The past two weeks have been sobering for Waffle House Chairman Joe Rogers, Jr. The chain of no-frills, 24-hour breakfast spots has remained defiantly open in the face of so many disasters that the Federal Emergency Management Agency uses a Waffle House Index to measure their severity.
Hurricane Hugo couldn’t shut the doors for long in Charleston in 1989. The same in Georgia when Irma crashed through two years ago. The index was solid green in Joplin, Mo. after a tornado killed 158 people there in 2011.
Then came the coronavirus pandemic.
“We’ve never seen anything like this,” said Rogers, 73, a co-founder’s son who has been running the 65-year-old chain since the 1970s. “Any disaster, momentarily, cripples some pieces of the business and we rush in to rescue it. But we have the rest of the system healthy to go do that. There is no healthy portion of this system today. We are burning cash every week.”
The FEMA index uses the time it takes for Waffle House locations to re-open after calamity strikes. Normally it doesn’t take long, if they even shut down. His system of 2,000 diners in 25 states is “almost comically” well positioned to mobilize in a crisis, Rogers said: It’s family owned, tightly controlled and able to shift resources and supplies from unaffected restaurants to those in need with alacrity.
This week he’s had to close 20% of locations, about 420 in all. Waffle House typically has annual revenue of more than $1.3 billion but with the country on lockdown — and only one drive-thru location and a marginal take-out business — sales are about 30% of what they should be, Rogers said. Thousands of his 40,000 workers are now furloughed.
FEMA’s appreciation for the chain took route a half century ago when Rogers took over and began chasing every hurricane, snow storm and tornado that affected a location. He found that when he showed up to help keep the bacon sizzling and the coffee pouring, so did lots of other employees.
He was 26 in 1973 when he took the helm of the company that had four family ownership groups, mounting debt and control of only 30% of the locations. He changed all of it five years later when a financial crisis hit and gas shortages were looming, first consolidating ownership within his family, which now has a controlling share. He created an employee ownership plan that now provides 3,500 workers with a piece of the business. And ended the company’s reliance on debt.
It fits the slow-growth strategy he has pursued from the start. Rogers had planned to open around 80 new locations this year, while Burger King, which franchises 99% of all locations, added 1,000 last year.
“Most of why we are here today is learning what not to do,” said Rogers. “We don’t have the most creative restaurant concept you’ve ever seen. We’re just a throwback to a diner.”
“We tried to show them the love over the years in those disasters,” said Waffle House’s Rogers. “We might need a little of that in reverse now.”
A throwback diner with a devoted cult following that returns over and over, at all hours of the night. During a crisis it is a source of comfort food and community for regulars, drivers trucking supplies and first responders, even if they don’t quite get it at first.
When Hugo hit Charleston, Rogers duked it out with a National Guardsman who wanted them to shut down, until he realized it was the only restaurant open in the area that was able to feed 3,000 emergency workers. A fire department in Georgia tried shutting one location down after Irma struck the state in 2018. The manager refused and the firefighters ordered 15 meals instead.
“As we tried to show them the love over the years in those disasters, it hasn’t always been easy,” said Rogers. “We might need a little of that in reverse now.”
So far, he’s getting the opposite, he said, and the staunchly right-wing businessman is not the least bit happy about it. He’s in the camp of business leaders who are questioning whether “the cure is worse than the ailment” when it comes to dealing with the spread of COVID-19, putting him at odds with scientists leading the effort to stop it.
“When you lose the Waffle House, you’re losing the local economy,” he said, noting that quarantine and shelter-in-place measures will leave the restaurant industry, along with the broader economy, in a state of disrepair.
“If we let this economy keep going the way it’s going, we are leading people to ruin. How many people are you sacrificing to the poor house?”
Rogers said he won’t pay hourly workers if locations are closed, a contrast to the decisions made at other chains, including Starbucks. “We’re deciding about benefits to the hourly associates that aren’t working, but we have to look at the week-to-week cash reality,” he said, explaining how Waffle House’s cash reservers were already used to cover furloughed employees on the corporate side. He and other family employees have also given up their salaries until the crisis is over.
“We’re going to do our best to protect their incomes,” he said. “But if our business is 30% of what it used to be, how long can we protect them? You have to save the business. Otherwise, you’ll be no good for anybody.”
What’s the worst-case scenario? Rogers controls more than 90% of the system now and says he can always shut down more locations, ride out the downturn and re-open when the economy turns around. He estimates if the recession turns into a full-blown depression, “then in a lasting way, we can only operate probably half the restaurants.”
I cover all things food and drink as a staff writer at Forbes, from billionaires and ag tech startups to CPG entrepreneurs and wine. I head up the 30 Under 30 Food and Drink list, as well as Forbes’ 25 Most Innovative Ag Tech Startups list. My reporting has brought me to In-N-Out Burger’s secret test kitchen, had me trekking through drought-ridden farms in California’s Central Valley and even sent me to a chocolate factory designed like a castle in Northern France. I gravitate towards the intersection of food and mass manufacturing. I also cover beauty and personal care. Send tips to firstname.lastname@example.org.
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