Few businesses are as much of a numbers game as running a restaurant chain. Razor-thin margins, tough labor conditions and fickle customers are only a few of the issues such a company faces.
"You have to understand what drives the business and how different factors impact the bottom line," says Nicolas Ibrahim, CTO for restaurant franchise Ruby Tuesday.
With 900 restaurants in the United States and 40 overseas, metrics and benchmarking are crucial. "A good IT solution has to start with a good understanding of the business requirements," Ibrahim says. Alas, many IT people haven't had experience with the basic issues and problems that staff and others face, he explains: "In the past, we have hadmanagers and others say, 'IT people don't know the restaurants, so how can they put measurements in place for us?'"
Ibrahim typically looks for a blend of user requirements. He talks to people from both the business and IT sides, and pores over numbers and statistics looking for metrics that reveal the essence of the business. "The reality is, others in the industry aren't going to share their key metrics with you, and many of them aren't capable of getting accurate information on key issues or metrics," he says.
Ibrahim focuses on internal benchmarks and key performance indicators that tie into ROI and overall performance. One of the most basic metrics he relies on is "capital expenditure as a percentage of ROI." "This is the first thing that determines whether or not we are going to get involved with a project," he explains.
But Ibrahim also has turned to other strategic metrics centered on business operations. These cascade down from an overall ROI metric. For instance, Ruby Tuesday examines loss prevention and performance metrics such as the number of voided orders that occur, the number of credit card transactions that take place, how many salad bar visits customers buy, tip percentages and more.
Ibrahim views the data over time to spot trends. He also drills down to the individual restaurant level to examine whether serving staff are doing their jobs adequately and how efficiently different regions and individual restaurants are performing.
This exception-based system allows Ruby Tuesday to monitor performance--and ultimately the customer experience--without mistrusting workers within its restaurants. "We can view statistical trends and make the necessary adjustments," Ibrahim says. Similarly, the restaurant chain can track coupon redemption rates and their impact on revenues in regions, cities and even individual restaurants; use time metrics to track project management tasks; and use technical metrics to ensure that IT systems are being used efficiently.
Driving these sophisticated measurement methods is a growing use of analytics and business intelligence, Ibrahim says. The company has built a sophisticated Teradata database and relies on BI tools from Cognos.
The technology allows Ruby Tuesday to adjust its menu items quickly based on changing customer preferences in different regions. The chain also can alter the course of a project on the fly when market conditions change, and it can measure productivity and other key performance indicators. "We can tie almost everything in to ROI and make good decisions," Ibrahim says.
However, Ruby Tuesday isn't entirely ruled by data and metrics. "In some cases, we have to sacrifice some metrics in order to handle a project that management wants to push," he notes.
Likewise, executives use their experience and expertise to guide decisions, and they keep a close eye on metrics so that changing conditions--such as today's sagging economy--don't skew results and lead to the wrong conclusions.
To be sure, metrics aren't going to disappear from Ruby Tuesday's plate any time soon. "We live and die by measurements and how they are taken," Ibrahim says. "They have transformed our business."
This article was originally published on 04-13-2009