InformationWeek
Defining The Business Value Of Technology
September 14, 1998
Personalized Service At Lower Cost
Hotels and restaurants turn to transaction processing and real-time communications to get a strategic edge
By Tom Davey
| InformationWeek 500 Menu |
|
HOSPITALITY & TRAVEL With data from Hoovers Online  |
Managing a chain of restaurants may not match the urgency of running a hospital's life-support system or coordinating trading orders on a stock exchange's floor. But dispatching buyers to the world's seaports for shellfish while ensuring timely deliveries of these perishables to 1,160 eateries throughout North America is enough to keep almost any IT manager in a state of red alert.IT has become critical in running operations and gaining a competitive advantage for the InformationWeek 500 companies in the hospitality and travel-services sector, which includes some of the nation's largest restaurant and hotel chains.
"We believe information can be used to establish a strategic advantage," says Patti Reilly, director of corporate systems at Darden Restaurants Inc., a $3.3 billion company that operates 678 Red Lobsters, 471 Olive Gardens, seven Olive Garden Cafés, and three Bahama Breezes. "It always has been important, but never to the degree it is now. Information needs to flow seamlessly to and from our restaurant support center in Orlando, Fla., and our restaurants throughout the United States and Canada."
Coordinating such efforts is one of many tasks Reilly performs as she and other IT managers transform the restaurant and hospitality industries with real-time communications and transaction processing. Reilly manages 140 IT employees who oversee the technology underpinnings of all Darden's restaurants.
Reilly and other IT managers who handle hospitality on a large scale are exploiting new technologies to ease work from the corporate boardroom to the most remote dining outposts. A cynic might view IT in the hospitality business as a tool to expedite corporate tasks at the individual's expense. Instead, IT helps restaurants and hotels offer personalized attention, instead of the years when uniformity in pricing, food, and accommodations were the goal.
Perhaps the most critical ingredient IT adds is helping a multibillion-dollar corporation with more than 100,000 employees deliver custom services to individual customers-uniformly and cheaply. Some of these services used to be available only at high-end hotels and eateries, but always at a premium.
Hilton Hotels Corp. is combining its data warehousing efforts with a central reservation system to letHilton's employees access useful historical and trends data when booking rooms for customers, says Joe Durocher, CIO at the $5 billion chain.
For example, when reservation clerks receive calls, they'll be able to plug in customer names and bring up their accommodation preferences, Durocher says. Hilton will begin testing the system next month and expects to have it fully operating during the second quarter of 1999.
Durocher says Hilton is also combining the rollout of a new sales and catering software package in all its hotels with an effort to build a global sales-force automation system. Hilton's national salespeople will be able to look up booking transactions and view an inventory of meeting and guest rooms at the company's other hotels. Under the old system, sales reps had the time-consuming task of calling each hotel for a rundown of its accommodations and facilities.
Restaurateurs, who arguably have a harder time pleasing customers than hoteliers, take a different approach. "We're moving to the concept of regionalized menus," Reilly says. "In the Northwest, they like larger prawns, but in the Southeast they like the little ones."
The next step, she says, means even further refinement through data warehousing. "Over the next year, we'll add all order details to our database." Everything ordered at every table, "including the extra sour cream," will be analyzed at the corporate level for trends in customer preferences.
As every restaurateur knows, even when diners are offered perfectly cooked dishes of their choice, they're not always happy. To gain an understanding of this problem, randomly selected Red Lobster customers receive on their invoice a survey and a toll-free number with a request to evaluate customer service. Their comments, keyed into a corporate database, are used to help Darden come up with an overall satisfaction rating for each restaurant, which is also tied to each manager's bonus.
Reilly operates under the philosophy that good IT systems and communications are critical to a company's success. She recently migrated the restaurants' client systems from DOS to Windows NT, and a proprietary E-mail system has been replaced with Microsoft Outlook.
Fast-food outlets, which make only a few products, but make them quickly, are also beginning to use IT to determine customer preferences. For example, Wendy's International Inc., the $2 billion fast-food chain, ties manufacturing resource-planning software into Pentium-based PCs used by employees who take orders. Customers can now make special requests, such as cooking instructions for a hamburger or baked potato, without a substantial wait, says Bob Jarecki, Wendy's senior VP of IT.
Custom-Made Fast Food
Even at McDonald's Corp., the company synonymous with fast food, decision-makers are discovering that consumer preferences are paramount. The $11.4 billion chain is implementing a restaurant-level planning system, dubbed "Made For You," which lets each restaurant eliminate its inventory of foods prepared in advance. Instead, workers make sandwiches based on actual demand without sacrificing any of the efficiency, according to a spokeswoman.
About 800 McDonald's restaurants use the system, which consists of PC-based cash registers running in-house software. Orders are routed to monitors at different food preparation tables to balance the workload among employees.
