Command and Control Wasn't Working
Tasty Catering didn’t have its most profitable years until the co-founders—Larry, Tom, and Kevin Walter—stepped back from the business.
In a recent conversation, Kevin Walter, co-founder of Tasty Catering and a coach with the Great Game of Business, talks about why Tasty decided to open its books, why he became a Great Game coach, and how the catering business made it through the pandemic without laying off employees.
Loren Feldman
Could you start by telling us a little of the background about Tasty Catering, the business you and your brothers, Tom and Larry, started in Chicago? How’d that come to be?
Kevin Walter
Sure, we were in the restaurant business since the early 70s. And I shouldn’t say we, because Tom opened his first place when I was only eight years old—that’s my oldest brother—I came on board—
Loren Feldman
Rub it in, Kevin.
Kevin Walter
Right. I came on board from my first day when I was 11 and then started pretty regular when I was 13. Back in the 70s, we operated fast food restaurants in the Chicagoland area. In 1989, almost as a—not a joke but just a sidelight— a customer came to us and wanted our food for some party he was having. So we put together a four-page menu that was actually one piece of paper folded in half. And that’s how Tasty Catering began.
Loren Feldman
And did it do well from the beginning?
Kevin Walter
Well, we were lucky enough that we operated out of the back of one of the restaurants that had a big back-room cooler and freezer. So there wasn’t any overhead. So the profit was there from day one. We just happened to get lucky and stepped into a ripe and open market. There weren’t many off-premise caterers that specialized in catering back then. And the sandwich shops that all claim to be caterers nowadays, they didn’t exist.
Loren Feldman
One of the things I learned about your business through the years is that it’s experienced both low turnover and high margins, both of which I believe are unusual in the catering industry. Did that come early?
Kevin Walter
Well, the low turnover—we always operated as a family-type operation. But we didn’t quite realize we were command and control—so we did have some turnover up till 2005 or 2006 when we approached two 20-somethings with job offers for life, a little equity in companies they wanted to start. And they said, “No, we’re leaving unless the culture changes. Command and control doesn’t work anymore. It’s the 2000s. It’s got to be an employee-built and employee-based culture. And you three have to follow it better than anybody else, or it means nothing. It’s just writing on a wall. If you can do that, we’ll stay.” So we had some soul-searching to do.
Loren Feldman
You were offering them equity in a business for them to start, and they said no—unless you change your ways?
Kevin Walter
Yes. They were tired of coming into work each day and spending 15 minutes on each owner, trying to figure out if they were red, yellow, or green. Red? Stay away from. Yellow? Approach with caution. Or green? Hey, we can get some work done.
Loren Feldman
Three brothers pulling in different directions.
Kevin Walter
Yeah.
Loren Feldman
So you did some soul-searching.
Kevin Walter
Yeah, the profit came a little bit later. Because as we grew, we assumed higher overhead to keep up with the growth of the business. We were very high growth. So when we moved into the new building, the latest building in 2005, it was four times the size of our old catering facility. So that’s when we said, All right, how are we going to maximize revenue out of this place and started, I think, four other businesses through time to help offset that. Then we started turning a profit, pretty nice margin.
Loren Feldman
If I’m not mistaken. I think they were businesses that started by serving Tasty Catering and became pretty much standalone businesses on their own. Is that right?
Kevin Walter
Correct. One of those two young people said, If you give me $100,000 worth of equipment, and let me hire this one person, I can turn that into seven-figure revenue in year one. And sure enough, he did it. That was our bakery company, TF Processors, a contract manufacturer of baked goods. So they create, I think it’s 13 different SKUs for Tasty Catering, and then one of our other businesses, a gift company, about 15 SKUs for them. And that started to grow.
Loren Feldman
Were these members of the family that you were backing or just employees who had come into the business?
Kevin Walter
One was Tom’s son. So yes, one was and one wasn’t. One was Jamie Pritscher who just worked for us, and we could tell she got it. She put in the extra effort. She thought, felt, and acted like an owner.
Loren Feldman
And did Tasty maintain equity ownership in some of these companies or all of these companies?
Kevin Walter
All of them.
Loren Feldman
The more common step to take is to outsource whatever you need—you know, go to somebody else’s business and buy the service or the product that you’re looking for. What led you guys to start businesses like that?
Kevin Walter
It was really the employees. If they had an idea, and they were passionate about it, and they presented a solid business plan, why not? All the businesses were somewhat related to the catering industry. One was a marketing company that specialized in catering, because our marketing team had won awards for best catering website and all sorts of different awards. So we said, well, these two young ladies that run the company, they’re getting their Master’s. Tasty Catering can’t afford two Master’s in our marketing department. So let’s set up a business with us as their first customer.
