Potbelly Sandwich Works

Restaurant Boosts Revenues 2.5 Percent by Giving Performance Data to Managers

Potbelly Sandwich Works is a fast-growing restaurant company. But the information on which Potbelly personnel made business decisions was limited in scope and available only to some of the people who needed it. To address the problem, Potbelly adopted a Microsoft® Business Intelligence solution that consolidates disparate data sources into a central data warehouse. Users access the analysis through scorecards and reports that enable them to drill down into the information. A pilot deployment immediately increased revenues 2.5 percent just by giving restaurant operators insight into the performance of their stores. Executives have visibility into company performance and can identify high performers and “best practices.” The decision to extend an existing investment in Microsoft software saves Potbelly U.S.$300,000 per year—50 percent—in licensing costs compared to a Hyperion system.

 

Situation

Thirty years ago, Potbelly Sandwich Works was a little antique store in Chicago that sold sandwiches on the side. When the couple who owned the store wanted to see how well the business was doing, the task was accomplished with little more than checking the cash register.

Today, analyzing and tracking performance are considerably tougher, and for good reason. Potbelly Sandwich Works has grown into a restaurant chain with almost 200 stores in 11 states, and 50 to 60 stores are added each year. The stores offer a range of sandwiches, soups, salads, hand-dipped ice cream, shakes, smoothies, and other desserts.

Although the company’s roots are in antiques, Potbelly is no stranger to technology. For years, the company has used Radiant’s Aloha point-of-sale (POS) devices to manage customer payment in the stores and to provide a simple form of sales tracking. Information from the POS devices was transmitted over the Internet to Radiant and replicated to Potbelly, which produced daily reports for executives.

“Executives received reports through e-mail—a highly inefficient way to access information, and one that was clogging our e-mail system,” says Tamy Duplantis, Vice President of IT, Potbelly Sandwich Works. “It was a massive e-mail nightmare. And there was no way to integrate this information with the data we were getting from our Microsoft Dynamics GP financial accounting system, our human resources system, and our inventory system.”

The technology issues were the least of the challenges, however. The information that Potbelly executives received was limited in scope and went to a limited audience. Executives saw aggregate sales numbers each day but couldn’t drill down to compare the performance of specific stores or regions—neither against other stores and regions, nor against financial expectations. Regional managers and analysts in the home office had to log on to the cost-control system separately for each store they wanted to analyze. In fact, one manager spent 10 hours a week logging on and off to view data for the various stores for which he was responsible.

What’s more, the executives couldn’t analyze historical data or track trends over time. Restaurant operators in the field did not have a consolidated view of their targets and performance. As a result, Potbelly executives and operators kept the data they needed in spreadsheets, but that practice often resulted in multiple and, eventually, inconsistent versions of the same information.

“The bigger we got, the more important it was to have the right information at the right time, presented in the right way, to make the right decisions to ensure our continued growth,” says Duplantis. “But our executives had only a small part of the data on how well we were performing, and the restaurant operators had none at all. What we needed was a central data repository and a way to make the information accessible and understandable. We needed a solution for growth—and we didn’t have it.”

Solution

Now, restaurant operators have the information they need to improve performance—and Potbelly executives have the solution they need to foster growth. Duplantis and her colleagues deployed a Microsoft® Business Intelligence solution that enables Potbelly executives and restaurant operators to view operational and budget data on a daily basis, to view and compare the performance of stores and regions for which they are responsible, and to put that information in the context of historical data going back three years. The solution is being implemented in phases. In the next stage, more data will be integrated from Potbelly’s financial, human resources, quality and safety, customer satisfaction, food management, and inventory systems, and enhanced scorecards and drill-down analysis will be added.

