Magazine Article | May 1, 2000

Profits Served Up FastIn The Quick Service Market

Southern Hospitality Systems, Inc. increased its sales by 30% in one year by moving into this profitable market. Can you do the same?

Business Solutions, May 2000

Point of sale (POS) VAR Oliver McLean has made his living in the hotel, fine dining, and country club markets.

He is president of Southern Hospitality Systems, Inc. (Dallas), which sells and services POS systems in Texas, Oklahoma, Louisiana, and New Mexico. With 30 employees and sales in excess of $5 million, McLean's business was going well. Selling to the quick service market wasn't necessarily in his plans. "I thought that quick service sales were more low-end," admits McLean. "Quick service restaurant owners used to spend $8,000 to $10,000 dollars for an integrated cash register system. Today, that's not always true. Customers are spending $25,000 to $30,000 to have all the functionality an integrated POS system offers."

McLean entered the quick service market in late 1998, and has been pleasantly surprised. In 1999, his company's sales were up 30%, due in large part to sales in the quick service market.

Meeting The Market's Support Needs
When McLean moved into the quick service market, he didn't mess around. His customers include franchisees of Wendy's, Denny's, Burger King, and Popeye's. What helped McLean land large chain accounts? "Franchisees typically own many units, for example, 20 or 100 Burger King restaurants," explains McLean. "The franchisees talk to each other and belong to regional groups. They communicate with each other frequently. Getting our foot in the door with one Wendy's franchisee led to the signing of an additional eight Wendy's franchisees."

"The quick service market hasn't incorporated POS technology for store-level management, compared to other segments of the food and beverage industry," says McLean. "You need to identify the franchisee who is willing to step up and take a chance on a new POS system. If the installation is successful, the smaller franchisee groups will often follow suit."

McLean says quick service corporate headquarters won't mandate the use of certain POS systems. "The corporate headquarters can, however, strongly suggest to their franchisees tools that will make them more successful," notes McLean. "These tools can include everything from store design to ovens to POS systems." McLean says to be successful in the quick service market, VARs must provide exceptional after-sale support. "We guarantee our customers a 15-minute response time," says McLean. "That means the customer gets a callback or a warm body on-site within that time. While a 15-minute response time is considered very good in markets such as retail or fine dining, it is exceptional in quick service." Southern Hospitality Systems offers 24/7 help desk support, as well as depot and on-site service.

"The quick service market also needs solutions that integrate back office functions with front-of-the-house operations," says McLean. "Restaurants are running many applications, such as time and attendance and inventory control, that are interrelated to the POS application. Anytime data is being transferred between applications, there will be problems. Restaurant owners or managers don't care why there is a problem, they just want it fixed. It's the VAR who will get that call." McLean says one of the biggest concerns new customers express is the need for an integrated solution. "Otherwise, we are dealing with interfaces between applications," he explains.

Training is also an important issue in the quick service market. "We had to learn about the importance of ongoing training in this market," notes McLean. "It was educational for us. A touch screen application is almost a given because of the employee turnover. If you use a cash register-based system, you get very little detail about what is being sold."

McLean profits by offering supplemental training to restaurants that require it. "We try to work with restaurants that have at least one area manager overseeing multiple units," explains McLean. "We train the area manager on the POS system. The area manager then trains all other new store managers." Because industry turnover is an ongoing concern, McLean says the quick service market benefits from POS solutions, such as kiosks, that eliminate human intervention.

Restaurants Use Internet For Real-Time Information
POS systems must meet quick service restaurant owners' demands for real-time information, according to McLean. "In the past, corporate headquarters would poll sales data from individual restaurants overnight, using traditional phone lines," he explains. "The Internet is changing that. Web-based applications provide online information. Multi-store operators with a Web-based reporting structure can ‘see' real-time data from all their stores via the PC."

Southern Hospitality Systems is partnering with other companies to develop several Internet-based applications, including online reservations and online food ordering. These applications are designed more for fine dining and table service restaurants. "Quick service restaurants usually have drive-through service, eliminating the need for online ordering," he says. McLean hopes to launch several tests of an online reservation system in Dallas this spring. Partnering with other companies strengthens Southern Hospitality Systems' position in the overall hospitality market. "We think we are working on some pretty exciting stuff," adds McLean. "We're not sitting back, waiting to see what others are doing."

Are you?

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