In this episode of the Instant Payments podcast, host Tal Clark, CEO of Instant Financial, interviews Kep Sweeney, the CEO of PDQ Restaurants. Kep shares his extensive background in the restaurant industry, from working in kitchens as an executive chef to transitioning to an analyst role on Wall Street and ultimately leading PDQ restaurants. The discussion covers PDQ’s business model, its focus on quality, workforce management, and current challenges in the restaurant industry. Kep also provides insights into the quick-service restaurant (QSR) space and how businesses can navigate market pressures. Tune in for part two, where Tal and Kep will discuss tipping etiquette, restaurant trends, and AI applications in the industry. To learn more, visit instant.co/podcast.

Introducing The Instant Payments Podcast 

Tal Clark: Hello everyone. Welcome to the Instant Payments Podcast. I’m your host, Tal Clark. I’m the CEO of Instant Financial, a fintech company that modernizes payments and payroll for hourly workers and their employers. I’ve worked in the payments industry for 30 years at companies like Fiserv and Money Network, and I’m glad you’re tuning in today.

If you like what you hear, please do us a favor and subscribe, leave a review or suggest a future guest for us to talk to. This podcast features industry leaders to discuss some of their challenges and the technologies they’ve used to improve their workplace and the lives of the workforce. Today’s guest has truly seen the restaurant business from every angle, from being in the kitchen to being in the boardroom and even on Wall Street.

Kep Sweeney is the CEO of PDQ restaurants, which stands for People Dedicated to Quality. With more than 30 years of experience in the restaurant industry, Kep has worn just about every hat you can imagine—from Wall Street analyst covering the restaurant sector to executive chef in some of the nation’s finest restaurants, to executive roles leading financial turnarounds and restructuring some of the nation’s largest fast casual brands. He’s also the author of The New Restaurant Entrepreneur and has been featured as an expert commentator on major outlets.

Kep, welcome to the show. Where are you joining us from today? And how are you doing?

Kep Sweeney 1:19
I’m doing great. I’m in Tampa. I live in Tampa at the headquarters of PDQ.

Tal Clark 1:27
Super great spot to be. I’m in Pensacola. We’re getting a little bit of cool weather up here for a change. Cool being 75, so it’s getting better. Moving forward a little bit—look, I gave a little bit of your background in the intro, but we’d love to hear in your own words your journey, if you don’t mind—from when you got in the restaurant industry to where you are today. And then we can pick it up from there.

Kep Sweeney 1:53
I started off in kitchens, and then my big break after college was Jeremiah Tower, who had Stars. He was a legend at that time and really created the foundation for new American cuisine. He was on a book tour, and I followed him to a number of places, and would talk to him after. I said, I’d like to work there. He didn’t respond. He didn’t respond. He didn’t respond.

I sent a letter saying, I’m moving to San Francisco. I have no job, and I have no money, but my intention is to work at Stars. And I did it. After three interviews, I got the right to peel garlic there—peel garlic and peel tomatoes. It was great to be in that environment, and then I was able to move through kitchens. I did well. I got an award from Julia Child, went to Cordon Bleu in London, and I was executive chef of 21 Federal.

It was interesting, though, because during that time I was also building with a friend in San Francisco software for food cost management, and I always had a bias toward the business side of the restaurant industry.

I think I was better suited for that side than as a chef. I liked being a chef as a manager, but some of the creativity I see out there from chefs amazes me. So I’m glad where I ended up.

Tal Clark 3:49
Well, that’s great. So when did you—what year did you make the transition from executive chef to more on the business side?

Kep Sweeney 3:57
Went to MBA school at University of North Carolina, and then I was hired as a restaurant analyst at Solomon Brothers on Wall Street.

That was the transition. That got me into the analytics side, modeling side of the industry.

Tal Clark 4:22
Well, that’s really interesting. And for those that don’t know—and I don’t know as much detail in that area—as a Wall Street analyst in the restaurant space, what was your focus as far as the businesses you covered, and then I guess some of the data you focused on? What was always interesting to you and important?

Kep Sweeney

So yeah, as an analyst, we had a universe of 30 stocks, and we covered seven. Those were companies like McDonald’s and Burger King at that time, Cheesecake Factory, PF Chang’s and Outback, which I covered. I got to know Chris Sullivan from Outback in the 90s when they were going public at Solomon Brothers. And today I work for Bob Basham, the chairman of PDQ, so I thought a lot about the strategies that made him successful at Outback. That kinship has been helpful in understanding what worked early on.

