Key Innovation: Hamburger restaurant chain Wendy’s is using a business intelligence tool to analyse sales data in near real-time, enabling it to improve marketing decisions in a competitive market.
Old-fashioned hamburgers might be what lure Wendy's customers through the doors of its 15 New Zealand restaurants. But it's a new-fangled business intelligence system that Wendco, the New Zealand Wendy's franchisee, is deploying to ensure customers keep coming back.
Since the middle of the year, Wendy's head office staff have been using a state-of-the-art business analysis tool to keep daily tabs on which burgers are selling best from which stores.
The software that is giving them new insight into customer behaviour is IBM® Cognos® TM1, which Wendy's financial controller James Irvine says is bridging the information gap that used to exist between stores and the company's Te Atatu headquarters.
It's not that the Aloha point of sale system in use in the restaurants wasn't recording abundant data. The difficulty, says Irvine, who is responsible for Wendy's information systems, was extracting the data in a timely and useful fashion.
"Aloha records every transaction, telling you how the customer paid — cash or eftpos — and every line item of what they ordered." The problem was, despite being able to store a year's worth of transactions, there was no automated way of accessing and analysing them.
In an effort to get some of that information into management's hands, the restaurants were linked via a wide area network to head office, and provided with email access. At the end of each day, restaurant managers would manually enter sales figures from Aloha into a spreadsheet, that they would then email to head office. And once a week a more detailed — but basically formatted — file would be exported from Aloha and sent to Te Atatu.
"We started this about two-and-a-half years ago, and it worked quite well, but we realised there was still a gap in terms of detailed information. Using a spreadsheet, we weren't able to get detailed reporting of, for example, hourly sales or individual transactions."
Of the enormous amount of data in Aloha, they figured they were using only about 10 percent. By the blunt instrument of spreadsheet reports, they were able to see what product mix the chain as a whole was selling. But because creating customised reports was too hard for non-expert users, a great deal of useful data was going begging.
"It was difficult to select and drill down to individual stores," Irvine says "or compare sales week by week, day by day."
A first step in making better use of store data, accomplished early this year, was to transfer it from Aloha into an SQL Server database. Once more accessible, they would either continue to crunch the numbers by spreadsheet, or they would implement a business intelligence tool.
The spreadsheet limitations were soon apparent.
While pivot tables could be used to view the data in a variety of ways, manipulating the information was slow and, if a new view was wanted, that required expert help.
IBM Business Partner Cortell Group, which had set up the SQL Server database, gave Wendco management a demonstration of how they could take analysis of the business to the next level. Using IBM Cognos TMI, and the Cognos Executive Viewer, they showed the managers some of the company's own data in ways they'd never seen it before.
"It was a very powerful demonstration. We had all of our management team in — marketing, human resources, facilities management and our CEO — and straight away they saw the potential of this tool."
Within a month, Cortell had put together a formal proposal, which was accepted by Wendy's CEO Danielle Lendich, and by July user acceptance testing of the system had been completed.
A feature of the quick-service hamburger business is that the better information you have about the product combinations customers like, the more targeted the promotions you can come up with.
"If a person orders a hamburger, what did they order with it — a Coke, or an orange juice? For us it's a matter of trying to understand customer order patterns."
Armed with that information, now being served up by IBM Cognos TM1, Wendy's can fine-tune its marketing and promotions, and place orders with suppliers with greater certainty about demand.
What's more, the tool lets Wendy's marketing manager Fay Stretch see the effect on sales within a day of a promotion beginning. "It gives me the ability to analyse many aspects of the business that I couldn't look at previously so I can make more robust decisions," Stretch says.
Reports are displayed by the Executive Viewer dashboard in a highly visual easy-to-read way, and the dashboard can also be readily user-customised.
As financial controller, Irvine has an alert set up to highlight cash variances between store takings and recorded sales. District managers, for their part, might want to be alerted when speed-of-service targets aren't being met.
Wendy's could have carried on without the detailed business information it now enjoys, Irvine says, but that would have left it "flying blind" in an increasingly competitive market. Having successfully deployed IBM Cognos TM1 in marketing, sales and operations, early next year it will extend it to human resources, the supply chain and deeper into the financial side of the business.
With all the business insight they could want at their fingertips, Wendy's management will then be in a better position to serve customers the old-fashioned burgers they enjoy.
"That's always been the difficulty of our business — people were always waiting for information. Now they no longer have to."
Key Benefits: IBM Cognos TM1 is providing Wendy's managers with sales data in a day that they used to wait a week for.
Using Cognos Executive Viewer, Wendy's managers can easily extract a wealth of sales information relevant to their particular needs
With timely and detailed information at their fingertips, the restaurant chain's marketers are able to make robust decisions about future sales promotions.
As IBM Cognos TM1 is rolled out further into the business, it will help with human resources, supply chain and budgeting decision-making.
