With that said, I want to depart from our comfort zone for a moment to discuss variability and top quartile performance as a way to manage results so that they exceed average. In every company, every market and every segment there is a variability of performance from best to worst, yet one seldom hears it discussed.

We generally discuss most results relative to the average, even though the actual performance spans a pretty wide spectrum of results. To me, it begs the question, “Will average be good enough to win if we don’t explore top quartile and overall variability in the results?”

Let’s look at some examples in our April data:

We are talking about real money here. As I said, in every system there are the top performers that can achieve results that their counterparts in the same concept and market cannot. Why is that?

I will give you one more set of data on a company we reviewed to understand some of the performance correlations that made a difference. We looked at the company’s best five markets and worst five markets in their Black Box Intelligence data first.

10 markets we found a gap of 61 points difference in management turnover from the best five versus the worst five markets. In hourly turnover it was less pronounced, with a 20-point gap.

Now, you might say it’s obvious that higher turnover hurts sales and profits. But think about it this way: Attracting, hiring, training and retaining the right management talent in those top five markets has delivered top-quartile same-store sales performance in the marketplace for their stores, as well as an additional 13.5-percent increase in same-store sales over their own peers, while reducing management turnover costs by as much as two-thirds.

It’s always good to know that great management counts.

Now, that is a possibility in the variability. I hope you have a great May.

Wallace B. Doolin

Doolin is Chairman of Thomas Doolin and Associates LLC, the holding company of People Report, the leader in human capital business intelligence for the restaurant industry and Black Box Intelligence. He is the Founder of Black Box Intelligence, a state of the art business intelligence software product also for the restaurant industry. Additionally, he serves as a Trustee Emeritus of the National Restaurant Association and National Restaurant Association’s Education Foundation where he is a past Chairman. Other current responsibilities include serving as a Board Director for Famous Dave’s a public company, SplickIt a mobile technology company, Phase Next Hospitality a non-traditional operator/franchisee and Share Our Strength a leading nonprofit. Previously, Doolin served as CEO of Carlson Restaurants Worldwide, T.G.I. Friday’s, Buca Inc. and La Madeleine, as well as president of Applebee’s. He is a frequent speaker and writer on the global restaurant industry.

The Restaurant Industry Snapshot is a compilation of real sales and traffic results from 170+ DMAs from 100+ restaurant brands and approximately 15,000+ restaurants that are clients of Black Box Intelligence. Currently, data is reported in four distinct segments: casual dining, upscale/fine-dining, fast casual, and family dining. Black Box Intelligence is a sister company to People Report, which tracks one million restaurant employees on workforce analytics. The Restaurant Industry Snapshot also includes the Restaurant Industry Willingness to Spend Index from Consumer Edge Research, which is a monthly household survey of more than 2,500 consumers. Consumer Edge Insights is a marketing partner with Black Box Intelligence and People Report

Savvy professionals are always on the lookout for new trends. If you’re like most, you often run across articles and comments about what to watch for in the coming months and years.

Every industry has gurus whose opinions focus on a particular market. It’s unusual for a finance trend, for example, to also show up as an HR trend. But in reading various “what to look for” lists, I noticed that one theme came up repeatedly – Big Data.

It looks like Big Data is going to be in the headlines for a while. As everyone knows, it refers to data repositories that are, well, . . really big. Far larger and more complex than what was available in the past.

Executives wrestle with the question of how to use this mountain of information. Marketing types, for example, are captivated by the potential to fine-tune advertising messages. But Big Data isn’t limited to marketing – there are many potential applications within an enterprise. The tough part is figuring out what the payoffs might be.

One of the biggest hurdles is scoping the effort. Data is so widely available and in so many forms, few organizations have adequate systems to aggregate, store, analyze, and distribute it. Harnessing the potential requires a commitment at the highest levels. Once a strategic framework is established, the appropriate communications, hardware, software, training, and maintenance infrastructures have to be built. And let’s not forget the analysts who will actually be responsible for command and control.

Uncertainty about costs and benefits makes it tough to quantify the potential returns. It’s certainly a competitive necessity for a company like Google or Yahoo, but probably not (yet) for the manufacturer of a commodity good. Between those extremes, CFOs and CIOs struggle to find a way to balance investment with projected benefits.

So should we discount the coming of Big Data? Probably not. Big Data isn’t so much a new approach as it is the continuation of a movement that’s been in place for some time. Remember data mining from a few years back? Las Vegas casinos like Harrah’s were famous for using customer data to increase the value of high-stakes gamblers.

It’s more a question of scope. As computing and software resources mature, Big Data will evolve and companies will find ways to integrate it into operations.

In the meantime, I think there’s merit in pursuing what might be called “Modest Data”. Modest Data is similar to Big Data, but on a, well, more modest scale. Think of it as bite-sized initiatives. Where Big Data casts a wide net looking for unknown patterns, Modest Data is more focused, more limited, and is aimed in a specific area. Typical questions worthy of some creative research might include:

• What are the characteristics of my high performance managers?
• What are the relationships between turnover, compensation, tenure, and performance?
• Does our compensation program deliver intended results?
• How can our internal data be used to understand sales impact (cannibalization) from new units?

