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Serving up risk management family style at Texas Roadhouse

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Family is the cornerstone of Patrick Sterling's approach to risk management within Texas Roadhouse Inc., a company that prides itself on treating its employees and customers with “care and concern.”

Mr. Sterling became senior director of risk and legendary people for the Louisville, Kentucky-based casual restaurant chain in 2004 after being recruited by a close friend and college fraternity brother. A collage of pictures featuring Texas Roadhouse's 12-member risk management team hangs in Mr. Sterling's office directly next to a collage featuring his three daughters.

“The expectation is we're all a family, and we take care of family,” said Britt Roarx, senior claims manager for Texas Roadhouse.

“I look up to him as a family man almost more than anything,” said Kit Summers, the company's workers compensation administrator.

Operators of Texas Roadhouse's 483 restaurants worldwide say they have such a close relationship with Mr. Sterling that they can call him directly on his cellphone at any time, day or night.

“The same way he would treat his family at home ... is the same way he treats his partners in all the restaurants,” said Jerry DiCroce, a Syracuse, New York-based market partner with Texas Roadhouse who oversees 11 restaurants in Vermont and upstate New York and is working to open three more.

Sources say Mr. Sterling's familial approach has helped Texas Roadhouse employees to buy into his corporate culture and risk management endeavors, which have led the company to reduce its insurance costs, save millions of dollars in workers compensation and general liability claims and promote a safety culture throughout the Texas Roadhouse chain.

His efforts to craft Texas Roadhouse's risk management strategy from scratch have earned him a place on the Business Insurance 2016 Risk Management Honor Roll®.

Texas Roadhouse, which was founded in 1993 and went public in 2004, has a corporate culture and structure that presents challenges and advantages.

While the vast majority of Texas Roadhouse's restaurants are corporate-owned, each was started by partners who invest $25,000 to $50,000 to open a location. The company works to create an entrepreneurial environment for those partners, whose compensation is based on a portion of annual profits for their restaurants.

Creating a cohesive risk management and safety culture among Texas Roadhouse restaurants is one of the company's top priorities, even though it gives its operators leeway on the commercial side of the business, Mr. Sterling said.

“We treat each restaurant like an independent business,” Mr. Sterling said.

Decisions made by operators run the gamut from how to decorate parts of the restaurant interiors to choosing whether to use specific floor cleaning products from those selected by executives in the “support center,” the company's preferred term for its headquarters.

Although Texas Roadhouse sets expectations for how restaurants should perform, the company has thrived by bringing in experienced restaurant operators, training them in Texas Roadhouse culture and giving them operational autonomy, said Nora FitzGerald Meldrum, associate general counsel with Texas Roadhouse.

“All those guardrails allow us to have the flexibility to not be a company with ... corporate policies on every little thing because we trust our folks to do the right thing, and then we're there to help guide them and educate them,” Ms. FitzGerald Meldrum said.

Mr. Sterling was a restaurant industry veteran when he came to Texas Roadhouse — including a stint at Maryville, Tennessee-based Ruby Tuesday Inc. — but he had never worked on the risk management side of the food service industry (see related story, page 40).

Mr. DiCroce, who opened his first Texas Roadhouse restaurant in 2005, said he's watched Mr. Sterling build a risk management culture that has promoted safety while providing him and other restaurant operators with “a shoulder to lean on.”

“We've done a lot of things over the years to really make prevention the biggest part of our culture, instead of reacting to problems when they pop up,” Mr. DiCroce said.

Scott Colosi, president and chief financial officer of Texas Roadhouse, said Mr. Sterling has been a critical figure in the restaurant chain's business success.

“Patrick's been literally at the forefront of just about everything that's transpired in risk management at Texas Roadhouse over his tenure in the company,” said Mr. Colosi, who joined Texas Roadhouse a couple of years prior to Mr. Sterling. He notes that Mr. Sterling spearheaded the implementation of Texas Roadhouse's enterprise risk management program, which has been instrumental in helping the company identify and curtail risks.

While Mr. Sterling's work has reduced risk exposures for Texas Roadhouse restaurants, he insists that his efforts are “not about the money.” Rather, he said he believes that it has been more important to create a culture at Texas Roadhouse where employees treat each other as family and work to take care of each other.

“If the culture part of it's right, the financial part follows,” Mr. Sterling said.

Mr. Sterling's care for Texas Roadhouse employees has benefitted the company as a whole, said Keith Humpich, senior director of internal audit for Texas Roadhouse who co-leads the company's risk committee with Mr. Sterling. For example, data shows that Texas Roadhouse's workers comp claim costs and employee safety have improved on Mr. Sterling's watch.

“You can just see in his mind that he has just such a tremendous passion for making sure we protect this company,” Mr. Humpich said.

Mr. Colosi said he expects Mr. Sterling to continue finding ways to innovate within Texas Roadhouse as the company continues to expand worldwide.

“He's had a lot of victories, and I think he's still not satisfied with where we are,” Mr. Colosi said.