leaders lead app. In the app every day, you'll get a two minute video that'll give you a leadership insight from one of our amazing guests from our podcast to inspire you and to really get your mind in the right place before you start your work day. So go to the App Store, search how leaders lead, download the how leaders lead app, and start your day, every day, with two minutes of leadership wisdom. It'll take 20 seconds, go to the App Store, download the app, and you'll be able to watch every day, just like me, the leadership insight from how leaders lead.

David Novak 33:35 

You know you also have a very unique strategy where you it's a dual brand strategy, where you're putting ihops and Applebee's in the same location. You know, we did some of that when I was at yum brands and and, you know, we had our challenges with that. I'm so I'm curious how it's working out for you.

John Peyton 33:52 

So this is a little bit different than than what I think yum brands did right years ago, where you had similar brands and similar day parts, right in the same in the same restaurant or box. What's this started for us internationally, and we now just opened our 13th dual brand restaurant outside the US. And the concept is, is that you have an Applebee's and an IHOP in the same restaurant. Consider like a red side and a blue side and a common entry. They have a shared kitchen and cross train staff. So from an economics, a cost perspective, there's a lot of synergy there. You activate the restaurant during all four day parts, right? IHOP is primarily breakfast and late night, and Applebee's is primarily dinner and and lunch. And so you go from either brand being active for half the day to activating the restaurant 24 hours. The revenue at these restaurants that have opened are and they typically are adding one brand to an existing brand we already had are 2x before, right? So it makes sense put both brands in the box and they're doubling their revenue. And so we're now opening our first couple in the US in the first quarter of next year. Here, and even more than a proposition for our guests. You and I just talked about how B to B is part of how I think about the business. This is a proposition for our owners, our franchisees and our developers, that you can build a restaurant that's the same size you would have built for an Applebee's or an IHOP. You put both brands in, and you have potential to double your revenue, which is a significant contributor to their bottom line, because restaurant margins are about 10% it's a thin margin business. So we think it's a very big idea, particularly based upon the international reaction to it, and we're anxious to see it here. I believe we've got to build a couple in the US to prove it out. Because the brands are so well known here internationally, guests don't necessarily wonder why an Applebee's an IHOP are in the same building. They don't know they're owned by the same company. And so here in the US, where guests really have strong opinions and beliefs about the brands, we need to actually show them what it looks like. I don't think we can do market research that says, What do you think about an Applebee's an IHOP in the same building? They wouldn't know what that looks or feels like. So we're gonna build a couple in partnership with our franchisees, and we think it's got a big potential for unlocking growth. Well, there's

David Novak 36:14 

no question, the customer loves that branded variety. You know? Yeah, you know, I was in Nashville a couple of years ago, and I met this guy named Josh Jenkins, who just so happened to write one of your favorite songs with Walker Hayes. And that song is fancy,

John Peyton 36:31 

like, all about his wife's and his date night at Applebee's.

David Novak 36:36 

Well, as I understand it, I mean this, this went viral. There's all kind it really, really took off. Tell us about that experience and how you capitalize on it. So,

John Peyton 36:47 

crazy phenomenon, right? A gift from the heavens, because we had nothing to do with it. And we all talk about what happens when something goes viral, and we all work hard to make things go viral. And the truth is, if we had asked our ad agency to write a song about Applebee's, nothing would have happened. But the truth is, at Walker Hayes, he and his wife have date night at Applebee's in their real life, they have six children, and he wrote the song that meant a lot to him. He then made it extra viral by doing the dance that he put on Tiktok and our marketing team jumped on it right. He we partnered with him. He ended up doing over 40 appearances for us. He performed at our brand conferences. There were so many versions of the dance on Tiktok that we then our TV spots became right, a accumulation of just tiktoks, right, including Shaq leaving an Applebee's and doing the dance with some other guests that were just in front of the restaurant. You can't you can't pay for that. You can't make

David Novak 37:52 

that. I said, Did you say that? No, it actually happened. No, yeah, when Shaq

John Peyton 37:56 

knows the dance and Shaq's doing the dance with people you know who are walking into the restaurant, you just look up to the skies and you just say, you just say, thank you. But to your point, you have to have a really nimble right into our point earlier, marketing team that knows how to jump on it and amplify it and and turn it into something. And that's exactly what our team did. And

David Novak 38:18 

now I understand you've got some NFL players working in your restaurants. Tell me more about that. So