As soon as we deployed the pilot … we saw the ‘needle’ on revenues in those stores move up 2.5 percent … just by giving restaurant operators insight into how they were performing. Tamy Duplantis Vice President of IT, Potbelly Sandwich Works

To design and deploy the foundation solution, Potbelly turned to Microsoft Gold Certified Partner Friedrich, Klatt and Associates (FK&A). Together, they created a solution based on Microsoft SQL Server® 2005 64-bit database software and a variety of Microsoft Business Intelligence technologies. At the core of the initial solution is a SQL Server–based central data warehouse that receives sales, forecast, timesheet, and other data from the POS system and budget data from Microsoft Dynamics™ GP business software.

Potbelly recently partnered with Analytic Vision, a boutique firm specializing in business metrics cubes, to further build out the analytical dimensions. The data warehouse holds millions of line-item records in some 30 tables and is growing at a rate of 1.8 million rows per week with 185 stores. 

The data warehouse is refreshed nightly with updated information from its source databases automatically populated by SQL Server 2005 stored procedures, themselves automatically generated by a metadata-driven “software factory” developed by FK&A. The warehouse, in turn, refreshes an online analytical processing (OLAP) data cube with 15 dimensions and 16 measure groups, based on SQL Server Analysis Services.

The cube makes it possible for data to be pivoted dynamically for a variety of views based on stores, regions, individual sales items, time periods, and other dimensions. The Analysis Services cube feeds a number of very flexible and dynamic reports created using SQL Server Reporting Services.

Users access the reports through Microsoft Office SharePoint® Products and Technologies, including Microsoft Office SharePoint Server, for executives, and Windows® SharePoint Services, for restaurant operators. All users can take advantage of SQL Server Reporting Services. Each person sees a summary scorecard report customized according to his or her role in the company, based on the person’s profile in the Windows Server® 2003 Active Directory® service and organization-chart metadata contained in the data cube.

For example, restaurant operators see information for their own stores; managers see aggregate data for their districts or regions and all the stores that make up those districts or regions; and executives in the central office see aggregate data for the company, as well as for the regions, districts, and individual stores. The users can click on the scorecards to drill down to underlying data.

The company’s business analysts need more in-depth access to information than may be available through the scorecards and reports. The solution gives them additional tools for that access, including SQL Server Reporting Services and Microsoft Office SharePoint Server, which enables the analysts to mine data directly from the cube.

To give those users greater capabilities for in-depth data monitoring and analysis, Potbelly is also deploying Microsoft Office PerformancePoint™ Server 2007 business intelligence software and ProClarity® business analysis software.

As the quantity of data and the number of data sources continue to grow, Duplantis and her colleagues plan to create a series of data cubes—for labor, sales, inventory, financial information, and more—to help ensure fast access to analytical information.

Benefits

Executives, managers, and store operators are making better, more profitable decisions based on information and insight newly available through the Microsoft Business Intelligence solution. “Most importantly, the operators can more easily access the information they need to run their business and can spend more time making sure customers are getting great products and exceptional service,” says Jim Hirshorn, President and Chief Financial Officer of Potbelly.

Providing Information Boosts Revenues 2.5 Percent

Potbelly Sandwich Works adopted a Microsoft Business Intelligence solution because executives, managers, and restaurant operators needed the right information at the right time to make the right decisions for its continued growth. That’s what those personnel now have. They can analyze the performance of airport stores compared to stores in a downtown, they can analyze the performance of those stores at 15-minute intervals throughout the day, and they can compare their performance to other stores and to budgeted plans.

“Thanks to the Microsoft Business Intelligence solution, our people have a view of the operation that they never had before and a view that enables them to perform like they’ve never performed before,” says Duplantis. “The vision of our team was to step back and ask what the real measures of our success were, and to make those measures available to the people who could act on the information. We decided we needed to know more than how much money we were taking in; we needed to know our throughput for producing entrees—because that’s the figure that helps guide the most effective staffing levels and the delivery of a quality experience to our customers.”

