4-page Case Study - Posted 6/19/2008

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Golden Spoon

Growing Yogurt Chain Quintuples Sales Speed, Cuts Payroll, and Keeps More Cash in the Till

Rich Ferraro brought a background in software and information technology (IT) to his first retail effort. When he opened Golden Spoon Frozen Yogurt in Simi Valley, California, he knew technology would increase efficiency, cut costs, and increase his bottom line. As Golden Spoon’s exceptional tastes and rotating flavors packed stores with more than 1,000 customers a day, Ferraro saw that long lines and bottlenecks at his electronic cash registers (ECRs) annoyed and even scared off some customers. He knew ECRs’ inadequate security contributed to cash in the tills seldom matching cash sales reports. And managers didn’t love spending an hour a day tallying and transposing totals into Golden Spoon forms. But Ferraro’s concern was more far-reaching. He foresaw that, until he implemented a solid retail IT solution, each new store he opened would bring as many problems as profits.

Situation

Golden Spoon Frozen Yogurt of North LA/Ventura County owns three very busy frozen yogurt shops, with a fourth reaching completion in July 2008. Individually owned by Rich Ferraro, they are part of the 90-store Golden Spoon chain.

Ferraro’s 68 full- and part-time employees sell approximately one hundred SKUs, rotating more than 50 flavors annually and twelve flavors daily, along with a creative inventory of toppings. Golden Spoon’s taste trademark is to use the finest natural ingredients for a velvety smooth taste and texture rivaling high-quality ice cream; all but one flavor is fat-free.

A classic favorite, this vanilla cup with strawberry toppings helps pull in more than 1,000 customers a day in busy months.

Speed Is the Challenge

In busy April through August, Ferraro’s busiest stores can sell more than 700 transactions.

But success proved servings weren’t always smooth. Ferraro’s background in software, IT, and other technologies kept reminding him of his early system and process weaknesses.

“Lines crowded the stores just when potential customers wanted to buy. Passers-by looked in, saw the long wait, and drove by instead of coming in. I knew we had to increase our operational efficiency and speed up our order-to-purchase process or customers wouldn’t return. We focused more on employee training and process improvement and, secondly, we knew we had to replace our electronic cash registers and separate credit card terminal For example, our most experienced and efficient employees took two minutes for a credit card sale. They had to enter transaction data, punch in the store ID, wait 20–30 seconds for authorization, and print out a receipt. But only if the system processed the order on the first try. If not, customers could melt down waiting for their verification.”

Keeping What’s Earned

Employees’ mis-entry of sales—punching in a sale as a small yogurt when a large was received—cost Ferraro revenue and led to inaccurate reporting and the inability to reconcile and report daily sales. The back-end reporting and reconciliation was doubly hard because the front-end information was inaccurate. “The ECRs [electronic cash registers] gave us a classic case of ‘Garbage in meant garbage out,'” says Ferraro.

But the most troublesome concern was a reliable U.S.$400 per month in obvious cash shrinkage from ECRs. “Even if it were theoretically trackable on those machines,” says Ferraro, “it would take have taken me or my managers hours to do it.”

“The ECRs didn’t let us assign any security features by employee, so no one could manage who opened which register drawer when. It was all blind trust, and sometimes we got burned.

“Closing each day’s books and reporting took a minimum of an hour, mostly because we had to manually transpose ECRs’ day-ending ‘Z-tapes’ into Golden Spoon’s report forms. Yet we still couldn’t track peaks and valleys in the day’s traffic, or see buying trends in terms of smalls, larges, pints, toppings, and the times of day that things sold.”

Solution

Chris Lazenby, president of CKS Business Solutions in Glendale, California, says, “All the parts were present and working—manual registers, credit card terminals, time clocks. But nothing talked to anything else. There was no way to economize the work or save steps. Everything was its own little kingdom of information, and they wouldn’t share.”

Ferraro chose CKS because Lazenby had specialized in retail POS systems for more than ten years. CKS chose and partnered with Microsoft to develop a specialized POS solution for quick-service retailers.

Transactions that once required two to three impatient minutes now take 20 to 30 seconds. That gives us five to ten times the customers per hour. Rich Ferraro Owner, Golden Spoon Frozen Yogurt of North LA/Ventura

Planning on Growth

“Based on my knowledge of information systems, Microsoft is my preferred platform,” says Ferraro. “Microsoft Dynamics–Point of Sale ensures I can always integrate with current and future Microsoft products such as Microsoft Office and Microsoft Small Business Server to better communicate to my partners and employees.”

“Other solutions try to sell retailers their own ‘proprietary technology,’ meaning it would be hard to get at my own business data and to integrate with products they didn’t make. Others didn’t offer a complete solution or an overall view of my business.