Loren Feldman
So I can see why backing employees like that would address turnover issues, to some extent, but that’s not the same thing as changing the command-and-control operation of the business. How did you address that?
Kevin Walter
By putting together what we call the Good to Great Council, based on Jim Collins’ book, “Good to Great.” We put together that council, and that council over, I think it was three to four months, hammered out what the core values were going to be.
Loren Feldman
Does the council have employees, people at the business or outside?
Kevin Walter
At the business. One representative from each department or team in the company. And they got feedback from their people and their teams. So basically, the whole company was involved, represented by one person at that table, putting together the culture. So that took about three months, through once-a-month, three-hour meetings to hammer that out. And then we just live by it.
Loren Feldman
How did Tasty do during Covid? That seems like it would have been a very difficult time for a catering business.
Kevin Walter
Oh, of course. We rely on groups of people to generate revenue and cash, and there weren’t many groups of people once the governor shut the state down. We actually stopped doing our huddles, forward-looking forecasting huddles that we did weekly, because it was just the wash of red numbers. We were down 95 percent the first month—off of where we were supposed to be. Our team came to us and said, All right, we’re tired of looking at the red numbers. What really matters is how much runway we have before we have to start looking for jobs. They wanted truth and honesty.
Most other caterers either closed their doors or laid off everyone but maybe one or two employees. And mysteriously, when PPP money became available, what? Two, three, four months later? They mysteriously reopened so they could get their hands on the money. We kept everybody employed. They told us we need a minimum amount of hours a week. We’ll take a 10-percent pay cut. The owners will take 30 percent. But we’ve got to keep this band together, because this is going to end. And when it does, we’ve got to be together and ready to seize more market share from caterers that are slow to react or they can’t get their people there.
Loren Feldman
Was it the PPP money that allowed you to do that, to keep people on board?
Kevin Walter
Yes, in part. The other part was those reductions. Another part was pivoting. We know it’s an overused term nowadays. But we moved people around through the different companies so that the contract manufacturer of baked goods—they had the capability to wrap things single-service. So that business actually picked up a bit. So we rotated people around to make sure we made the minimum hours no matter what company it was in.
Loren Feldman
At a certain point, you guys started practicing the Great Game of Business. What led to your decision to do that?
Kevin Walter
It’s funny. Through Small Giants, my brother Tom met Jack Stack, of all places, in Constance, Germany at a Small Giants retreat. Tom didn’t know about the Great Game of Business, didn’t know about Jack. They started talking about open-book management versus open-book reporting. We thought, we’re open-book because we shared financials. Jack said no, you’re not forecasting. That’s reporting. So they had a little debate. And then Tom read the book, was fascinated by it. He came back, had the rest of our leadership team read it, and we started the Great Game of Business that fall.
Loren Feldman
To take on something like that requires a lot of effort. And employees sometimes don’t understand what the purpose is. You have to be committed. What drove that?
Kevin Walter
We all read the book and decided this is the final piece to our puzzle, to make the company successfully sustainable beyond ownership. Right? With command and control, we felt we had to be there every day for things to go right. When the culture changed, we backed off a little bit on that, giving the employees a little more freedom and responsibility. And when the Great Game came in, that gave people a reason to think, act, and feel like owners, and understand how their daily actions, attitudes, and behaviors impacted the company’s future and in turn their own future. So once we started playing, it wasn’t all wine and roses. We realized after eight months that the first three, four months were great, they were fantastic—and then the engagement kind of waned on it. We started in October with mini-games.
Loren Feldman
We should explain. What’s a mini-game?
Kevin Walter
It’s a short-term, rifle-focused game wrapped around a particular challenge or opportunity, or an issue. It’s a problem-solver, kind of like a Kaizen Event for those that do Lean. But it’s developed by the employees for the employees, where people focus on a certain metric and keep score and get a reward at the end. So that’s the mini-games. So we started the big game in January. By August, Tom said, people aren’t as interested. They were at first. I don’t know what it is, but you’ve got to figure it out.
So I went down to Springfield, Missouri for some training. Found out some simple tips or tricks or hacks, brought them back, put them in place, and it picked up. So that’s the point I thought, I could do this. I could be a coach for Great Game. You know, something as simple as, people who’ve met in the huddle for eight months that didn’t understand that, Hey, more revenue than we planned is green. That’s good. Less is red. That’s not good. And the opposite applied to the cost of goods and the expenses. Do you spend too much? That’s red. You spent too little? It’s green.
