Julia Stewart has been getting a lot of press these days as chief executive of DineEquity Inc., the Glendale company that owns IHOP and Applebee’s. Mostly it’s been about the over-the-top IHOP menu item, the Waffullicious Waffle, which comes stuffed with bacon or cream cheese – and enough calories to raise eyebrows. That’s just fine with the 59-year-old CEO, who’s on a mission to raise the profile of her restaurants, better known for comfort food than cutting-edge cuisine. Stewart certainly knows the territory. She was a teenage waitress, before heading to college and a series of management jobs that led her to the top post at IHOP in 2002. Then in 2007, she pulled off an audacious acquisition, buying the faltering Applebee’s for $2.1 billion in debt, creating DineEquity. The recession threatened her plans to pay back that debt by franchising Applebee’s outlets. But the deal worked out and these days franchising is hot on Wall Street. The Business Journal sat down with Stewart to talk about her path to the C-Suite, why she’s irritated by questions about balancing work and family time, and how she handles her crazy travel schedule as DineEquity expands globally. Question: What is it like traveling all over the world meeting franchisees? Answer: It goes up and down. There will be eight weeks where I travel every week and then there will be two weeks in the office. So, on average, it’s probably almost every week, but it’s not for more than a day or two. I’m on the road next week for three or four days, I’m in Canada and D.C. and then the last two weeks of this month, I’m in the office with the franchisees who all will fly in, to give you an example. They come to us a fair amount too. So between all of this travel, are you able to have a personal life? Besides raising my wonderful, exceptional, fabulous children, I would say my husband and I very much love entertaining. We love to serve, to cook. I work hard at being a good friend, a good mom and a good mentor, a role model and also a good leader. I really enjoy my family, friends and then I would say, I’m still pretty active sportswise. I would also say I’m very active in charity. How have you been able to balance work with your personal life and family? I’m fortunate enough to where I had help. So fortunately for me, I started late in life, but I was able to pay someone from outside so they could be there when I couldn’t be there. I would be an exception to the rule. I don’t think most American families have the extra money to be paying for childcare help. I’m blessed to have the wherewithal to be able to do all of that. How old are your children now? Today, they’re older, they’re 15 and 17, but when they first started, they were younger tikes and that was tougher. I married late in life and I had children late in life. Most people don’t have their first child at 42. The career for a long time was my number one key goal and then sort of late in life, I married and had children. There has been a movement from people like Facebook COO Sheryl Sandberg who are interested in changing the workplace to allow more balance. Do you think your experience makes you more open to helping employees with their families and personal lives? I hope that you ask that same question of a man. I think men and women are trying to do it all. They’re trying to raise a family but also provide a work experience. Men and women alike come up to me in the middle of the day and need to go to a football game or baseball game or need to pick up their kid from school. One employee, who is a woman, came up to me recently and said ‘My daughter was just accepted to this program. Would it be alright if I cut out early and went to it?’ I said, ‘Of course.’ I think part of it is how you establish the culture. It sounds like you don’t necessarily want to draw attention to the fact you are a female CEO, but are there any benefits that come from being a female leader? Unfortunately in the restaurant space in the public restaurant space, there are very few women CEOs. I wish there were more. So I understand you started as a waitress at IHOP when you were a teenager. How did you find your way back to the company after all these years? Yes, we called it a waitress back then. Today we call it a food server. Back then, I started as a waitress in San Diego. It was my first restaurant job. I think I was 16 when I started as an IHOP food server. Is that where your interest for the industry began? There is no question that working in the restaurant business in high school and college, I got the bug. I like the daily feedback. I like the family orientation and spirit. I really like that. That made a big difference for me. I got the bug for the food service business that way. What happened once you got the bug? The part that people don’t like to tell is I actually went off to college. I had several other jobs, but then I ended up here. People always like to say ‘food server to CEO’ and they miss sort of everything in the middle, which really disappoints my father, God rest his soul, who used to say, ‘Honey, do they know you actually went to college?’ So what was in between? There were a lot of marketing jobs. Then I went into operations, I went into general management. Then I ended up as president of Applebee’s, left Applebee’s, came here to IHOP and then six and a half years later, we made the acquisition. Did you make the acquisition because of your connection to Applebee’s? We did not. It was more that it was the right place and fit. In fairness, I think it did help that I knew the franchisees and I knew the business. What do you think prepared you to lead DineEquity? I think that’s in my wood. My dad used to tell stories of me organizing the neighborhood when I was in the third grade. The idea of leading and being accountable, I always thought was a privilege and I always took that very seriously that someday, I might be able to lead. When I was young, I didn’t think I was going to be the CEO of IHOP. That came much later, but the idea of being accountable and being able to lead something, I remember thinking that was a privilege since I was very young. What other responsibilities come with being in such a high position? I coach people all the time. I mentor people all the time. I tell young people who come out of college to experience new and different things, find your passion but find a culture that works for you. Now, let’s talk some business. Will DineEquity continue its rapidly overseas expansion? I think there are opportunities for us to significantly grow internationally, and the commitment we made is that in the last quarter of the year when we do our last investor call coming up here that we would showcase international in a more meaningful way. Can you define meaningful? Giving more depth and breadth to the question several people have been asking, which is ‘How big do you think international can get?’ We owe that to the Street at the end of this year. Where are your biggest opportunities internationally? I would say Central and South America, Asia and the Middle East in terms of development and growth. How big is the overseas business right now? To size it for you today, we don’t even disclose in our public filings the international results because it’s significantly less than 5 percent of EBIDA (earnings before interest, depreciation and amortization). Do I think it will ever be 60- or 70 percent of EBIDA? I think anything’s possible but probably doubtful. Franchising has become hot among restaurant companies. TGI Friday’s just announced they were getting out of operations. You were ahead of the curve. It works for us. And why is that so? I think the Street loved the notion of getting out of that risk business. The reason we were so adamant, even during the recession, about franchising the Applebee’s chain was that we were so successful with it at IHOP. There’s no such thing as risk free, but we certainly took a lot of the risk out of the business. But yet you maintain close relationships with some of your franchisees. Yes, this is a relationship business. Most of these guys I’ve broken bread with, I know them personally. Many of them, I’ve been to their homes. I know their spouses, I know their children. Give us an example of how the business relationship works? We set out to form a purchasing co-op, which is at about a $2 billion spend. It enables us to streamline distribution and consolidation, and save the franchisees an incredible amount of money and they are able to pass that along to consumers. How so? We’re probably the biggest buyer of bacon for IHOP. We’re also probably the largest buyer of ribs for Applebee’s. So think of us going to the pork manufacturer and saying, ‘I want a great deal on pork in its raw state, because I’m not just buying for IHOP. I’m buying for Applebee’s. Be honest, any stumbles lately? I think our restaurant within a restaurant concept that we introduced about a year and a half ago (at Applebee’s) was not successful. What was that? We recognized fairly quickly that as a consumer, there’s this notion that when you walk into a casual dining restaurant, there’s a hostess stand and he or she greets you and takes you to your seat. So after all this time, Applebee’s introduced the idea, I’m exaggerating, but basically, ‘Would you like to sit on the right side of the restaurant and have the fast casual lunch in 10 minutes or less or would you like to go over here and sit in the regular seats and have the regular menu?’ That confused people. What was the lesson there? One of the things I pride myself on is failing quickly. I think we probably did some things wrong there, not just the service platform but the way we approached it with marketers and consumers. I think we believe from that failing quickly, there’s a lot more we can do to expedite the experience and deliver what you want. To be nice about it IHOP and Applebee’s are not exactly trend setters. What are you doing about Starbucks, or even Dunkin Donuts, which is rapidly expanding nationwide? We want to be a consideration set. It’s a work in progress, but we think we have some unique opportunities with both brands – to be more relevant, more competitive and more targeted. We will soon be making changes within our infrastructure. Today, you do not get out of your car, walk into IHOP, order a cup of coffee and leave. You certainly don’t pay $3.85 for it. It’s going to be taking what we have and being very creative with how we might be more competitive. Why not just buy another, young fast-growing company? Certainly because we have that shared services platform, we could leverage and scale that for an acquisition. I think right now we’re focused on our two brands, but I wouldn’t want to say never. And if we did make an acquisition, it would be something that wasn’t either in casual dining or family dining. It would be something different than what we have today. It’s not out of our realm of possibility. I know you are on the board of Avery Dennison and the Los Angeles Children’s Bureau, among other organizations. What kind of commitment is that? I’m very involved with the charity. The goal of the Children’s Bureau is to eradicate child abuse and neglect. I am chairman and I also chair this annual event. Every year we have a huge event where celebrity chefs cook for you. We have some of the finest wineries in the world, and the organization has raised a lot of money through this fundraiser. It’s pretty meaningful. Finally, I have to ask, what’s your favorite item on the menu? At Applebee’s, I love the new Smashburger. It’s so fabulous. At IHOP, don’t laugh. But honestly, it’s the Waffullicious right now. The one that is stuffed with bacon and cheddar cheese is my favorite. I am telling you, you will need to go to Betty Ford after having it, it is so addicting. I swear to God, I love it. This interview has been edited for space and clarity. Julia A. Stewart Title: Chairwoman and Chief Executive Company: DineEquity Inc., Glendale Born: Visalia, 1955 Education: B.S., communications and marketing, San Diego State University; Honorary Doctorate in Business, Johnson & Wales University Career Turning Point: Working as a food server at IHOP throughout high school and college. “I got the bug for the food service business that way.” Most Influential Person: “I didn’t have one mentor in the traditional sense. I learned from CEOs’ mistakes more than anything.” Personal: Lives in Pasadena with her husband and two youngest children, her 15 year old daughter and 17 year old son. She also has a 23 year old stepdaughter. Interests: Cooking, entertaining family and guests, sports and charity.