John Peyton 38:23 

Applebee's is the, is the, you know, casual dining sponsor of the NFL this year, first time we've had a partnership at that level, and we just launched, two weeks ago, new series of spots featuring NFL not all players, right? So we have Dan Campbell, the coach of the Detroit we've got Brock Purdy from San Francisco, Jaquan Barkley from Philadelphia, and they're all in spots. They're very funny, they're very clever, you know, in the spots, you know, Campbell is an assistant manager, one of the football players is, you know, a server in training, and they're breaking through. So Dan Campbell, you know, did a really clever spot where He's taking, taking an order, but he puts the menu over his face like he would, you know, calling his plays from the sideline because he tells his guests he doesn't want the table, the other table next door to them to hear their order. And he was hilarious. He was a natural, and at his first the NFL season kicked off two weeks ago, but at his at his pre game press conference, he got 10 minutes of questions from the sports media about the commercial. And we had no idea you were so funny, Dan, and why did you decide Applebee's and again, like to your point, that's, that's the cherry on top, right? We didn't, we didn't pay for that, but the commercials broke through, and we're thrilled that he got 10 minutes of questions about the spot during his pre game press conference.

David Novak 39:46 

So the coaches and the players, they kind of go undercover and work at Applebee's speaking of going undercover, you know, have you ever done anything like that? Or how do you stay connected to the front line and find out what really is going on? Yeah.

John Peyton 39:59 

It's, you got to be out there, right? So I, I am in the market, I do two or three weeks a quarter, visiting restaurants and visiting franchisees, and spend, you know, at least an hour to two hours in each restaurant. And it's talking to the General Manager, it's talking to the the back of house staff, the wait staff talking to guests and hearing about what's going well, what's not. My favorite question, particularly to team members, is, you know, if what do you go home at night and you say to your loved one at the kitchen table, you know, you bang your head and you say, I can't believe headquarters hasn't figured this one out yet. Why are we still doing it this way after 10 years, when it's so obvious, the other way is better, and that usually unlocks a smile and a list of things that could be done better. And I take them back to the headquarters here our restaurant Support Center, and it's a great source of information. It also helps build a network of people that I meet who are willing to reach out after I leave sometimes and let me know what else they want me to know as time goes by. So, you know, I can't do my job unless I'm in the restaurants. I learned that at Starwood Hotels, right is you got to be in the hotels as often as possible, and you got to hear from guests, and you got to hear from all the team members that are delivering service. What's

David Novak 41:19 

the best idea you ever got from a team member in one of your restaurants. At two years

John Peyton 41:23 

ago, at IHOP, we rolled out the new loyalty program, which was a, you know, earn points and redeem them for food and other other rewards. We call it the International Bank of pancakes. Our points are called pan coins, and you deliver you deposit them in the stack market, you know, and if you for $15 you earn enough pan coins to redeem for your first stack of pancakes. And so a big part of what we were asking our team members in the restaurants and our franchisees was to enroll people. And I was in Seattle at one of our ihops, and I met a server. Her name was Alma, who had been with this franchisee for 30 years. And she had, you know, all of her regular guests and things like that. And she did two things that that knocked my socks off. The first was she spent her own money to to buy, you know, boxes of pens that had, you know, love heart, like a little heart on it, heart Alma and IHOP that she gave to all of her repeat customers, and just a little thing like that. They love the pens, but a lot of her customers were were older and weren't as comfortable with technology. And, you know, apps. And I saw her sit down at table after table, take out their phones and in and show them how to enroll in the program for them, and show them how to redeem points. And because she did it, other servers in the restaurants did it. And, you know, that was an idea that I took home and said to the to the team here, is we've got to use people like Alma as ambassadors, brand ambassadors, for our other servers, if, if we, or the franchisee, say you need to enroll people, it doesn't mean the same thing as showing how Alma does it and what that means for her repeat guests. And she did that all on her own.

David Novak 43:13 

I bet you, Alma gets the biggest tips absolutely right. And it takes time. If

John Peyton 43:17 

she sits down at that table and enrolls them, she's probably turning one less table, right? But she's playing the long game. Number one, she cares about her guests, and number two, they're going to come back and they get and they ask to sit in her section.

David Novak 43:28 

I love hearing stories like that. You know, this has been so much fun, and I want to have some more with my lightning round of questions. Are you ready for this?

John Peyton 43:36 

Yes.

David Novak 43:37 

What are the three words that best describe you? Uh,

John Peyton 43:43 

uh, funny, casual and tired.

David Novak 43:49 

If you could be one person for a day besides yourself? Who would it be?

