Ashish Tulsian:

Hi, welcome to Restrocast, today my guest on the pod is John Payton, he’s the CEO of Dine Brands Global, operators of Applebee’s, IHOP and Fuzzy’s across America. John’s journey as summed up by him is the one which exemplifies do good work in organizations that take care of your people and good things come to you. For me this was the first time having a public company CEO on the pod and I learned you know quite a lot on how to take on roles or how to grow into roles that not only look steep but that might be mighty impactful for the organizations that you work with as well as in your career, do watch. Welcome to Restrocast. 

John, welcome to Restrocast.

John Peyton:

Thank you Ashish, I’m glad to be here. 

 

Ashish Tulsian:

When I was researching about your entire career, 17 years at Starwood were something that I really want to dive deep in, 

 

John Peyton:

okay

 

Ashish Tulsian:

but not right now. I want to start from where it all started for you, tell me about your early years.

 

John Peyton:

My early years, so like childhood years, baby stories.

 

Ashish Tulsian:

If you remember, I’m all years.

 

John Peyton:

My earliest memories in nursery school, we had a playground that was at the bottom of a hill and I remember that one of the four-year-olds at the top of the hill threw a rock that hit me on the top of the head and I got stitches and that’s my earliest childhood memory, is the rock coming down from the top of the hill when I was four years old.

 

Ashish Tulsian:

And if you thought that that was the most painful one, how did the restaurant industry treat you?

 

John Peyton:

Great, until COVID, right? I think COVID might have exceeded the rock on top of the head when I was four years old.

 

Ashish Tulsian:

We’ll definitely get to that, but how were the growing up years?

 

John Peyton:

I grew up in Villanova, Pennsylvania, about 30 minutes outside of Philadelphia, went to public high school there and then to college in Philadelphia as well and I was an English major undergrad, much to my father’s disappointment at the time. So my dad was sort of a guy who’s classically of his era, his age, and so was sort of very business focused and work focused and it pained him that I was at University of Pennsylvania and that I was in the College of Arts and Sciences and not in the Wharton School. So it took him a while to get used to that.

 

Ashish Tulsian:

But why English major?

 

John Peyton:

So I really believed at the time, and I still do, I give the same advice to my kid and other kids now, is that when you’re in college, it’s probably the only time you’re going to study the classics and learn how to read literature and really learn how to write. And so for me, the religion classes and poli sci and women’s studies and English were, if I wasn’t going to do it in college, it was never going to happen. And I felt like business school made a lot of sense for grad school.

I almost viewed it as like technical school at the time. And as an undergrad, it was just not of interest to me. But I do remember calling my dad because he always held out hope that I would transfer, I think, from the college to the business school. And I called him, I think maybe second semester, sophomore year. And I said, Dad, I declared my major. And he said, what is it? And I said, English. And there was literally, I’m not kidding, there was 30 seconds of silence. And he said to me, but girls major in English, right? Took me years to recover from that. A lot of therapy, but I’m good now. I’m good now. But he was just very old, old school. And my first job out of college was consulting for PWC. And they specifically recruited liberal arts majors alongside all of their accounting and finance majors.

 

Ashish Tulsian:

Oh, wow. 

 

John Peyton:

Because they had a point of view then that we were taught differently and we thought differently in our writing skills and analytical skills. And I did get to say to dad two years later, wouldn’t have gotten this job if I hadn’t majored in English. So it is valuable.

 

Ashish Tulsian:

Okay. So English major started with PWC. And what after that?

 

John Peyton:

10 years at PWC. So I was there from 89 to 99. I spent the first two years in audit, which was a requirement of the firm for all of the liberal arts majors that they hired. I was one of probably eight or nine liberal arts majors in a class of 100 in New York that year. And the firm learned pretty quickly that the liberal arts majors didn’t last all that long in audit. And so after my two years, I moved to consulting, which was a much better fit for me. I spent the first couple of years in the bankruptcy consulting turnaround practice, worked on some really interesting projects. I remember the Farmore bankruptcy, which was sort of the CVS of the era. I worked on Michael Milken and Drexel bankruptcy, the Macmillan bankruptcy. I remember the British and all of that. So some really interesting projects. At my level, it was a lot of spreadsheet work and following the money and all that kind of thing. And then my last five years there, I went into what was then called management consulting practice and did process improvement, change management, org design, some strategy, things like that.

 

Ashish Tulsian:

How difficult was that, like a liberal arts major, then getting into something as dry and specific as audits? And even if you’re saying that you did for two years before you bought into interesting projects, it’s still a lot of grind. Soo

 

John Peyton:

It was super difficult and probably one of the most challenging things I’ve ever done and still done up until yesterday. So what I didn’t mention was that the program that I was in was part of a partnership between a bunch of consulting firms like PWC and banks and NYU and the Stern School of Business. And so NYU had an MBA program for liberal arts majors. And so you had to be simultaneously admitted to the program and sponsored by one of the sponsoring firms. And all the sponsoring firms paid the same salary, et cetera, so that they weren’t competing for you based upon that. It was just a matter of getting a spot. And so I graduated from school in May, went to NYU in June. And that first summer, I took calculus, statistics, accounting, financial accounting one, corporate finance, and cost accounting.

 

Ashish Tulsian:

Wow

 

John Peyton:

And in college, the extent of my math was turned to page 47 was the extent of numbers in my life. So it was like hitting a brick wall that first summer.

 

Ashish Tulsian:

I can totally relate to that because I can tell you that I did something crazy in my undergrad. I was in computer science engineering in my undergrad. And my dad was a professor in University of New Delhi back in India. And he was a professor in commerce. And like everybody in my family was like a commerce champion. My dad wrote a lot of books on mercantile law, income tax, and whatnot. And I basically, while doing computer science engineering, in my first year, I asked him, I said, I want to learn commerce. He said, what do you mean? I said, I want to pursue a degree in commerce as well. He said, but how would you do that? I said, parallelly. He said, OK. So I actually took admission in a distance learning like a correspondence sort of course. 

 

John Peyton:

Distance learning before distance learning was a thing. 

