Many of the technologies that will be most meaningful to foodservice operators in the months ahead are transformational in nature and will reshape the way they deal with guests and employees, speakers told attendees at the recent 15th Annual FSTEC conference and showcase held in Long Beach, Calif.
Among the messages operator presenters and experts from Forrester Research shared with hundreds of foodservice technology professionals Feb. 21-24 at the Long Beach Conventional & Entertainment Center:
Social-networking tools will soon be key to interacting with guests and inspiring in-house innovation.
Technologies for interacting with customers increasingly will need to function on “smart phones” and other small-screen mobile-computing devices.
Internet technologies are gaining importance in supporting core business applications that once ran only on desktop computers or in proprietary data centers.
Social media rising
“Social media will become a normal part of business,” said Todd Michaud, vice president of information technology at Focus Brands, the Atlanta-based parent of Schlotzsky’s, Moe’s Southwest Grill and Carvel, among other chains. “It will be integrated with CRM [customer relationship management], it will have to be tracked, and the procedures will be placed into standard business practices.”
Michaud was part of the general session presentation, “Social Media and Foodservice: The 411 from Operators & Academicians,” sponsored by PAR Technology. He said restaurant company IT departments will start to work hand-in-hand with marketing teams, public-relations groups and even operations to find the best returns from social-media efforts.
“IT will be core to social media in the very near future,” Michaud said. He and some other speakers noted that marketing departments often begin their exploration of social media without involving in-house technology experts, only to seek their help later when it comes time to aggregate or analyze the data generated by such experiments.
Keynote speaker Nigel Fenwick underscored the point when he said, “We’re entering a new era of social innovation” and because of that “never before have we had a need for a relationship so close between marketing and IT.”
Fenwick is vice president and principal analyst for Forrester, this year’s conference research partner for FSTEC, which is produced and managed by Nation’s Restaurant News with Robert N. Grimes of Accuvia. He maintained that a company’s social-media initiative must be driven by “people with P&L responsibilities” and through an assessment process known as POST. Such initiatives likely will not succeed if engineered solely by the IT department or based on an executive’s preconceived notion about which social-media platform is best, he said.
POST, Fenwick said, stands for “People, Objective, Strategy and Technology,” and involves assessing a company’s customers and the types of social media they use and why, establishing an objective to be reached by engaging customers using such media and developing a strategy for doing so before deciding which technology or social-media platform is best.
Fenwick cited Pizza Hut multimedia materials related to online ordering as demonstrating some “great harmony between marketing and IT,” and said the
Also cited by the Forrester analyst was an online post by someone who bemoaned the elimination of a favorite menu item at Arby’s and the positive replies by two “empowered employees.”
CIOs sound off
During FSTEC’s annual “CIO Panel” general session sponsored by Radiant Systems Inc., Brian Pearson, vice president of information services for BJ’s Restaurants Inc. in Huntington Beach, Calif., said the 90-plus-unit chain currently was focusing on new social-networking tool sets.
“We originally had about 1,200 friends on FaceBook,” Pearson said. “Now we’ve got 40,000. They’re the most loyal followers you’ll ever find, even more than some loyalty programs. Guests just seem to like it.”
Pearson said the brand has integrated social networking into its marketing group and uses it to feature product and new restaurant information. He said one person in the marketing group is responsible for adding daily postings.
Charles Lee, CIO of Taco Bell in Irvine, Calif., said the giant Mexican quick-service chain is using social networking “to share know-how around the system. We’re making an effort to capture best practices and post them.”
Gary Johnson, director of information services for In-N-Out Burger in Irvine, Calif., said his company also has been using social networking as an internal-information source. For example, he said, a new In-N-Out restaurant opened recently in Salt Lake City, and the company monitored FaceBook and You-Tube to observe “what has been posted about us. It’s been very beneficial.”
Panelists discussed the shift toward Web-based ordering as well. While Johnson said In-N-Out Burger was “not contemplating it,” Allison Watanabe, vice president of information technology for El Pollo Loco in Costa Mesa, Calif., said the chain was in the process of redesigning its website and plans to build an online-ordering component into it.
