Actionable Insights From APT's Retail Practice
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Rising Gas Prices: A Triple Whammy for Restaurants

April 17th, 2012 | Posted by CCorman in Restaurants - (Comments Off on Rising Gas Prices: A Triple Whammy for Restaurants)

The LA Times reports that three out of four restaurant operators feel pinched by high gas prices, an economic factor possibly contributing to a small same store sales decline in February. Rising gas prices impact restaurants in three key ways. First, spikes at the pump are generally correlated with higher commodity costs. Second, higher gas prices leave guests with less discretionary income. And third, rising gas prices may decrease travel and therefore reduce restaurant traffic. All of these factors create significant margin pressure – only restaurants that pick the correct strategies to succeed in this environment will find the road to profitable growth.

The National Restaurant Association (NRA) reports that food costs have overtaken the economy as the number one concern for restaurant operators in 2012. Chains are seeing beef prices in particular go through the roof, such as Atlanta’s Ruth Chris Steak House, which reports an 11% increase in strip loin costs since the beginning of March. As input costs rise, restaurants have six choices to maintain profitability: (more…)

Mother Nature: Did the warmer weather impact my revenue, or was it my promotion?

April 10th, 2012 | Posted by CCorman in Labor & Operations - (Comments Off on Mother Nature: Did the warmer weather impact my revenue, or was it my promotion?)

This year in particular, restaurant operators are having a difficult time understanding how much of their sales lifts can be attributed to better weather versus how much is simply due to the direct impact of a single initiative.

With such drastic seasonal changes, the only way to find the true incremental impact of any initiative is to test it in a subset of your restaurants. “Test” doesn’t mean trying something in all of your locations in Phoenix and Michigan and comparing it to balance of chain. Dust storms in Phoenix and snow storms in Michigan would derail any hopes of an accurate read. In order to find the true cause-effect relationship between any initiative and key performance metrics, it is necessary to set up representative tests and employ a scientifically-based control group strategy that has the potential to deliver highly statistically significant results.

Only through representative, scientific testing can companies really begin to understand the impact of their initiatives. Is it time to rethink what’s really causing your sales to change this year?

Mother Nature: Did the warmer weather impact my sales, or was it my promotion?

April 9th, 2012 | Posted by CCorman in Retail | Uncategorized - (Comments Off on Mother Nature: Did the warmer weather impact my sales, or was it my promotion?)

This year in particular, retailers are having a difficult time understanding how much of their sales lifts can be attributed to better weather versus how much is simply due to the direct impact of a single initiative. Highly seasonal companies, like The Home Depot, have already reported stronger sales due to the influx of customers who were able to use their shovels for planting instead of clearing snow from their driveways.

With such drastic seasonal changes, the only way to find the true incremental impact of any initiative is to test it in a subset of your stores. (more…)

Breaking Down New Strategies to Improve ROI

April 6th, 2012 | Posted by Will Weidman in Uncategorized - (Comments Off on Breaking Down New Strategies to Improve ROI)

This month, Banking Strategies released an editorial discussing some new challenges as banks focus more on multi-channel delivery. The strategy suggested is to create a profitable, scalable, and flexible multi-channel delivery strategy that caters to a new customer. This new customer requires a seamless experience across channels and is much more fee sensitive than we’ve seen in the past.

Adjusting the current delivery strategy is operationally difficult. Some channels need to be modified and others need to be introduced into the mix. Ideally to mitigate the risk involved in these major changes, banks should consider approaching these shifts as a set of small steps. As we’ve seen recently with Bank of America back-tracking on debit card fees, pulling a few small levers can cause dramatic disruptions. Banks should understand the customer response to each of these steps, so that the overall delivery strategy is built off only the small changes and additions that truly drive value.

As banks begin to use this approach, they will need to accurately determine what works, what doesn’t, and what will work if fine tuned. The robust way to do this is by piloting some of these new ideas in a small subset of branches. Trying out these strategies in a subset of the branch network, enables leaders to correctly understand the impact of these ideas, without making costly missteps in network-wide rollouts. Carefully isolating ideas that truly generate incremental profits is essential for many banks to survive today’s turbulent environment.

Try a New Model for Branch Remodeling, APT Featured in American Banker

April 4th, 2012 | Posted by Jatin Atre in Financial Services | Uncategorized - (Comments Off on Try a New Model for Branch Remodeling, APT Featured in American Banker)

A byline written by APT VP Will Weidman was recently featured in American Banker. Will explains that many banks are not currently employing three easy strategies to realize significant returns on remodel investmentClick here to read more.

What can executives learn from Hans Rosling’s famous Ted Talk?

April 3rd, 2012 | Posted by CCorman in Uncategorized - (Comments Off on What can executives learn from Hans Rosling’s famous Ted Talk?)

In 2007, Swedish professor Hans Rosling gave a Ted Talk about global development that changed the way many people look at data. His talks, which have now garnered millions of YouTube hits, provide a key lesson for corporate executives: decisions not supported by data can often be wrong.

Rosling starts his talk by presenting the results of a survey that he gave to top Swedish graduate students. The survey asked students to choose the country in a given pairing with the highest child mortality rate. The pairings were Sri Lanka or Turkey, Poland or South Korea, Malaysia or Russia, Pakistan or Vietnam, and Thailand or South Africa. If you are like the top Swedish students, you would have incorrectly answered Sri Lanka, South Korea, Malaysia, Vietnam, and Thailand.

It is easy to make business decisions based on intuition alone; but as the above survey exemplifies, sometimes intuition fails even the smartest and most successful people. Obviously, there were no repercussions for answering Rosling’s questionnaire incorrectly. But what if you were using this same kind of judgment to make a $5 million advertising decision or a $100 million capital expenditure investment? Rosling explains that the problem many people face is not ignorance, but preconceived ideas.

Top executives at any of the Global 2000 companies have incredible business sense, but when making high-stakes decisions, it is necessary to glean actionable insights from the data. And Rosling does this by weaving hundreds of thousands of data points into incredible stories to show how global development is evolving, debunking many myths about how the world actually works.

Just as Rosling turned thousands of lines of data into a meaningful story, corporate executives are beginning to understand how to turn their data warehouses into business insights by testing key initiatives in a subset of their locations. Sometimes these tests confirm previous intuition, but often executives gain new and profit-generating insights.

To provide just one illustrative example, companies have tested profitable network-wide local advertisement programs and found out that only a small percentage of the local markets were contributing to incremental profits, while the other markets were losing money.

Looking at huge amounts of data in innovative ways, just as Rosling does with his global development work, enables individuals to move past preconceived ideas and extract valuable information from their data that will lead to profitable decisions.

 

Help Wanted: How do you turn your second largest cost into your most profitable investment?

April 3rd, 2012 | Posted by Jatin Atre in Labor & Operations - (Comments Off on Help Wanted: How do you turn your second largest cost into your most profitable investment?)

Hiring continues to be a key challenge for many restaurants. Michael Harms, senior business analyst at the Dallas-based People Report, recently commented that, “the ease of hiring and the ease of finding candidates is going away and going away quickly.” Since labor is usually the second largest expense for restaurants (other than food costs), hiring correctly can often be the key differentiator between making money and suffering large losses.  To successfully staff restaurants, executives must correctly answer three questions: (more…)