Waffle House Inc. Business Information, Profile, and History

Company Perspectives:

Waffle House is truly a people-driven business. The Company's corporate philosophy is to serve folks on both sides of the counter--Customers and Associates.

History of Waffle House Inc.

Waffle House Inc. operates a chain of about 1,400 Waffle House Restaurants located in 25 states. The restaurants, which are either company-owned or franchised, pride themselves on serving good food fast, at a reasonable price, in a diner atmosphere 24 hours a day, 365 days a year. The menu includes everything from waffles and eggs to steaks and salads. Family-owned, Waffle House Inc. is known for being an extremely private company. In recent years, however, the company has found itself in the public spotlight, due to lawsuits filed against the company relating to civil rights violations and sexual harassment.

Company Origins

Waffle House, according to information released in 1995 for the company's 40th anniversary, began as the dream of two neighbors, Joe Rogers, Sr., and Tom Forkner, who envisioned a company dedicated to both its customers and employees. The partners wanted to create a place where friends and neighbors could get together to enjoy good food served with a friendly smile. On Labor Day in 1955 they opened the first Waffle House restaurant in Avondale Estates, Georgia, a suburb of Atlanta. The first Waffle House restaurant was a smash, and the owners soon opened other Waffle House eateries throughout Georgia.

The "Good Food Fast" Concept Paying Off: 1950s-70s

Waffle House made a name for itself during the late 1950s and 1960s by living up to its promise of "Good Food Fast," which became one of the company's mottos. Waffle House located many of its restaurants along interstates, and truckers and travelers came to know that the Waffle House sign meant good food and friendly service. The company eventually spread outside of Georgia's borders and into neighboring states including Alabama, Louisiana, North Carolina, South Carolina, and Florida. As the U.S. interstate system expanded throughout the Southeast during the 1950s and 1960s, new Waffle House outlets were added along major arteries like Interstate 75, which trails from the southern tip of Florida through Tennessee to northern Michigan, and Interstate 85, which traverses Virginia and extends southwest into Alabama. Waffle House eventually built up a network of several hundred restaurants throughout the Southeast.

Waffle House also began franchising its name and concept to individual operators, which allowed the company to expand without assuming heavy debt and without having to sell shares to the public. Keeping Waffle House private was very important to its owners, because taking the company public would have required them to release financial and operating information. "There are three types of companies," explained Bryan Elliott, analyst at Robinson-Humphrey, in the September 19, 1988 Atlanta Business Chronicle. "There are public companies that trade stock and have to share information. Then there are private companies that don't trade stock but are somewhat open about their operations and numbers. And then there are the companies that won't even acknowledge that they exist. And that is Waffle House. They are a very, very private and tight-lipped company." For that reason, details about the growth and expansion of Waffle House and about the lives of its founders and executives are scant.

During the 1970s and into the 1980s, the roadside restaurant market became dominated primarily by two styles of eateries: fast-food chains like McDonald's and Burger King, and large sit-down restaurants like Shoney's and Cracker Barrel. The traditional diner-style eatery, in contrast, declined in popularity, with the chief exception of Waffle House. Indeed, Waffle House restaurants in the new millennium looked much the same as they did 50 years before. An exposed grill was located behind a long counter, at which customers could sit on stools. Other guests were seated in the booths that lined the restaurant. Waffle House continued to advertise solely through word-of-mouth, relying on its loyal clientele instead of promotion to reach new customers.

Even the Waffle House menu of southern fare had changed little since the 1950s. The restaurants still emphasized their famous T-bone steak, waffle, and egg meals, and claimed to have "America's Best" coffee. Meals that became a tradition at Waffle House included the "King Size T-bone & Eggs" dinner, which included a ten-ounce steak, hashbrowns, and two eggs or a salad--for just $8.99 in 1995. Other signature menu items included pecan waffles, Bert's chili, raisin toast, and cheese 'n eggs. Waffle House took particular pride in its hashbrowns, which it served six different ways: "scattered" (on the grill); "smothered" with onions; "covered" with cheese; "chunked" with hickory-smoked ham; "topped" with chili; and "diced" with fresh tomatoes.

In addition to its proven menu items, Waffle House prided itself on cooking all of its meals to order, and on using only the best ingredients in its food. Waffle Houses used only Kraft cheese, Minute Maid orange juice, and Heinz sauces, for example. The company also distinguished itself by staying open 24 hours a day and 365 days each year, which let highway travelers know that they were always welcome. In addition to proclaiming itself "America's Best Place to Eat"--a slogan that supplanted "Good Food Fast"--Waffle House touted its organization as "America's Best Place to Work." Workers were referred to as associates, rather than employees, and the company sought to provide good jobs and careers for them.

Expansion Continuing in the 1980s-90s

Although Waffle House's operating strategy had changed little by the 1980s, the size of the chain had. In 1987 Dun & Bradstreet reported that Waffle House had 351 franchisees in addition to its network of company-owned stores. It also was reported that Waffle House employed a workforce of 4,500 people, had a financial worth of roughly $60 million, and had total assets of about $81.2 million. Nation's Restaurant News estimated that in 1987 Waffle House had generated about $210 million in sales, up from about $175 million a year earlier, including receipts from franchise units. Excluding franchise sales, company revenues were about $87.5 million, which was up only slightly from a 1976 estimate of $84.6 million.