“We have the expertise in-house to do it ourselves,” Watanabe told attendees.
Pearson said BJ’s has offered online ordering for a couple of years, adding: “I think it’s great. We’re a casual-dining operator and have a larger, complex menu. This is an opportunity to get the order 100-percent right.”
Online ordering boosts sales
Other restaurateurs attending FSTEC 2010 reported positive results after the implementation of online-ordering systems.
Geoff Alexander, vice president and managing partner of Chicago-based Lettuce Entertain You Enterprises’ three-unit Wow Bao Asian concept, told attendees that orders placed through his brand’s third-party-hosted online-ordering system run as high as $36 at one restaurant, compared with an average dine-in check of $6 to $7.
Kenny Sullivan, senior director of operations and analytical systems for Dallas-based Brinker International, said in the past several months since Chili’s and On the Border have begun to offer Internet ordering, the two chains have enjoyed a number of benefits. Among other things, the ordering system adds a new revenue stream and attracts more customers, is convenient for guests, allows the To Go specialists at each unit to spend more time with each guest, adds a new marketing platform and minimizes the phone-ordering process.
Meanwhile, Sullivan has seen online check averages running 30 percent to 40 percent above standard checks. He added that Maggiano’s is expected to add online ordering later this year.
Paul Valle, chief information officer for Papa Gino’s—which also includes D’Angelo Grilled Sandwiches—in Dedham, Mass., said online ordering can reduce congestion when a customer picks up his order. If the order is paid for in advance, the guest can proceed directly to a dedicated pick-up spot in the store.
“We can also gather a customer’s ordering history, which gives us more marketing potential,” Valle said.
He said that orders placed online at Papa Gino’s chain run 70 percent higher than the chain’s standard check average. At D’Angelo, online checks are running 54 percent more than in-store checks.
Valle, Sullivan and Alexander were the presenters for the breakout educational session, “Online & Mobile Ordering.”
Alexander’s online-ordering technology supports a branded application for Apple’s iPhone. And while he noted that the iPhone app does not generate a tremendous amount of business at this point, he said: “This is where technology is going. You can use it to find a location, learn about the concept, see the menu and look at pictures. It’s cool.”
Taco Bell’s Lee, during the CIO Panel, said his chain was employing “a couple” of iPhone apps, including one that helps users locate restaurants, while another markets the menu and showcases “how much food you get for under $5.”
More mobile apps on the way
Members of the “Technology Executives Panel” general session, who represented major hardware and software supplier companies, also maintained that mobile devices would be among the hottest developments of 2010.
The executive panel included Paul Langenbahn, president of the hospitality division for Radiant Systems Inc. of Alpharetta, Ga.; Ed Rothenberg, vice president of restaurant sales and strategies for Micros Systems Inc. of Columbia, Md.; and Peter Wolf, vice president of marketing and business development for PAR Technology of New Hartford, N.Y.
Wolf said mobile technologies benefiting service staff and diners, such as coupons that can be scanned from a cellular phone, are likely to be a focus for many restaurant operators in the coming year. “Customer relationship management and loyalty will gain traction,” he predicted.
Rothenberg highlighted customer database management, saying restaurant operators will be looking for ways to collect data when customers order or make reservations online. These are opportunities to identify guests and build a database to capture return visits, he said.
Langenbahn said connecting with consumers is key, but he added that restaurant operators will also be looking for new tools and strategies for business loss prevention, as well as security.
Most restaurants think about security in terms of compliance with credit card data security standards, but Langenbahn noted that operators who have unsecured remote management applications on their POS computers are giving data thieves access to information in a manner akin to “leaving the back door of a restaurant wide open.”
“The industry needs to move beyond thinking about this as a compliance problem and think about it as a security problem,” he said. “Usually it has less to do with payment applications and more to do with the security of a network.”
