James McGehee knows 11 key items drive 80 percent of the spend at Dave’s Hot Chicken. Understanding the components that make up a restaurant’s profit is essential to making smart decisions on how to apply data where it’s most useful, said McGehee, chief financial officer for the 150-unit hot chicken restaurant franchise.
“Discipline is key to leveraging data,” continued McGehee as he noted part of the challenge for CFOs is consolidation of the many sources of data and then turning that into productive insights at the store level.
Finding and using productive data to drive traffic and unlock sales is of particular importance in California and other markets where the minimum wage is rising and squeezing margins for operators. McGehee and other CFOs on the November 14 panel at the Restaurant Finance & Development Conference talked at length about the challenging environment. Dave’s Hot Chicken is based in Pasadena, California. Third-wave coffee company Better Buzz and all of its 18 locations are in California, noted CFO Laurie Lawhorne. And Little Caesars, where Leigh Burnside is the CFO, has a heavy presence in the state.
“You have to turn over every leaf. It’s not going to be one solution that solves that issue,” said Burnside as she noted Little Caesars will likely lean into its tech-forward pizza portals, where customers can pick up their pizza without interacting with staff.
“We’re going to have to look at more technology. We’re going to have to look at pricing, frankly. You can’t really absorb that without some element” of a price increase, she continued. Brands should also use data-driven insights and think about ways to deploy technology that improve employee retention, often by automating tasks employees don’t like doing or otherwise using it to make their jobs easier.
“Take hard look at pricing, to scheduling, to supply chain to utilities to your leases, to all the decisions you make down the road,” said Lawhorne, being mindful to always protect the integrity of the business and not make short-term cost-cutting decisions that will have a detrimental long-term impact.
Lawhorne also emphasized the importance of cross-training. “Everyone is a utility player,” she said, which also has the benefit of boosting morale among employees because they feel integral to overall operations.
A Dave’s, McGehee said they’re looking for new ways to get new guests in the door and understand their behavior, such as with Dave’s Not Chicken. The company tested its new cauliflower sliders and bites this summer and found that 20 percent of new guests ordered the cauliflower and then a high percentage returned and ordered its chicken offerings.
“We’re all talking about how we’re going to handle minimum wage in California. Drive traffic. That’s the answer,” he said.
The Restaurant Finance & Development Conference, presented by the Restaurant Finance Monitor, Franchise Times and Food On Demand, runs Monday, November 13, through Wednesday, November 15, at the Bellagio in Las Vegas.