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Texas Roadhouse stresses independence with engagement

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Reducing risks at hundreds of independently operated restaurants has made it tricky at times to create a unified risk management culture within Texas Roadhouse, since the company doesn't mandate that its partners adopt any mitigation strategies, Patrick Sterling said.

“We like to get buy-in from our operators,” said the senior director of risk and legendary people for the Louisville, Kentucky-based Texas Roadhouse Inc. “That's very important for us. So sometimes it's like a collection of 483 CEOs that you're trying to get buy-in from.”

For instance, Texas Roadhouse has secured a service provider to clean kitchen exhaust hoods in the restaurants, since built-up grease on the hoods is a leading cause of kitchen fires. While restaurant operators can choose to hire the service provider, Texas Roadhouse will not require them to do so, Mr. Sterling said.

With operator independence in mind, Mr. Sterling creates a business case for each of the company's risk mitigation tactics and provides memorable training seminars that appeal to restaurant operators on an emotional level to get them on board with his risk management strategy.

The result is that restaurant operators have been largely supportive of Mr. Sterling's risk management style because they feel they are choosing to participate in Texas Roadhouse's risk culture.

“When they feel that it's their decision, there's going to be more buy-in,” Mr. Sterling said. “It's a slower way to get things done, but when it is in place it's usually a lot better.”

In the case of kitchen exhaust hood cleaning in the restaurants, Mr. Sterling's risk management team has trained operators on how to properly clean the hoods and reduce fire risks. Mr. Sterling also cuts property insurance premiums in half for restaurants that use Texas Roadhouse's preferred hood cleaning vendor.

Meanwhile, operators of restaurants that have hood fires or other accidents have charges taken out of their profit-based compensation for each month.

Mr. Sterling's hood cleaning awareness campaign is credited with significantly reducing fire losses at Texas Roadhouse restaurants. The company's property loss ratio declined to 1% in 2015 from 188% in 2005, according to internal data. The reduction in hood fires has saved Texas Roadhouse $400,000 annually in property insurance premiums and more than $100,000 in retained property losses since 2014.

Creating an operator-centric risk model has helped Mr. Sterling to adopt ideas from the restaurant partners themselves, he said.

For instance, Texas Roadhouse created a mobile app and is developing an intranet site that allows restaurant operators to alert the company about potential workers compensation or liability claims, access crisis management information and look up legal information, such as wage and hour laws for each state, for their specific locations.

Mr. Sterling said placing such information online was based on a recommendation from one of Texas Roadhouse's operators.

Jerry DiCroce, a Syracuse, New York-based market partner with Texas Roadhouse, said Mr. Sterling has garnered favor with restaurant operators because he provides “common sense” strategies to keep restaurant employees and guests safe.

“He's one of the operators when he talks to the operators,” Mr. DiCroce said. “I think that people respect him because he makes things very simple (and) easy to understand.”

Mr. Sterling's collaborative risk management style has made him a go-to contact for restaurant operators who trust him to help them out, said Rick Kaskel, a Providence, Rhode Island-based regional market partner responsible for about 150 Texas Roadhouse restaurants in Maine, Wisconsin, Georgia and other states.

“He's been my right-hand man to make sure we contacted the right vendors to make sure that our people are safe, our product was safe and our guests were safe,” Mr. Kaskel said.

Mr. Sterling said he prefers working in partnership with restaurant operators, rather than dictating what they should do.

“I get to be an educator, not a policeman. It's a lot more fun way to be,” he said.