Living Large brands can improve by using the numbers
Franchises are collecting every piece of data they can get their hands on as they seek to understand who their customers are and how to market to them—not to mention managing cost of goods, scheduling, inventory and adjusting product mix in the meantime. The concept of big data isn’t new, but plenty of major benefits, brought by the speed and efficiency of technology, are.
The smartest brands are not simply looking at data, but also gleaning useful insights to improve operations, such as reducing food waste by evaluating inventory, understanding which menu items are selling and stocking accordingly. Or, they’re using an analysis of peak hours and sales trends to make decisions about adding or cutting labor.
This same data can be used to demonstrate sound decision-making to franchisees, who may be wary of a change to the system without the analytics to back it up. Using a business intelligence dashboard, franchisees can also benefit from better reporting metrics and make adjustments accordingly, as one of our Living Large brands found when it invested more in its business management software.
The information is there and franchises need to capture it in order to stay relevant and give themselves—and their ‘zees—a competitive edge.
“I’m somewhat of a fanatic—anytime on my iPhone I can pull up real-time sales.” — Andy Howard, Huey Magoo’s
Sales get the tech treatment
In a QSR restaurant segment where high profit margins can be hard to come by, tracking the flow of business, hour by hour, is part of what helps Huey Magoo’s Chicken Tenders develop successful stores.
“We want to maximize sales per man-hour, so we’re looking at how productive is every employee,” says Andy Howard, CEO of the Orlando-based franchise, describing the “labor matrix” that helps franchisees schedule employees based on sales and cost of labor. “That way we’re able to have the lowest labor level and still provide great service.”
The company developed criteria based on sales projections that serve as a guideline for franchisees on when to cut or add employees.
“For instance, if you’re going to do $1,000 an hour, you’re probably going to have seven or eight employees,” explains Howard. “At $200 or $300 an hour, it’s probably three or four employees.”
Though Howard admits the seven-unit chain is “still a little bit old school” when it comes to tracking inventory, using spreadsheets until it adds the inventory modular available on its Revention POS, tracking sales gets the full technology treatment.
“I’m somewhat of a fanatic—anytime on my iPhone I can pull up real-time sales,” says Howard. And at the end of each day, management gets a detailed report on items including product mix, check average and what was sold through UberEats or DoorDash, the two delivery services Huey Magoo’s uses. Those services themselves are “very protective” of the customer data they get, notes Howard.
“We’ve tried and tried and tried and they’ve said no,” Howard says of repeated requests to access more information about delivery orders. That’s led to the restaurants putting bounce-back coupons in delivery bags that invite those off-premise customers to come in for a free cookie or other item.
“If you can convert an UberEats customer to a regular Huey Magoo’s customer, we don’t pay a fee, so we’re really working on that conversion piece,” says Howard.
Other marketing efforts include taking advantage of broader demographic and psychographic consumer information to create digital advertising campaigns. Huey Magoo’s works with San Diego-based InnoVision, which developed ads targeting consumers in the Orlando area, running on desktop, mobile and tablet platforms.
“We’re already seeing a lift in sales,” says Howard, noting the digital strategy can grow as Huey Magoo’s expands in new markets. “You can basically turn it on anywhere in the country and everybody’s getting the same benefits. For a small company like us, it’s a way to get the most bang for your buck.”
‘Crazy levels of reporting’
Net sales, referral sources, average repair ticket, same-day repair rate. These are just a few of the key performance indicators franchisees of CPR Cell Phone Repair see on their RepairQ KPI Dashboard. Calling the tool the “No. 1 industry solution,” Josh Sevick, CPR’s CEO, says the company decided to significantly upgrade its business intelligence reporting about a year-and-a-half ago to help franchisees “run the business versus just running the store.”
“It gives us a pretty powerful set of tools,” says Sevick of the software that also got everyone in the system using the same platform and provides ‘zees with “crazy levels of reporting about their business.”
Cost of goods is a particularly important number in the digital device repair business, for example, and the RepairQ tracking helps franchisees and regional managers stay on top of costs and identify opportunities for improvement. Another key metric is the “rework rate,” or the percentage of return/warranty repairs.
“If we see that warranty repairs are high, maybe there’s a need for some additional training,” says Sevick of how insights are turned into action.
CPR also closely monitors its referral sources to identify where its customers are coming from so it can market effectively to those groups. To ensure accurate data, the referral source field is mandatory.
“You literally can’t close a sale if you don’t have the referral source in there,” says Sevick, adding there was an adjustment period as franchisees and employees got used to the enhanced platform, but “once you start conditioning people to have insight into their business, they want way more.”
As one of several businesses in Cleveland-based Merrymeeting Group’s portfolio, CPR benefits from the services of another of the group’s companies, digital marketing firm Front Porch Solutions. Front Porch builds a digital marketing footprint for each CPR territory, creates marketing programs and analyzes the effectiveness of those various efforts each month.
“We do full P&Ls for every outlet, every week.”— David Morton, DMK Burger Bar
Turning data into action
“People do best when they know how they’re doing,” says David Morton, which is why his Chicago-based DMK Burger Bar relies heavily on data to analyze and improve performance across all aspects of the brand. Take servers, for example. Restaurant management software from Avero “enables us to match an individual’s performance and schedule them at times they’ll do the most sales,” says Morton of the performance optimization tool.
“It basically tells us, for example, that at 7 p.m. on a Friday night is when the restaurants sell the most Lagunitas IPAs,” he continues. “So say Laura also sells the most IPAs during her shifts, so you should schedule her on Fridays.”
Managers do check-ins with every employee at the end of each shift to quickly review sales data, and employees can also see how they rank, along with their sales of particular products and average tips.
“It’s the most transparent platform for our employees,” says Morton.
A careful evaluation of the sales mix across all of the group’s restaurants (DMK has nine independent Chicago concepts in addition to its burger bar franchise) is used to tap into guest preferences and inform future menu items.
“One of the huge advantages we have is being multi-unit and multi-concept, so we can see broader trends,” says Morton, which in turn influence DMK Burger Bar as it sets monthly specials and markets certain products.
But perhaps the most powerful data set comes from something Morton says most brands would see as too costly and burdensome.
“We do full P&Ls for every outlet, every week,” he says. “We get down to the penny and anything that can be modified and improved is.”
It was because of that process that Morton says he saw huge declines in soda sales before it became a broader industry trend, for instance, and so was able to instruct the restaurants to highlight soda alternatives and DMK’s own house beverages. “It takes a lot of the guesswork out of it.”
Laura Michaels, managing editor, follows three franchise systems through a year’s worth of challenges. For more expert advice on the subject of big data, see her Franchise Insights group on LinkedIn or send comments to firstname.lastname@example.org.