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How Schlotzsky's, Auntie Anne's, Krystal, Huey Magoo's bring technology to the table
The final panel at the Restaurant Franchising & Innovation Summit in Louisville made it clear that chains need to tackle the challenges of online ordering, third-party delivery and technologies that empower employees to excel.
June 11, 2019 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times
The name of the game in fast casual dining nowadays is technology, especially for chains looking to grow in a competitive marketplace where customers are expecting a fast, easy and satisfying purchasing experience. So much, that some fast casual establishments go as far as calling themselves technology companies that provide food.
At the end of three days that flushed out every conceivable challenge facing restaurant chains, the final panel at the Restaurant Franchising & Innovation Summit in Louisville, dubbed "Franchising Think Tank," made it clear that chains need to tackle the challenges of online ordering, third-party delivery and technologies that empower employees to excel. Peter McLaughlin, head of customer success at PlayerLync, moderated the panel.
Top of mind: third-party delivery
Third-party delivery was the 800-pound gorilla in the room. The panelists acknowledged concerns about loss of customer data and employee accountability, but most are continuing to pursue growth on this front.
Kelly Roddy, president of Schlotzsky's Austin Eatery, said third-party delivery could account for as much as one tenth of the company's sales by year's end, and eventually account for half of the sales. He sees it as a way to generate more sales without more labor, as well as a way to get return on your investment during business lulls in the restaurant.
Paul Macaluso, president and CEO of Krystal, agreed on the importance of delivery sales, but noted that in his case, he has had to add employees to handle the extra business.
For Huey Magoo's, third-party delivery already accounts for 20% the sales, President and CEO Andy Howard said, and has necessitated additional labor during peak business hours. The company raised prices by 15% on delivery items and did not notice any negative impact on sales, he said. The 10-store chain witnessed a 15% sales bump in the past year.
Despite these positive results, Howard does not want third-party delivery to command any more of the company's business due to the delivery costs. He hopes to negotiate more favorable terms with the delivery service providers.
Offering new technology is important to a number of prospective franchises, Howard said.
Time for brand refresh?
For some players, the need to add third-party delivery and other features has dovetailed with the periodic need to refresh the brand.
Roddy said repositioning the brand is necessary due to a changing culture that requires a higher level of service. Roddy's goal is for every guest to say they're glad they came to Schlotzsky's. To accomplish this, they are training employees to show the customer gratitude through a program called "We're Glad You're Here," which is paying off in more satisfied customers.
"It's caught on much better, much faster than I thought it would," he said. The rebranding also includes a redesign to look more like an Austin restaurant, which Roddy characterized as a "budget" look with its reclaimed wood and bright metals.
In addition to third-party delivery, Schlotzsky's investment over the last decade has also included a loyalty app and a self-order kiosk test.
Krystal has also launched a redesign, which has boosted sales by 70% in the seven units that were already updated as of this report, said Macaluso. The two remodeled franchisees have posted 30% sales boosts.
Auntie Anne's, in addition to offering third-party delivery, has introduced food trucks as a way to reach more customers, said Heather Neary, president. Food trucks can reach customers through catered events and festivals, she said, although the business dynamics of the food truck are different than a restaurant.
"We're a technology brand who happens to sell food," said Neary. In addition to third-party delivery and food trucks, Auntie Anne's also recently introduced a customer loyalty plan and an upgraded POS system, Neary said.
How to empower employees
On the employee empowerment front, Neary said the company is trying to make each crew member realize they are important to the team, which is something management is committed to on account of the tight labor market. There are also training videos less than one minute long.
To foster a sense of comradeship Auntie Anne's has a Facebook page for its employees where they are free to express their ideas. Neary said she comments on all the employee posts.
Macaluso said it is especially important to boost employee morale following a change in company leadership. To this end, his company started an employee scholarship program along with a new training program. These efforts reduced employee turnover by 27% in one year. In addition, an employee recognition app which can highlight an individual on the spot and reward them with a gift card has been especially well received, Macaluso said.
Krystal also recently invested $5 million in a new POS system in its company owned restaurants and is in the process of rolling out online ordering, he said.
Asked for advice for taking on new franchisees,Howard recommended focusing on groups that are located close to your own operation as possible to be able to spend enough time with them.
Roddy suggested choosing someone whose culture and attitude is similar to your own.
Asked for advice for industry newcomers, Howard advised people not to put money at the top of their wish lists. Financial rewards will come when they produce good results.
Neary said having humility and being transparent with your employer was important. For managers, she advised making employees feel a sense of ownership for what they do.
About Elliot Maras
Elliot Maras is the editor of Kiosk Marketplace and Vending Times. He brings three decades covering unattended retail and commercial foodservice.
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