 

Ashish Tulsian:

Yeah. Yeah, exactly. And I took that. So my exams, my tests used to coincide where in the morning, I was doing all the physics, chemistry, and math. And in the evening, I’m doing cost accounting. I’m doing all kinds of commerce stuff. So when you just said all of that, all the subjects for MBA.

 

John Peyton:

So were you getting better grades in the morning or better grades in the evening?

 

Ashish Tulsian:

Oh, well, I think I got better grades in the morning, thankfully. But I think my evening grades were not supposed to do grades. I just wanted to make sure that I pass somehow so that I can keep my little prestige in front of my dad because he told me that this is stupid. Like, why are you doing this to yourself? But I just wanted to learn business eventually. And I thought probably accounting is going to be one of the things that will come handy later on.

 

John Peyton:

Well, I learned that there are two kinds of liberal arts majors. So there were those of us who were English, history, poli sci. And then there were the econ and math majors. And so my roommate was a econ major from Brown, played ice hockey. And we took all the same courses. And he would open the book and close it and go out and drink beer all night and get A’s. And I would the rest of us were studying. So there’s two kinds of liberal arts. And one is definitely more quantitative than the other.

 

Ashish Tulsian:

So now that gets a little better, of course, that NYU Stern was also preparing you for the job that you were up to. But then how did that transition happen in management consulting? I find, and I’m just making a, I don’t know if it’s a right statement or not, but what you just described, how the program was a partnership between a couple of consulting firms and NYU Stern. I almost feel that all the business schools are manufacturing candidates for consulting jobs.

 

John Peyton:

I felt very well prepared to do consulting after business school, for sure. And I think I’m also, I was also better suited for it. So I struggled with the the rote part of an audit and the repetitiveness of it. And it was really, particularly then it was very manual compared to what it is today. So it was a lot of pull 10 invoices. Do you have all the right check marks in the right place? And so it was not a lot of, particularly at the junior levels, original thinking. What I liked about consulting was what’s the problem we’re trying to solve? What’s our approach to gathering information is going to help us solve it?

How are we going to analyze it? What are the insights that we draw from it? And then most importantly, what recommendations do we have and how do we help the client actually implement them? So it was problem solving, which I found much more liberating, stimulating, exciting than the repetitive, more, not to say that audit isn’t important. There are people that are fantastic at it. I was better at the more open-ended kind of work.

 

Ashish Tulsian:

What about after PwC?

 

John Peyton:

So I was at PwC for 10 years. It was 1999. We had a almost three-year-old and a baby on the way. We were living in a little one bedroom in New York, which was basically living in a toy box when you have a three-year-old in a small one bedroom. And consulting then was on the road five days a week, right? 45 weeks a year. And I would leave on Sunday night or Monday morning, get back often Fridays. Like sort of many clueless husbands, I thought everything was great. And my wife said to me one day, you need to get a job where we actually live.

So I ended up going to Starwood Hotels, doing recruiting and networking and everyone. And so it wasn’t that I had a dream to be in hospitality or to learn about hotels. I was really leaving the consulting lifestyle more than I had a dream to go join Starwood. But it turned out to be one of the best things I’ve ever done.

 

Ashish Tulsian:

How did that happen? Why Starwood? Why hospitality from consulting?

 

John Peyton:

I cast a wide net, called friends, headhunters. At the end of a couple months of searching, I had two offers. I had the Starwood offer, which was to become sort of the chief of staff slash re-engineering and process design, which I’ll tell you about, for the chief marketing officer in the marketing group. Or I got a job doing strategy for the derivatives group at Citibank. And I thought to myself, I’ll never forget what a derivative is. Not sure I even understood it when I was in business school. And I’ve been staying in hotels 45 weeks a year for the last 10 years. 

 

Ashish Tulsian:

Sure

 

John Peyton:

How hard can it be to figure out that business? Turned out it’s a very complicated business. And so literally that was my brilliant decision making at the time.

 

Ashish Tulsian:

Fantastic So, starwood?

 

John Peyton:

So Starwood was interesting. I joined in 1999, which was just about a year after the company was formed, when Barry Sternlich, who’s a real estate genius, he had a REIT at the time that owned 70 or 80 hotels. And he was like 35 or 36 years old and did one of the boldest transactions, particularly for a guy that age. He bought Sheraton and then bought Weston in two separate transactions in the same year, combined it with his REIT and suddenly invented, created a competitor to Marriott and Hilton overnight. And so I got there about a year later and the company was still going through the aches and pains of integration and multiple payroll systems. And you’d still be a year or two into it.

And you’d start each meeting by saying, I’m a Sheraton person. I’m a Weston person, versus I’m a Starwood person. And so, for example, in addition to creating the company, the company did a couple of really bold things innovatively to make it known that they were now a player in this space. So they invented the loyalty program called SPG, Starwood Preferred Guest. And the exciting thing about it was there was no blackouts. They were the first hotel company to do no blackouts. And there was all sorts of angst from the owners and the franchisees of the hotels that you’re going to bankrupt us with these no blackouts. And Barry Sterling, to his credit, said we need to do this to distinguish ourselves because we’re the new kids on the block. So I was hired because at the time you would enroll in the program and this was pre-digital, right?

So we would send you a beautiful kit with like a beautiful card that came wrapped in a shoebox-sized box. And it was lovely, but it cost $7 to put the kit together and $4 to mail it. And we’d send you a box every week, week after week after week, because we didn’t have to turn it off. So as- 

 

Ashish Tulsian:

What do you mean by that?

 

John Peyton:

Like the process is behind the scenes. Once John Payton enrolled, we just seemed to send boxes of new cards all the time. So crazy process, things like that need to get fixed. And in my consulting career, I had done what was then called re-engineering, right? So a lot of process improvement.

 

Ashish Tulsian:

BPR.

 

John Peyton:

Yes. So I was really brought in to work on the processes that supported a lot of the marketing functions. And that’s how I first got into the firm, working for the CMO.

 

Ashish Tulsian:

And how, what was your first reaction looking at hospitality industry from the other side?

