Magazine Article | June 1, 2000

Retail In Restaurants

Source: Innovative Retail Technologies

Rainforest Cafe offers patrons a surreal dining experience — and a good place to shop. In a business typically defined by food and service, Rainforest is collecting 20% to 25% of its revenue from the retail stores within its restaurants.

Integrated Solutions For Retailers, June 2000

Are you familiar with professionals who restore great works of art? They occasionally feature these individuals on the Discovery Channel. There's something in conflict about their temperaments: the mercurial artist meets the deliberate scientist. Despite the rarity of this combination, though, there are people well-suited to this work.

Some might draw a similar comparison to Rainforest Cafe, Inc. Most retailers would not show interest in the restaurant and hospitality industry. Conversely, most restaurateurs don't care about retail. Rainforest Cafe, Inc., however, does both.

With 29 stores domestically and 11 internationally, 20% to 25% of Rainforest's revenue is coming from the retail stores within its restaurants. That equals nearly $60 million. No one is snickering.

Combining Retail With Restaurants
The vast majority of management at Rainforest has restaurant industry backgrounds. "Sometimes that makes it hard to explain the nuances of retailing to them," says Brian Brown, business systems analyst at Rainforest Cafe, Inc.

Because the restaurant chain was growing at a rapid rate, auditing the retail sales portion of the company became a problem. Rainforest began with three individuals auditing six stores – a ratio that worked. By the time the chain reached 29 stores, however, the sales audit staff still consisted of three people.

"We couldn't maintain that ratio," explains Brown. "But we didn't want to increase the retail sales audit staff. We knew the only way to solve our problem was to implement technology that could streamline our auditing processes."

Evaluating Retail Solution Providers
Rainforest didn't have to look long for a solution. Rather than going through the lengthy process of evaluating vendors, the company chose a vendor it was familiar with: STS Systems of Montreal, an international supplier of integrated computer applications designed for retail.

Rainforest knew what to expect from STS because the vendor had supplied much of the company's software and hardware. Rainforest also believed that STS' familiarity with its company would help expedite the installation – which it urgently needed.

Eventually, Rainforest chose STS' AuditWorks, a product designed to facilitate retail sales auditing. The installation took a total of six months; and fortunately for Rainforest, it only required implementing the software in the company's Hopkins, MN, headquarters.

New Audit System For Retail Sales
On the retail side of the store, Rainforest's POS stations consist of STS' PC Register software running on PCs. Each of the company's restaurants houses between two and six retail POS stations. Its larger restaurants (units with more than four POS registers) have a dedicated server. Nightly, whether directly from the POS stations or servers, data is polled from the retail stations and dumped into the AuditWorks system. "AuditWorks is an exception-based application," comments Brown. "We create the rules, designating what we do and do not want flagged. For example, if the ending cash balance was off or if there were missing transactions, the AuditWorks system automatically flags those items."

This scenario is in opposition to the way the paper-based system ran. With it, sales audit employees had to review and pick out these types of mistakes from a paper-based system. The work was labor-intensive; and by the time Rainforest had established 29 stores, it was no longer a realistic workload for three employees.

"The installation was so much easier because we only needed to install AuditWorks in our headquarters," says Brown. "It took about six months to install. And, although we haven't done a formal calculation, jumping from six to 29 stores without an increase in labor is an indicator of the system's success. With the old application, the audit staff was just slogging through everything. The new system directs them to the really important issues."

Retail Supply Chain Management
Rainforest Cafe has to manage its supply chain just like any other retailer. And for that purpose, the company runs a warehouse in Minneapolis near its corporate headquarters. Rainforest buys most of its hard-line goods (plush dolls, key chains, etc.) domestically. The company produces its own apparel, about 90% of which is made overseas. Beyond sending all of the company's retail goods through the warehouse, Rainforest also stores restaurant items suitable for long-term storage, such as sugar packets and other dry goods.

"We don't have a dedicated WMS (warehouse management system)," comments Brown. "But we need one. It's something that is on our immediate to-do list. The system we are using now is paper-based, which is fine for two or three stores. Now that we are nearing 30 units, though, we're pushing its capabilities."

Integrating Restaurant And Retail Solutions
On the restaurant side of the business, Rainforest is using POS stations from HSI (Hospitality Services International) of Boca Raton, FL. The restaurants are also using touch screen and swipe card technology, as well as receipt printers from Epson.

All restaurant employees carry an ID badge attached to their belts that they can swipe through devices at the various registers. This allows them to log on to POS stations without having to remember an ID number. After they input the order, it is broken down into categories and sent to the correct sections of the restaurant: drinks are routed to the bar, meals to the kitchen, and salads to the prep kitchen. Each of these respective sections of the restaurant has its own receipt printer, on which the order is printed.

The system works well, but having separate POS stations for restaurant and retail creates major hassles for Rainforest. "To get rid of that inconsistency," comments Brown, "we are working on using the AuditWorks system for the restaurant's POS data. It is a hard project because there aren't really any other restaurant chains that have such a strong retail presence. That means we'll have to work with a vendor to develop a solution."

Technology And The Future
Beyond tentative plans for a WMS and an integrated POS system, Rainforest is also looking at several other projects for the near future. The first project is the installation of a loss- prevention system to track fraudulent transactions at the unit level. The second project is a gift card system that would eliminate paper gift certificates.

"We always put our customers first," says Brown, "and that's the reason for most of our technology upgrades. The card system is a much more efficient and elegant way of handling that process, so we decided to do it. You have to make those kinds of improvements to stay competitive these days."

After Brown's descriptions of the various upgrades at the company, he was asked to articulate the company's philosophy on technology. "We have a good track record with technology," responds Brown. "We don't feel a need to be on the cutting edge, but we want to do whatever it takes to make the business successful. Our number one goal is to serve our patrons. That is the underlying motivation for any of the technology upgrades we implement."

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