So I just simply likened it to home finance. Hey, when you see your paycheck up here, this is the revenue. When it’s higher, it’s green. When it’s less, it’s red. And down here, these are your bills. When they’re higher, they’re red, and when they’re lower, they’re green. I saw about 20 or 30 heads go, Oh, I get it now. So it’s just simple stuff like that. Just explaining it a different way. The second part was, since we started eight months in, it was still the original five people running the huddles. They were our huddles. They weren’t the people’s huddles. So we started getting the people involved in running the huddles. We changed the huddle leader, we changed the person writing the numbers. So by getting them involved, it became their game and the learning was much, much accelerated.
Loren Feldman
What year was this that you implemented?
Kevin Walter
It was 2011, Q4, and then the big game in Q1, 2012.
Loren Feldman
You were already aware that you had had command-and-control issues and wanted to run the company in a different way. Was there any aspect of it that didn’t feel natural, that maybe employees struggled with and didn’t take to right away?
Kevin Walter
Not really. The only thing I’d say is just the education piece. We weren’t good at it the first four or five months? Sure, our pre-education, the mini-game. Sure, month one, around the scoreboard. But then we just—it was just simple maintenance instead of continuing education. Once we picked up that continuing education and got people involved, then it took off.
Loren Feldman
It sounds like Tom thought you guys were already practicing open-book management but there was a piece missing, and that was the forecasting. Why is forecasting an important part of open-book management?
Kevin Walter
It helps you see around corners. It helps you see what’s coming up and anticipate things. In business, anticipatory spending is always better and cheaper than reactionary spending.
Loren Feldman
Some people are really dubious about how much they can forecast for their business. They doubt that they can predict—I don’t know how much we’re going to sell next quarter. How do you address that?
Kevin Walter
Ready, fire, aim. We fired away, we started playing the game, and then as we learned about the numbers and learned about trends and learned about data, we fine-tuned the aim. You know, it’s not easy. It sounds simple, but it’s not easy. It took us three years to figure out how to forecast our special events. We don’t know who’s going to call up on the second or third of the month for the $100,000 party for the last week of the month.
But I worked with somebody on the special event team, and both of us were stumped. And she and I really knocked heads on this. We started tracking by this model and started tracking and forecasting by that model. And we started tracking and forecasting by another model. One day—I forget if it was she or I—we took the average of the three models for the forecast. And we blended them together. And we’re like, Whoa, that’s close. And then we went back three or four months and applied that model, and said, Oh, boy, I think we’re on it. So we finally nailed it as far as getting that forecast better. And now it works.
Loren Feldman
So that’s the kind of thing that every business has to go through. They have to figure out what drives their numbers and see how best they can forecast that.
Kevin Walter
Absolutely. You know, at first, it’s ugly. We call it “poorcasting” for the first six months, and that’s okay. But by paying attention to the numbers, by tracking, monitoring, reporting, A) you’re going to make the numbers better. B) that communication and the focus on the numbers by every single person in the company, you’re going to harness the wisdom of the crowd and get better.
Loren Feldman
Did Tasty Catering hire a coach to help you guys implement open-book management? Or did you figure it out on your own?
Kevin Walter
No, they didn’t hire a coach. They put me through coach training, and I became a coach.
Loren Feldman
I see, and then you—at some point you left Tasty Catering and started coaching full time. Correct?
Kevin Walter
Right. Yeah, we started our game in 2012, I became a coach in December that year. I went down for the second workshop in the series back then, came back and applied it, went and spoke to a master’s class at DePaul about the Great Game, and my middle brother Larry was with me. We came out, and he said, You know, you’re pretty good at this stuff. You understand it. Why don’t you become a coach? And I said, Hmm, sounds good. I was in human resources and purchasing, people and numbers, so it was kind of a perfect transition.
By 2016, our team realized that if my salary came off the board, and they replaced me with somebody younger, smarter, and cheaper, that would mean more bonus money for them. So they took away my job duty. So all I had left was some high level HR stuff, 401(k), those types of things. And they actually moved me next door into a building we own. That worked so well, that the first year we saved two points on food cost after they took my job away. So they kicked the old guy to the curb.
Loren Feldman
It sounds like you were ready to go.
Kevin Walter
Yes. Then they started working on Tom and Larry and replaced them by 2018. And 2018 and 2019 were our most profitable years ever with the owners working the least in the business.
Loren Feldman
Oh, that’s interesting. And tell us about being a coach. What’s the process like if somebody is interested, and they contact you, or you find them. What happens?
