Decemben 3, 2004*39

NATION'S RESTAURANT NEWS

SEGMENT STUDY: Q U I C K S E R V E

No mystery: Shopping the 'shops' gains in popuiarity With new techniques and methods in place, an age-old practice once again is fashionable By Amy Garber

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n the restaurant industry's perpetual push to improve unit-level operations, the highly competitive quick-servicerestaurant segment is renewing efforts to evaluate how it's measuring up with customers. New techniques are modifying operators' decades-old use of "mystery shoppers" — professional evaluators who pose as customers and report detailed findings about service and overall quality — though that method is back in vogue and growing in popularity. That's especially true since QSR segment leader McDonald's Corp. revived a national mystery-shopper program for its U.S. restaurants in 2002. The assessment campaign is one component of the burger giant's turnaround plan, which has been successful in propelling domestic same-store sales. McDonald's began to scrutinize its operations more carefully nearly three years ago by deploying an official but anonymous visitor to evaluate each of its domestic restaurants on a monthly basis. Now the world's largest restaurant chain, buHish on the success of the program, rapidly is expanding its reliance on the technique from 13,600 U.S. restaurants to include all 30,00{J of its worldwide locations in 120 countries by the end of 2005. "It is a program that people have embraced, and it ensures that our customers have an excellent experience when (Continued on page 40)

40 • December 13, 2004

NATION'S RESTAURANT NEWS

SEGMENT STUDY: Q U I C K S E R V E

Shopping the 'shops' gains in popularity (Continued from page 39) they visit any of our restaurants," says Sue Fangmann, program manager for McDonald's U.S. Restaurant Operations Improvement Process, or ROIP. In contrast, rival Jack in the Box. which has 2,0tK) QSR units nationwide, is scrapping its mystery-guest program and replacing it with one that asks randomly selected customers to rate their restaurant experience in an automated survey via the telephotie or Internet. The chain's new program, dubbed "Voice of the Customer." provides restaurant managers with more relevant guest feedback, according to officials of the San Diego-based burger chain. The survey system is expected to save the company about $1 million annually. Jack in the Box spokesman Brian Luscomb says the change was made "to provide a better vehicle to assess feedback from our guests. [Mystery shopping] was an effective program, but this is a better program for evaluating guest service. We are able to generate more frequent reports on the level of service that the crew is providing." Nonetheless, quick-service chains of all sizes around the country, from McDonald's and Sonic to Captain D'sand the relaSue Fangmann, program tively small manager for McDonald's U.S. Restaurant Operations regional operator Zoup. insist that Improvement Process, says the chain is taking its mystery-shopper mystery-shopper program initiatives are worth the investoverseas in 2005. ment. Often those anonymous assessments are used to reward employees, which operators say create incentives for providing top-notch service. They also point to new advancements — such as computer generated reports available almost immediately via e-mail — that are making mystery shoppers more useful tools than they were 10 years ago. "Mystery shopping in and of itself is a unique type of research," says Jeff Hall, president of the Mystery Shoppers Providers Association, or MSPA, a 150-member trade group based in Dallas. "The type of information collected through a mysteryshop program could not be gathered through any other means." He adds that anonymous visits provide "insight on the customer experience" and give quick-service operators measurements on speed of service, temperature and weight measurements of different products, and the cleanhness of the facihty, including the drive-thru. Hall, who also is president of Second To None — the Ann Arbor. Mich.-based mystery-shopper

mystery shopper is instructed to provider he founded 15 years ago order and assess the quality and — says increased competition appearance of three menu items. among fast feeders has led to including a core product, such as more chains utilizing anonymousthe Big Mac; a side item, like visit programs. He estimates that fries: and a beverage. In addition. between 70 percent and 80 perthe friendliness of the staff — cent of quick-service operators like a smile and greeting from the are using some type of mysteryorder taker — is evaluated, shopper prt)gram. Although costs according to Fangmann. "We are vary widely. Hall believes that a looking to see if the sandwiches 25-unit chain would spend in the are hot and fresh, if the fries are range of $l:i.CK)O to $25,000 annusalted and if the drinks are carally on a program involving one bonated." she says. shop per store each month. "Mystery shops are a unique "The QSR segment is more tool," Fangmann explains. "They competitive than ever before, and allow us to touch every restauchains have to compete with nonrant every month. It is also a traditional outlets, like C-stores great tool to use for restaurant and fast-casual concepts," he says. crew incentives." "Consumers have more choice but not necessarily more discreThe mystery-shop report, tionary dollars." once completed, is e-mailed to the company officials and the Hall concedes "that it is diffioperator of the store, if it is a cult to relate mystery shopping to franchised unit. an increase in sales or customer loyalty," He adds. "Oftentimes "Every month we look at the when a mystery-shopping proresults, and they provide us gram is in place, there are also insights into how we are performother initiatives that an operator ing," Fangmann says. —JEFF HALL is running that could have an Although McDonald's, based PRESIDENT, impact on sales." in Oak Brook. III., declined to MYSTERY SHOPPERS However, "we know that there disclose its rate of progress on PROVIOERS ASSOCIATION is a return on investment," Hall operational improvements since insists. "We don't know exactly 2002, Fangmann says its U.S. how to define it. but it certainly is restaurants are performing better there. Operators who are using mystery-shop pro"in every category," with the greatest gains in hospigrams consistently see an increase in performance." tality and cleanliness. For McDonald's a national mystery-shop proIn addition, McDonald's also evaluates the pergram ensures "that every restaurant has one goal formance of its restaurants with other tools, such as and one sel of marching orders." according to a toll-free telephone number for customers and Fangmann. "We can leverage the program to make announced visits made by field consultants. strides in consistency." "We want to make sure the restaurants are runOn each monthly visit to a single restaurant, the ning well all the time," Fangmann says. She declined McDonald s mystery shopper evaluates both the to comment on the cost of the mystery-shop profront counter and the drive-thru, measuring speed of gram but says it is viewed as "a long-term investservice, order accuracy and cleanliness of the dining ment" that "without a doubt has been extremely room as well as the rest rooms. Each professional successful in the U.S." The burger conglomerate's goal of having the mystery-guest program in place globally by the end of 2005 means that each McDonald's around the world will be visited by a mystery shopper once a month, according to Fangmann. "Getting a read every month is an incredibly valuable piece of information." she says. Oklahoma City-based Sonic Corp., parent of the 2.885-unit drive-in chain, conducts one corporate-sponsored mystery shop a month, but many of its franchisees pay for additional ones, "We average about 2.4 shops per unit per month." says Diane Prem. Sonic Corp.'s vice president of operations services. "Basically what we are looking (Conlinued on page 44)