“It was important for me to start simple and easy, then grow with the system as my needs and company grew. I knew Point of Sale was a smart starter system that came with extra features I could dig into and use when I needed them. “

Implementing What Works

Ferraro saw the streamlined user interface in Microsoft Dynamics–Point of Sale was ideal for fast transaction times, for repeatedly teaching a somewhat fluid work force, and his need to export data easily to QuickBooks, a bookkeeping solution his CPA knows.

Microsoft Dynamics–Point of Sale came with solid reporting capabilities that would get managers home early, and its inventory capabilities were well beyond what the growing chain needed.

Installing two Point of Sale registers per store, Lazenby echoed the tweaks he had implemented at earlier Golden Spoons for transaction speed, then used staffing grids and reports he had written to help managers run more efficiently.

Benefits

“Because it’s easy to use,” Ferraro says, “Microsoft Dynamics–Point of Sale cut steps in everything it touched, from entering a sale to credit card processing, to financial reports. Transactions that once required two to three impatient minutes now take 20 to 30 seconds. That gives us five to ten times the customers per hour. Lines are shorter and people looking in the windows come in now, rather than drift by.

Golden Spoon Frozen Yogurt stores feature clean, efficient interiors designed to speed service and provide a positive shopping experience.

Personal Accountability

“Microsoft Dynamics–Point of Sale security measures cut our cash shrinkage by 75 percent through its practical measures and by working as an emotional deterrent,” says Ferraro. “We resolved ECRs’ security weaknesses by assigning a Point of Sale register to one experienced and trusted employee per shift, who logs in and out. During the shift, only that person’s ID code can make sales or open the cash drawer on that register. Whatever happens during the shift is his or her responsibility.

“We can identify, down to the transaction, who made mistakes. And when one foolish person stole over $150, we not only tracked it down quickly but recovered our money.”

Revenue Retention

The system also tracks what size yogurt was sold, which helps us identify customer trends and manage portion control.

“We cut managerial costs and complaints by dropping the previous one hour of day-end wrap-up to 15 minutes,” says Ferraro. “Multiply that savings times your hourly overhead, times four stores, times every day for a year. Plus, we end up with far more flexible and useful reports than any ECR system could generate. We have better insight on trends of what was bought when. And we can pull up this knowledge in real time on the screen or printer any time, so we can make quicker management decisions.”

Advice from an IT Pro Turned Retailer

Diet-conscious customers can enjoy Golden Spoon products guilt-free, as this nutrition card shows.

“There are definite hard and trackable savings. But don’t forget the soft savings that aren’t as measurable. Things like getting home earlier, not worrying about your cash drawers, and knowing you’ll have the right inventory mix for the next holiday.

“And pay attention to who installs your system. CKS was an unexpected benefit. They were a good implementation partner and an even better trusted advisor. They offered good insights and support on how to expand the system’s functionality. Chris took the time to learn my business, so his company really became a key part of my management staff and crucial to my business. When we had problems—from how-to questions to fine-tuning and configuring our application—they were very responsive to our needs. I highly recommend CKS.”

Next in Line, Please

“Our next expansion will be to open our fourth store in July,” says Ferraro. “We’re just waiting for build-out. Then we’ll extend functionality to track the flavors and toppings we’ve sold, then integrate with our key distributor. When done, this should save us another four to six hours per week, further increase our operational efficiency, and decrease labor costs.”
 
For this new store, CKS expects to completely install and set up to first-sale capability in a few hours. “And that’s if I have to crawl around, drill holes, and string cables,” says Lazenby. “Because we pre-image the disk with Point of Sale, then Golden Spoon’s inventory, Rich’s business rules, and CKS's optimizations and extra reports, ideally we should make that first sale inside an hour.”

Ferraro’s IT background gave him clear, up-front expectations. “I had talked to other Point of Sale users and did my homework, so I didn’t make the common mistake of thinking that any software/hardware solution will solve every imaginable retail problem,” he says. “You will have to invest forethought and hands-on time. But this system will help you think things through and it will improve every process it touches.”

 
Microsoft Dynamics–Point of Sale
Microsoft Dynamics–Point of Sale helps small, independent retailers level the playing field in today’s competitive retail environment. Microsoft Dynamics–Point of Sale provides a comprehensive, easy-to-use retail system to track sales, inventory, and customer information. Designed to overcome the limitations of electronic cash registers (ECRs), this software helps retailers save time and money by automating stores at an affordable price. Microsoft Dynamics–Point of Sale works with the Microsoft Office System and other financial software to streamline store operations and record keeping. Retailers can use Microsoft Dynamics–Point of Saleout of the box with existing PCs and peripherals, or they can acquire complete hardware/software solutions from leading Microsoft technology providers.
 
For more information about Microsoft Dynamics–Point of Sale, go to:
www.microsoft.com/dynamics/pos

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:
www.microsoft.com

For more information about Golden Spoon products and services, visit the Web site at:
www.goldenspoon.com

For more information about CKS Business Solutions products and services, call (818) 631-2724 or visit:
www.ckstech.com