Big Data might provide insight into these (and many other questions). But my guess is that some key benefits can be realized with resources at your disposal today. There are several reasons why smaller, targeted projects make a lot of sense:

1. You’ll learn something, one way or another. Always objective #1. There’s no question that providing evidence to support a hypothesis or show a relationship is very rewarding. What’s often more useful (and eye-opening) is demonstrating that a hypothesis isn’t true. When that happens, it’s a good indication that the existing process isn’t working as thought.
   There will be times when an analysis doesn’t seem to shed much light. Those are learning experiences, not failures. Maybe there just isn’t a relationship, or, more likely, perhaps there are other variables that need to be considered. Some liken the process to a laboratory experiment – you only have to be successful every now and then to create some real value.
2. You probably have most of the data already. The cool thing about a focused effort is that it usually involves information you can get your hands on quickly. Moreover, it’s probably data that you’re familiar with and can verify. One of the huge problems with Big Data is getting all the inputs verified and standardized. Modest Data has fewer variables and more credible inputs.
3. Modest Data helps shape the discussion of Big Data. I mentioned earlier that the benefits of Big Data are hard to quantify. But each Modest Data project helps an organization better understand the ways that data synthesis and analysis add to insight and actionable information. With a series of smaller successes, leaders get a much clearer view of the potential benefits and how the process can work for them.

Generating a list of potential areas to investigate isn’t much of a problem. Every organization has pockets of opportunity. The key is to get some quick wins – here are a few hints:

1. Start with a pain point. What’s one area that can really benefit from a deeper dive into relationships and patterns? Try to bring new perspective to an issue that has visibility. Results get noticed and the process begins to get traction.
2. Ask the right question. Data analysis can yield powerful insights. But it can also deliver results that are nonsense in the real world. Interpretations are critical, so be extremely careful about assuming cause and effect relationships. Make sure your findings pass the “smell test”. Many projects go off the rails because the outputs were accepted literally without using an experience filter. Nate Silver’s book The Signal and the Noise gives great perspective on how to interpret forecasts and projections.

3. Keep it manageable. Remember, this isn’t Big Data. It’s more targeted – try to address a reasonably specific topic. The odds are good that your research will lead to other questions that will take you new directions. Peeling back layers of the problem is part of the journey.
4. Memorialize it. Document the process with specific objectives, steps, and results. It’s necessary for benchmarking, and you’ll likely revisit the project in the future to measure improvement. It also provides a reference point for future projects and adds to the organization’s understanding of how data analytics influences results.

Big Data is probably coming. But Modest Data is already here, and organizations don’t need state-of-the-art systems to uncover powerful learnings right away.

We had a difficult quarter that included payroll taxes, delayed tax refunds, more gloom for the US economy caused by the Sequester, high gasoline prices, New Year’s Eve helped in the beginning, but an early Easter hurt in the end. Oh yes, we had worse weather by far from 2012’s mild winter creating the most difficult rollover of this year (+1.5%).

The Black Box Intelligence Index for March finished at +0.5% in comparable sales and -2.0% in traffic. The quarter that seemed it would never end posted – 1.3% in comp sales and -3.7% in traffic which is the worst quarter since Q-2, 2010. Ouch.

So that is the news, but what about the commentary?

I would like to share some thoughts from last week’s UCLA Restaurant Conference in Los Angles. It was a very good conference that presented some great speakers and content. Greg Creed, CEO of Taco Bell, brilliantly delivered the keynote sharing a very transparent view of their bold vision for the future. Tim Ryan the CEO of the Culinary Institute of America received the innovator of the year award, followed by an informative view of our industry from his insightful vantage point. I gained valuable insights and visited with many great people in our industry.

However, the conference opened with a grocer, not a restaurateur, Walter Robb, Co –CEO of Whole Foods. I had heard him last October at the Conscious Capitalism Summit. Walter is a great leader of a wonderful company. This time, his remarks gave an interesting perspective that no one commented on all day. I love Whole Foods as a consumer, but listening to Walter as a person that has made and continues to make my living in the restaurant industry, he scared the heck out of me.

As I mentioned last month we have an oversupply of restaurants in our industry that has created a market share battle for you and your competitors. Someone opens, someone closes. Someone innovates and sales go up at the cost of someone else who didn’t innovate and their sales go down. You see product proliferation in many brands to include QSR, and constant efforts to broaden the possibilities to gain more share of dining out. This represents the customary line of sight and strategy in a market share battle, but what about your flanks? This is where a formidable competitor is chipping away at our dine-out dollars, the dollars that lead to positive comp sales.

So here are a few observations about Walter’s presentation.

Whole Foods is constantly innovating. It may be in product category choices, product improvement or totally new products. They especially like their ability to innovate in pre-prepared products. Listening to their customers and employees especially at the local level drives that innovation. They incorporate great flexibility of regional choices according to local product and local flavor profiles.

They have aggressive growth plans. If they aren’t in your neighborhood, they will be, and of course they are not the only upscale grocers we have to compete against. They have amazing talent committed by the attraction of their principles and purpose. He had two local store associates speak to the audience. Their tenure was 7 years and 10 years respectively. With tears in their eyes they discussed how they love working for Whole Foods because it is a team environment, purpose beyond profit, good wages, paid health insurance, paid time off for community service and a career with opportunities.

You may be saying so what? They are in the grocery business.

Actually, they are in the food business, like us. They happen to sell most of their product for home consumption, but Whole Foods and their competitors are after our customers and employees. The incentive is their margins are higher when they sell food prepared in competition with restaurants.

So to me the lesson is simple. We can’t take any competitor for granted and we have to watch our flanks. As the saying goes we better “hold them close”!

Good luck in Q-2 and buy groceries not meals at your local grocery store!

@BoomerCEO

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