The Recipe for Front-End Success

Louie Psallidas, senior VP of finance and CFO, Papa Gino’s Holdings Corp.

Papa Gino’s Holdings Corp. is dedicated to delivering a unique, superior experience. By implementing a two-pronged information technology strategy focused on a business intelligence (BI) and enter-prisewide planning program, and the upgrade of its point-of-sale fleet, the growing chain is eliminating manual, time-consuming practices and reemphasizing its commitment to its consumers.

Papa Gino’s has been a household name across New England for 40 years. The Dedham, Mass.-based privately held company, which operates 170 Papa Gino’s pizzerias and 200 D’Angelo’s sandwich shops, reported approximately $250 million in sales for 2006. The chain distinguishes its pizza brand with three dining experiences: dine in, carry out and home delivery.

The company is currently focused on expanding both its Papa Gino’s and D’Angelo’s brands outside of New England.

When the chain began assessing its chainwide expansion, it evaluated its existing systems and business processes. This analysis also revealed areas in need of improvement.

“For example, we operate a 20-year-old homegrown POS system that we program and maintain ourselves,” explained Louie Psallidas, the chain’s senior VP of finance and CFO. “Besides being outdated, the system doesn’t provide a centralized, efficient way to monitor enterprisewide performance.”

The company tapped the expertise of Cleveland-based LakeWest Group in the summer of 2006 to prioritize its needs and define a new IT strategy.

Two key opportunities emerged: a needed upgrade for its aging POS system and the addition of a business intelligence (BI) and enterprise-planning system. In connection with these initiatives, the company realized the need to transition the role of its IT team.

“Historically, IT departments were viewed as cost centers or a back-office operation,” Psallidas explained. “For us, IT is a strategic partner in our overall business operation.”

The company was able to make this transition with the help of Paul Valle, a former LakeWest consultant who worked on the project. Following the evaluation, the chain invited Valle to join its team as the VP of information technology. His first task was to implement the company’s transition.

Internal Insights

The first step in Papa Gino’s new strategy was to implement the BI solution. “This would be the core of all other solutions in our organization,” Psallidas said.

The six core objectives of its BI and enterprise-planning initiative are:

Eliminating the manual processes that caused administrative burdens when collecting store-level data. (For example, each district manager is responsible for gathering the prior-day’s sales and performance information for up to eight restaurants. “They call each store, manually input this data into Excel spreadsheets, and compare results to the previous day’s records,” he explained. “It could take up to two hours for each DM to compile this information and send it to corporate.”);

Communicating key performance metrics in a timely way to executives throughout the enterprise, including the CEO to district managers;

Gaining fact-based decision-making tools;

Delivering data to users in a self-service environment;

Turning the financial team into analysts vs. data gatherers; and

Improving business and planning-process efficiencies.

Wasting no time in searching for the ideal solution, the company hit the marketplace with a targeted list of requirements in the fall of 2006. “The first requisite was an open system that was POS-agnostic,” explained Valle.

“We also needed a solution that had multidimensional reporting capacity vs. a relational model. This would allow us to input massive chunks of data, and the solution could sort it into multiple views that we can analyze to make the best decisions,” he said. “Finally, the ideal solution had to be technologically advanced and possess a strong, solid platform. Each criteria would support us as we expand in the future.”

By February 2007, Papa Gino’s chose the Cognos 8 suite of products. “The company is clearly well under way with its IT upgrades, but it still needs to make [operational] decisions,” said Patricia Waldron, global retail industry director, Cognos Inc., Ottawa.

“Cognos provides a transparent, intelligent layer that enables companies to leverage existing technology and support future upgrades,” she said. “Yet it doesn’t disrupt processes, enabling users to make strategic business decisions.”

The Web-based solution resides on a server located at Papa Gino’s corporate headquarters. “With 50 district managers responsible for supervising 370 restaurants, Web-based access to data is critical,” Psallidas noted.

Each evening, the chain polls every POS unit enter-prisewide and all data is stored in the company’s SQL Server database. Cognos will merge data from both the SQL Server database and the company’s ERP (enterprise resource planning) system from J.D. Edwards, then present data to users in dashboard-style charts. This will enable users to complete comparisons and analysis, and ultimately, make more informed decisions.

Having completed its data modeling, the chain is now building and populating Cognos with data from its SQL Server database and general-ledger data files. By the fall, the chain expects to be using the solution “to facilitate our operations team’s daily decisions,” he said.

Next, the chain plans to leverage the solution to conduct monthly store- and corporate-level revenue and profitability reports. The final task will be to use the solution to prepare annual and long-range business and budget forecasts. The chain hopes to add these features by the end of the year.

“During the first phase, we expect to significantly reduce the administrative burden on our operational team,” explained Psallidas. “We also expect the system to provide our marketing team with much more detailed data related to customer behavior. This will help us to tailor promotions and product development.”

While the company does try to do this analysis today, it requires the time and experience of the company’s financial team. “By delivering an automated, self-service solution right to the users’ desktops, we can empower users to be analysts and migrate our financial team away from the historically time-consuming task of gathering data.”

Psallidas also envisions a day when the solution will enable “all 370 restaurants to create their own budgets,” he said. “This could cut our budgeting cycle in half.”

POS Priorities

Simultaneously, Papa Gino’s is beefing up its front end. Eager to migrate away from its proprietary, limited solution, the chain is currently researching its next POS system.

“We run up to six POS units in each location,” Psallidas said. “Since our guests are our prime focus, POS is a strong way for us to create a positive guest experience.”

Like its BI program, Papa Gino’s has a distinct list of needs that its ideal POS system must meet. Besides requiring an open system, the chain’s ideal solution must also improve order accuracy and throughput speed, and provide applications that could improve front-end customer service.

Using these criteria, Papa Gino’s narrowed a crowded playing field to two potential solutions.

Both options are currently being tested in its internal lab. Psallidas declined to reveal the names of the solutions the company is testing.

“We need the system to handle current and future technologies,” he said.

“We want a solution that can support a Web interface as well as a call-center interface,” he explained. “It also has to support real-time, or near-real-time access to data. This will set the stage for our upcoming customer-relationship management (CRM) and loyalty programs.”

Upon choosing its ideal solution, the chain will begin in-store pilots by late fall.

Although the solution is not yet in place, Papa Gino’s is already planning how it will further leverage the system moving forward. “It will be important to integrate our call-center and Web-ordering applications with the CRM tools and loyalty programs to improve our interaction with the guest,” he explained.

“We look forward to leveraging the POS system, our new BI tools and our existing infrastructure to improve the quality of data and make better business decisions that ultimately enable us to deliver better service and new products to our guests,” he said. “To me, this is as strategic as it gets.”

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