Chick-fil-A is one of the fastest-growing restaurant chains in the US, and it recently underwent a digital transformation to improve decision-making based on predictive analytics on location and market analysis.
The popular fast-food chain opened its first restaurant in 1967, and four years ago, company executives began using Esri's ArcGIS (geographic information system) platform to optimize site selection using predictive analytics.
The privately-owned company currently operates approximately 2,200 locations and opens 90 to 100 new stores annually, according to Chan Lee, enterprise GIS manager for Chick-fil-A's strategy and analytics team.
SEE: IT leader's guide to achieving digital transformation (Tech Pro Research)
The company has revenue estimated at more than $8 billion according to QSR, and it's not just soccer moms taking their kids to the restaurant after games. Although that is, admittedly, a big part of their customer base.
Making data-driven decisions
The types of data that is assessed before a new restaurant is opened includes the basics of census data and business data, but it also creates personas of the typical customer that lives in the immediate area that goes beyond median health, population, and income information. "It'll say something like, 'this is a soccer mom.' You can almost put a face to that customer. Being able to tell that story with the data really rang a chord within Chick-fil-A," Lee said.
"Everything we're doing is data-driven decisions. And now we're trying to look at more and more data. On top of the data we collect, we do intercept surveys, or now we're really going for more automated technologies," Lee said. "Let's say we can get data from cell phone providers or other sources of data. We're looking at transactional levels of data. We're looking at really large data sets at this point. You're thinking about billions and billions of records. And that's great and all, but really what we're trying to do is trying to figure out, find the signals from the noise within such a large data set, and that's where really advanced spatial technologies and big data servers are really paving the way for how we continue to apply our methodology and foundation, and doing it at a much larger scale."
SEE: Ebook—Digital transformation: A CXO's guide (TechRepublic)
Every new store opening is being assessed using this new data, and it's one of the reasons Chick-fil-A finally entered the New York City market in October 2015 and opened a second location in April 2016.
"We strategize the entire country of every intersection where we would like to be. We know where all the stores are. Obviously we know how they're performing and trending compared to other stores in the chain. We can drill down to region, to designated market areas, to counties, just flashing by this data very quickly. And all the data is updated in either real time or near real time as it comes in. So that visibility across the business helps really drive much better decisions much more quickly," Lee said.
Moving to a digital environment
This is a complete transformation from how the company used to determine new restaurant sites before Lee joined the company in early 2013.
Lee recalled, "The first day at my job, I was walking through a hall and one of my co-workers was at the copy machine printing out a map, and I was like,'why are you printing out a map? Don't we have an app for that yet?' They're like, 'no, we just print this out, and you Google map in the field and make note on pen and paper, come back to the office, and input it into the system.' I was like, 'hey, this is not the way we should do this. There's redundancy here, we can clean this up.' That's when we decided, well everything should be real time, everything can be updated on an app, everything should flow across servers, and all the data should be shared across the entire organization. As a company that's built brick-and-mortar stores, anyone benefits from being able to see stores on a map. So immediately there was inherent value in going that route."
Lee compares the difference in the old way versus GIS mapping on the Esri platform: "In a technical state, unless you've worked in it, you tend to lose people. It's almost like saying, 'I will paint you this painting,' and you will describe to them the blank canvas. Most people have a really hard time visualizing the finished product. So what we've ended up doing is initially saying, 'we'll paint the entire painting for you,' and that's when they have an aha moment. When you have a painting in front of them, they say, 'oh, I can see this tree,' and they can start asking better questions."
The GIS mapping allows everyone to see the stores spatially, with analytics tools such as what the customers look like, the size of the trade area, how far customers are coming from, or why they're underperforming in an area where, Lee said, "we know soccer moms are living there, but why do they not tend to come from this one particular area. What are we missing?"
"We start to ask much better questions once you have something in front of people. And I think that's how we've been able to transform data and data analytics at Chick-fil-A because of that. You just take baby steps and keep adding on to that," he said.
The importance of this data-driven work is expanding. When Lee started working at Chick-fil-A, he only supported a dozen users at the company—that quickly expanded to 50 people, and within two years Lee's department supported had 200 people. Today, his team of about 20 people support just under 400 people, he said. Overall, the company has 1,500 full-time employees. "We're getting close to just under a quarter of all employees. And these are not really simple tools. You can do a lot with them. The fact that we have that many users, and I think our active user rate (anyone who logs in at least once a month) is hovering around 75%. So we know the system is getting used, and we're constantly adding more people and constantly adding capabilities."
Having a customized system has allowed the platform to be used broadly across Chick-fil-A, touching 43 different groups within the company. "My approach to this was that I didn't want to buy something off the shelf because once you do that, you tend to have to give up different functionalities, or you have to click two or three more buttons," he said.
The challenges of success
The growing pains of being so successful are part of what Lee's team is trying to overcome with data-driven decisions, as volume increases within each store and bigger stores are needed to provide more parking and seating, he said.
As part of the need for larger stores, in 2018, the chain will open its largest-ever Chick-fil-A, and it will be in New York's Financial District.
"New markets are always a challenge, because you never know, because you don't have a ton of exact comparable data based on that. But definitely the years of knowledge of doing this has definitely helped. It's a tremendous asset, and the way we forecast with the same methodology, we have to tweak it for an ultra urban environment like New York City and Manhattan," Lee said.
The billions of data points from an ever-expanding restaurant chain create their own challenge as well.
"We want to have as much information as possible, but because we're growing as quickly as we have, that's created some technological challenges, because once you hit a certain threshold of volume of data coming in, processing that in an old-school manner no longer really applies, it was taking too much time. This is where bringing in systems like Esri and being able to really integrate that with all their other enterprise systems really took off a lot of the mundane tasks that people should not be doing, nor do they have the capacity to do. We're automating that so they can really focus on things like customer service and quality of food and leveraging their market knowledge to other selected sites or to help our customers," Lee said.
- How Sephora is leveraging AR and AI to transform retail and help customers buy cosmetics (free PDF) (TechRepublic cover story)
- How a hybrid cloud digital transformation saved a 96-year-old company (ZDNet)
- DreamWorks Animation gets a Hollywood-style digital transformation (TechRepublic)
- Why Siemens put $10 billion into digital transformation (TechRepublic)
- How one auction website underwent a digital transformation to boost sales from $8 million to $70 million (TechRepublic)
- Why Dick's Sporting Goods decided to play its own game in ecommerce (PDF download) (TechRepublic)
- Research: Digital Transformation 2017: Strategy, Returns on Investment, and Challenges (Tech Pro Research)
Teena Maddox is a Senior Writer at TechRepublic, covering hardware devices, IoT, smart cities and wearables. She ties together the style and substance of tech. Teena has spent 20-plus years writing business and features for publications including People, W and Women's Wear Daily.