Billion-Dollar Diner: Waffle House
How to build a divey restaurant empire
I'm fascinated by businesses that thrive despite awful marketing or old-fashioned systems. It's a sign that they deliver on something else exceptionally well.
Waffle House, or WaHo, is one of these businesses. If you haven't spent time in the southern U.S., let me introduce. Waffle House is a restaurant chain of 2,100 always-open diners.
Each location is crowned with a black-on-yellow “WAFFLE HOUSE” sign that looks like it belongs above a seedy motel (Anthony Bourdain once described it as a “yellow beacon of hope” for the “seriously hammered”). And yeah no, they definitely don't accept Apple Pay yet.
WaHo is heavily concentrated in the American South; 439 of its locations are in Georgia. Which means that while restaurant franchises such as Olive Garden and Red Lobster loom larger in the American consciousness, WaHo has more locations than both those chains combined. They prepare 2% of America's eggs each morning, but you might not know they exist if you haven't been south of Tennessee.
Here's the kicker: WaHo does over $1 Billion in annual revenue. With zero marketing spend.
How?
They understand their customer, they don't change their core product, and they are fanatical about delivering on their “always open” expectation.
They Understand Their Customer
At their founding in 1955 the two partners added “Waffle” to the name, hoping to push their highest-margin food item, but also to imply that they were a dine-in place (waffles don't do takeout very well). The in-restaurant experience is a key element of WaHo.
Still today every WaHo building is intentionally compact, with customers seated in an L-shape around the grill. Waffle House's Pat Warner says, “We keep the small footprint to keep the grill out front for the experience. That’s a big part of the experience for customers, hearing their orders called out and seeing it cooked.”
WaHo strives to be the “home away from home” for its customers, so being familiar and friendly is a priority.
They Don't Change Their Core Product
WaHo launched with 16 items on the menu, and those items are all still there. Since opening in 1955 they've added to the menu, but they've never deviated from their core products: eggs, hash browns, sausage, steak, waffles, gravy, biscuits, grits.
Over time they've developed their own Waffle House language, with words such as “smothered” (sauteed onions), “covered” (melted cheese), and “chunked” (hickory smoked ham). This allows customers to communicate their favorite order quickly, but also fosters a sense of familiarity and loyalty.
They Are Always Open
WaHo takes being always open so seriously that a rumor has spread that the restaurant doors have no locks (untrue). This means that when a hurricane shuts down a city, WaHo is usually the last to close, and the first to open. They work hard to make this happen: ahead of a major storm, corporate headquarters will send large amounts of supplies while the supply chain is still intact. Then they will switch to a limited menu to optimize freezer space. Often WaHo has stayed open, even if there's no power for the lights—they'll either use a generator, or light coming through the windows.
By being the last to close and the first to re-open (or the only ones to never close), WaHo usually enjoys a spike in business around major weather events. But they deny that their strategy is economically motivated. I suspect it is motivated by their effort to be seen as dependable, which is a description they've rightfully earned.
Always There For You
Waffle House is proof that the best customers are repeat customers, and that companies can win by obsessing over the customer experience instead of focusing on marketing or aesthetics. They've demonstrated that a billion-dollar company can be built on outdated infrastructure as long as the core value is delivered on. And that's where they've placed their focus: on being welcoming, and staying open 24/7. As Anthony Bourdain said, Waffle House is “always, always there for you.”