 

John Peyton:

What I learned over time is how complicated it is, both the on-property business and operations as well as the off-property. So if you think about the Sheraton New York, right? Which is 2000 rooms, right? And tens of thousands of square feet of meeting space. It’s like a little city, you know, it’s incredibly complex organism between the housekeeping staff, the front office staff, the engineering staff, the sales staff, HR, finance, tech, HR, catering, you know, all of that. It’s a very complicated business. You, every day is, you know, they’re dealing with 2000 guests. Some days you have 2000 guests checking in on the same day, if it’s in a big event or checking out on the same day. People have their most important meetings or conferences, you know, ranging from, you know, a presidential candidates, you know, New York, you know, primary night to someone’s wedding or bar mitzvah or big business meeting.

And so anybody who’s there is there because it’s most important thing going on for them at the moment. So it’s an incredible customer service environment at a time when you’re also managing a very complex organism. And then behind the scenes, you’ve got revenue management, you’ve got the online travel agencies, you’ve got global sales, you’ve got the technology to check people in, you’ve got the POS for all the restaurants, you know, and, and, and. So it’s a very complex business.

 

Ashish Tulsian:

I think, I think, you know, hotels and restaurants both, you know, from, from an outside perspective, most of the people don’t really understand even within the trade, unless they start managing one.

 

John Peyton:

Yes.

 

Ashish Tulsian:

How each day, or maybe in some cases, each hour is a new hour each time.

 

John Peyton:

Yes. And restaurants are, are close cousins of hotels in terms of the, the operational issues, the, the complexity, the front of house, back of house, right. And then the customer dynamic. And since COVID, restaurants have become much more complicated as well because they’re, they’re offering their goods and services through so many new channels to so many new people.

 

Ashish Tulsian:

I actually call, you know, restaurants distant cousins of hotels actually. I generally, I generally say, you know, that a lot that, you know, they’re somehow clubbed in the hospitality, but hotels have far less variables, thanks to the fact that, you know, a hotel can only have X number of rooms, you know, and beyond a point you can’t increase that complexity. But a restaurant, you know, is like, you know, once a guest checks in, a hotel has a variable that’s a constant,

 

John Peyton:

Yes

 

Ashish Tulsian:

You know, that I checked in, right. I can only bring up so much trouble. But a, but a restaurant.

 

John Peyton:

You’d be surprised what could happen in a hotel room. Yeah, that, yeah, that, that’s fair. And the other difference between hotels and restaurants, unless it’s fine dining, is hotels, for the most part, know in advance how many people will have a house. You know, and if you’re, if you’re national brands like ours, like Applebee’s and IHOP, you don’t know until that day.

 

Ashish Tulsian:

Yeah, that’s what I meant.

 

John Peyton:

So it’s harder for staffing, harder for ordering, et cetera, because you’re predicting versus having a book of business.

 

Ashish Tulsian:

So 17 years, what was the journey like from BPR to, you know, what, what kind of roles did you?

 

John Peyton:

So I, I benefited from being at the headquarters. And so the headquarters in Stanford, Connecticut had three entities in the same building. So it had the North America hotel business there versus, you know, Europe, Africa, Middle East and Latin America and Asia Pacific, which were around the world. So you had the North America hotel business. You had the corporate headquarters, finance, HR, legal, regular things. And you had what was, you know, brands and marketing. So you had sales, revenue management, brands and marketing. And so I was, I was fortunate to move among all three, all while I was at headquarters. So that was, that was helpful. My first role after the, so I got hired by the CMO. He left within three or four months of my joining. And that led to panic, right? Because I had just left my 10 year career at PWC. I was about to start the partner admission program. We had purchased a house in Connecticut that we couldn’t afford, right? We were down to two meals a day to pay for the house. And no one in the company knew me. I’d been there for three months. And I didn’t really understand the business of that.

 

Ashish Tulsian:

Well, you’re not from hospitality, yeah.

 

John Peyton:

And I got, I got lucky. Talk about people who have been influential in your life. The, the CMO who hired me, his name was Keith Ferrazzi. He’s, he’s now written a lot of books about management and teams and leadership. And on his way out, he was thoughtful enough to introduce me to the incoming COO. So the company had not yet had a COO. And Barry Sternlich brought over a gentleman named Bob Cotter, who was running Europe and was a 30 year Sheraton veteran. And I think Barry was thinking, since Barry was sort of an outsider to the company industry, he brought in Bob to be a COO. Bob had no staff in Stanford. And so I became his guy. And my first project, I learned a really great lesson from Bob. So he called me into his office and he said, because remember, this is now 2000. So it’s, it’s a different time in terms of the availability of information and be able to consolidate data. He said, I’ve got sales teams in four different divisions around the world. And I can’t press a button and know how much business do I get from McKinsey.

And so therefore, I don’t know how much I should be charging them and all that stuff. So I want you to work with the four sales leaders from each of the four divisions. And I want you to create one consolidated sales report. So I know how much business we get from McKinsey or the American Medical Association or whoever it is. And so I said, OK. And I came back the next day. And I had, because I had just spent 10 years in consulting. So my only skill was putting together work plans. So I had, you know, 180 lines on my work plan. I had a project charter. I had roles and responsibilities. I had deliverables.

And he was sort of a tough South Boston guy. And he took off his glasses. And he said, who did that? Where did this come from? Who did this? Right. And so, you know, you get that panic feeling when your stomach does butterflies. And I said, I did. Right. And he said, I don’t understand. How did you do all this overnight? And I said, well, this is kind of all I know how to do. It’s what I’ve been doing for 10 years. And he said to me, and I’ll never forget it. He said, do you know that you’re the only one in the company who has these skills? And I said, I had no idea. And he said, and I learned then that it’s really important to know what you do uniquely well. Right. That no one else does. And to at least modestly let others know that you know how to do it. And he, I worked for him for two years doing projects like that because he didn’t have anyone who’d sort of come out of consulting for 10 years and knew how to run teams and form projects and get deliverables implemented. And I sort of made my mark that way. But the lesson for me was I had no idea that I should have told anybody I even had those skills.

