SpeedLine POS: Customer Case Study,Capital Pizza Huts, Inc.

Managing Globally, Selling Locally:
Strategic Technology Investment Pays Off for Pizza Hut Franchise Company

Whether you run a pizza empire or own a single store, there's one hard and fast rule to live or die by: "Ultimately, you need to take money to the bank at the end of the day," says David Henderson, vice-president of field technology for Capital Pizza Huts, Inc., a franchise company that owns 89 Pizza Hut units in New Jersey, Maine, Tennessee, Virginia, New Hampshire, Vermont and North Carolina.

When Capital learned in 2004 that their POS provider was phasing out support for its menu management software, they recognized they were facing a significant business challenge with direct implications for their bottom line. Control over menu changes was essential to ensure that the company could respond quickly to market changes—and keep overhead in check. "We were so accustomed to making our own changes that we refused to give up menu management," David says. "We decided to look for another point of sale solution that would support this functionality."

Formed by Ken Wagnon in 1982, Capital Pizza Huts, Inc. had developed effective systems to drive lean and mean operations. The company needed a POS that would not only help them maintain their market share, but also improve profitability. "We put together a multi-page list of different points of comparison between POS systems," says David. "We used our current POS as a baseline: we wanted to have at least the same functionality, but also add to it."

At the time, David worked as vice-president of operations for the Tennessee region. He'd started out with Capital in 1984 as an assistant manager and grown through the ranks until he became director of field automation in 1992. In this role, he had already overseen a successful transition to a new POS system. When the need arose to select another point of sale provider, founder Ken Wagnon asked David to bring his extensive experience in operations and technology to the task at hand.

As with any large technology switch, much was at stake: The decision took a full year. "This was going to be a significant change for our stores," David explains. "We wanted a system that was easy to use and that would integrate seamlessly with our existing above-store system."

"When we finished our evaluation," David continues, "we were very impressed with SpeedLine's ease of use. The software also offered us all the features we needed. Add to this a compelling price proposal, and the deal was sealed."

"We wanted a system that was easy to use and that would integrate seamlessly with our existing above-store system."

Successful Roll Out and Integration

"We started our roll-out in July 2005, after a four-month testing period," David recalls. "Our last store was installed in March 2006."

"We had put in place a detailed plan to get the crew trained," David says. "But SpeedLine's order flow is so intuitive that even staff who had missed the training could just start using the system with little help. The fact that someone could walk up practically sight unseen and be able to take orders was helpful in a rollout of this magnitude."

"Even today, SpeedLine's ease of use continues to be an asset as we train new employees," David concludes.

"The fact that someone could walk up practically sight unseen and be able to take orders was helpful in a rollout of this magnitude. "

The integration with Capital's above store system also proceeded without a hitch. "We use an IBM AS/400 system for data analysis, accounting and marketing," says David. "SpeedLine's integration with our above store system has been a huge win. With the data we get out of SpeedLine, we can do significantly more in-depth reporting than we did with our previous point of sale. The amount of information we get is phenomenal. It helps us make good decisions."

Management Tools that Work

Central management of menus and pricing empowers head office to respond quickly to changing conditions. "We may have a market where a competitor is coming up with a new strategy," David explains. "With SpeedLine, we can have new prices or menus out in a matter of minutes. We're able to make decisions in a heartbeat and implement changes. We don't have to wait for somebody to get it done. We can do it ourselves."

SpeedLine also enables Capital to maintain different pricing for the same menu in various locations. "All our stores carry the same base menu, with the exception of our Bistro locations that have an expanded menu," says David. "But we have different pricing for our four regions. SpeedLine makes it easy to manage four menus with different pricing structures."

"SpeedLine makes it easy to manage four menus with different pricing structures."

Recently, Capital has integrated their online ordering with SpeedLine: "All of our 42 delivery stores are now taking orders from the Pizza Hut Web site," David says. The Pizza Hut site links customers to offers and prices specific to their location.

Beyond menus and prices, Capital also manages POS system settings above-store. "That way, we know it's the same in every store," David says. "We expect everybody to do a void, manage inventory, or enter new employee information the same way. Controlling these settings above store ensures consistency."

Most of Capital's major marketing efforts are pushed through from above store as well. The depth of data SpeedLine provides helps the company achieve better marketing results. "We've been able to add a unique coupon code to all our offers," David says. "Door hangers, direct mail, newspaper ads, they all get a different code. So now we can really track the results of our marketing campaigns."

"When customers hit so many days without an order, we send out postcards with offers that are specific to their needs, based on their order history from SpeedLine."

"We've found out direct mail works best," David adds. "We target lapsed and faded frequency customers with coupon offers based on their order history from SpeedLine. When customers hit so many days without an order, we send out postcards with offers that are specific to their needs, based on their order history. If a customer typically orders large pizzas, we'll send a coupon for a large pizza. And that has been extremely successful."

Tighter Security

While marketing to their SpeedLine database generates a good return on investment, the system's ability to cut costs also helps bolster the bottom line. At the stores, installing SpeedLine translated immediately in better cash control. "Fingerprint security was a huge benefit," David points out. "At first, our employees complained, because they didn't like the idea they couldn't do anything without having their fingerprint on it."

