Jim Moran is a pizza and restaurant industry veteran, and an industry consultant and speaker with Restaurant Trainers, Inc. and a contributing editor to PizzaMarketplace.
When it comes to restaurants, I have seen the extreme ends of the spectrum on almost every issue in the last two decades. I spent over half of that time working for Domino's Pizza
Uniformly, the most glaring difference between the two types of operations is crew image. Until recently, I did not fully understand the significance of its impact on the long-term success of a store until two recent clients of mine illuminated the issue for me.
The first client, who I'll call "Client A," brought me on as a consultant primarily for marketing purposes. He is a nine-store franchisee for a major national pizza company. Sales have grown at all of his stores for the last few years, but he knew that he could do better, because he has not spent a single dime on any kind of marketing.
When I toured Client A's stores, it was obvious that this franchisee was the exception to the rule. The stores were immaculate and everyone was in perfect uniform. In fact, in 2004, this franchisee had not received a single crew image violation on a single corporate or internal audit. That was certainly not because of his ideal hiring pool; his stores were located in an area of the country where crime is high.
Client A spends a great deal of time maintaining an extensive mystery customer base and encouraging customer feedback. Most people would be satisfied with this client's consistent, positive sales, but his POS computer's database showed that he pulled in very few new customers each month. His sales remained positive because he maintained his customer base: 72 percent describe themselves as "very satisfied" with his product (which, in my opinion, was above-average at best). However, his customer return rate on deliveries was 89 percent.
** A short aside: To calculate your customer return rate using your POS system, bring up the number of addresses you delivered to in 2004. Next, bring up the same addresses, but use the >1 (greater than 1) function to calculate the number of address you delivered to more than once. If you had 9,000 delivery customers in 2004, and 6,000 ordered more than once, your customer return rate is 66.6 percent.
In case the number you get seems too low, rest assured that calculation isn't statistically perfect. Be certain, however, that it is more than close enough to the truth. Many operators I've worked with don't want to believe it when they see such low return numbers, but as the old saying goes, numbers don't lie.
Now, back to the story: Client B owns 10 stores, but he's in a very different situation from Client A. The only thing he had in common with Client A was that both use mystery customers, audits and extensive customer feedback. Client B has the advantage of serving a much better product. In fact, 91 percent of Client B's customers describe themselves as "very satisfied" with the product.
Client B also hired me for marketing purposes, but unlike Client A, he had spent a great deal of money on marketing: direct mail, Advo and Val-Pack, advertised in local papers and even used some of the door-hanging and school fundraising ideas I have written about for PizzaMarketplace (read also OPERATIONS: Pizza-centered school fundraisers pay dividends for all).
Despite all this, and despite having a better product, Client B was consistently returning to negative sales. And when I toured that client's stores, the reason why became obvious: The stores were dirty and the crew image was horrible. Though the uniform standards for both companies were almost identical, each operator placed vastly different levels of importance on those standards. Both companies required khaki pants, but the crew for Client B often substituted cargo pants or khaki colored jeans. His employees wore non-uniform jackets and hats, and very few male employees were clean-shaven.
Even with all these problems I was surprised that their customer rate was as low as it was: a disastrous 32 percent. Even with some image problems, they would still be able to draw more customers, I thought. But that low number spoke volumes about how much importance customers put on image.
Product Satisfaction Customer Return Rate
Client A 72 percent 89 percent
Client B 91 percent 32 percent
It seems hard to believe that image could have such an incredible impact on your delivery business, but if you put yourself in the customer's position, it starts to make sense. When customers order delivery, they agree to open the doors of their homes to complete strangers. That is why the big companies that have been successful for so long pay so much attention to image. If the person a customer opens his door to is clean-cut and non-threatening, the customer will be more comfortable and likely call that restaurant again (of course, the product has to be good, too, but you get what I'm saying).
In retrospect, Client B was spending a lot of money to bring customers in, and they were coming in. They just weren't coming back. Client A has never seen the big upward spikes in sales enjoyed by Client B, but he has not suffered the sharp declines either.
I guess Client A may have been concentrating on the most important marketing technique all along.
Other articles by Jim Moran ...
* OPERATIONS: Well weathered
* OPERATIONS: Pizza-centered school fundraisers pay dividends for all
* OPERATIONS: Pricing and perceived value
* OPERATIONS: In the pizza business, your telephone line is your lifeline
* OPERATIONS: Top five operational trends for 2004
* OPERATIONS: Top five client mistakes of 2003
* OPERATIONS: Protect your investment and people with store safety policies
* OPERATIONS: Take pride in your product
* OPERATIONS: Monaghan's maxim was never to put the cart before the horse
* OPERATIONS: Rule #1 in pizza is, 'The customer is always right'
* OPERATIONS: Doorhanging is for drivers, not for kids
* OPERATIONS: Everyone wins on the 'one per run' delivery system
* OPERATIONS: Cross-training lowers labor cost, boosts morale
* OPERATIONS: The secrets of running low labor