 

Ashish Tulsian:

But, you know, as somebody coming from 10 years of consulting and like spinning up those plans, you know, came naturally to you. You did that, you know, long enough for large organizations and bankruptcy and all that. But actually executing those plans. And I’m assuming here that now you were a part of the CEO’s or, you know, helping him. That means your, the plans that you were spinning up were also, you know, supposed to be executed or, you know, you were supposed to see them getting executed.

 

John Peyton:

Yes

 

Ashish Tulsian:

Was that a part of a learning curve for you?

 

John Peyton:

That was the biggest learning curve for me for two reasons, right? One is typically consultants leave before they really implement all the way through. 

 

Ashish Tulsian:

That’s what I’m alluding to.

 

John Peyton:

And so, and that was even though I left consulting mostly because it was time to get off the road and be home with my family, I was also beginning to get the itch about how many more times can I leave the report, you know, on the desk for the client and not be part of implementing it. And I was feeling that need. So getting to do that there, which also helped me learn the business and make relationships and things like that, it helped that people knew who I worked for. I worked for the number two guy in the company, so they took my calls. But it was a, I learned a lot about, and I had learned this in consulting too, but it’s the same principles about achieving consensus, helping people get to the answer as well, even though I may think I know what the answer is, you still have to take the time to let others get there as well. Letting others get the glory and present the results and show that it wasn’t, in this case, me who came up with this global sales tool. It was the four sales leaders who did it, and they were the ones that presented, you know, to Bob and leadership. And that’s, you know, they got to get the recognition for it. So there’s those change management tricks, right? To make sure that you have people bought in and cooperating and wanting.

 

Ashish Tulsian:

Was there like a change in how you were spinning these plans up, given like you also had to, you know, kind of learn and incorporate those learnings back into, you know, your plans, because now they were supposed to be executed as well. So did you have that learning curve where, you know, you realize that, okay, your plans are not getting executed exactly as they, you know, looked on the PPT or Excel?

 

John Peyton:

Yeah. And the learning for me there was learning to accept that they’re never going to quite be implemented the way I thought they should. Because Starwood was, which was purchased by Marriott in 2016, but when Starwood was independent, it was a very large global company, right? So you couldn’t really see over the horizon, right? When you had the Asia Pacific headquarters in Shanghai and Singapore. In Singapore. So, you know, one example is when I was in leading the brand teams, we wanted to elevate the thread count in the linens in the Heavenly Bed. Because the Heavenly Bed was Weston’s signature bed. We were the first major brand to implement an all white bed. Remember in the old days, it was sort of like your grandmother’s curtains and they were very rough and hard and a zillion colors. So you couldn’t see if they were dirty and we wanted to do them in white. And so and then once we did it, then we wanted to elevate the thread count and make it softer.

And so I spent a year, right, on calls, for example, with the Asia Pacific division, when you know how that is, right? When I’m up at four in the morning to get them or vice versa. And you all agree and everyone’s great and you do it. And then you fly over three months later and nothing’s changed, right? And so I learned that good is better than perfect. When I was a consultant, it was all about really what’s perfect, I think. By the book. By the book. And I became more of a incrementalist once I was on the operating side about if we can get this much done now, let’s do that. And we’ll come back and do more later. And so my biggest change was taking smaller bites and having several bites along the way versus trying to get one large thing done at a time.

 

Ashish Tulsian:

You said that you were leading the brands team.

 

John Peyton:

Yes.

 

Ashish Tulsian:

Is it like going back to the marketing, branding as a function?

 

John Peyton:

Yeah, well, if I go in order, if that’s helpful. So I spent the first two years working in the COO’s office. The big thing I did was we implemented Six Sigma. So one of Bob’s missions from the board and from the CEO was to put in place a global quality program. And so because that was my background from Starwood, led sort of this global transformation to introduce the Six Sigma practices into the hotels. We put in black belts who were full-time process improvement people into our 100 largest hotels and ran projects like that. And then this example of how a mentor can really influence your career. Bob called me into his office one day. I’d probably been working for him for two and a half years. I’d implemented Six Sigma. I was running Six Sigma for the corporate functions. And this was like a Thursday or a Friday.

And he said, on Monday, your new job is you’re going to be leading franchise guest owner services in North America. And you’ll be reporting to the president of North America. See you.

I said, but Bob, I don’t know anything about owner services. I’ve never met an owner. I’ve never read a contract before. And he said, exactly. He said, if you’re going to succeed in this business, you need to learn the business. You clearly know how to run projects and improve processes. And you now need to do something else.

 

Ashish Tulsian:

And I think doing that meant now you’re responsible for ROI.

 

John Peyton:

And so that’s how I started to learn about franchising, which is what I’ve been doing for a long time now. And so in that role, there were three ownership types at Starwood. Either Starwood owned and operated the hotels. The second ownership type was you own the hotel, but you pay us to manage it for you. We call that managed. Or you own it and you run it yourself. That’s a franchise. 

 

Ashish Tulsian:

But I take the brand.

 

John Peyton:

Yes, you take the brand. So you pay us a royalty fee for Sheraton and you have your own people running it. Or you pay us a royalty fee and we run it for you and there are employees instead of your employees.

 

Ashish Tulsian:

Like Foco and Fofo.

 

John Peyton:

Yes. So all the owners of the… My responsibility was to manage the relationships with all the owners of the hotels. So that was our brand, our owner conferences. And most of the owners I spoke to were the ones who were complaining or unhappy about something. So it was a very commercial relationship, a lot of legal involvement, finance involvement in terms of their dissatisfaction. And sometimes my job was literally just to not get sued that year and try to push it off to the next year, to the next year, to the next year. And so I remember I had one owner who wrote a letter to Bob about how impossible I was and how awful I was and I wouldn’t let them do this and I wouldn’t let them off the hook on that. And I got the letter writing thinking, okay, this is it. My career is over. And Bob called me up to see him and I was nervous. And he took out the letter and he said, this is how I know you’re doing a good job.