Operators can more easily access the information they need to run their business and can spend more time making sure customers are getting great products and exceptional service. Jim Hirshorn President and Chief Financial Officer, Potbelly Sandwich Works

The Potbelly leadership team calls the deployment of Microsoft Business Intelligence the “move the needle project” because, according to Duplantis, “as soon as we deployed the pilot in 20 stores, giving restaurant operators a half-dozen scorecards that showed performance trends updated every 15 minutes, we saw the ‘needle’ on revenues in those stores move up 2.5 percent. And that wasn’t by making any operational changes or offering any incentives. It happened just by giving restaurant operators insight into how they were performing. It was fantastic.”

And Potbelly is building on that success by making operational changes in response to information gleaned from the Business Intelligence solution. For example, the potential introduction of soups and salads to the Potbelly menu posed a question: Would expanding the menu increase revenues and net profits and, thus, be worth the effort—or would it reduce sales of existing items while increasing costs and, thus, decrease profits?

By analyzing per-item and aggregate sales at stores that introduced the new items during a test period, Potbelly was able to make the decision to expand its menu throughout the stores.

The better decisions that Potbelly executives, managers, and operators make with their business intelligence data aren’t limited to issues of menu expansion. “The Microsoft Business Intelligence solution gives us one version of the truth—we never had that before,” says Duplantis. “And that means that our people can take advantage of the information to start conversations about how to improve and grow the company.”

“The results Potbelly has seen from this new system are another example of the business intelligence that Microsoft technology makes possible,” says Dan Friedrich, Chief Executive Officer of FK&A. “It lets you build an incredibly rich data foundation that reflects the dimensions of your business, and you can make the most of that foundation with Excel 2007, Excel Services, and other cool client applications. Then you can get out of the business of writing tangles of traditional reports.”

Licensing Saves 50 Percent, $300,000

Potbelly executives didn’t adopt Microsoft Business Intelligence because it was the more cost-effective choice—but that turned out to be an added benefit.

“Initially, we chose Microsoft Business Intelligence because it was a natural extension to the environment we already had and would be easy for us to deploy and use,” says Duplantis. “But when we began to plan our longer-term approach to monitoring and analytics, we looked closely at alternatives, particularly Hyperion, because we knew this was an investment we’d have to live with for a while.”

What Duplantis and her colleagues saw when they looked at Hyperion was a per-seat licensing fee that they’d have to pay for 200 restaurant operators, with the number of licenses going up year after year as the company continued to expand. It was a licensing fee that they would avoid with their volume licensing agreement with Microsoft.

“We saw Hyperion costing us $300,000 per year more than the Microsoft solution,” says Duplantis. “With Microsoft, we are getting a full analytical solution, no compromises, and we’re saving 50 percent of what we would pay for Hyperion. That’s a tremendous deal.”

Solution Enables Fast, Easy Deployment and Use

Virtually everyone at Potbelly—both the executives, managers, and operators who use the solution, as well as the IT personnel who manage it—are more productive, thanks to Microsoft Business Intelligence. For example, the executive who formerly spent 10 hours per week logging on to the cost system to view results for each store for which he is responsible now can get the same information in just 20 minutes. Executives and managers throughout the company achieve similar results.

Meanwhile, for IT personnel, the use of familiar Microsoft technologies means that the Business Intelligence solution was faster and easier for them to deploy and now is faster and easier to maintain, compared to solutions based on unfamiliar technologies.

“As a small but growing company, we find that SQL Server works for us,” says Kumar Machado, Director of Information Systems Application Development at Potbelly. “We can take advantage of this ubiquitous Microsoft software to easily integrate our various source systems’ data and can utilize talented technical resources across all systems. And the use of SharePoint Products and Technologies makes it equally easy for us to give users access to the information they need, all in one place.”

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For More Information

For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:
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For more information about Friedrich, Klatt and Associates products and services, call (773) 753-1806 or visit the Web site at:
www.friedrichklatt.com

For more information about Potbelly Sandwich Works products and services, call (312) 951-0600 or visit the Web site at:
www.potbelly.com