Lawyer & business paragon Rick Silva L’90
By Art Carey
Wearing a toupee and a fake mustache, Rick Silva posed as a failed pharmacist from Philadelphia on the highly rated reality TV series Undercover Boss last February. As president and CEO of Checkers and Rally’s restaurants, he performed all sorts of jobs alongside his unwitting employees – making sandwiches, grilling burgers, cooking fries, manning the drive-thru window.
At a restaurant in Homestead, Fla., he befriended an employee named Todd who told him about his ambitions to be a chef. When the manager of the restaurant shouted at Todd and told him to stop talking, Silva was shocked by the manager’s disrespectful manner.
When he asked Todd why he tolerated such abuse, he learned that he needed the job to help support his mother and was afraid of being fired. Silva was so disturbed by the manager’s behavior that he felt obliged to confront him.
When he asked the manager why he yelled at his employees, the manager replied: “If I don’t scream at them, they don’t listen to me.”
Then he added: “I’m not going to let you continue telling me I’m disrespecting my crew. Have you been in the fast food business before?”
Silva, who oversees the largest double drive-thru restaurant chain in the country, with 800 restaurants in 30 states, felt he had no choice but to break character and drop his disguise.
“I’ve been in the fast-food business for over 20 years. I’m CEO for this company.”
The expression on the manager’s face was a reality-TV “money shot” – stunned, his mouth open in disbelief.
Silva immediately shut the restaurant down.
“I was not comfortable he had the capacity to run the restaurant at the standards we require in this company,” Silva recalled. “His attitude towards his employees was not to my liking. In our company, we are here to serve the employees and guests. If things are not done right, if there’s a problem, we’re going to fix it.”
And fix it he did. Silva reopened the restaurant the next day with a new manager, dispatched the offending manager for more training, and enrolled Todd in culinary school and gave him $15,000 to help support his mother. (Silva, who generally keeps a low profile, was surprised to be chosen from among the 100 or so CEOs who audition for about 12 spots.)
“I learned so much from that show, and we made some significant changes as a result,” Silva recalled recently from company headquarters in Tampa, Fla. “The show reflects who I am and hopefully shows my passion for business and maintaining incredibly high standards, as well as my respect for both our employees and guests…At the end of the day, I’m fully accountable for the results in all our restaurants. If they’re not perfect, it’s my responsibility.”
It’s such an attitude, combined with a keen appetite for competition, that has propelled Enrique “Rick” Silva, 46, L ’90, to the top job in a fast-paced business that was far from his thoughts when he was studying law at Penn. Along the way, he has earned a reputation as a bold leader of change and passionate businessman who tolerates little deviation from excellence.
Rally’s began in 1985 in Jefferson, Indiana; Checkers began in 1986 in Mobile, Ala. The restaurants are virtually the same with double drive thru service, a walk-up counter, and no dining room. The two chains competed with one another until 1999 when they merged.
Over-expansion led the chain to falter in the early 2000s, and the private equity firm Wellspring Capital Management assumed control. In February 2007, they recruited Silva, who came to Checkers with plenty of experience. For 13 years, he worked for Burger King. He began as an in-house lawyer but soon moved to the business side. As a Cuban American, he was fluent in Spanish and an ideal candidate to oversee Burger King’s Latin American operations. He later ran the company’s U.S. restaurants as well as its franchise business.
During Silva’s time there, Burger King went through two changes of ownership before going public. All the while, Silva applied himself to the tasks at hand, dramatically improving the efficiency and profitability of the restaurants under his command.
“It was a wonderful experience, trying to change the culture, the people, the systems, and the financial results,” Silva says.
Silva is trying to work the same magic at Checkers. Of the company’s 800 restaurants, 300 are owned and operated directly by the chain itself, the remaining 500 are franchised.
The company has 6,000 direct employees, and 20,000 employees altogether. It is privately held but Silva reveals that systemwide revenue in 2011 was $669 million. The chain sells 310,000 burgers per day; 2.2 million burgers per week; 113 million burgers a year.
Nevertheless, in the fast-food firmament, the Checkers/Rally’s chain is something of an underdog. McDonald’s has over 14,000 restaurants; Burger King, 7,500, and Wendy’s, about 6,000.
But Silva is undaunted and plans to expand the number of Checkers restaurants to between 1,200 and 1,500 in the next five years. The restaurants are spread across the country, but the largest number, in descending order, are in Florida, Georgia, Ohio, Indiana, Michigan, Louisiana, New York, Kentucky, Alabama and California.
Silva is proud of the fact that over the past two years, his restaurants’ sales results have climbed at a faster clip than those of his bigger competitors.
“Our food is what sets us apart,” Silva says, “and we deliver much better value. We do a lot of focus groups to ensure that the taste of our food is what differentiates us. We sear and hand-seasoned beef on the grill and have a unique proprietary process for our fried food, such as our seasoned french fries.”
Another distinguishing feature: the restaurants stay open until the wee hours, 2 a.m. on weekdays, 4 a.m on weekends, monopolizing late-night appetites.
