Can't Find the Tech You Want? Build It.

By Dorothy Creamer, Managing Editor | March 06, 2015

In 1956 Mike’s Subs started out as a mom and pop storefront in the small seaside town of Point Pleasant, N.J. By the early ’70s the store had become a thriving landmark known for its authentic, fresh sandwiches and signature olive oil blend. In 1975 the operation was purchased by a then 17-year-old, Peter Cancro. Within the following ten years, Cancro opened two other local Mike’s Subs stores and in 1987 he began franchising the concept, changing the name to Jersey Mike’s Subs.

Today Cancro is the CEO of Jersey Mike’s Franchise Systems (www.jerseymikes.com) and from its humble origins, the sub shop has become a coast-to-coast chain boasting more than 1,300 locations open and under development nationwide. Nearly doubling in size in just three years, Jersey Mike’s has been named a favorite fast casual restaurant in a 2014 Consumer Reports survey, the number one fastest growing chain in Nation’s Restaurant News’ 2014 Top 100, and one of the top five fastest growing restaurant chain’s by Technomic’s 2014 annual report on U.S. restaurant organizations.

Steady growth and consistently strong-performing franchisees are the result of a well-crafted and implemented cross-franchise plan that is heavily reliant on the effective use of various, integrated technologies. The lynchpin of this strategy is Jersey Mike’s proprietary point-of-sale system software that all franchisees are required to use.

When Scott Scherer, CIO started with Jersey Mike’s in 2005, the company had about 220 stores all using standard cash registers that were running POS software from a company called Infosoft. At the time, Scherer says it was a pretty forward-thinking product that captured printer port data and transmitted it up to an enterprise system at the headquarters so management could generate sales reports. The system wasn’t reliable, however. People could kick cables out and there was nowhere to store anything at the store level, so if the Internet couldn’t be accessed, the data wasn’t accurate.

Rather than just accepting the system as it was, Jersey Mike’s worked with the company to make the POS software fit its needs. “The company was very small. We prefer to deal with small to medium-sized companies so we can change software to meet our operations, rather than change our operations to meet someone else’s fixed framework software,” Scherer explains, noting that the POS supplier was small enough to be willing to do that. “The enterprise system they had was good and they produced a PC-based POS system that we rolled out to 270 stores in 2005. We purchased Dell hardware for all locations and rolled out a Windows-based POS system using this company’s software.”

After a few months Scherer became concerned that Infosoft wasn’t going to be in business much longer. “We were concerned about the size of the company and if it would be able to keep up with our growth,” he notes. “We went out looking for other systems, but we found most of them to be very rigid and based on how we should operate rather than how we actually operate.”

The decision was made for Jersey Mike’s to hire its own product manager and developer. A year and a half later the company installed a pilot version of its proprietary POS at a few stores. Soon after it was deployed nationwide and the company continues to roll out the same software to all its locations. “The hardware has changed over the years — now we are using NCR (www.ncr.com), but it is all Windows-based, all the same OS, and all stacked on a POS-embedded operating system for Windows,” Scherer states.

Cross-franchise consistency is key
When considering which components would be imperative for Jersey Mike’s point of sale, Scherer says the focus was less on utility and more about flexibility. “It’s not so much about the functions as it is about the ability to change the way things operate without having to depend on somebody else,” he recalls. “By doing it in-house and sending franchisees the same hardware and software, it gave us a big benefit because we had everybody on the same system.”

Scherer notes that many bigger franchise companies generally have multiple POS systems and have to deal with moving data from disparate systems into an enterprise system. For Jersey Mike’s this process is now streamlined as everyone is the same across the board. Franchisees are not allowed to use any hardware or software that corporate does not provide. “It’s easier to support, do upgrades, and we have the ability to change when we want to change,” Scherer says. “If we want to do something different, try out a special, or add a feature, we can just do it and roll it out. We’re not dependent on anyone else.”  

Finding success with bringing the POS in-house, Jersey Mike’s tends to bring most other technology in-house when possible. “It makes security, PCI compliance, and any kind of price change or database changes so much easier because we control it and it’s right here,” Scherer says.

Planning ahead has also helped Jersey Mike’s to circumvent many issues that other operators are finding themselves mired in currently. “Because we have a forward-thinking owner, when the EMV regulations came out, it was decided that we were going to switch from swiping cards on the POS to customer-facing terminals,” Scherer says. “We thought ahead and made sure that every store got the same terminal which has EMV support as well as NFC.”

This means that Jersey Mike’s is also ready to accept Apple Pay. Now it’s literally just a switch in the software that has to be flipped. Jersey Mike’s initially installed the customer-facing terminals in response to legislation that required customers to provide a written signature when opting-in text message marketing. The change in that law escalated the release of the terminals which now makes it easier for Jersey Mike’s to be EMV compliant. “That’s why we’re so close to Apple Pay,” Scherer explains. “We mandated that every store has one of these customer facing terminals from Ingenico (www.ingenico.com), purchased 800 terminals and sent them to the stores. Any store that was open at the time we made the mandate got these terminals and they weren’t forced to pay for it, which would have made it harder to get it deployed.”

