Going Global – Beyond Franchising

Stan Novack -

Dr. Relly Nadler:
Today, our show features Stan Novack of HMS Hosts.

Stan is the Vice President in concept development for Bethesda Maryland, HMS Host Corporation. HMS Host is a world leader in creating diner and shopping concessions for travel venues which operates in more than a hundred airports around the globe including twenty of the busiest airports in North America and more than a hundred motorway travel plazas throughout the US and Canada.

Stan, do you want to say hi?

Stan Novack: Hi, how are you?

Dr. Relly Nadler: We are going to bring you back and ask you a lot more extensive questions once we get going.

Let me give a little bit more extensive bio for Stan Novack.

I mentioned he was Vice President for concept development for HMS corporation.

HMS Host is a world leader in creating diner and shopping concessions for travel venues. I’m sure all of us on the phone have been through some of their venues at airports. They operate at more than a hundred airports around the globe including twenty of the busiest and more than one hundred motorway travel plazas throughout the US. The company also operates the destination retail stores at the Empire State building and the Johnson Space Center.

HMS Host was the first to introduce brands into airports and travel plaza environments in the early 1980s.

Today, the company has more than three hundred international and regional and proprietary brands in its concept portfolio including an exclusive relationship with brands consumers prefer such as Starbucks.

Mr. Novack’s leadership has accelerated the evolution of airports from mere stop overs to destinations, reflecting the shift from fast food only to quick, casual, full service, sit down restaurant offerings. He over sees the casual dining theme restaurants and entertainment concepts and categories for HMS Hosts.

He has been recognized as one of marketing 100 by Advertising Age. Mr. Novack was responsible for the creation-development-implementation of the Cheers branded theme restaurant concept based on the television series. He leads HMS Host creative teams that work with popular names to develop proprietary brand concepts such as The Fox Sports Sky Box, Jose Cuervo Tequila, Casa Bacardi, and Dewar’s Clubhouse, among others.

He’s won numerous different awards that I won’t go into, just so we can get him back on the line.

Welcome Stan to the show.

Stan Novack: Thank you very much, I’m happy to be here.

Dr. Relly Nadler: We have also Cathy on the line and, Cathy, maybe you want to start us off with some of the questions?

Dr. Cathy Greenberg: I would love to.

I am very happy to know Stan. We met at the multi-unit franchising development conference and I was awed by Stan’s perspective on the franchising business and branding.

Stan, you’ve won so many awards, you’ve won the Chairman’s Award, you’ve won the President’s Award from American Beverage Institute, Best Merchandising Programs from Adam’s Publishing, Most Innovative Concessions from the Airport’s Council of North America.

Tell me how you have become the leader you are, and who have influenced you as a leader.

Stan Novack: My arrival at this position was sort of a circuitous route. I actually started in human resources at a hospital in New York City. After doing a number of years there I came on board, at this time the company was called Host International when they moved into the New York Market and got the Food and Beverage Concessions contract from the Port Authority for JFK, LaGuardia, Newark Airports.

A lot of people who travel don’t realize that when they do travel, they are doing business with us, because our name doesn’t appear, usually, on the concessions that we operate. But, if you patronize a Starbucks or a Chili’s, or Burger King, or Pizza Hut, or Sbarro’s, or any of those brands, you’ll look at the bottom of the receipt and you’ll see HMS Host.

You’ll know you’ve been transacting business with us.

In terms of who influenced me, I guess it would start back with my parents and the values and work ethic that they have imbued me with.

And then I would look at the leaders within our own organization. I’ve been with the company a number of years. I’m coming up on thirty-five years with the organization and I’ve met a lot of people within the organization, and without the organization and have all influenced me.

The other influences on my background, probably my education. I have an undergraduate degree in Psychology and I fully intended to pursue a professional field in the field of psychology. However, while I was going to college, I also worked quite a bit and I really enjoyed the challenges involved in the work environment.

So, I was looking for ways to combine the two parts, psychology and work. I found a graduate program at Colombia University called personnel psychology.

I went into that program and it really tied my two interests together, it allowed me to pursue both my major interests and it gave me, I think, a unique perspective on business and business relationships. The psychological background as well as business itself and dealing with people.

Being with the company, I moved into operations for a while. Ran a few airports for a while. Then moved on into food and beverage management and then in the early 90s – late 80s, early 90s – our business started changing into branding.