Unexpected benefits from security tech
The topic of technology and security came up more than once during FSTEC, including during the “Video and Audio Surveillance Technologies” panel presentation, which touched on systems that rely heavily on the Internet or related technology, such as private Internet Protocol networks.
Scott Bleau, director of IT for Qdoba Restaurant Corp. in Wheat Ridge, Colo., said the 500-plus-unit fast-casual chain initially installed video surveillance systems to stop shrinkage and help with human resources troubleshooting. However, an added windfall, he said, was its application for training. “You can watch a busy shift and share [the learnings] with less experienced employees,” he said. “That was an unexpected bonus.”
He said the system is useful also in sexual-harassment cases, and slips and falls. “It’s difficult to calculate the ROI, but I’d say we’re getting our money’s worth,” he added.
Christian Sandoval, owner of Sandoval Family Inc., a San Diego-based operator of 21 McDonald’s, said that his company uses video monitoring at 14 outlets. “In one month we’ve seen a 2-percent reduction in theft and a 1-percent gain in productivity,” he said.
Sandoval said that in a one-week period the company terminated 15 employees for theft and giving food away.
By monitoring employees’ performance, the company also is able to help managers manage more effectively during peak periods, he explained.
Greg May, chief technology officer of Paradigm Investment Group, the San Diego-based franchisee of 85 Hardee’s locations, said the company employs video surveillance in 35 of its stores so far. The system is used primarily to monitor robberies as well as employee pilferage, and is able to link video segments to POS transactions, which he said helps reduce food give-aways.
Employee work habits are also scrutinized.
May said Paradigm has centralized access to the digital video recorders in its restaurants and uses dedicated staffers to review video and present items for remediation.
He cautioned attendees, however, to consult a lawyer before installing audio-recording devices, as that is “illegal in some states and has HR ramifications.”
Security concerns may force operators to use other new technologies, speakers in the “PCI Best Practices, Case Studies & Market Trends,” panel session hypothesized.
Richard Del Valle, director of Restaurant Systems for Friendly Ice Cream Corp. of Wilbraham, Mass., voiced concerns that Payment Card Industry trade group policy makers might force a dramatic change in the way restaurants conduct business.
Restaurants are one of the few retail environments where a customer hands a credit card to a complete stranger, and then the stranger temporarily disappears with the card. Given the potential for card-information theft, Del Valle worried that PCI regulators might eventually require that foodservice operators process their credit card transactions at the table.
Tom Lindblom, vice president and CTO for CKE Restaurants Inc. of Carpinteria, Calif., agreed, noting one solution might be through the use of swipe devices at the table.
Such pay-at-table devices are already used by 30-unit Legal Sea Foods Inc. of Boston, which this year was an FSTEC Project Excellence award winner.
Evolving technologies improve operations
The Carino’s Italian casual-dining chain in May is scheduled to roll out an advanced sales forecasting and labor scheduling application developed in partnership with its online workforce management software and services provider.
Outlining the system in the breakout session, “HR Tech Toolbox,” Ray Gallagher, senior director of operations for Austin, Texas-based Carino’s Italian, said the system has been tested in eight stores. The chain is planning to deploy the hosted software to 71 company stores within the 140 domestic units starting in May, and franchisees will be invited to participate.
Among other functions, the combined forecasting and scheduling software takes sales and guest counts in 30-minute increments and develops averages, creating a system that plans staffing based on need. Carino’s also has been able to integrate its own rules for the scheduling system to follow, such as the need for a minimum of two servers at all times, or staffing one server for every 8.5 guests.
Stores testing the software had reduced labor costs, in part because the units were able to cut back on higher-wage back-of-the-house employees, even while beefing up front-of-the-house staff during peak hours, Gallagher said.
FSTEC’s Diamond Sponsors are Micros Systems Inc., Par Technology and Radiant Systems Inc. Altametrics is the Platinum Sponsor and the Gold Sponsors are CrunchTime! Information Systems, DTT Surveillance, HyperActive Technologies and Patni Americas Inc.