John Peyton 43:52 

Barack Obama?

David Novak 43:54 

What's your biggest pet peeve?

John Peyton 43:56 

Crunching noises in my ear that's directed at my that's directed at my wife and her candy corns,

David Novak 44:03 

who would play you in a movie

John Peyton 44:06 

Matthew Broderick.

David Novak 44:09 

What's your favorite IHOP order?

John Peyton 44:12 

I'm a purist, so pancakes, in my mind, should only come with one topping. So banana pancakes, syrup.

David Novak 44:20 

How about Applebee's?

John Peyton 44:21 

It's bone in, bone ins, very hot. Buffalo wings, all day long,

David Novak 44:26 

fuzzies. Taco Shop,

John Peyton 44:29 

our new battered cod, our fish taco. Fantastic. Now

David Novak 44:33 

be honest here, could you do the fancy like dance?

John Peyton 44:38 

I I'm a terrible dancer. I have no I have no rhythm. I can't carry a tune. So whenever we were filming the fancy like dance as a group, I always made sure I was in the back row, because it just didn't look good.

David Novak 44:52 

If I turned on the radio in your car, what would I hear?

John Peyton 44:55 

You know, I sort of follow the kids these days, so I like Noah. Han, you know, in that sort of genre, like the country rock folk right now,

David Novak 45:07 

what's something about you few people would know? Well, I told you earlier

John Peyton 45:10 

in the hour, but few people would know that my background is fine art and graphic design, and that I spent a big portion of my time in college, you know, as an art director, that newspaper which, which was a 40 hour a week time commitment because we published five days a week.

David Novak 45:23 

What's one of your daily rituals, something that you'd never miss? I'm

John Peyton 45:27 

addicted to my protein shake in the morning that I make the exact same way, bananas, blueberries, chocolate, protein ice and oat milk, with all of my healthy powders that I mix in every morning religiously. Will

David Novak 45:41 

we ever see protein shakes at IHOP?

John Peyton 45:45 

Stay tuned.

David Novak 45:47 

I know what the number one will be, okay. One thing I've always felt is that in leadership, you have to constantly be thinking about creating new memories. And you know when people say, I remember when that can be absolutely deadly. And when people are looking back and you've got these brands you know, that have been around forever, how do you how do you create new memories for your team

John Peyton 46:11 

around the brand? Specifically, you know, I love that you bring up that point, because the challenge with what we would call nostalgia brands, or legacy brands like ours, is embracing what everybody loves and finding ways to make them relevant and contemporary. And so your example of the NFL partnership right takes, takes the nostalgia of Applebee's, marries the local community right, where we can activate that partnership by having our team members wear their favorite football jersey right to the to the restaurant with something that's very contemporary, which is the, you know, the NFL and all of its digital channels. And so we try to do that here in the office as well. We've got team member resource groups that we established four years ago for the first time. We've got, we've got one for our African American employees, one for our our young employees, our female employees, etc. We've got six of them that have now been in place for a couple of years, and each of them has established really great rituals. Just today, our our Latin American and Spanish speaking team and resource group had a breakfast, we know, with all their favorite cuisine from, you know, countries south of the south of the US and Spain, and so a lot of what we're doing there is helping to introduce just ritual and and the fabric of our culture here in Pasadena, where our headquarters is, you know, every day, and it's, it's team member driven, which is what, what we love about it.

David Novak 47:34 

What's it like having a headquarters or Support Center in California? I mean, do you ever think about moving out get like everybody else's

John Peyton 47:42 

No, no. A couple of thoughts on that. So I was born in Philadelphia. My wife was brought born in New Haven, and she and I have lived our entire lives between New Haven and Philly, most recently in the last 30 years, centered around New York and Connecticut. And so when I got the opportunity to come out here four years ago. We did it in part because our our children were young adults post college. You know, living, living and working in New York, and it's beautiful, it's exciting. It's a great adventure for us, personally, to be out in LA but more importantly, we have over 300 people assigned to this office. And I think to presume that people who have chosen to live in Los Angeles want to live anywhere else is an awfully big presumption, and to relocate a company is the quickest way, I think, to destroy the culture progress momentum. And so we are proudly, you know, residing in Pasadena, and there's a it's the second largest city in the country, and we have an incredible field of talent to draw from here, and we have an all star team, and I think it's because we're in Los

David Novak 48:48 

Angeles, you know, with three brands, over 125,000 team members. You know, I know you have a lot of demands on your time. How do you prioritize things so that are most important to you in your life and and in your work? And stay super focused?