Shoring up franchise success with complete tech package
When a franchisee signs up all they need is an Internet connection and Jersey Mike’s provides the rest. The Jersey Mike’s Technology Package is a comprehensive kit that gives franchisees all the tools that the company believes will create a thriving location. The kit includes: POS, business intelligence, food and labor management, mobile app, store evaluations and reports, loyalty program, text messaging and email club, comment cards/mystery shop, and online ordering. This “pinwheel,” as Scherer calls it, displays the plug-and-play strategy that has worked for Jersey Mike’s. “It’s completely turnkey for them,” he says.
    
Most of the components are proprietary and done in house, but a few pieces are provided by vendor partners. The company’s online ordering and mobile app is by Splickit (www.splickit.com), the mystery shop is by Confero (www.conferoinc.com) — which also houses customer experience data received via mail, email, phone, etc. from customers, and the food/labor portion is handled by CrunchTime (www.crunchtime.com).

Each spoke of this technology pinwheel provides valuable data that is then filtered back to Jersey Mike’s. “We have the ability to look at a million data points and report on it,” Scherer says.
 
With data coming from so many different places, Jersey Mike’s has created a virtual database that can be utilized to provide managers with streamlined yet comprehensive reports. “Our biggest database is our POS database which has every single transactional record; every single loyalty transaction, anything related to in-store, is stored in our datacenters and that’s where it all starts,” Scherer says. That data is pushed up to the CrunchTime business intelligence software and then other data points are pulled from Confero and other sources on an as-needed basis to create a virtual super database. “Ultimately, from the perspective of the person who’s running the reports, it looks like they are getting information from a single source, when in reality they are getting it from many different places,” he explains. “All the legwork is just done for them.”   

Sifting through data distortion
When dealing with a tremendous amount of information, it’s important to put parameters in place. “We ask managers, ‘What are you trying to accomplish; what are you looking for?’ and then try to build custom reports and give them a dashboard so they can’t go down what we call the rabbit hole,” Scherer explains. “If you let people have full access to all this data without some parameters, eventually they’ll get to the bottom of this rabbit hole and say, ‘That’s great, but why do we care?’”

Scherer and his team are careful about keeping data controlled so the right questions are being asked and answered. Using the Biz IQ platform from CrunchTime and Jersey Mike’s own proprietary reporting package, the management team can decide what data to send out and how to format it so it makes sense operationally and to the franchises. “We’ll have four or five very specific reports with key indicators in them that we’ve decided are important operationally,” Scherer says. “This clears that data distortion so they’re not getting a report that is 5,000 pages with all sorts of data that they don’t know what to do with. Instead they’re getting maybe seven or eight key indicators emailed to them every Monday morning.”

Deciding what’s next for tech
Often, distinguishing between technology that will truly have an impact and those that will be just a flash-in-the-pan novelty comes down to waiting it out. Scherer describes mobile payment as a great example of this concept. “Three or four years ago we were contacted weekly by mobile payment companies, but we made the decision to lay back and see which technology would rise to the top,” Scherer recalls. He explains that while Jersey Mike’s waited it out, many other concepts jumped into using multiple mobile payments. “It’s confusing for customers to have so many options,” Scherer says. “Since our customers weren’t demanding it at the time, we waited and now we’re going to release ApplePay and probably Google Wallet and that will be it unless some other big player comes out.”

Jersey Mike’s is using the same strategy as it begins to consider location-based technology and beaconing. Scherer admits that the impending shift to EMV has taken resources away from innovation, but beacons are one technology they’re considering. “We are waiting to see if it really is going to give us a return on investment,” he says. “We try not to do something just for the sake of doing it.”   

Mobility is where Scherer sees the greatest amount of potential. In addition to offering mobile payment options the company plans to expand its mobile app so that customers can scan offers, including gifting, loyalty, beaconing and payment. “It’s going to get to the point where basically every consumer is going to have a kiosk in their hand,” Scherer says. “We want to take advantage of that. Maybe there won’t even be a POS anymore at some point in the future.”  

Jersey Mike’s finds itself well-positioned to keep up with the shifting priorities of its customers in large part due to its proprietary POS. “We are set up to be nimble,” Scherer says. “We used to say we could turn on a dime. Now we’re a big ship, so it might be a little harder to turn, but we can turn it instead of having to wait for other people to make the turns for us.”  



Best Practices To Ensure Franchise-Wide Growth
Jersey Mike’s CIO, Scott Scherer offers his secrets to success for a thriving franchise organization.

Bring it in-house.
Whenever possible, bring technology in-house. This may not be feasible for a lot of restaurant companies, but that’s been behind our success. We have control over most of our technologies and it makes us more flexible.

Leverage vendors to work for you.  Tell potential vendor partners how you want something done or delivered. If they can’t, or won’t, move on to the next vendor. Make sure that the vendor is willing to work with you and adapt to what your company wants or needs, not the other way around.

Use technology to monitor speed and quality of service. Since we control our technology we can see if something is reducing speed of service and react quickly. We can’t be in every store, so we utilize the technology to monitor that a quality product is being produced every time in every store.

Keeping up with and getting ahead of the Joneses. Decipher between what technology is cool and what people want and will utilize. Our customers wanted an app, they wanted to be able to order online and they wanted loyalty without the plastic cards. Domino’s implemented voice ordering – which is kind of cool and people might use it once or twice, but ultimately even if it just drives a customer to the Domino’s site and they order the normal way, it’s still a great idea. We try to do the same thing and come out ahead with some ideas.

Merge Marketing & IT. Our technology team includes both the chief marketing officer and the chief information officer. We work together to come up with strategies that will foster growth from both a marketing and technology perspective.

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