Tal Clark 6:02
Well, that’s great. Tell us what a few of those things were. What stood out to you about what they did at the time that made them so successful?

Kep Sweeney 6:13
They had a set of strategies. One was that they just did dinner. They focused on dinner only because they felt they could only operate dinner successfully. They couldn’t have twice the staff to do both a great lunch and a great dinner.

They also had the back of the house at over 50% of the business. That was another strategy. Bob also had a bias toward people. Every strategy tied to employees.

At PDQ, I think we’ve been able to do the same. We have about 85–95% turnover versus the industry’s 170%, and we never lose the top people in our units. We’ve been able to provide a comp plan and positions that allow people to flourish.

Tal Clark 7:38
Okay, well, that’s great. So you worked as an analyst for a bit. When did you make the transition from being an analyst into what you’re doing today? And talk a little bit about how you got involved with PDQ.

Kep Sweeney 7:57
I was at CR3 working in restructuring, which is most of my career. If a company gets in trouble, they may bring someone like me in to take a 30,000-foot view and then do a deep dive where they can surgically assist. That’s what I was brought in to do here originally.

The team here could have easily worked with us at CR3 or at Solomon Brothers. A lot of times I go into companies and people say, “We have a great team.” This time it was really true. I got to work with very smart people with great backgrounds.

What’s most interesting is the range of experience. A CEO I once had breakfast with said he was tired of people saying they had 20 years of experience when it was the same year repeated 20 times. My range included everything from restructuring a steel manufacturing company in Louisiana to a cosmetics company in Los Angeles. That variety helps, because lessons from outside restaurants often apply directly.

Running Alert Nest, which became part of Sinclair Broadcast Group, was also very helpful in understanding how people look at our site and how to track engagement.

Tal Clark 10:03
Got it. Let’s talk a little more about PDQ. For people not familiar with the brand, tell us what it’s all about.

Kep Sweeney 10:22
PDQ is unique in the amount of work that goes into the food. It’s not equivalent to QSR. For example, we marinate tenders in buttermilk, double bread them, and keep short hold times with tight specs.

This is similar to what made Outback successful: focus on one item at a time quality. That’s what we do, and it results in a very good food product.

Tal Clark 11:09
That’s great. And how many locations is PDQ today?

Kep Sweeney 11:15
Not including airports and arenas.

Tal Clark 11:22
And where is the business today? How would you describe it and the goals moving forward?

Kep Sweeney 11:37
We’re working on that right now, so a lot is up in the air. It’s very exciting though. We have an active board, lots of interactions daily, and plenty of opportunities ahead.

Tal Clark 12:20
I know PDQ stands for People Dedicated to Quality. How is that represented in the environment? How do you ensure employees are dedicated to quality and in a good position to deliver that?

Kep Sweeney 12:45
It’s a hybrid of the Outback model. We have 50 partners, each running units. They’re compensated and incentivized to run them better than we could.

They put pressure on us for new software, new items, and solutions, and we work closely with them. These are company-owned units, not franchises, but each partner runs their unit like a president.

Tal Clark 13:46
Is that similar to Chick-fil-A’s model?

Kep Sweeney 13:54
I think it’s similar. PF Chang’s also had a model like this. It’s effective because incentives are aligned. Partners are at the customer level, getting feedback from employees and customers, and they have skin in the game.

Tal Clark 14:57
Makes sense. Let’s talk about the headwinds in the restaurant industry today, specifically QSR. With your analyst background, where do you think we are and what should owners and managers be planning for?

Kep Sweeney 15:33
The key today is pricing and value. There was a big run-up on cost, so prices followed.

Kep Sweeney 18:35
QSR solves two problems: poverty of income or poverty of time. A 16–24 year old has no time and no money, so they use QSR much more frequently than someone older.

Tal Clark 19:18
Sounds like you’re talking about price compression.

Kep Sweeney 19:41
Yes. Pricing ran up so much that people are becoming more value conscious. QSR might once again be seen as the low-cost alternative—but not low quality. Chick-fil-A, Raising Cane’s, In-N-Out Burger—all offer quality food. But pricing has risen enough that customers now weigh options like a Cava bowl versus Chick-fil-A or PDQ.

Tal Clark 20:43
That’s very interesting. Kep, this is a great place to wrap up. For listeners, you can learn more about PDQ at eatpdq.com.

Please tune back in for part two of our podcast, where we’ll dive into tipping etiquette, distressed restaurant trends, and even Kep’s thoughts on AI in the restaurant space. Thanks for joining us on the Instant Payments Podcast.

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