"Our old system was code-based," David says. "When the manager was too busy to do a void, he would yell his code across the room for everyone to hear. It's easy to cheat when you have your manager's code. Now, staff can no longer do that and it was a big adjustment for them."

"Before SpeedLine, people would steal and find ways to hide it," David says. "Now, we can hold people responsible for their own cash drawer. We can track all the activities that go in and out of it. We didn't have that ability before. It has helped us improve loss prevention dramatically."

"Change downs can be a big source of abuse," David continues. "Someone pays for a medium pizza, but before Suzie server cashes it out, she changes it to a smaller size and pockets the difference. Before SpeedLine, it was hard to monitor this type of activity. But now, every day, our district managers receive a report with all of their stores' void activity, coupon activity and change downs. Having daily access to such transaction details helps them identify offenders."

Taming Food Costs

Another advantage of above-store reporting is improved inventory control at the store level. "The stores do a weekly inventory," David explains. "We pull all the information at head office and consolidate it. Then we pass it back to our district managers, who review it to see if there are any food cost issues."

"They can compare usage variance numbers side by side. If they find that one store has wasted more cheese than the other stores, for example, they can go and ask ‘Where's the cheese?' They can also compare purchasing from store to store. If one store is buying lettuce for one dollar a head and another is paying $1.50, they can change the vendor to get the better price. Having consolidated numbers for inventory helps reduce costs."

Forecasting Power

Accurate sales and labor forecasts boost Capital's operational efficiency and ensure timely service at the front counter.

SpeedLine's forecasting suite enables Capital to build prep plans and schedules that are based on hard numbers rather than estimates. SpeedLine supplies sales data, labor hours for every position, numbers of items sold and production averages. The system can also make a sales forecast not only for the day, but for lunch and dinner separately.

"At lunch, managers can even forecast how much traffic is going to be dine-in, carryout and delivery," David says. "That really helps when it comes to scheduling labor."

"Store forecasts are a collaborative effort," David adds. "At the beginning of each year, our managers come up with a forecast for the year. If business needs change, district managers will roll that up and pass it to us every quarter. We'll then push down a home office sales projection and home office projected costs of labor back to the stores. This gives us a base to work from."

"But we keep the forecasting tools turned on in all the stores. Each week, managers make a sales forecast and build a schedule. The store manager may be aware of things we couldn't have anticipated, such as a competitor's closure or construction on the street. We pull all the stores' forecasts every week and push them back down to the district managers. On Monday morning, the store forecasts and crew schedules are waiting in their email box. They can review them and address any issues that arise. These tools have been very helpful."

"At lunch, managers can even forecast how much traffic is going to be dine-in, carryout and delivery. That really helps when it comes to scheduling labor."

Having information flowing daily between stores, head office, and district managers is invaluable in more ways than one. "We've dramatically improved communication with our stores," David says. "And not only that: We've also eliminated a lot of soft costs, like faxing and mail costs. Now we can just email information back and forth. It's tough to put a number behind these savings, but they're definitely there."

Branching Out

Now that the dust has settled on the large technology overhaul, there's no doubt that the switch to SpeedLine was a shrewd business move for Capital. "We're leaps and bounds ahead of where we were before," David says.

Pleased with the gains realized with SpeedLine in their pizza units, Capital recently opted to deploy the POS system in their new quick service concept, Freddy's Frozen Custard.

Freddy's Frozen Custard stores specialize in lean, seasoned steak burgers and thick, creamy custard. Capital recently bought into the quick-service franchise, founded in Wichita, Kansas, in 2002. "We currently have five Freddy's Frozen Custard stores," David says. "And we will install SpeedLine in all of them over the summer."

Freddy's is already taking advantage of several enhancements in SpeedLine that address the specific needs of quick-service restaurants. With SpeedLine 5.8, quick-service operators can integrate drive-thru and customer facing displays with their SpeedLine systems. Moreover, unique Directed Order Entry™ tools deliver faster, more flexible order entry and pricing for value meals, as well as new options for suggestive selling.

"Combos are big in the burger business," David says. "SpeedLine gives us the ability to keep our combo meals together. Enhancements to the kitchen display system also ensure that an order moves along the makeline and remains together all through the kitchen."

"Our relationship with SpeedLine is the best vendor relationship I've ever experienced. They've delivered on what they've said every time. The relationship has been outstanding."

"Enhancing SpeedLine for quick service is a logical step for us," says Terry Haan, SpeedLine's vice-president of Development. "Many of our customers own multi-brands and need a versatile POS that can perform well in different settings. We welcomed the opportunity to work on developing solutions for concepts such as Freddy's Frozen Custard. We have added new capabilities that will have a wide appeal in both the pizza and quick-service segments."

"Our relationship with SpeedLine is the best vendor relationship I've ever experienced," David says. "When they tell me they'll do something, they do it. And if they can't, they tell me that too. They don't try to snow me with promises they can't keep. They've delivered on what they've said every time. And that's not something that is true of many vendors. The relationship has been outstanding."

Capital Pizza Huts, Inc. in a nutshell:

Established in 1982
2 concepts: 89 Pizza Huts, 5 Freddy's Frozen Custard
SpeedLine in all locations
Integrated AS/400 system above store for data analysis, accounting, and marketing

Visit SpeedLine's home page

David Henderson sitting in a booth in the Johnson City, TN, Pizza Hut