Everything you ever wanted to know about a store, but didn’t know how to get
By Kurt Peters
There’s little doubt that the web changes the way retailers operate. The surprising thing is that it is doing it in ways that some retailers would never have dreamed of.
A few years ago, selling on the web was revolutionary. Then vendors of POS terminals web-enabled their devices to report sales and inventory data via the web to headquarters. Next a number of vendors began promoting the notion of linking video cameras to the web so district managers and headquarters executives could look in on what employees are doing any time—and consult a searchable video record of activities to detect any shady dealings.
Now Oklahoma City-based Apigent Solutions, a vendor of web-based monitoring systems, is going a step further and has developed a system that allows remote monitoring of all kinds of store data. Its product, ZEOM.net, can report sales and inventory in real time, staffing levels, wait periods for service, as well as such data as how many times the back door was opened and for how long, the temperature of food storage coolers and freezers, who had access to the safe or POS terminals, when and for how long.
Filling a niche
Apigent already has deals to install its system in 133 Irvine, Calif.-based El Pollo Loco restaurants, and in 30 Taco Bell restaurants operated by franchisee GenXMex Foods Inc. of Wentzville, Mo. “We want to tap into every silo of information in the store,” says Apigent CEO Jim Melvin.
Although Apigent is starting its rollout with quick-service restaurants, it is targeting traditional retail chains for its next phase, Melvin says. “Our focus will primarily be retail,” he says.
Some vendors have promoted web-based surveillance systems for some time (see Internet Retailer, April 2000). “Certainly this is one capability of the new networking offered by low cost Internet access and the decreasing cost of electronics such as small video cameras and telemetry monitors,” says Victor Wheatman, vice president and director of research for Gartner Group Inc.
El Pollo Loco, which split from Denny’s Restaurants in December, looked around for other vendors but was unable to find any to suit its needs, says Wendy Jacobson, El Pollo Loco’s director of information technology. “Apigent fills a particular niche,” she says. “We did not see a lot of decision support systems geared to the quick-service retail industry.”
Another part of the appeal to El Pollo Loco, Jacobson says, was that Apigent’s ZEOM.net system is modular. The restaurant chain will start converting to Apigent with sales and P&L data gained from its POS system before moving to other uses. “We wanted to start with the back-of-the-house system,” Jacobson says. “But then it is easy to layer in other particular systems with ZEOM.”
To gather all kinds of information requires wiring up the store with sensors. The customer chooses which actions it wants to monitor, then Apigent technicians install sensors and wire each one to the customer’s in-store server. So, for instance, if a supermarket wants to monitor how often someone goes into a meat freezer and how long the door is open each time, it will install a sensor at the freezer. Or if it wants to monitor how often the back door opens and for how long, it can install a sensor on the back door. Another application might be to monitor rest room use so the restaurant can know to send an employee in to pick up after 50 rest room uses.
At the customer’s server, a program aggregates all the data and converts it into an XML file, then sends it to a central Apigent collection point in Oklahoma City via the Internet. An Apigent program at the central point puts the data into formats that the system analyzes and managers access via the Internet or cell phone. “We pull all the information into a single portal,” Melvin says. “People in the field can know what’s happening in real time.”
Speeding things up
Jacobson notes that much of the information that the ZEOM.net system communicates is information that El Pollo Loco gathers already. The difference is that this system delivers it in a timely fashion. Until now, a store manager would batch all the information and download it automatically at 2 a.m. The previous day’s activity would not be available until a district manager came into work the next morning. By then it would be too late to take action like sending workers home if sales were slow. Furthermore, the system allows the gathering of information such as store P&Ls, or sales numbers from the stores that now are distributed via mail or e-mail. Once the Apigent system is operational, such information will be available much more rapidly at the web portal. “We want to speed things up for the managers at our restaurants so they can concentrate on serving our guests,” Jacobson says. “That kind of power is priceless—we can make decisions on the fly.”
Among the pieces of information that El Pollo Loco is collecting via ZEOM.net are labor, inventory, sales by quarter hour or half hour, snapshots of activity during various parts of the day and waste. In addition, El Pollo Loco contemplates using the system to communicate more accurately with suppliers. “This will give us an online inventory and allow real-time communication with our food suppliers,” she says. “Having all this data will help us make sure that we are getting our food at the contracted price and help us match deliveries and contracts faster and more accurately.” Typically, discrepancies don’t show up until El Pollo Loco receives the bill and then require manual matching and someone to follow up.
Melvin says the actual wiring of the store takes only a short time. For a store that wants 10 contacts or fewer, Apigent technicians can finish the job of installing the sensors and running the wire to the server in five hours. The cost of installing a system is $85 to $100 per run, Melvin says. Once installed, retailers pay a monthly fee of about $300 per store, depending on the number of stores using the system.
Furthermore, the system does not require new technology, Melvin says. “The technology resides on the customer’s hardware is operating-system independent,” he says. “We’re not forcing the customer to change out their technology investment. To make sense from a business perspective, you have to tap into their existing infrastructure.”
Return on investment in this system comes in such areas as reducing theft, more precise labor scheduling and the ability to fix a problem as soon as it occurs, rather than waiting for the end of the reporting period to find out there was a problem, Melvin says. “The cost was not expensive in terms of capital outlay,” Jacobson says. “There are minimum recurring expenses every month, and the initial fee to create reports was not that high. The real benefit was not having to spend $100,000 or $200,000 to create reports and craft a system.”
Furthermore, the Apigent system allows retailers to increase the number of stores that a district manager can supervise. While El Pollo Loco says it obtains a benefit in freeing up area managers to concentrate more on coaching store managers, Apigent claims that its system allows managers to supervise twice as many stores.
Apigent was a spin off from Chickasaw Holdings, a telecommunications and Internet services provider that serves 30 states. Melvin and Chairman of the Board Jim Peterson both have long ties to the retail and restaurant industries. Melvin was founder of point-of-sale company Compris, which is installed at more than 40,000 points of sale in major restaurant chains, as well as Disney theme parks and Kmart Corp. stores. He also is technology adviser to the National Restaurant Association. Peterson was chairman and CEO of Bojangles’ Restaurants and headed up Whatburger during its growth to 550 locations. He is also co-chairman of the International Franchisee Association and a board member and former chairman of the National Restaurant Association.
The drive-offs
Melvin has plenty of stories to tell about how customers have used Apigent’s system and saved money doing so. For instance, he reports about the drive-up window at a restaurant where employees didn’t want to be bothered with customers in the wee hours of the morning. ZEOM.net reported to headquarters that for every 50 cars that pulled up to the drive-up ordering device, only 10 stopped at the pick-up window. He also tells about the pizza restaurant where the warming oven was set 50 degrees hotter than was intended because the sign on the oven stating the proper setting was smudged and employees couldn’t read the proper setting. Headquarters discovered the problem during a demonstration of the Apigent system.
Melvin says Apigent’s biggest competitors are internal IT systems and POS vendors. “Both have limited vision,” he says. “They’re focused on POS data and POS data just isn’t enough.”
