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Moe's Southwest Grill Franchisee Adds $250k to Bottom Line

Mickey Bailey knows there's a fine line between keeping his Moe's Southwest Grill customers happy with the portions they are served while ensuring reasonable profits for his restaurants. He believes his company, Red Hawk Restaurant Group, has achieved bothÃ.‚¬"and in the process is saving as much as a quarter-million dollars a year as a result of implementing RTIconnect back office software from Restaurant Technology, Inc. (RTI).

Before his Alabama restaurants began using RTIconnect in April 2009 to track food and labor cost, the controller and co-owner of Red Hawk Restaurant Group (RHRG) thought the company's numbers were pretty fairÃ.‚¬"as compared to his peers. Now he thinks they're excellent. "We're very happy with the software," says Bailey. "It exceeds our expectations, and that comes with a little bit of embarrassment, because we were right up there with some of the best in terms of controlling food cost in the Moe's system. So to find out there were opportunities to lower food cost, to be able to achieve these kinds of results, is definitely rewarding and enlightening. RTIconnect has substantially improved our store economics by as much as 3.4%Ã.‚¬"for an annual savings north of $250,000."

Food cost lowered by 2.4%
The biggest savings was in food cost, he said, which accounts for 70% of the total savings. Using RTIconnect's Daily Food Variance Report to follow the seven highest-cost food items, they discovered and analyzed variances between ideal usage (what should have been used based on sales and recipes) and actual usage (what was used based on inventory counts and purchases). Once managers investigated the variances, they determined that employees were over-portioning. Unlike other quick-serve restaurant concepts, where portion control is somewhat built-in by virtue of menu items, such as sandwiches, Moe's customers proceed through the southwest grill restaurants' cafeteria-style-serving-line where servers dish up the customized food at several stations.

"The software became the 'daily news flash' as to what was going on with the food variance," says Bailey, who does double-duty as controller and providing operational support information. With this knowledge, management adjusted training procedures to ensure that servers are "ever mindful that there is a balance to be reached, between giving the customer the right portion based on the price and not shorting them, but at the same time avoiding over-portioning just to always make sure they're getting 'more' than enough." Based on both unofficial customer feedback and the Moe's corporate "Questar" customer survey program, Bailey says efforts to avoid over-portioning were positive. "We have received less than five complaints from our customers, out of tens-of-thousands served, concerning servings not meeting expectations." Bailey notes "This is astonishingly below the rate it was running prior to any emphasis on portion control!"

Another result of the variance report was a closer watch on food waste, he said, such as having employees pay closer attention to things such as completely emptying the bags of queso cheese dip, or coring and cutting tomatoes more carefully to avoid unnecessary waste — and there are many other examples.

Red Hawk, which has marketing/operations offices in Birmingham and executive offices in Atlanta, operates three Moe's in Montgomery, three in Birmingham, and one in Tuscaloosa. When the growing company began looking for a back office solution to replace their conglomerate of spreadsheets, Bailey says they searched for software that would help them achieve three primary goals: better monitor and manage food cost to improve profits, reduce labor with better information to plan and schedule needs to meet projections while continuing to provide excellent service; and third, provide more automation and integration of the cash and information management system. Recommendations from several Wendy's franchisees, among others, led them to RTIconnect.

"Having looked at several competitors, RTI really nailed our needs. Its service reputation was impeccable, they had a large and broad customer list providing a solid experience base, and the software was user-friendly and reasonably priced. In a matter of 90 days managers implemented all modules and in the 60Ã.‚¬•90 period realized the targeted savings in food cost."

Matching labor to sales saves another 1%
Within two weeks of implementing the Labor module of RTIconnect Bailey says they were seeing "about a 1% savings over what we would have scheduled for labor had we just been doing it loosely like we were in the past." Previously, he explains, while the company had historical data on sales, they had no automated means of projecting sales and matching labor to volume. "We were scheduling the right number of people but exceeding our needs during non-peak hours."

RTIconnect collects hourly sales data and generates sales trends to help managers project sales for the upcoming week. Before using RTIconnect, he says, they may have scheduled five people for 11 a.m. to 4 p.m. Now, by seeing the natural drop-off in hourly sales after lunch, managers see they don't need to keep more employees than needed through the afternoon so adjustments are made to match volume.

The third RTIconnect module, Cash, is giving them the automated cash/information controls they sought. "Although they were clunky and clumsy and fairly intricate, we had a series of spreadsheets that kind of emulated what RTIconnect now does for us automatically." The biggest improvement in their cash management, he says, is that the software makes it easier to track paid-outs and paid-ins, such as cash transactions for catering delivery fees or catering accounts receivableÃ.‚¬"which the company needs for 1099 preparation.

Management support; tools for growth
Bailey emphasizes that none of these accomplishments in RHRG's seven-store portfolio was realized without the "dedication, persistence, and impressive teamwork generated by each store manager and his/her committed staff members."  As a result of implementing RTIconnect, and this committed buy-in from the stores, he said, Red Hawk has seen "phenomenal savings," improved efficiency, and a "heightened sense of awareness and responsibility in key operational areas." What's also impressive, he said, is the company's return on its investment in the software: "an incredible 2,000% ROI."

With this success comes re-energized plans for growth. Bailey says RTIconnect gives Red Hawk a competitive edge and a stronger sense of confidence — a means to help the company expand while growing sales and profits.
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