And so that’s how I learned the contractual side of the business in terms of I got a really good understanding of the investment that franchisees or owners make in their hotels and how large that investment is. Sometimes they’re tremendous companies like Host Marriott, which had hundreds of hotels. Sometimes it’s a franchisee who has one or two hotels and the whole family’s working in the building. And it’s their entire life. So I got a really good sense of what that looks like and the contractual commercial side of it. And then from there, I picked up sort of all of operations for North America over time. And by the time I left that job, I was leading owner services, Six Sigma, food and beverage, which is how I began to learn the restaurant business, rooms, housekeeping, engineering, sustainability. And did that for about three years and then was moved over to the brand side. 

 

Ashish Tulsian:

And what was your title before you moved to the brand side?

 

John Peyton:

Senior VP of operations. Working for the president. 

 

Ashish Tulsian:

And then you moved to the brand side.

 

John Peyton:

So then it’s about 2005. Barry Sternlich left the firm. We hired the board, hired a new CEO. His name was Steve Pire. He was the COO of Coca-Cola. He was the number two at Coca-Cola. He came and became our CEO. And he is a brand guy. And Coke is all about the brand. And Starbucks is all about the brand. And so he wanted to launch a transformational brand initiative. And his observation was W, the W Hotel, is a really strong brand, but that our other brands didn’t have that kind of DNA. And so he launched a yearlong initiative called Building World Class Brands. He was new to the company. He said to Bob Cotter, who can run this?

And Bob said, John. So I left my role in North America and started to learn brands for the first time. And so I spent a year working with Steve on this global effort to sharpen the position of each of our brands, align third-party partnerships with each of the brands to bring them to life, to redo the vocabulary, the programming, the visual design, the core values, the uniforms, you name it, for all 11 of the brands. At the end of the year, I thought I was going to go back to North America. And Steve said, no, you’re staying in brands and marketing. And so I spent the next couple of years leading the loyalty program, what was then called CRM.

 

Ashish Tulsian:

How do you, from thinking 24-7 about operations, P&L, you know, owner services, franchise, agreements, contracts, et cetera, how do you build the muscle to think about brand and eventually, you know, marketing and loyalty? That’s like, these are two different muscles, and I don’t think they talk to each other as well as they should be, but they don’t.

 

John Peyton:

And there’s always a natural tension between operations and brand in every organization I’ve been in. Hopefully, it’s a healthy tension. And what’s a little bit hilarious, right, is I went from being the operations guy when the Sheraton people would come and say, we want to redo all the gyms because we want them to have this new point of view. And I would say, we can’t possibly afford that, and our owners can’t possibly afford that, and there’s no way. And then a year later, I was the Sheraton person coming to operations saying, we have to do this new gym, and, right, life will end as we know it if we don’t have this new gym in the Sheratons. So, it helped. The helpful thing for me was that I was in operations first, and kind of like that comment I made about I learned to be just a bit more incremental in my transformations from a consulting perspective, I also learned to come to the operating divisions with brand projects that had an ROI, hopefully a quantitative one or at least a qualitative one about guest experience or guest retention. And again, willing to do things somewhat incrementally versus spending all this at one time, or even better yet, make tradeoffs. If we do this, then we can dial down this brand program.

 

Ashish Tulsian:

But I mean, I’ll still stay on that question, because when you’re talking about Star Wars of 2005, like a global brand, you know, fledging business, large stakes, right? And you become, like, you go from operations and from, you know, in operations, you still had like some sort of a, you know, zero to one or one to five time. But, you know, when you go to a branding person, you’re suddenly starting at, let’s say, 25, you know, you’re on a 25 to 100 path. What’s your, what’s been your process whenever such resets have happened? Where, you know, something is definitely, I mean, you have a sense of it, of course, you’re in the business. But, you know, required a different muscle, a different perspective, a different way of thinking.

 

John Peyton:

The reset from, the common thread there for me, and it’s the same thing about moving to Dine, right, and becoming a first time. 

 

Ashish Tulsian:

Yeah, and I’m going to come to that, exactly. I’m basically laying up to that.

 

John Peyton:

And I think it’s the same answer, right? Becoming the first time CEO of a public company or becoming a brand leader, right, or the loyalty program leader is making, trusting the people that you have on the team. If you don’t think you have the right people on the team, then you’ve got to make some changes, but listening and learning, right? Because I learned a lot in before I ever felt comfortable making big decisions, right? It was about learning. And even, I’ll skip ahead, I know you might want to go backwards again, but just since we’re on the topic, you know, going, becoming the CEO of Dine, right, of a public company as a first time CEO.

What I know is operations and marketing and brands and owner relations. That’s not my job, right? We have COOs, we have CMOs, every one of the presidents, every one of the brands has a president. And so I had to be very deliberate when I got that job about not doing the work that I wasn’t there to do, because I had a lot of energy to go talk about the new Applebee’s commercial, right? I had a lot of energy to talk about the photography and the IHOP menu and how the food was merchandised. Not my job. You know, my job was dealing with investors and a board and analysts and refinancing our debt. And of course, having the company all work together in unison and things like that. But those other subjects in finance and legal, totally new to me. I mean, I was always adjacent to them because I was part of a leadership team at Starwood and Realogy, but I had to really listen and learn and rely on my judgment intuition to filter what I was hearing. And really the best advice I got as a new CEO was the most important jobs in the company for me were the CFO and the general counsel, because those are my weakest areas. And it was the same way in brand. It was making sure I learned a lot and I had good faith and trust in the people that we had around us.

 

Ashish Tulsian:

I mean, you already are on that point and I’ll probably continue on that. You know, being a first time CEO in the career and that to choosing a public company of a size, you know, of nine brands. Were you nervous? What parts were really, you know, haunting you before you took up the job? And now we can have some hindsight wisdom as well, right?

