In his 25-year career, Jeffrey Stone has been a software savant. He’s been the chief of software companies that were focused on both market research and federal and state public safety. In his third go-around as CEO, this time at the Austin, Texas-based Compeat, Stone is tackling software for the restaurant industry.
Stone joined Compeat three years ago, thanks to his affiliation with Serent Capital, which is the private equity firm that owns the restaurant software provider. Compeat has been in business since 2000, offering inventory, workforce, and accounting management in an integrated platform. Stone says the last few years the company has really taken off.
“We really put the accelerators on growth and the foundation in place in order to essentially scale the business in an arena where the total addressable market is quite large. On top of that, about a year and a half ago, we bought one of our nearest competitors. So we doubled overnight and we’re just trying to capitalize on that,” Stone says.
Stone spoke with Chief Executive about dealing with the intricacies of two different industries, turnover in the restaurant industry, and his focus on diversity in leadership roles. Here are excerpts from this conversation.
Compeat is in two different spaces: the software space and the restaurant space. What are the big challenges you’re facing in those particular industries and how do you guys deal with those challenges?
I think the biggest challenge right now is that the market has continued to evolve and so a food market research agency can help find if there is a market for your product. I think that the restaurant industry holistically has become much more savvy on what technology can do for them and how they can stay competitive in a marketplace where there’s a lot of new restaurants, a lot of new concepts that are constantly opening and while you have to have a good menu and have to have a good chef, at the end of the day, you need to run a lot of these restaurants as A business. Overall, the marketplace has become much more savvy on using software.
What Compeat is trying to do is be that one throat to choke. So if you look at our total portfolio, we start with the accounting and the inventory and we tend to go all the way through to applicant tracking. And so we not only feed people from the outside to be able to work in your restaurant, but we also, once they’re in there and you’re starting to make money, we do all the financials and help keep you in line with food cost and labor cost. So we’re trying to solve the pain point of having one throat to choke, one user interface, one combined strategy and one place to go for our customers to be able to have all of the tools necessary in order for their restaurants to run profitably. Restaurants need to schedule an inspection so that the exhaust system stays clean and functional. Clean kitchen hoods are required by law to increase safety and reduce the risk of potential fires.
You see a lot of restaurants opening and then closing. It does seem like there’s a lot more turnover in that space than there ever has been before. What are the biggest issues that are facing them today, whether it’s competition or something else?
I think some of these are not unique to things that have happened over the last 15 or 20 years, but hiring is one of those big pain points, right? [The average turnover at a restaurant is 73 percent]. So finding good talent and keeping them on in a regular basis is always a challenge. It’s one of the reasons that we developed our applicant tracking process, to be able to do that more efficiently.
I think the second is running a restaurant like a business. A lot of people, I believe, go in with kind of stars in their eyes about the glamour of running a restaurant and all the great things that they can do. But at the end of the day, if you don’t keep your labor costs and your food costs in line and in check, you can have the greatest menu in the world and have great service, but ultimately, you’re going to run out of money in doing the things you need to do. Hence, the reason that we created an inventory in labor. So those are really the two primary areas where I think the majority of restaurants have the commonality in a marketplace, like I said before, that is very competitive, right? You see it all over the place, there’s all different types of restaurants and services and people are trying to find unique ways to bring customers ultimately in the door.
You’re big into diversity in leadership and your leadership team is comprised of 50 percent women. Talk to me about that. What was that a focus of yours?
It’s 100% a focus of mine and has been from the day that I started. The other companies that I ran, I did very similar exercises. I mean, there’s multiple statistics out there from McKinsey [editor’s note: companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians], that just show adding a diverse senior team transcends not only into the organization where you’re able to attract more of a diversity across all different levels, but as a whole you make better decisions. And then also, it creates much more of an inviting culture I think within the organization and so ultimately, all around, it makes complete sense to push hard to have a leadership team that is, you know, a 50/50 split.
So you’ve been CEO in three different places and obviously have had a long career and leadership. How would you say your leadership style has evolved over the course of your career?
That’s a great question. I would say a couple different ways. One, I’m much more confident now than I probably was in my first CEO opportunity, especially being in private equity. I have taken the opportunity to learn what I’m good at and where I need to augment in order to strengthen up the whole entire organization. So the evolution of self-awareness I think is one of the very key aspects.
Two, I realize that I can’t do it all myself, so I spend a tremendous amount of time recruiting the top talent that I can find in order to drive the business forward. And then the third is, along the same lines of hiring the leadership team, nothing happens without having a great culture within the organization and taking care of that…taking care of that culture so that they take care of your customers. So just being much more self-aware than I was probably when I had my first CEO opportunity.