Aramark’s new CEO says what’s right for customers and employees is right for the company
In an interview, John Zillmer discussed how he hopes to restore employee morale and the investment approach of Paul C. Hilal, Aramark's biggest shareholder.
Returning to Aramark as the Philadelphia food and uniform services giant’s new chief executive was like a step back in time for John J. Zillmer.
What Zillmer heard coming in last week — listening to what the businesses are focused on, the challenges they are facing — sounded familiar to the executive, whose previous tenure at Aramark ended in 2004. “The business construct hasn’t changed all that much,” Zillmer said Thursday, his fourth day on the job.
Zillmer’s return to Aramark followed a period of turmoil — fueled in part by the company’s decision last year not to pay expected bonuses to thousands of managers — that got the attention of activist investor Paul C. Hilal, who now controls 20 percent of the company. In short order since August, previous CEO Eric J. Foss was out, the board was revamped, and Zillmer was back.
During an interview in the seventh-floor employee dining area of Aramark’s new headquarters at 2400 Market St., the events at Aramark before his arrival were off limits. Still, Zillmer, who displays quiet confidence, made clear that he has a deep understanding of the challenges facing Aramark.
Two employees described the way Zillmer presented himself as refreshingly humble.
After leaving Aramark, Zillmer was the CEO of companies in Scottsdale, Ariz., and Seattle, but he never moved from Chester County, choosing instead to commute to those jobs and spend weekends at home.
“We love Chester County. We’ve got friends, our church, the whole community,” he said.
It helps that he and his wife, who manages the couple’s charitable foundation focused on youth in the Kilimanjaro district of Tanzania, have a daughter who stayed in Chester County. That means five of their seven grandchildren are here. They have three other grown children, in Florida, Arizona, and Chicago, where Zillmer spent 20 years before moving to the Philadelphia area in 1995.
A Milwaukee native, Zillmer admitted to being a lifelong Green Bay Packers fan. But, thanks to three of his grandsons who are avid hockey players, he roots for the Flyers.
In a 45-minute interview, Zillmer discussed his desire to reinvigorate the company’s customer focus and to restore employee morale, and the investment approach of Hilal, the company’s biggest shareholder.
Answers have been edited for length.
What are your immediate goals? What does Aramark need?
The first 30, 60, 90 days I’m going to be on a listening tour. I want to get out there and get into the field organization, meet with the frontline management ranks, the field ranks, and also with customers and clients and really get an assessment from them of what they think the company needs to do to get better. I come from a hospitality background. That’s been my focus for most of my adult life. I believe the company needs to reinvigorate its hospitality focus, its customer focus.
It’s not a secret that the company’s growth rate has slowed over the last few years, that we’ve been not as competitive in the various markets that we serve, that we haven’t had the new account business sales that some of our competitors have had. My primary focus is finding a way to solve that problem, to get the growth back into the organization. I think a lot of that is really about creating that culture of customer focus. I think the company has been too inwardly focused on what was right for Aramark, as opposed to what was right for the other constituents, our customers, our suppliers, or the employees, frankly.
Turmoil at the company, especially following the cancellation of 2018 bonuses for lower-level managers, has hurt morale. What can you do about that?
I absolutely agree that there is low morale. I think we’ve begun to make a start. One of the things you do is you re-empower the front line to make decisions that are the right thing for the customer. We had centralized a lot of the functional support inside the company and begun to make decisions on a central basis that historically would have been made locally by frontline managers, district managers, and the regional VPs. We want to give them the power to serve the customer the way they want to be served.
Aramark has tried to improve margins by limiting the variety of food products, or SKUs, frontline managers can buy, but the software caused a great deal of frustration. How do you fix that?
You open up the SKUs to allow the frontline manager to get what the customer wants. There’s no question that there are opportunities for process standardization. You want to be as efficient as possible, but you want to be efficient serving the customer what they want, not what you want to give them. That’s the difference. I don’t know what the SKU count is today. Frankly I don’t care. I want the frontline manager to be able to get what they need to serve the customer. We’ll make that fix very quickly.
What about the trepidation of higher-level executives who are sitting on pins and needles, thinking their jobs might be on the line?
The organization is staffed with a lot of talented people. I would say if anything we are under-resourced as an organization today. There aren’t a lot of cuts to be made. To my way of thinking, this is going to be about adding resources to the organization to reinvigorate the growth culture. Will people end up moving from one position to another? It’s potentially possible, but I don’t see this as an opportunity to make cuts or to make significant changes in the structure.
You and Hilal started talking about Aramark in March. What is Hilal’s investment philosophy?
He has no interest in being characterized as being an activist investor. That’s not his approach. That’s not his style. He really wants to do what’s right for the company. That’s why his approach is very different. He studies the investments meticulously. He invests the time and energy to really understand the business, and he makes a long-term investment decision as opposed to a more typical activist approach where there is financial engineering and then they take their money out and they move on.
A perennial suggestion from Wall Street analysts is the spin-off of Aramark’s uniforms business. What are your thoughts?
That idea has come up for years and years and years. I don’t have any preconceived ideas about what to do or what not to do. First and foremost, I want to run the business the best that it can be run. Are there ways that we can improve the margins in that company, in that part of the business? I think we’ve got very good leadership in it. We have a very strong base of business. There are some things we can add to the capabilities. There are some things we can add to the product portfolio that would enhance the margins, but I don’t have a solution that I’m willing to sell to the street yet.
Did former Aramark CEO Joe Neubauer have anything to do with your return?
I can’t tell you whether he did or didn’t. Joe has always been a very strong supporter of me. When I looked for new opportunities after leaving Aramark, Joe was my best reference.
Have you talked to him since returning?
He called me the day I was announced, and we had a nice chat. My intention is to keep him engaged because he is such an icon to the company and the industry.