Kevin Walter
I work as a contract coach for the home office. I’m basically a hired gun for the home office down in Springfield, Missouri. Leads come in through them or I bring leads to them. And we set about landing the client and getting the work done. For me, it’s been fascinating learning about all types of different industries, businesses. They’re all similar. Everybody thinks they’re a special snowflake, right? But I tell you what, any organization that has inflows and outflows of cash, and financial statements, the Great Game will work. In fact, out of, I don’t know, 100 or so clients I work with, only about 20 percent of them have been manufacturers.
Loren Feldman
Is there a particular mindset or type of company that you think is best suited for open book?
Kevin Walter
Yeah. One where ownership doesn’t have a lot of ego.
Loren Feldman
How often do you find that?
Kevin Walter
Pretty often, because if they pick up the phone and call Great Game, they know, it’s open book. They know that their financials are gonna be like the laundry on the line on the front yard. They have some level of humility. And then we just take it from there. The question I ask potential clients always is, Why do you want to do this? And if I don’t hear the right answer: “It’s for our people.” “The company’s outgrown me.” Hearing those things, I’m on board 100 percent. If I hear, “Well, we’re gonna try to boost up the profits and then sell,” maybe that’s not the right way. The Great Game can be a great problem solver for owners who need help to continue to grow.
Loren Feldman
I hear what you’re saying about not wanting to just boost the profits so somebody can sell. But boosting profits in and of itself is a good thing, right?
Kevin Walter
Yes. Typically, two points of profit get added at every client that I work with, or more. A lot of it depends on how hard the leadership/ownership at the company work on the Great Game and keep it front of mind. One owner in West Texas went from seven and a half percent Ebitda to 22 percent in year one. I mean that’s just crazy. It doesn’t happen every time but he put in the work. He figured it out.
Loren Feldman
I assume there are times where it doesn’t take, where it doesn’t work. What are the most common reasons if it doesn’t work?
Kevin Walter
Leadership. If Leadership isn’t 100 percent on board, Loren, it’s never gonna work. Let’s say you have a leadership team of eight. If one or two of the leaders aren’t fully committed to seeing it through and revert to command and control or say all these numbers don’t make a difference, it’s more of a struggle. Now, my job as a coach is to try to get them on board and shine the light. But in the couple instances where leadership just didn’t get it, just didn’t get involved, didn’t think it was the best thing since sliced bread, it’s a struggle.
Loren Feldman
Do you think that happens because they don’t realize what they’re getting into and what it’s going to be like? Or what?
Kevin Walter
I don’t like to say it, but if you’re 55 and up—and I’m in that class, so I can talk about it—you know, you’re thinking more about the end game. You’re not thinking about change. Change comes harder as we get older and set in our ways. One company, it was a 62-year-old executive vice president of a branch of the company. And he was just looking at retirement and retiring with his title. And it was always easier for him to revert to what he’d done in leadership for 40 years in the construction industry and just be command and control.
So when we had everybody together from the different—there’s three different cities in that company—we had them all together as the design team, he was great. He asked questions, he was singing about. When he went back to his little fiefdom, it was reverting back to the command and control that was easiest for him. As a result, the other branches did well, his branch struggled.
Loren Feldman
Have you seen it work for companies that choose to try to implement open book management without a coach?
Loren Feldman
If somebody hires a coach to help with implementation, is the expectation that you’ll do this for one year? For two years? Forever? What’s the thinking with that?
Kevin Walter
Yes. Simple answer. You know, we’ve got different levels of coaching and implementation. Some companies, we can do what we call level one, get it in, get set up, get it designed, and get it launched. Then there’s another level where we drive the results and make them stick all the way out to each department. And then there’s the third one, which is the high-involvement planning and creating a five-year plan with weekly measures that get us to that five-year plan, changing our one year strategies and goals. And then there’s ongoing with HIV, high-involvement planning. So your client can come in and go from the original four month, get it up and running, to the three-, four-year out and beyond high-involvement-planning coaching,
Loren Feldman
Can you tell us how much it costs to hire a coach?
Kevin Walter
It varies on the size of the company, not because we’re trying to see how much revenue we can get out of them, but we make an estimation of what the total hours will be to do the implementation and the different stages. We base it off that. I’d say on average from 30 to 40,000, 45,000. For that first level. It’s a four-month engagement, and we start from scratch and get you up and running and launched.
Loren Feldman
All right, well, thanks to Kevin Walte, who’s a little bit in the door at Tasty Catering and a coach at the Great Game of Business. You can learn more at Great game.com.
Loren Feldman is editor-in-chief of 21 Hats. Once a quarter he interviews a practitioner of open-book management with the help of the Great Game of Business, which suggests business owners to interview but plays no role in the reporting or editing.