I was interested in moving in that direction and pursuing that. Started working on bringing brands that were very prevalent on the street into the airport environment. Really, it was the beginning of a movement and a lot of people refer to airports and motorways as almost like shopping malls with the various options that are available to the consumers.

One of the things that I love to do now,— which I get a lot of satisfaction out of – is developing our own brands. In other words, taking a brand that the consumer knows and turning it into a living, breathing, experiential entity.

For example, one that we have had a lot of success with is something called The Jose Cuervo Tequileria, where we started working with a tequila brand, worked with that brand, identified the brand attributes, the brand experiences, the brand wheel, and then taking those attributes and converting it into a restaurant concept which had never been done before.

It is very interesting when you start working on this project in a conference room with a bunch of stickies on flip charts and today we have about sixteen of these up and running and probably sales in excess of fifty-million dollars from just that one particular brand.

Dr. Relly Nadler: That’s fascinating.

Let me ask you a couple more questions, Stan, just about this.

So, let’s say, maybe that one for example, Jose Cuervo, how did that idea come up, was it people sitting around the table saying we need to get a different brand and was it kind of a brain storming process or did someone come in with that. Did you come in with that?

How did that happen?

Stan Novack: What we try to do is we do a lot of research with our consumers, we do a lot of focus groups and we do a number of intercept entities. What we try to do is figure out what our consumer is looking for. What they would like to see within our venue environment.

Then we also tie in research, one of the things that I’m charged with is looking somewhat into the future and see what the trends are and how the trends impact our business, and what we can do to keep on top of those trends.

For example, I’m going to go back to the Jose Cuervo, or the tequileria example.

When we started working on that, Latin foods were becoming extremely popular.

In working, we looked at the leading brand in that category, in terms of trying to tie in an adult beverage concept along with the food concept.

Jose Cuervo was the leading tequila brand in that category, and still is.

Approached them about developing a restaurant concept around that particular brand and nobody had ever done that before. It was the first for them.

Approaching brands like that, there is a lot of trepidation on the brand part because you are talking about multi-million-dollar brands that spend, literally, millions of dollars advertising their brand and to develop a huge brand equity and they are going to entrust us with their brand equity.

Dr. Relly Nadler: Can you talk a little bit about what is a brand, why is it so important and then the hurtle of getting a company to trust you to expand their brand.

Stan Novack: I think, one of the things, if you think back to the mid-80s when you traveled and went through an airport or train station or traveled along a turnpike, and there was no branding.

Basically, the consumer would stop, there would be a snack bar, there may be a restaurant or something like that, but it didn’t have an identity to it. It was just, everything was the same – generic food and beverage available.

One of the things that we discovered, again going back to the late 80s, early 90s, was branding, consumer branding was becoming a much more important part of the overall fabric of purchasing behavior in the United States.

I guess, in a capsulated format, a brand is a promise. It brings a comfort level to the consumer. If you walk into, and we will take our primary venue which is airports, and you walk in and you see airport food and beverage, and that’s the sign out there. You don’t know what it is.

But if you were to walk in and see something like a Pizza Hut, or Chili’s, or Friday’s, or Gallagher’s, or Sbarro’s, or Starbucks, that brand gives you a promise. You have an expectation of what you are going to receive when you walk inside that brand.

What I try to do in the brands we develop internally and try to bring brands to life in our venues. Is the fact that I want to use that consumer brand, whether its Jose Cuervo or Bacardi or any of the other brands that we have that we develop internally. Or going back to Cheers or Fox Sports, that brand has set up an expectation in the consumers mind and we want to capitalize on the next expectation and deliver on what the consumer expects.

When you walk into a restaurant that says tequileria on the outside, you have a certain expectation of what’s going to happen inside that, and we try to fill out that expectation.

Our obligation is to protect the brand, the brand integrity.

Dealing with a brand and trying to convince them to deal with us is a difficult hurtle. We have to assure them that we are going to nothing to harm their brand and only enhance the brand experience.

Because, again, our name is not on the outside of the facility, it’s the brand name on the outside of the facility and if we don’t deliver on the promise and the expectation. The brand is the one that’s going to hear about it as far as, you know – I was in your place in this particular location and I had a really bad experience.

So, we are continually on top of that. We put together a number safe guards, a number of inspections, a number of training programs. Working with our folks and so on and so forth, to ensure that whatever we do, we deliver on the brand promise.

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