Pancake Chain Adopts E-Business

When IHOP Corp. made the decision last year to stop financing franchises--a move that's expected to produce $100 million in annual savings--it shifted the financial burden of opening new restaurants to franchise owners. Still, IHOP is engaged in a technology-modernization effort that it says will let it better serve and manage its franchises.

IHOP will go live in July with a new IT system designed to speed development of franchised restaurants by automating management of routine business processes. In addition to better oversight and more-consistent information, the system is expected to allow IHOP to be faster and more accurate when responding to the needs of its 1,300 franchises.

Behind the new system are a number of modules from Oracle's E-business suite. These modules will manage, among other things, contract development, loan documents, and the creation and approval of restaurant designs. Documents will be entered into an automated workflow process, making sure they're routed to the appropriate people for review or approval.

The system also will let IHOP review the state of any franchise, such as its status in obtaining financing or the progress of its construction. In the past, restaurant data had been collected ad hoc, often on unshared spreadsheets. "It's very difficult when you have 80 or 100 stores being built to know what's going on," says CIO Patrick Piccininno, who joined the company last year after two years as CIO of Intel's platform networking group.

IHOP will use Oracle's portal software to publish report data about restaurants for review, so executives will know how many are under development, whether any are behind schedule, and which operating locations are generating the most revenue. IHOP eventually will make restaurant reports available on Web sites personalized for each franchise, Piccininno says. A new data warehouse fronted by Oracle's Customer Data Hub will aggregate data from restaurant point-of-sale systems and business applications, including those that manage finances and human resources, ensuring consistency of the data that's presented about each restaurant.

Piccininno expects the new system to put IHOP ahead of family-dining competitors such as Denny's and Cracker Barrel Old Country Store. Family-dining restaurants traditionally have lagged behind fast-food companies in the use of technology, says Michael Gallo, VP of equity research firm CL King & Associates. Still, while IHOP's E-business environment may provide it with a competitive edge, he says, other family-dining companies are waking up to the value of automated business processes and probably aren't too far behind in such efforts.

Meanwhile, IHOP also is working to improve communications with restaurant patrons. In April, it opened a call center to collect and respond to customer feedback. When a customer calls or E-mails the company, that contact is assigned a case number, stored in an Oracle call-center application, and routed to an employee whose mission is to ensure that the customer gets an answer within 72 hours. Each inquiry also becomes part of a knowledge base the company is building, so answers to questions that have been asked before will be easy to find and consistent with past answers. Eventually, Piccininno hopes to deploy feedback kiosks inside the restaurants.

The call center also will be the company's point of contact for franchise owners with questions. Says Piccininno: "It's really about becoming smarter about our business--about who we are, about what our franchisees need, and about what our guests want."