Silva has harnessed the latest technology to make the restaurants more efficient and improve guest satisfaction and speed of service. Because they are strictly drive-thru, with no dining rooms, the restaurants can be built on only half an acre. Most are assembled from prefabricated modules, further reducing costs and making them more attractive to potential franchisees. Says Silva: “The cost of building our restaurants is the lowest it’s ever been.”
A new freestanding restaurant costs about $500,000 to build, including equipment and signage. Site development (landscaping, parking, curb cuts, etc.) adds another $150,000 on land that is typically leased A franchisee pays a $30,000 onetime fee, plus four percent royalties on gross sales, Silva says.
Business is in Silva’s blood. His parents emigrated from Cuba with little more than the clothes on their back and a small suitcase. Although they were professionals on the island, they took a variety of odd jobs in Miami. Eventually, Silva’s mother, a pharmacist, earned her license in the U.S. and the family opened a small pharmacy.
“That’s where I really fell in love with business,” Silva says. When he wasn’t in school, he was working. He kept the books, tracked inventory and dealt with customers.
“My mother was a natural businessperson who had an instinctive understanding of what customers need and the importance of being part of their lives. As a small family drugstore competing with national chains, we learned quickly we needed to differentiate ourselves. We needed to supply customers with something they couldn’t get elsewhere.”
After high school, Silva attended the University of Miami, where he earned a degree in business administration and accounting. Believing that a law degree would prove helpful, he applied to the University of Pennsylvania. The Penn experience was “amazing,” he says, “the best decision I ever made.” He was impressed by the diversity of the students and the intellectual vitality of the place. (He served on the Law Alumni Society Board of Managers until recently.)
Chris Gegylys, now an in-house lawyer for Covance Inc., a company that assists the pharmaceutical industry in drug development, was Silva’s roommate during their third year of law school.
“He was always balanced in the way he approached things and very well liked by his classmates,” Gegylys recalls. “His family was important to him, and he had strong family values. He also always had a strong interest in business. He would spend his spare time reading Business Week and following business stories in the news.”
After Penn, Silva joined the large Miami law firm of Greenburg Traurig.
At Greenburg Traurig, Silva gravitated to real estate law because it was the closest thing to business. Then, after three years, came the offer from Burger King.
“It’s interesting where life will take you,” Silva reflects. “I guess I shouldn’t be totally surprised that I ended up in this business. My grandfather ran a restaurant in Cuba. And when he came to Florida, we cooked a lot at home. I love food and I absolutely love this industry. It’s a very interesting business, and people don’t realize how dynamic and exciting it can be because it’s so competitive. In order to be successful in fast food, you have to very nimble and sophisticated.”
Thomas Haas, an industry consultant and analyst and former publisher of the Nation’s Restaurants News, has been impressed by what Silva has accomplished. “They were in pretty bad shape before Rick came,” Haas says. “Any time you don’t have consistency in management and ownership you’re in trouble, and Checkers and Rally’s were in trouble.”
Hass lauds Silva for expanding and diversifying the menu and stabilizing the quality of the brand.
“He’s taken a concept that was dead in the water and brought it back to life,” Haas says. “You have to be a pretty good operator to stabilize a struggling concept and move it in positive direction, which is what Rick has done.”
Carl Stanton, a partner of Wellspring Capital Management in NYC, lauds Silva and his team for taking “an under performing asset when we invested in it and adding tremendous value.”
“He’s got classic leadership skills, and by that I mean he has the right mix of vision – a sense of where to take the company and how to make it grow – as well as fierce attention to detail and performance and tremendous personal integrity, so people who work for him very quickly realize that he has their best interests in mind as well as those of the broader company, and it’s very easy to work for somebody like that. Which is not to say he’s an easy boss. He’s got a tremendous work ethic, but everybody who works for him knows first and foremost he demands a lot from himself.”
Joe Hertzman, who owns 13 Rally’s restaurants and was one of the first Rally’s franchisees in Kentucky and Indiana, calls Silva “one of the finest CEOs and people I’ve had the pleasure to do business with.”
“He’s a sophisticated operator and visionary, while at the same time being a real down-to-earth, leave-your-ego-at-the-door type of guy,” Hertzman continues. “I’ve been in this business for 30 years, and have seen a lot of different executive teams come and go. Rick’s done a great job of putting a first-class team together and really moving the brands forward.”
Over and over again, those who know Silva mention his humility, combined with a fierce inner drive.
“The biggest thing that stands out with him is that he’s very humble. You would never know he’s the CEO,” says Rick Giusto, managing partner of Greenburg Traurig’s Miami office who still says in touch with Silva. “On the other hand, there’s this very quiet intensity underneath. When he sets a goal for himself, one way or another he’s going to get there, and he’ll outwork everybody to do so. But he’ll only ask of you what he asks of himself, which is one reason he’s been so successful.”
Silva describes himself foremost as “very dedicated.” Dedicated to a balanced life. Dedicated to his family (he and his wife, Lisa, his high school sweetheart, have been married 22 years and have two children, Michael, in college, and Jessica, a high school senior). And dedicated to his job.
“Every day I wake up, I feel like the luckiest guy in the world,” Silva says. “I could not imagine doing anything else.”