 

John Peyton:

Yeah. So after Starwood, I went to a company called Marriott Purchase Starwood. I went to a company called Realogy, which is now called Anywhere, just to give you context. And Realogy, now called Anywhere, is the largest owner and franchisor of residential real estate brands in the country and in the world. So brands like Century 21, Caldwell Banker, Sotheby’s, Better Homes and Gardens, Corcoran and others. And I led one of four divisions, which was the franchise group, because at that point I was, you know, if my expertise was franchising and they hired me not because I knew a whole lot about residential real estate, but because they had 2,400 franchisees in the US and then 140 countries around the world with franchisees. And so the business of franchising is really what I’ve learned over time. And whether it’s a hotel or a restaurant or a commercial or a residential real estate office is sort of almost secondary. And there too, I learned a lot from a tremendous CEO. His name is Ryan Schneider. He was the first time CEO as well. And as a member of his team, I saw the way he approached how do you get four operating divisions to work together and get more than some of its parts.

I saw his meticulous approach to communication and telling the Realogy story, right, to investors and analysts and the media and how much time he invested in doing that. You know, I saw the way he managed a board. And so that was really my training ground, because a lot of what I do at Dine, I learned from him, because I think I saw a lot of best practices for the way he ran the corporate public side of the company. So when I got the call for Dine, I was very receptive. I was there at Realogy for four years, liked it very much, loved the people, was challenging. But as a marketer and a brand guy and someone who’s really had drunk the Starwood Kool-Aid about the guest experience and the relationship with your customers, the average American buys herself a home once every 10 years. So you don’t have a real strong connection with your customer. You can’t run a television commercial that says, buy one house, get one free. And so I missed that B to C really connection with the consumer.

The business is really about recruiting agents, less about the home. And so when I got the call to come back to hospitality, when I got the call for brands like Applebee’s and IHOP, we’ve since added Fuzzy’s. They’re all American brands in every neighborhood across the country. Iconic, everyone knows them. You say to someone, I work for IHOP, and their eyes light up and they tell you about how they went to IHOP every Sunday after church with their grandparents, or everyone has their story. So that was all a no-brainer for me. The one rub was that it was in Los Angeles, and we lived and have spent our whole lives in Connecticut. And I’ve told this story before, but we sat the kids down for what we thought. Our kids were then 20. My son was maybe a junior in college. My daughter was just out of college. Sat them down for this serious conversation. Dad has a great opportunity, but it’s in Los Angeles. And my obnoxious son said, of course you’ve got to take the job. He said, you and mom are slowly decaying in Connecticut. He said, you take the same walk around the neighborhood every day, commenting on the same neighbors who haven’t painted their shutters for 10 years, and I’m going to come home one day and find your corpses in the basement. And he said, you need to be replanted and re-energized. 

 

Ashish Tulsian:

And he was right.

 

John Peyton:

And he was right. And now we’re in Los Angeles, and everything is new and fresh, and the kids are both living and working in New York. So we have that ability to go back and forth. And the 19-year-old wise-ass was right. We needed to be replanted and re-energized. And that was the hardest part, was the LA decision. Because the job to me, and I’ll tell you the truth, is I did not have an ambition for 20 years. I must become the CEO of a public company. That was not my ambition. I’ve always benefited from and believe, and this is the advice I give to people that I work with, is if you do good work, good things come. And so in all my time at PWC, at Starwood, at Realogy, I was always given new work, new assignments, a promotion. At about the time, I was feeling a little bit restless, and I never asked for anything in 25 years. And so I really believe if you do good work, and you work for an organization that is well-managed and people-oriented, you will be recognized, and you will be given the next thing to do. And so I wasn’t pursuing the next thing, but the call came, and it was the right thing at the right time.

 

Ashish Tulsian:

I think what you chose from, and I’m just drawing from like Starwood, which was like a B2C movement to Realogy, where you’re saying that, of course, customer connection was not really that- A little bit more, just a little bit more. Yeah, it was distant, right? And then Dine Brands, this is almost like Starwood on steroids. It’s coming home. Yeah. But I think the restaurant is also about that buy one, get one free, which you can’t do in a room, but restaurants, you can do a lot, lot, lot more.

 

John Peyton:

You can promote hamburgers a whole lot of different ways. Yeah. So this is a very intimate relationship with the customer, both in the restaurant, online, through digital and social channels, on television as well. And we talk a lot about in advertising and marketing recently that TV, particularly linear TV, is not an effective means anymore. This is one of the businesses where when we’re on television, you see the effect on traffic. When we’re not, you see the effect on traffic. And so television still moves the needle. And if you’re an old school marketer, it’s fun. It’s right. It’s fun to shoot commercials. We’re on sports and news, and you’ve got to be on live events. But this is an industry where you really have got to be in touch with your customer. The experience in the restaurant, of course, is crucial. 

The relationships we have with our almost 400 franchisees have got to be really, really collaborative and effective because they’re delivering that brand promise every day.

We’re not because we don’t own the restaurants. And so we could be having the most fabulous marketing in the world if we drive people into the restaurants and it’s not a great experience, then they don’t come back a second time. So the partnership between our franchisees and us is, in my 30 years of franchising, is I’ve never seen such effective coordination, cooperation, mutual brainstorming about what works because of just the nature of the way our company is structured.

 

Ashish Tulsian:

But being a public company CEO and that to 100% franchised business, in today’s day, when restaurants are really pressed for margins like never before, I think restaurant margin profile has moved over the last five, six years. I think industry is still grappling with so much of that reality. I mean, up until literally 24 months back, ghost kitchens was a big thing. And nobody’s talking about it right now, at least in the same tone. What’s been your challenge to unlock that margin profile and especially getting your franchisees on board?

 

John Peyton:

This focus on margins or four-wall margins or franchisee profitability isn’t unique to the post-COVID era. And so one thing that I think is important is that franchisor and franchisee relationships have existed for decades. Franchising was invented in the 60s and 70s.

And for the most part, the interest of the franchisor and franchisee is aligned and there’s no debate about that. We’re all there to build the brand. We’re all there to drive traffic. We’re all there to serve our guests well. The one place where it’s not perfectly aligned is as a franchisor, we’re paid as a percentage of revenue and the franchisee is earning based about the bottom line of the restaurant. And so the concern the franchisees have had since I was back at Starwood in 2000 is you’re not paying enough attention to our costs. You’re just thinking of crazy creative things like put in new gyms regardless of what it’s going to cost and no evidence that it’s going to affect the bottom line. And that’s become exacerbated since COVID concluded because of what we saw about inflation and the cost of goods into the restaurants, which is finally stabilizing, and the escalation of the cost of labor. 

