Papa Gino’s boosts sales and customer loyalty

Using business analytics to maximize the profitability of marketing campaigns and promotions

Based in Dedham, Massachusetts, Papa Gino’s, Inc. is the parent company of the Papa Gino’s Pizzeria and
D’Angelo Grilled Sandwiches restaurant chains. The company operates more than 275 company-owned and franchised
Papa Gino’s, D’Angelo and dual-location restaurants and employs more than 5,000 people across New England. Both
D’Angelo and Papa Gino’s are committed to providing high-quality products, attentive service, clean, convenient,
attractive restaurants and a premium value experience for every guest.

To maintain competitive advantage and support business growth, the Papa Gino’s senior management team
decided to rethink its information technology strategy and invest in innovation. The company’s IT team was tasked with
assessing the existing technology landscape and identifying the areas where new systems and processes could deliver the
greatest business value.

Moving away from spreadsheets

“At that time, we effectively had three main business systems: our JD Edwards ERP system, our restaurant
point-of-sale system and Microsoft® Excel®, which we used very extensively,” explains Martha Lieber, Director of Business
Systems at Papa Gino’s. “Basically, almost everything that wasn’t covered by the other two systems was managed in
spreadsheets, which meant we had numerous sources of ‘truth’ across the organization. For company-wide processes
like budgeting, this was a major problem, because it could take up to four months to consolidate and validate data from
all the different spreadsheets and complete the process.”

Paul Valle, CIO, adds: “We knew that if we could create a single central solution for business analytics, we
could standardize and significantly accelerate our planning and reporting processes. We also realized that it would allow
us to analyze operational performance in areas that we had never previously been able to measure accurately – such as
pizza delivery times and marketing campaign effectiveness. When we presented our ideas to the board, they
immediately agreed that this should be the top priority in our IT transformation.”

Building a partnership

In partnership with QueBIT, an IBM Premier Business Partner, the IT team deployed a suite of IBM Cognos
software including IBM Cognos Business Intelligence, IBM Cognos Planning and IBM Cognos Finance.

“QueBIT is a great partner for our organization, and the QueBIT consultants have done a terrific job throughout
all the projects we have worked on with them,” comments Martha Lieber. “By working closely with us, they have not only
given our in-house team a lot of very valuable insight into the Cognos solutions; they have also gained a great
understanding of how our business works. As a result, they have definitely become our go-to partner for business analytics
projects.”

From data collection to analysis

The first priority for the Papa Gino’s and QueBIT team was to integrate the IBM Cognos solutions with the ERP
and point-of-sale systems, migrate data from existing spreadsheets, and create the new standard financial reports and
budgeting process. Next, the team embarked on a series of projects to monitor operational metrics and provide data to
different groups of business users in near real time.
 “The main objective is to turn people from data gatherers into analysts – not just at corporate level, but all the
way down into the field,” says Martha Lieber. “For example, we have district managers who are responsible for all the
restaurants in their territory. Previously, they had to spend hours each day pulling together all the information they
needed to manage their restaurants: now, they get a simple, one-page report every morning that tells them everything
they need to know. Beyond that report, we’ve really focused on managing by exception, so online reports highlight the
parameters that are outside of the normal range. Instead of looking at 50 data points for every single restaurant to find
out what is going on, they can see the problems immediately and focus on solving them.”

Optimizing labor costs

One of the first projects was to optimize labor costs by using IBM Cognos Enterprise Planning to provide trend
analysis based on current and historical sales data. The solution compares recent weeks’ sales figures with previous years’
figures to provide a two-week forecast of probable staffing requirements, helping managers ensure that each restaurant has
the right number of staff to provide excellent customer service at all times, while managing cost levels.

“The ability to predict staffing requirements and to make this data available to executives and district managers
in real time helps to identify problems quickly and nip them in the bud,” explains Paul Valle. “For example, we had a
situation in one of our restaurants where we saw sales increasing significantly, but the labor costs were decreasing. We
immediately investigated this incongruity, and found that there were some errors that needed to be corrected.
Previously, we probably wouldn’t have spotted the problem until much later; the effect on sales and customer service
might have been significant.”

Better customer service

A second project was to start measuring order management performance using metrics such as the average time
taken to deliver orders to customers’ homes compared to the estimated time.

“The insight we obtained from measuring delivery times in Cognos was really an eye-opener,” comments Martha
Lieber. “We found that, on average, we were promising to deliver pizzas within 45 minutes, but we were actually
delivering them in less than 30 minutes. As a result, we started to adjust the promise time to reflect reality – setting our
customers’ expectations more accurately and potentially avoiding lost orders.”

More effective marketing

The third major area where the Cognos analytics solution is helping to optimize operations is in marketing and
promotions management.

“We do a lot of email, SMS and postal marketing where we send coupons to our customers with special deals
and offers,” explains Paul Valle. “With Cognos, we can track which coupons are actually being used, so we can see which
kinds of deal are most attractive to customers and create the most sales. We recently created a loyalty program for
regular customers which provides rewards that can be used on future orders and, thanks to Cognos, we have been able
to track its effect on sales. What we’ve found is that customers who are members of the loyalty program order from us
about 33 percent more frequently than those who haven’t joined yet. So this insight has led to a real drive to encourage
customers to sign up.”

Martha Lieber adds: “Similarly, we can now compare the sales figures for orders that are placed online with
those that are placed by phone or other channels. We are seeing that, depending on seasonal changes, online orders are
between 40 and 70 percent larger – so, again, it is now our strategy to promote our online service and make it our
customers’ preferred channel.”

Since it is easy to track customer behavior via the Cognos solution, the Papa Gino’s marketing team can create
numerous nuanced versions of each campaign or promotion, and then compare the results. As a consequence, the
company is able to constantly fine-tune its marketing effort and focus on the campaigns and deals that deliver the
highest returns.

Streamlining the budgeting process

A further area where the introduction of IBM Cognos solutions has improved operations for Papa Gino’s is in
financial planning. The company’s budgeting process, which previously required the planning team to gather data from
across the business in spreadsheets and manually check and collate it, is now substantially simplified and improved.

“While the duration of the plan process has stayed consistent, what has changed is our capability to process
scenarios and/ or adjustments that flow through to other aspects of the plan,” comments Paul Valle. “It is estimated that
our efficiency has improved by 25 percent, enabling us to take deeper dives into the key drivers of plan results and
improving overall plan quality. Automating time-consuming spreadsheet-based processes has increased accuracy as well
as stakeholder confidence in the plan as a whole.”

Social media and mobile applications

“We see social media playing a significant role in the future of the restaurant business, so we’re currently active
on Facebook and Twitter, and we’re working on projects with Foursquare, Yelp, Groupon and a dozen other social media
sites,” comments Paul Valle. “We’re also due to launch apps for the iPhone, BlackBerry and Android mobile platforms.
The great thing about the Cognos solution is that we’ll be able to use our existing solution to monitor the performance of
these new channels too, so we can continue to optimize our sales performance and focus on the most productive areas.”

Martha Lieber concludes: “For the future, we’re looking at upgrading to the latest version of Cognos and
providing better mobile access for our district managers – perhaps via iPads or Android tablets. This will help them work
more effectively when they are visiting their restaurants and really do a ‘show and tell’ with their team members to
highlight areas where operational performance can be improved. These types of initiatives, powered by IBM Cognos
technologies, will help us maintain our position as an innovator and stay ahead of our rivals in a highly competitive
marketplace.”