Oftentimes when a mysterv-shopping program is in place, there are aiso other initiatives that an operator is ninning that couid have an impact on sales."

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44 • December 13, 2004

SEGMENT STUDY: Q U I C K S E R V E

Shopping the 'shops' gains in popuiarity (Continued from page 40) for is speed of service, guest interaction, product quality and preseutation, and brand elements." She adds that the mystery-shop program, which began about six years ago. has evolved with franchisee input. For example. Sonie has mystery shoppers evaluate new products and operational changes, such as the addition of a drive-thru window to 849 of the drive-in chain's locations. A drive-thru consumer "is looking for a different type of service than those using the drive-in stalls." Prem explains. "So we target those things. We have also done productspecific shops, and new markets are shopped more frequently to see how they are performing." Unit-level managers receive the mystery-shop reports within 24 hours after they are conducted, either via fax oremail. "We want it to be fresh in their —ERIC ERSHER minds." Prem says, CO-FOUNDER, ZOUP adding that managers use the shops as part of an extensive 10-month, systemwide crew incentive program called Sonie Games. Prem also uses the reports "to see trends and to balance the business with other measurements. We have a toll-free consumer hot line and Internet feedback, and between all of those, we can get a balanced look at what the customer is thinking." The restaurant industry has been using mystery shops for at least 30 years, according to Hall. "Mystery shopping gained a solid footing in the late 1970s and has grown exponentially since the mid1980s, as more and more chain executives have realized the unique benefit shopping programs provide." he says. Although some fast-food chains rely on professional anonymous shoppers. Captain D"s has eonducted its own in-house program since it was founded 35 years ago.

The only time n^iative scores or experiences will be brought up as anything more than a training tool is when we see a trend or a consistent fallir^ short of the standards."

The Captain D's chain has relied on an in-house mystery guest program for 35 years.

"We recruit local business people to come in and fill out a form, and then we reimburse their meal," explains Gary Wilson, senior vice president of operations for Captain D's. The goal is for each store to have six mystery shops each month. The 579-unit chain spends an estimated $25.0(X) a month — or about $250,000 a year — on the program, mostly to reimburse meals at about $8 per visit, according to Wilson. The 12-unit Zoup chain enhanced employee training by "Franchisees are required to particidebuting a mystery-shop program one year ago. pate, and they get billed for the program each time a shopper eomes in." he says. In 1999 Captain D"s updated the program so that all shopper reports would be filed electronically via emaii, which allows each store to get feedback immediately so that the managers can make on-the-spot fixes. such as correcting service lapses by shifting labor. Before electronic reports, "each store got the report weeks later." Wilson says, adding that the manual system also was more costly to run because it involved more corporate manpower. The chain attempts to rotate shoppers every six months "so employees don't get to know who they are," according to Wilson. "Sometimes we must ask shoppers not to be in the program if Ihe quality of their repori-^ is not good." For a brief period several years ago. Captain D's replaced its shopper program with Tlie 12-unil Zoup chain, based ill Fcnidalc. Mich., a toll-free customer feedback phone number, and, introduced a mystery-shopper program about one Wilson says, while it provided some valuable inforyear ago to evaluate the effectiveness of employee mation, it was skewed almost entirely toward comtraining and reinforce operational standards, says plaints and it laeked positive comments, which are Eric Ersher, managing partner and co-founder of equally important. That is because Captain D's uses Zoup. He describes the anonymous visits as "one of its shopper program for employee ineentives, which the truly breakthrough additions to the Zoup traininclude gift certificates to Wal-Mart among other ing process." rewards. For example, the shopper looks for Zoup's order taker to say hello immediately and for the cashier to say. "Thank you" with a smile, according to Ersher. Each restaurant in the chain is shopped once every two weeks, and the number of anonymous visits sometimes increases if the store has new managers "or otherwise is in training mode." he explains. The cost of the mystery shops — which are budgeted at less than $100 per month per store — is paid from the chain's marketing fund, aecording to Ersher. Both the franchised and corporate stores contribute lo that fund in equal amounts. "In our view there is no marketing more important than ihe value of each customer experience," Ersher explains. The reports are e mailed to all units, but "we are very careful not to use the mystery shops as a punishment or reward system," he insists. "They are a snapshot and one transaction among thousands. We determine what went right and what went wrong and what we can do better next time." Ersher adds. "The only time negative scores or negative shop experiences will be brought up as anything more than a training tool is when we see a trend or a consistent falling short of the standards." • http://www.nrn.com