 

Ashish Tulsian:

And I think delivery business as well.

 

John Peyton:

The delivery business as well, but there are ways to offset those fees and things like that. But the margin on the delivery business is not as good as the in-house as well. So all of that has put a lot of pressure on what was already thin margins in the restaurant business.

And that’s one of the things that we work hardest at is working with our franchisees on programming. And it’s got to be significant programming to really drive cost across, to save cost across the system as big as ours, right? Because we’ve got 3,600 restaurants between Applebee’s and Fuzzy’s. So it’s around process improvement. It’s about new technology. It’s about smarter supply chain sourcing and things like that. For example, Applebee’s took out last year in partnership with the franchisees $50 million in cost, mostly backup house cost on an annualized basis. 

 

Ashish Tulsian:

Oh wow

 

John Peyton:

Things like automated beer pouring machines to make the pours more accurate, saving hundreds of thousands of gallons of beer a year. So that’s one of the things we work hardest at.

And honestly, and frankly, one of the things where in a very good relationship with our franchisees, that’s probably one of the areas where you have to work harder to gain trust because of the mismatch between how we’re paid and how they’re paid.

 

Ashish Tulsian:

Yeah. So I think I still wonder that, you know, how, when you’re saying that the margin profile was already thin before, I, my view is that it was not as thin as it got, you know, post COVID.

 

John Peyton:

Oh, it’s definitely more thin now. Yes. Yeah. But the restaurant business was never a 30% margin business, right? It was a slimmer business than that to begin with.

 

Ashish Tulsian:

That’s right. Yeah. I think, I think, yeah, I’m alluding to more the fact that the delivery business, I mean, the rise in delivery business and thinner margins there is also eating up from your dining business, right? Because it’s the same customer who’s, who’s ordering from delivery.

 

John Peyton:

I don’t know, you know, the data says they’re not a hundred, it’s not a hundred percent overlapping Venn diagram. So for example, Applebee’s in restaurant dining in 2023, for the first time exceeded 2019. So, so 2023 is back to where 2019 was. And they have an additional 20% of their revenue, which is off-prem, which they didn’t have before. Before that, it was less than 10%. Same issue for IHOP. They were less than 10% pre pandemic, and now they’re in the low 20s. And forced by the pandemic, they had to accelerate, right, their abilities to promote their off-prem menu, figure out the packaging that, right, delivered our much, our very complex menu is, it’s different than QSR, right, where it’s about burgers and fries. Like we have everything from, you know, ribs to soups to salads.

And how do you do all the different packaging for those things? How do you re-engineer the back of house that was not built for takeout and delivery? And so they had, they had a lot of work to do and grew their takeout business, as I said, from single, single digits to low 20%.

It still holds today. And what we see is that is largely incremental business, that those two brands have become part of the consideration set for to go in some format in a way they weren’t before. And that there are customers who are primarily off-premise customers and don’t come into the restaurant. So it looks to us like that off-premise business is 60 to 70% or more incremental, and not just an in-restaurant Applebee’s customer deciding I’m not going to come in today.

 

Ashish Tulsian:

Has not, so okay, it’s not biting off your existing pie as much. John, how are you as a leader? And how have you changed as a leader, let’s say in last, let’s pick last 10 years? What do you feel changed in you?

 

John Peyton:

Well in the last, in the last year I just, I just heard from one of our general counsel that this is the beginning of year four for me, and she said I’m less patient than I was the last three years. So I guess that’s changed a little bit. Look, my leadership, it’s, I actually find it very difficult to talk about my, my leadership stuff, because it’s hard to talk about yourself, right? 

 

Ashish Tulsian:

Please do 

 

John Peyton:

It feels, it feels, so it’s, it’s a weird thing to talk about. I, I think I, I, I am informal versus formal.

I have, I really value the wisdom of the crowd, and that if you’re in the room you’re there to have an opinion, and so I do make a point, you know, if there, if we’re in a room with 15 people, then I like to hear what everyone has to say. I’m usually the person who speaks last, because I’ve learned that if I speak first, then that becomes the answer, and it’s usually not the right answer, so I like to hear what everyone has to say. I’ve been described as, my risk is that I can be too consensus-oriented or too patient, which I believe comes out of my consulting background, where I spent 10 years, you know, being paid by clients to achieve consensus, and I, that’s the, I guess, easy or default spot for me, so, so my self-conscious thing about where I have to shift my style, and when I know we’re looking for an answer, we’re looking for something definitive, we’ve talked enough, that for me is the, is the, John, you need to do this now, because that’s not the, my natural state, right, my natural state is, is deliberately and methodically, you know, getting there, and so that’s the biggest shift for me, is, is learning to find that balance between listening and deciding, and the team wants a decision, too, at some point, right, they just don’t want to, they don’t want to talk forever. The other thing I learned that’s very different now, and my son said it to me again, same son who said, you know, you need to move to LA, when we were all cooped up at home during COVID, and we were all working from the dining room table, after a couple of weeks of him listening to me, he said, you know, I could do your job, and I said, really, why is that? He said, because all you do all day is ask questions, and again, I said, that’s, you’re, you’re, I thought about, you’re right, I, my job is to ask questions, look, uncover risks, uncover where we’re not aligned, uncover where we’re not clear, we’re not communicating, and help solve problems, and so I’ve, I’ve learned my leadership style over time has really been about shifting from, I think, telling to asking.

 

Ashish Tulsian:

I’ll, I’ll spin that question a little, you know, deeper, what’s, like, when people, especially your direct reportees, or people who are working with you correctly, what, what is the manual that you, you know, give them, how to operate with you, you know, what do, what do they need to take care of when they’re working with you?

