|
Sales rising, stock soaring, Red Robin Gourmet Burgers Inc. owes much of its success to smart business decisions backed by swift technology execution.
With an IT staff of 17, the casual dining burger chain has a full IT plate. Analytic tools, for example, carve up data and uncover trends and demographics within the chaotic restaurant business, of which Red Robin's slice is 263 outlets, including 122 franchises. That data has given $409 million Red Robin a better understanding of its core customers — women and families, who spend an average of $10.36 per person per visit -- and helped the chain tune operations to better serve them.
The company is testing a bar code scanner system. Restaurant workers scan "tickets" -- orders sent by servers to the kitchen or bar for fulfillment -- at different times to show how long the various phases of making a meal take. ("We strive to offer guests a 37-minute dining experience at lunch and a 42-minute experience at dinner," says the company's 2004 annual report.)
Inventory management software, labor management tools and compliance work have cut costs and improved efficiencies. For example, Red Robin used ConfigureSoft, a server configuration tool, to update passwords for service accounts in less than an hour. That task used to take 10 to 15 hours.
Red Robin has been expanding its footprint by roughly 20% a year. Its stock, trading at about $60 per share last month, has risen steadily since the company went public in July 2002 at $12 per share. Annual sales jumped 7.5% in 2004.
At company headquarters in Greenwood Village, Colo., Eric Houseman, vice president of restaurant operations, and Bill Randall, IT director, spoke about how they keep business, technology and culture aligned.
How has rapid growth changed the way you think about IT?
Bill Randall: From an IT perspective, we have to be looking at something that can scale five years out to handle the number of users, the amount of data. When we were doing 20% growth with 40 restaurants, it wasn't that big of a deal.
So what are your technology priorities?
Randall: We have a ton of stuff going on. There [are] a number of projects [under way] to get [operations] more data. We're getting to the point where a lot of our newest challenges are getting more granular at the data collection points. We're providing some custom applications and testing things in restaurants, such as bar code scanners for ticket times. And we're currently working on putting VoIP [voice over Internet Protocol] phones in the restaurants. From an infrastructure side, quite a few things this last year have been driven by compliance.
Eric Houseman: We are real heavy with Cognos and all the data cubes that allow us to pull information, slice and dice it, change it up and look at it a multitude of ways. From an operating point of view, that's really important.
The other thing we did was build this platform to go in and poll the restaurants daily. In the mornings by 7 a.m., I can pull a report and know sales in every single restaurant across the country, labor percent, productivity, guest counts, voids and promos, discount lines, hours we've utilized in the front and back of the house, overtime.
What does this volume of information do for you?
Houseman: You can measure everything and get all this data, but if the data doesn't help move the needle, at the end of the day it's pretty worthless. So we sit down every 60 days and go over our priorities. What could we do? What should we do? Our decisions must relate to one of our cornerstones, such as the gift of time.
For us, 30% of our guests make up 70% of our sales. We have one the highest frequency rates in the industry -- 3.3 times a month. And 28% of our guests are under the age of 18, which is higher than McDonald's. No one caters to America's families like we do. But the thing about catering to them is that they have limited time. You can't hold them hostage, you can't keep them for an hour like some of our competitors. With this in mind, you have to give them the gift of time. For us, that's a 37-minute dining experience.
How does technology help you give customers this "gift of time"?
Houseman: We've come to IT and said, "OK, let us know how we're doing." And so we created the gift-of-time report. I can see things like how many tables per server we're running at every single one of our locations. We look at ticket times. Entree delivery times are probably 35% of the guest experience. We aspire to have an entree delivery time of 10 minutes. We built this system that electronically scans and tracks the production time of every item. As we start filling that data cube, we can identify a food item across the country that's causing us to go over the delivery time. Or we can identify a part of the kitchen. Is the cold side not producing information as fast as the hot side? How do we redesign the items? The kitchen layout?
Has all this data unearthed any surprising trends?
Houseman: One interesting statistic is that 58% of our guests are female. We provide a very safe and clean environment. We have soccer moms. We've always known this, but over the last three to five years we've been able to articulate it better, demonstrate it through numbers and guest surveys. So now we're delivering to the retail community -- like Nordstrom and Victoria's Secret -- their target demographic. And now we're the first call among shopping mall developers.
How does IT keep up with business demands?
Houseman: From a pushing standpoint, we're always asking, "Are there advantages out there with technology that we can jump on?" There are so many things we can do but -- again -- will they really move the needle? Do we want to scan the credit card at the table? The biggest thing IT provides to operations is how to simplify people's lives.
We did a time-and-motion study several years ago and built this labor management system for [food] servers, bussers, hostesses -- a platform that has seven key volume indicators, such as tables open, tables closed, bar menu items produced. Bill spearheaded this. He created a NuSTaRS (New Scheduling Team and Reporting System) program that allows us to look at our ideal labor, forecast labor, scheduled labor, and gives a scorecard for restaurant managers.
Randall: We built this in-house; there are not a lot of things we do that way. It was [aimed] at a very specific set of requirements. We looked at several solutions and didn't find anything that could provide us measurements the way we wanted to do it. So we ended up having to build it.
How did you build it?
Randall: NuSTaRS was developed in-house as a VB [Visual Basic] application with an Access 97 front end. NuSTaRS is the third generation of our labor solution. Initially, we had a [restaurant consulting] company called Deterministics come in and complete some time-and-motion studies to help us identify some ideal standards for different jobs in the restaurants. We identified a number of these key volume indicators to use in generating a schedule. These indicators could be calculated based on different data points collected from the POS system. They provided us with a spreadsheet that could be used to generate the schedules.
We began by customizing the spreadsheet, and it quickly became too large to use effectively. A 25 MB spreadsheet was slow and prone to corruption. We outsourced with a company to help us develop this as a database application. This was successful but difficult for us to maintain and update. We brought the project in-house and had two developers work on the project for about eight months. They partnered very closely with subject matter experts from operations. We are now able to use this tool to provide schedule recommendations by job code based on historical data, and also go back and provide a "report card" of how the management team responded to changes in the daily business by calculating an "ideal labor" after the shift is complete.
How has this labor system moved the needle?
Houseman: It's probably reduced operational error by 200 basis points across the country [the equivalent of 2% to the bottom line]. More importantly, it has reduced errors as we're putting more servers and cooks on. It's an efficiency model that allows us to reinvest in the guest and, at the same time, the byproduct is that we're saving beaucoup bucks.
How do you keep IT projects and business objectives aligned?
Randall: The key is the culture across Red Robin, whether it's a team member taking orders at a table or a team member who's part of the IT team. We are a culture of service. If we find team members who fit correctly in that culture, then we're going to be very successful. We're not going to have issues because everyone's whole focus is on finding ways that they can be of service and help us move that needle.
Houseman: There are little things we do here, like monthly luncheons and summer and Christmas parties. We nominate people for awards at our leadership conference. Last year, we gave away seven awards for corporate support team members. Out of the seven, five went to the IT team. That's a statement of the type of day-in, day-out commitment to service. You can call these guys on the weekends. I've called them at midnight before.
Tom Kaneshige and Ellen O'Brien were senior editors at CIO Decisions. To comment on this story, email editor@ciodecisions.com.
|
 |
|
|
