Industry Case Studies

Restaurant Client uses Mystery Shopping to Motivate Staff & Increase Profits

By the summer of 1998, this SQM restaurant client owned and franchised more than 100 full-service casual dining restaurants across Canada.

Similar to any company attempting to grow in a supersaturated business environment, the client faced the challenge of capturing market share from its competitors.

A number of strategies were set into motion to attain this goal - one being the maximization of the customer experience through superior customer service. To accomplish this objective, the client sourced a Mystery Shopping and Customer Service Solutions supplier that could measure the present customer experience and set benchmarks for a future improvement process.

In September of 1998, the client contracted Sensors Quality Management Inc. (SQM) to provide these services. SQM worked closely with the client's top management to create a Mystery Shopping Program that was customized to their specific requirements and goals. It was important to have a program that was scalable and that could be easily modified to match the evolving needs of the client.

Identifying Missed Profit Opportunities:

As the Mystery Shopping Program began to generate feedback, the client used the information to monitor customer service at the frontline level. Evaluation criteria were based on the client's customer service training initiatives and the company's policies and procedures. This information gave restaurant managers a coaching and mentoring tool and allowed the client head office to benchmark the results for future performance goals.

It was evident that up-selling and suggestive selling behaviours were not being consistently executed by frontline staff, which resulted in hundreds of thousands of dollars in missed profit opportunities. The question then became: "How do we communicate the importance of this to franchisees, managers and frontline staff?"

The next step was to implement a "Profit Building" program component that would impact up-selling and suggestive selling activities, thus increasing sales and profits.

Motivating Franchisees, Managers, and Frontline Staff

SQM created a Profit Building tool that demonstrated missed profit opportunities at each restaurant location. The first step was to define the key behaviours that had a direct impact on profitability (i.e. up-selling and suggestive selling). Mystery Shopping was then used to obtain the numerical basis for these calculations.

Accurate assumptions were made regarding customer traffic and the average purchase per transaction. As a result, the client could calculate total estimated missed profit opportunities at each location, in each region and across the entire client network. This information was continually updated to show up-to-date figures.

The Profit Building tool became an instant success with client head office, franchisees and managers. Now the challenge became getting frontline staff on board. Since the Mystery Shopping Program primarily evaluated employees that rely on customer tips as a source of income, an additional element was added to demonstrate lost tip opportunities associated with missed profit building behaviors (see Exhibit 1).

*sample analysis report

Trackable Results and Immediate Impact

The impact was large and immediate. The client found that presenting franchisees, mangers and frontline staff with "black and white evidence" to demonstrate real dollar values increased their buy-in to the Mystery Shopping Program and to new client customer service initiatives.

Increased Sales and Profitability

Between 1998 and 2001 (the period during which the client initiated its Mystery Shopping Program with SQM), the client has grown its network by over 33% and now has over 180 franchisees across Canada, the United States and Mexico. As a result: sales increased by 67%.

The President understood that the chain's phenomenal growth reaffirms its position as the number one casual dining restaurant in Canada.

The Financial Post and Arthur Andersen LLP and CIBC named the client one of Canada's 50 Best Managed Companies for three consecutive terms.

Maintaining Desired Frontline Behaviours

SQM's Profit Building tool allowed the client to demonstrate trackable, positive results to head office, franchisees, restaurant managers and frontline staff. Now the challenge became maintaining the frontline behaviours and management systems that support this success.

SQM's results-based collaboration with the client has led to a 110% increase in its Mystery Shopping and Customer Feedback budget. As of December 2002, the client has committed to continue the SQM relationship into 2003, which will include expansion into the United States, Mexico and China.