In McDonald's restaurants that don't have the new system, workers must anticipate the demand for each type of sandwich in advance and place them in bins. When a customer wants a sandwich that's not ready-made-or one with a different topping-the person at the register shouts out the order and workers move out of the assembly line for the special request. This slows down the process and causes the customer to wait longer.
McDonald's introduced the new system in March at a meeting for its franchisees. The spokeswoman says the company is encouraging its 12,400 U.S. restaurants to incorporate the system, but the decision is left up to each manager. The technology eases the workload and should add a percentage point to the company's profit margin because it can sell more food faster, says Douglas Christopher, a financial analyst with Crowell Weedon & Co.
Of course, time is of the essence in the fast-food industry. At Wendy's, auditors randomly visit restaurants to find out how long a customer spends from the time he or she walks through the door to when he carries out an order. Starting next year, that information will be gathered on Windows NT-based servers in managers' offices at each location, so they can determine how to speed service.
At least once a day during off-hours, Wendy's polls nearly all its 5,000 restaurants, which transmit data over modems, for transactions that have taken place and updates them with new pricing and recipes. The data is pulled back via IBM AS/400s at headquarters, where it is consolidated on a mainframe. Much of this data is crunched and used to keep customers happy.
Through its polls, Wendy's executives have also learned that drive-up customers generally don't want to keep track of every item they order for a family of four. So Wendy's has installed a "scoreboard" at the drive-up window of each restaurant, which lights up each item the customer has ordered. This innovation is linked to the point-of-sale PC through a LAN to help ensure against communication glitches between the customer and the order taker.
"Our restaurants of the future will improve the service level even more without increasing costs," Jarecki adds. Wendy's is installing a Windows-based application from Progressive Software that ties the point-of-sale PC to the back office. When this system is in place next year, regional managers will be able to make real-time adjustments in ordering supplies and scheduling workers.
Next year, all employees at Wendy's headquarters in Dublin, Ohio, will begin using applications from PeopleSoft to automate financial, inventory, distribution, and human-resources departments.
Training Boost
Restaurants are also using IT to improve employee training so that college students and other seasonal workers can get up to speed on their jobs more quickly. For example, so that workers can speed orders to cooks via touch screen instead of having to memorize four-digit numbers for every menu item, Darden Restaurants has installed six PCs in the dining rooms of each Olive Garden and Red Lobster.
Brinker International, which does $2 billion in annual sales through its Chili's Grill and Bar and several other chains, uses its own internally developed software, called Crews, which runs on Windows NT servers, to handle shift scheduling. "The software better matches demand with the supply of labor," says Jodie Ray, CIO at the Dallas company.
Bringing food to businesses, schools, hospitals, and government offices, nearly all of which have cafeterias, has become big business, and many of these organizations pay outside companies, such as Sodexho Marriott Services and Sysco Corp., to provide food services.
Sysco, a Houston company with revenue of $15 billion, provides products and services to 270,000 locations. Each of its 61 distribution centers stocks several thousand types of items, including food, dishes, chairs, tables, and janitorial supplies. The goal, says CIO Larry Pulliam, is for a restaurant or cafeteria to be able to order nearly all its supplies from a single purveyor. This simplifies life for customers because Sysco would dramatically cut back its accounts payable.
To that end, Sysco is rolling out a customized version of an SAP enterprise software package that incorporates accounts payable, financials, purchasing, and inventory management. By next June, it will link all the distribution centers. "We track the items, the times and the days of the week they purchase, and forecast space on trucks," Pulliam says.
Also, warehouse workers will have instant access to a customer's order because they'll be equipped with a tiny computer and screen that they'll wear on their wrists. The screen will display the order, an attached bar-code-scanning stylus will ensure that the workers select the right items, and a radio will transmit the data to update the back-end accounting software.
Sodexho Marriott Services in Bethesda, Md., a $4.2 billion company formed in March when hotelier Marriott International Inc. spun off its hospitality unit and merged it with the French firm Sodexho, is piloting an intranet-based catering tool. Sodexho Marriott customers can use the encrypted IP network to browse menus and order food from their PCs. "If they have enough bandwidth, they can see pictures of food, too," says CIO David Smail.
Sodexho Marriott is rolling out an IT project to about 100 schools that lets children pay for their lunches with a magnetic card, he says. Because some of the children are on government-subsidized food programs, it was embarrassing for them to take a free lunch or pay a reduced amount. "Many of them don't eat, because they feel humiliated," Smail says. The card system, via a program called Cricket II, makes the payment amount invisible to bystanders.
It's one more way a hospitality company is using IT to provide service with a personalized touch.
Back to InformationWeek 500 menu page
Back to This Week's Issue
Send Us Your Feedback
Top of the Page
