Extraordinary measures: The top four areas restaurants should measure for success
By Matt Steinfort, President and CEO, Envysion
Management consultant and author Peter Drucker once said, "What is measured improves."Today, forward-thinking restaurant operators are using modern video technology to measure virtually everything from shift readiness to inventory control.
While many restaurant operators have historically viewed video intelligence solely as a tool to catch fraud and theft and to minimize loss, this view misses a huge opportunity to improve the business. Video intelligence can help restaurants assess employee performance, reduce high-risk fraud and theft behavior, and increase profitability. Additionally, modern video technology offers an even bigger opportunity to impact the business by measuring key performance indicators that are critical to the company’s formula. When these key metrics are combined with analytics and the underlying visual context, operators gain powerful insights to improve overall performance and profitability.
The following are key business areas restaurant operators should be measuring to improve performance and profit margins:
1. Customer interaction:There are three ways to make more money in business: get more customers, raise prices, or sell more to each customer. Selling more to each customer, cross-selling ("Would you like fries with that”) and upselling, ("Would you care to super-size that order?”) are easy and critical to measure. Are your employees aware of marketing promotions? Are they making the offer to each customer?
D-Carr Investments manages ten KFC stores in Florida. Bernie Quintero, director of operations at D-Carr, uses video to observe customer interactions and ensure that employees are actively supporting ongoing promotions. "We went from selling 30 mini-cakes a week to 300 using video analytics technology,"Quintero says. "We were $3,000 over quota at every store."Monitoring behavior and using the results to more effectively train employees can maximize the value of every customer interaction.
2. Loss prevention: The U.S. Chamber of Commerce estimates that 75% of employees steal from their employers, and some do so repeatedly. Just by having processes in place and monitoring for theft, businesses can decrease its incidence. Video, when integrated with POS systems, and with the application of advanced business intelligence, can keep honest people honest. Simple exception reporting on high-risk behavior such as no sale ring-ups, cash refunds, and low-dollar transactions, for example, can help an operator spot exceptions and quickly take action to address the issue, whether through training or corrective measures. We’ve seen restaurants gain double-digit profit improvement by using video intelligence to fight loss prevention.
3. Operational processes:Though managers of restaurant chains may not be able to be at each store every day, they can remotely gain greater insights on their operations to ensure their standards are being consistently met and their processes are being followed. They can identify best-performing stores and those with the most improvement opportunities. They can sit down with their employees, using the video as "game film"to help coach them on desired outcomes. As with identifying opportunities to prevent loss, operators can isolate just the exceptions or information that is important to running their business—on sales conversions, checkout efficiency, store cleanliness, open and close procedures, etc. —to quickly hone in on specific transactions without having to watch hours of video.
Widely thought of as an innovator in the fast casual space, Chipotle is an example of one company using video analytics across its operations. Its profits, among the highest in the industry, are a clear indicator of its success. In addition to decreasing loss to a fraction of the industry average, Chipotle uses video intelligence technology to gain complete transparency into store operations across virtually every department at the company. Managers in HR, legal, facilities, marketing and finance can easily access and search on video from each store, securely logging in from their computers. Information gleaned from video and POS data is used for various projects, from responding to customer incidents to looking for opportunities to increase profitability and efficiency.
4. People counting and service time analysis:"How many people came in today?"The practice of "people counting"is as old as the restaurant business itself. In the past, operators would rely primarily on their point-of-sale system for the count of customers (i.e., we sold 100 hamburgers, so we must have had 100 customers). And ultimately, counting customers this way didn’t add much more insight than just tracking sales. Today, with video analytics and POS integration, operators can not only count the number of customers, but also measure how long they spend in line, where they tend to dwell, and whether they abandon lines—and be able to see the video of the actual customer experience behind each of these measures. The insight gained from this analysis can then be used for an almost endless variety of tasks: to create more targeted and effective marketing campaigns, to improve staffing, to understand in-store traffic patterns, etc., across one store, a region, or beyond. "We use video analytics to do audits where we’re looking for what we call our pillars of throughput—operational things like being ready for the shift, all hands on deck, all the food prepared. If the video shows us that those elements are in place, we know we’re going to bring more customers through the doors, which results in higher sales,"explains Tim Spong, director of safety, security and risk at Chipotle.
When a restaurant brand is simply the aggregate perception that the guests have, having a data-driven understanding of the customer experience can be all-important in the creation of a customer-centric experience.
From our customers’ experience, on average, companies can expect about a 10 percent improvement in profitability in as little as a few months from reduced loss as well as better visibility into customer experience, store operations and sales effectiveness, through broad utilization of video-driven business intelligence.
By measuring key indicators in these key business areas, mining the data for insight and then turning that insight and game film into action items, restaurants can get results that give new meaning to the saying "What is measured improves.”
Matt Steinfort is responsible for both the strategic direction and the day-to-day operation of Envysion, a leading provider of video intelligence platforms used by leading brands such as Chipotle, Einstein Bros. Bagels, Bohme, Verizon Wireless, Noodles & Company and more, at www.Envysion.com. Prior to Envysion, Matt was at ICG Communications, Level 3 Communications, Bain & Company, and IT consultancy, Cambridge Technology Partners.