Restaurant Business Turnaround Rooted in “Return” to Family Values, Recognition of “Purpose” as Key to Success

For Doug Pak, achieving a sense of ‘clarity’ – or as some would say, experiencing an epiphany – in his role as the CEO of an emerging restaurant business – occurred at 35,000 feet.

“In the spring of 2011, I was on a flight to Dallas to prepare for the sale of the company. Spaghetti Warehouse was struggling, and I wanted to focus on another company that was showing more promise at the time,” said Pak, who serves as the chief executive officer for Irving, Tex.-based Spaghetti Warehouse Restaurants Inc. “I was looking back through some materials that had been prepared for us in 2009 when we had tried to secure financing for the company.

“On one of the documents was a description of our brand’s mission statement and it read, “…we are about family and friends who want to spend time together.” It was at that moment, it became clear what Spaghetti Warehouse meant to me, and what we could achieve by getting families back to the dinner table and sharing one another’s company,” explained Pak, adding that the sale did not go through – a fact that, at first, left him disappointed, but later, feeling relieved because he would have regretted it.

Ironically, it was on the same flight that the 39-year-old California entrepreneur began writing out ideas for the company’s 40th anniversary celebration, which began June 5th. In addition to the debut of a new menu, Pak said the anniversary is being celebrated with an elaborate, six-month campaign featuring a nationwide Trolley Tour, an online photo album and a community-based program with the one of the world’s most trusted organizations, the American Cancer Society (ACS).

Pak said the company even created a hip, pop-styled song and a video as a way “…to vividly illustrate how our guests feel about Spaghetti Warehouse and what it’s meant to them as a place to celebrate life…and the things that make us happy”. Most of all, Pak is especially pleased that the renewed effort is making a difference with the company’s managers and other employees, some of whom have been with Spaghetti Warehouse for more than 20 years.

“I think they’ve been surprised by the fact that a small company with little resources is committed to doing so much and that we’re so extremely excited. I believe it helps them feel even better about the impact they’re having and the difference it makes when they greet our guests and take care of them,” said Pak.

Restaurant’s Recent Emergence Began with “Recognition of Purpose”

Pak’s career as an executive is defined, in part, around the notion that in order to understand just how far someone has come toward achieving a goal, you first have to appreciate “where they’ve been”.  In his case, Pak achieved success over several years with a number of well-known brands including Papa John’s Pizza, Carl Jr.’s, and Denny’s, among others.  He also co-founded a technology company with an angel investor and secured funding from the National Research Council (NRC), a government technology funding arm of Canada.

From there, he founded a restaurant investment company in 2006 and quickly transformed the start-up into a growing, $90 million concern within just two years.

Blending his financial and restaurant operations experiences, Pak took the helm in 2007 as the owner and CEO of Spaghetti Warehouse. And. just as it appeared as though the company – which had been experiencing a decline in guest traffic and revenues for a number of years – would begin to show some progress, a downturn in the U.S. economy in 2008 wiped away its plans for a turnaround and renewed expansion.

Undeterred, Pak – over a period of three years – began to learn from some of the experiences early in his career and he became the father of two children. He also took to learning in other ways and read a book by the late management guru, Peter Drucker. He learned that the “purpose of business” is to create a customer. From those teachings, he gained a greater understanding of why businesses exist and what would happen if the company went away.

That same year, in 2010, he read a second book about the story of Dr. Muhammad Yunus, who was awarded the Nobel Peace Prize for creating a first-of-its-kind lending practice that spawned a social business phenomenon. According to Pak, Yunus’ goal to end poverty inspired him to think about the purpose behind his company.

More recently, Pak said he has drawn inspiration and advice from John Shields, the former chairman and CEO of Trader Joe’s. As his personal advisor and a trusted mentor, Pak said Shields has challenged him to think about the legacy he wants to create for his business.

“Understanding these teachings from the books that I had read – together with the birth of my children, and the influence I’ve been fortunate to receive from a legendary business leader – changed my view of the world,” said Pak, adding that it was during this time he embraced the importance of returning to family values as an approach for building Spaghetti Warehouse into a national chain.

Following a disciplined, three-year restructuring plan, Pak’s tireless perseverance enabled Spaghetti Warehouse to achieve a profit for the first time in a decade and produce 12 consecutive months of positive comparable sales.  Soon after, the company began to put into place plans for long term growth, beginning in 2013.

As the momentum continues for the company, Pak enthusiastically explains that he wants to move in a different direction when it comes to the footprint of the restaurant.

“If you look around at the restaurant industry, everybody wants to be a small, fast casual type of place and this completely makes sense.  I wanted to go the opposite direction for this brand. I don’t want Spaghetti Warehouse Restaurants to be known as a place where someone comes just to grab food.

He continued, “I want a place for families and friends. That takes a big place, especially if you’re going to host events, brings large families or companies together and have banquets.

“And, Spaghetti Warehouse is known for being able to seat large groups and serve food quickly, whether you’re there to enjoy a nice lunch or a weekend dinner. The company is also working on a new, creative and innovative prototype around the idea of creating a unique experience that caters specifically to families and large groups.

Pak goes onto to say that Spaghetti Warehouse – with its sheer size, historic, brick structures and downtown locations – is uniquely positioned to help drive economic growth as larger metropolitan cities reinvest in areas such Bricktown in Oklahoma City, Okla.

“This is not a new vision…it’s reliving a vision Spaghetti Warehouse had 40 years ago,” offers Pak, whose vision is to start with the 40th anniversary celebration as a foundation for making a commitment to its guests for the next 40 years.  If we do this right, success and profit will follow. My favorite time, personally, is to visit a restaurant with my wife and kids. And, from that, I want a business that’s not just profit-focused, but rather is purpose-driven…that’s my dream.”

David Ayers
Spaghetti Warehouse Media Team
(317) 554-6357 or (317) 502-8536