Waffle House remained a closely held company, with virtually all of the ten million shares of stock owned by company employees and the company still being run by the Rogers family. Joe W. Rogers, Jr., served as president. (His father, Joe W., Sr., had cofounded the company and presided over its expansion during the 1950s, 1960s, and 1970s.) M. Michael McCarthy, who joined the company in 1973, served as secretary-treasurer. J. Michael Upton, a former general manager of Old Hickory House, was a vice-president, as was Robert Bowman, who had worked with Arthur Andersen & Co. before joining Waffle House in 1976.

Going into the late 1980s Waffle House was operating in ten states; Alabama, Arizona, Louisiana, Florida, Georgia, Mississippi, Oklahoma, North Carolina, South Carolina, and Texas. It also was operating two subsidiary companies; WHI Inc., a real estate holding company that had its own vending machine subsidiary called Metro Distributors Inc.; and LaVista Equipment Supply Co., a designer and retailer of restaurant equipment. The real estate company reflected Waffle House's hefty property holdings: unlike many other chains, Waffle House owned much of the property on which its restaurants were built. According to Dun & Bradstreet in 1987, retained earnings had increased and the company's total debt was in line with its net worth. McCarthy confirmed in 1988 only that company sales were up in 1987 as a result of new restaurant openings, higher menu prices, and increased sales per store.

Waffle House grew rapidly as a result, in part, of its franchising. Announcements in 1988 made by Waffle House management, however, cast doubt on the financial success of the franchising strategy. Nancy Wilson, an employee in the franchising division, told the Atlanta Business Chronicle that the company planned to cease all new franchising efforts, making the statement as part of an effort to exclude Waffle House from the newspaper's list of top Georgia franchises. Joe Rogers, Jr., refused to confirm the report, stating, "It's our policy never to share information with the press."

Some industry insiders at the time cited the rumor that Waffle House had stopped franchising as evidence that the chain was stagnating in a rapidly changing restaurant industry and that it needed to update its image and menu. Waffle House did not change much during the next few years, however, nor did executives squelch the franchising program. In fact, Waffle House expanded at a rapid clip during the late 1980s and early 1990s, opening restaurants in existing markets and branching out into Arkansas, Colorado, Illinois, Indiana, Kentucky, Missouri, New Mexico, Ohio, Tennessee, and Virginia. Interestingly, the stores in Indiana were named "Waffle and Steak" because the Waffle House name was already being used when Waffle House Inc. entered that state. Waffle House celebrated its 40th anniversary in 1995 by opening Unit #1000, the chain's 1,000th store. The shop was located just a few blocks from the site of the original Waffle House #1 that had opened its doors in 1955.

Surviving in the Late 1990s and Beyond

The company often found itself in the public spotlight in the late 1990s and into the new millennium. The news was unrelated, however, to the launch of new menu items or the opening of additional restaurants. Instead it focused on the increasing number of lawsuits filed against the company. The Atlanta Journal and Constitution reported that from 1995 to 2000, more than 90 claims had been filed against the firm, mostly related to civil rights infractions against employees and customers. The aforementioned April 2000 article reported that "some customers and employees say the image of a down-home, friendly restaurant company is more illusion than reality. In interviews and court documents they describe a company with its head

Chronology

• Key Dates:
• 1955: Joe Rogers, Sr., and Tom Forkner open the first Waffle House restaurant in Avondale Estates, Georgia.
• 1987: The company operates 351 franchisees in addition to its network of company-owned stores.
• 1995: Waffle House opens its 1,000th location.
• 2000: By now, more than 90 lawsuits related to civil rights infractions and sexual harassment have been filed against the company. buried in the sand, where racial discrimination and sexual harassment complaints go virtually ignored."
• According to a 2000 Nation's Restaurant News article, Joe Rogers, Jr., claimed that Waffle House had "successfully addressed growth, diversity, and many challenges throughout our 44-year history." Nevertheless, its critics argued that Waffle House was turning its back on its corporate responsibility to provide a restaurant free of racial and gender discrimination. The company's policy of remaining extremely tight-lipped also came under fire, as many began to question the company's intentions.
• Despite its litigation woes, Waffle House remained dedicated to maintaining its position as one of the leaders in the family-style restaurant sector. Determined to continue its tradition of serving "good food fast," the firm pushed forward with expansion plans. By 2002, there were more than 1,375 restaurants in 25 states. In fiscal 2003, that number climbed to more than 1,400 units, with sales topping out at $410 million.
• Touting itself as "America's Place to Work. America's Place to Eat," Waffle House appeared to be on the track for continued growth well into the future. Regardless of the claims made against the company, its management team remained focused on solidifying its market strength in the southern region of the United States. With nearly 419 million waffles served since its beginnings in 1955 and more than 80 million cups of coffee handed out each year, Waffle House was poised to remain a favorite among its customers in the years to come.