John Peyton 49:08 

I've always found the work life balance question one of the hardest questions to answer, and what I've come to learn over the years is that if I feel like either side is in balance, then I'm out of balance, right? If everything is perfect at home, things are probably coming off the wheels at work and vice versa. And so I've always tried to feel just a little bit uncomfortable on both sides. For me, feels like the best balance. The other thing that that I always felt, and I could do this when my kids were young, because I lived in, I lived in, I worked in New York and we were in, we were in New York and Connecticut is I made it a point that if there was a baseball game or a music recital, I could leave and come back to work. And have always encouraged team members to do that. And for me personally, this may not be a best practice for everyone, but you know, Monday went. Tuesday, Friday, I don't start my day until 915 930 in terms of calendar meetings, because I go to the gym. And if I, if I, if I start meetings at eight o'clock, I'm not a great person to wake up at 430 and go to the gym at five. I know I need to wake up at 630 and go at seven. So I I schedule time to not conflict with that, because I need that out, like, 345, days a week, to, just to clear my head, listen to music, and just, you know, feel, feel, feel good. John,

David Novak 50:31 

you know, what's your what's your unfinished business?

John Peyton 50:34 

Well, my unfinished business here at dine is to is accelerate growth, right? I want to make sure that it's a tough economy right now. And, you know, our core customer has been dining out less the last two or three quarters. And so, you know, we're very focused on ensuring getting to the point where both of our, all three of our brands, are having positive comp sales, you know, year over year. And we're also working really hard to make sure that we have positive net unit growth. IHOP is remarkable. It's a 66 year old brand, and it's going to open 40 plus new restaurants a year. It does that year in and year out, and has some closures which a brand of that size will Applebee's has got more work to do to get to net unit growth. And so the unfinished, unfinished business, for me is when it comes to comp sales and when it comes to unit growth that we've got all greens, all positives across all three brands in both metrics. And

David Novak 51:33 

last question here, what's one piece of advice you'd give to anyone who wants to be a better leader?

John Peyton 51:38 

It has to be empathy. And you know, we've been talking about that a lot here as well, particularly post COVID, which accelerated individual team members expressing more strongly about what's important to them and their career and their life. And I think that you know, in the past, you know the the Jack Welch, Larry, boss, City School of Management, which was, which was incredibly successful at the time, but it was a little bit more, you know, their way or the highway. I don't think that works today. It doesn't work today with Gen Z. It doesn't work with millennials. And it it trickles up in terms of and team members and employees. They want to feel empowered to to be part of the discussion about not only their job and how they contribute, but how they integrate their life and their personal priorities with work and we as leaders have got to be empathetic and really good listeners and respond to and include them in the process of creating their jobs and contributing to our our success and their personal growth.

David Novak 52:44 

Well, John, I've really enjoyed this conversation. You've got a good handle on where you're going, and thanks for sharing all your insights. And you know, when you're in the gym, I recommend that you put on that fancy like tomb and, you know, work on your dance moves so you could move to the front of the row.

John Peyton 53:03 

I may have put the song on in the gym, but I have not danced in the gym. So I will, I will consider putting that those two together. David, thank you for having me. Okay,

David Novak 53:12 

appreciate you.

Well, no doubt about it. John is running two of the most iconic American Restaurant Brands. I love hearing how he's staying true to their differentiators, while also finding innovative ways to grow them. He also found a way to make me crave both wings and pancakes, but more importantly, he's helping his team stay agile and act with urgency in a world that's changing rapidly this week, ask yourself, in what part of your business do you need to be more agile? And I don't mean acting rushed or being careless. When you act with agility and urgency, you operate with the awareness that every opportunity has an expiration date, especially in a fast, changing world, and it's up to you to instill that mindset in your team. So do you want to know how leaders lead? What we learned today is the great leaders stay agile in a changing world. Coming up next on how leaders lead is Aaron Witt, the CEO of buildwit, which is a company that serves the construction industry and a category that Aaron has coined, the dirt world.

Aaron Witt 54:28 

I My name's on the company. And if the guy at the company is saying, Man, I am. I'm struggling, it gives people permission to Oh, yeah. Oh, he's human. We're all human. I can, I can. I can talk about that stuff too. I can. I can be vulnerable too. And I think, I think when people are more vulnerable, it creates a better organization.

David Novak 54:51 

So be sure to come back again next week to hear our entire conversation. Thanks again for tuning in to another episode of how leaders lead, where every three. Christie, you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business, so that you will become the best leader you can be.