 

John Peyton:

So, it’s a, the toughest thing about being in the top job is being comfortable that you’re being told the truth, being comfortable that you’re told about problems when they’re percolating, and not when they’re a 10 out of 10, and, and everyone wants you to see something that’s perfect, right? So, if they’re working on a PowerPoint deck, right, you see version 27 that, that is as good as they could possibly make it, and you almost feel bad for saying, I don’t understand what you’re saying on page 10, right? And so, what I encourage people that I’m working with the first time is, I’m a work in process kind of person. I understand, I’ve written decks also, I understand that version 2 is version 2, it’s not version 27, and so, let’s talk about what questions are you trying to solve? What data are you looking for? What stakeholders do you think you need to address? And so, I’d rather meet for 15, 20, 30 minutes several times along the way than have the grand finale meeting, and I think it’s discouraging to sort of say, well, I don’t agree at the end of someone working with anyone. So, my biggest thing is, let’s just talk regularly and often. That’s a big part of why I felt it was really important to come back to work. So, we were, we were remote, like everybody else was for a long time, and we’re now back in the office three days a week.

 

Ashish Tulsian:

It’s still not full.

 

John Peyton:

It’s not, it’s not full time. The teams choose, the teams, we, teams organize when they’re coming, and they all come, you know, Applebee’s picks when they’re in and what days and all those things, and it, as you’d guess, it mostly looks like Tuesday, Wednesday, Thursday is when we’re all in. I do four days because I just don’t do well at home. I prefer to be in the office, but I like all the conversations that happen in the hall, and a lot happens, you know. In the hall, I like being able to pop up from my desk and walk to someone else’s desk and say, just thought of this, because those, just those, I just thought of these moments. Don’t ever get communicated.

Rarely get communicated when you’re sitting at home, going from Zoom to Zoom to Zoom to Zoom. So, that was a big part of, I think, of my leadership style, was that, yes, I’m 56 years old, and I grew up in offices, but I do think there’s a benefit from human beings who are social animals being together, learning from each other, enjoying each other.

 

Ashish Tulsian:

I think remote work loss, remote work is like such a loss of serendipity, you know, at workplace, like ideas flying here and there, what you said, you know, walking up to somebody’s desk and say, hey, you know, I’ll discuss this. I think that’s such a brutal loss because, you know, your Zoom is extremely productive, but it’s extremely transactional.

 

John Peyton:

It’s, and many people are Zooming and emailing and on CNN.com at the same time, and we get that. That’s what happens, but when you’re in a, when you’re in a conference room and you’re all working together, you’re not on your phone, and you’re not on your email, and you are more productive, and you’re more present, and I think more, you get more brain power in that half hour than you do in a Zoom half hour.

 

Ashish Tulsian:

I, my, my, you know, I think, I think whenever I talk about remote work versus office work to anybody across the world, I think one thing that I’ve been actually asking people is that when you want to go to a restaurant, you want to go to a restaurant. When you want to go to the gym, you want to go to the gym because that’s the zone, but when you want to go to office, you don’t want to go to office, and that just baffles me because I’m somebody who loves the environment in office. I believe that the energy of creation in the office and the same coordinates when a lot of people are there, it’s different.

 

John Peyton:

Yeah, well, and the, the, the purpose of an office changed as a result of COVID and Zoom and working from home. The design of an office changed, and why you come to the office changed, and so one of the things that we did that helped with bringing people back to work is we left our long-time office in one building. that looked like, you know, was configured in the 90s, and you know what those offices look like, and moved to an office that we built from scratch last year. So it’s all about collaboration spaces. It’s all about open spaces. It’s about gathering. We offer food and beverage and social things in a way that we didn’t before. And so it’s about, you come to work to collaborate, and you work from home to do your email and your spreadsheets and plan your week that way. And so we’ve given them a physical plant that invites them to collaborate and come together.

 

Ashish Tulsian:

What’s your process to nurture yourself? How do you become better? How do you learn?

 

John Peyton:

I read a lot. So my phone is the newyorktimes.com, thejournal.com, thefinancialtimes.com, cnn.com, Politico, and Daily Beast are my big six. And then I also have HBS and McKinsey Digital. So I would say those are my eight everyday scrolls. I also, I’m old school. I like to print when I like something. So I have my stack of, you know, McKinsey quarterly articles and things like that that I pull out at different times and put in different folders when I think it’s relevant. So that’s that. Absolutely industry conferences, franchise conferences. And I talk to a lot of people. You know, I’ve got friends who are in banking. I’ve got other friends who are in retail.

I’ve kept relationships with many of the people that I’ve mentioned on this, you know, during this talk. And so it’s staying current is super important. I went to the, you know, here at MurTech, where we’re recording this. I was at the, you know, the AI session this morning, right? And learned something there. So it’s all about that. I have to confess that, you know, if I’m at the gym, I’m a music guy. Like that’s, for me, it’s not podcast time when I’m at the gym. But I like to just, I like to get in the zone that way. So for me, a podcast is more about an airport, you know, or something like that when I’ve got an hour to kill. But I’m a music guy when it comes to the gym.

 

Ashish Tulsian:

Mm-hmm. So what do you like, what do you do to keep yourself, is there a hobby apart from music? What else do you do to keep your soul nurtured?

 

John Peyton:

So my wife and I are crazy dog people. If you ask us to show you pictures of the kids, we show you pictures of the dogs. And then we spend most of our nights now without kids saying to each other, look at what Kylo just did.

Now look at what Kylo just did. Look where his paw is. So we’ve become those crazy dog people. We spend a lot of time walking with the dogs and hiking here in LA. The gym, yoga, the Peloton. So I like the exercise regime. I love being able to do things like that outside. And we can do it with the dogs, we do it with the dogs. And then I’ve always got a book or something that I’m reading as well.

 

Ashish Tulsian:

John, this was a great conversation. I think my big takeaway is definitely the piece where if you’re doing good work at the right organization, your work and your people are gonna take care of you. But I think the kind of leaps that you’ve taken in your career; I think each one I’m still mentally, a thread in my head is still digesting because I think each one looks like a steep learning curve each time you took that, including the one being a first-time CEO and that too of a public company, 3,000 plus restaurants. Thank you for doing this talk. 

John Peyton: 

Thank you, I appreciate it. It was super fun.