Meredith Lane: Why did you found Thomas & King?

Michael Scanlon: The main reason I started Thomas & King (T&K) is simply because I wanted a great place to work.  

ML: Carino’s Italian Grill or Applebee’s? Which do you like better?

MS: They both serve a different niche very well.

ML: Good answer. After almost 20 years, you are closing down your original flagship Applebee’s and opening a new and improved store right down the street.  

MS:  Thomas & King’s original Applebee’s on Richmond Road, at French Quarter Square, will close about the same time the new Applebee’s down the road opens, which is Sept. 24. The original location was the leading Applebee’s restaurant nationwide for several years, but after awhile there’s only so much a restaurant can grow in one location. We have remodeled it four times, and we just couldn’t remodel it anymore. Parking was also a nightmare.

ML: Describe the design of T&K’s new Applebee’s in Lexington.

MS: The new, $1 million restaurant, at 5,400 square feet and with a seating capacity of more than 230 people, is larger than the old location. The menu will be exactly the same. It will still be a casual, neighborhood bar and grill. However, the atmosphere is updated, more current and very different from what people have seen in Applebee’s before. While it is still a lively spot, the restaurant has added 14 flat-screen, high-definition televisions. There are also sound boxes at each table, so customers can tune into whatever television show they want.

ML: At the newest location of Applebee’s, you are unveiling what you are branding as “The Perfect Beer.” What makes a beer “perfect”?

MS: Beer has always been very important to T&K’s success, but now we are putting the spotlight on the beverage more than ever. “The Perfect Beer” is served at the perfect temperature, in a perfect glass, the perfect pour – the perfect serve. Also, in addition to recommending certain beers to drink with certain dishes, Applebee’s will begin serving beer in aluminum bottles chilled to 22 degrees Fahrenheit, as well as draft beer in a new glass custom-made for Applebee’s.

ML: How does T&K recruit quality employees?

MS: It is an art form. We have recruiters in every market. We invite good employees we come in contact with to work with us. We use the Internet. We constantly network. The best way to get quality people to come work for you is by word of mouth. You have to have the reputation as a good place to work. Reputation is everything.

ML: How do you maintain the continuity and flavor at nearly 100 restaurants?

MS: You have to start out with a great recipe. Next, you have to execute that recipe well and prepare the dish the way it was intended to be. You achieve this through extensive employee training and maintaining high accountability among your workers. Most importantly, you must use lots of fresh, quality ingredients. 

ML: What is the key to providing quality service to your guests?

MS: You have to focus on the guests’ wants and needs, have the tools to give them what they want, providing continued staff training, keeping your employees accountable by offering rewards and consequences for their actions and basically just doing whatever it takes to get the job done well.

ML: With the rising cost of food, how do you keep your menu prices down?

MS: Actually, there has not been a single commodity that has “acted up” more than others. Buying produce during a drought – and cattle prices – both are moving targets. With our vendors, we’ve agreed to certain surcharges based on the current price of gas. It’s a formula, so T&K is protected and the vendors are protected. That way, we can ensure that they continue to provide great service and products to our restaurants, while still keeping it affordable.

ML: How do you regulate stealing by employees, suppliers and customers?

MS: With employees, our managers do a complete profit-loss statement every Monday. They know the inventory of key ingredients (steaks, hamburgers, liquor, beer, etc.) and can easily discover when things are missing. Unfortunately, employees are always finding ways to scam businesses, but our managers tightly control all the procedures and watch the restaurants’ numbers closely.

It’s a “penny business” – a penny here and there becomes our profits. With our vendors, it is a quality-control issue, not an integrity issue.

With suppliers, the hardest thing to manage is quality control (fresh foods, etc.), not theft. With our customers, luckily, stealing the salt and pepper shakers off the table has become a thing of the past. Sometimes, people will still steal the condiments off the table though. If you don’t see them do it, there’s nothing we can really do about it.

ML: In July, IHOP Corp. acquired Applebee’s for $2.1 billion? Why did they buy it?

MS: They bought it just because they could.

ML: How will the IHOP acquisition affect operations at Applebees?

MS: Julia Stewart is the new president, CEO, COO and director of IHOP Corp. At one time, she was the president of Applebees’ domestic division, so she already knows what’s going on within the company. While the franchises probably will notice a difference post-acquisition, the program is being changed at the top, so customers probably won’t notice.

There are about 2,000 Applebee’s across the nation, with only about 50 owners. Those people have a passion for the business and are very focused on what’s going to happen now. Applebee’s is a highly leveraged acquisition, so we’ll stay focused on the changes that are made.

MS:  My role in implementing the smoking ban in Lexington is much more significant than the company I founded, and in the end, will have a much more lasting effect.

MS: Employees need to work in smoke-free environments. No employee – including someone working in a bingo hall – should work in an environment where there is second-hand smoke. It’s just not healthy for anyone.

MS: When I came into office, the council had voted it down once already. We reconstructed the ordinance and built community support for it. Lexington going and staying smoke-free has been a huge leader in the nation. It was one of the first cities in Southern states to do it, it was the first city in Kentucky to do it and it was the first tobacco-growing area to go smoke-free. Thomas & King also helped Ohio become a smoke-free state in the last election.

ML: What advice do you have for restaurateurs trying to create a successful business?

MS:  Always, always, ALWAYS make the object of your work the guest. Restaurant owners/managers often focus on the quality of the food, the ambience and the restaurant’s location, but operators often forget about the main object of opening a store in the first place – taking care of their guests. Also, if you’re going to give your customers a deal, give them the deal of the century.

Always make sure your guest is the winner. For example, at Applebee’s, happy hour and lunch specials are the best values for our guests. Since we launched the $5.99 soup/salad lunch a year ago, Applebee’s has had a 20 percent increase in lunch sales and they are now as strong as our dinner profits.

ML: What is your key to success?