Pocketing the difference
Chicago chain discovers online ordering
Pockets, a Chicago-based chain, sells sandwiches using store-made "pockets."
David Litchman started Pockets in 1989 when he was a self-described naïve kid fresh out of the University of Michigan and armed with a couple of credit cards and a strong desire to work for himself.
Over the next 18 years, Litchman managed Pockets’ slow, steady expansion in the Chicago area. Yet he resisted the temptations to franchise. That will change this summer when the company opens its first two franchise locations.
Why the change of heart? Online ordering. Three years ago, Litchman began taking orders for his stuffed bread pockets over the Web. He credits that move alone for boosting per-store sales by nearly a third over that time—enough to make the store’s finances attractive to potential franchisees.
“I have to believe it changed our whole ability to manage the business,” the 41-year-old said. “It was gigantic.”
Pockets markets itself as a healthy alternative to fast food, though Litchman acknowledges that customers “can eat unhealthy if you want to.” The “pockets” are an evolution on the typical pita. A pocket bread is baked for eight minutes, hollowed out and filled with a salad. The pockets can come with or without chicken or turkey and are roughly $6 to $7.
Throughout its history Pockets brought in considerable business through pickup and delivery. By 2004 a typical store pulled in $330,000 a year in revenues. That’s when the company tried something new by taking orders on its Web site.
A growing number of restaurants are taking orders on the Web, from big companies like Pizza Hut to small, one-store shops. Several Web-based companies now sell online ordering services.
At Pockets, customers were initially slow to take to the new service, Litchman said, adding that he didn’t know what kind of impact online ordering would have. Once customers got on board with the concept, however, online ordering took off. Now, more than half of the company’s orders come in over the Web.
On a simple level, the move made it more convenient to order from Pockets, allowing families to order even when the store is closed. They could also determine a time to pick up the food.
Customers don’t have to wait to make their order once they decide what they want, and they have more time to peruse the menu without feeling rushed either at the store or on the phone. That simple convenience has translated into dollars: The average ticket price at Pockets has increased since online ordering was implemented. “People spend more time ordering cookies and drinks,” Litchman said.
Online ordering made the stores more efficient by eliminating the phone call, freeing up employees to interact with customers while enabling orders to come in over a computer. It also made customers happier by cutting the number of mistakes in half. If there is a mistake, people are more likely to contact the store over e-mail, Litchman said. That provides an opportunity for the manager to build loyalty by sending the customer a coupon.
These days a typical store brings in $430,000 a year, $100,000 more than when the company first started online ordering, and with the same number of employees. “It was a big win for us,” Litchman said. “It’s a gigantic win when a customer orders online. They spend more money and we make less mistakes.”
Nevertheless, don’t expect that online ordering and the new move into franchising will spur a sudden boom of Pockets locations. On the contrary, Litchman maintains his desire to grow at a steady pace. “My goal is to initially work with a handful of franchisees locally and help them get a good return on their investment,” he said. “It’s not about quantity, it’s about quality.