Jersey Mike's: Technology Integration and Collaboration Fuels Growth

At Jersey Mike's Subs, technology, marketing, operations, and strategy are so intertwined, "We joke back and forth about who's in charge of who, because there's so much overlap," says Rich Hope, the company's CMO. "We have a super open-door policy with marketing and IT, and try to get operations involved as well."

"Each department has needs," says CIO Scott Scherer. "In this day and age most of those needs involve technology."

The company's POS system, developed by Scherer and his team, is at the core of the inter-departmental collaboration that is a big part of Jersey Mike's culture - and its rapid growth - as the company reached the 1,000-unit mark last October. Scherer describes the brand's award-winning POS system as an integrated software suite with the POS system as the hub (see graphic).

The POS System: The Center of It All

Note: Text messaging has been added.

"Our POS system provides a base technology package. Then, depending on which department has a technology need, we'll build it into the program as part of the database," explains Scherer.

For example, marketing uses POS data to prove the effectiveness of their efforts; the executive team to look at growth indicators and plan strategy; the customer service team to determine customer opinions and brand image; operations for food and labor efficiency; and development to show candidates how the brand's technology will help them build their business.

"We distribute a KPI report every Monday morning to area directors to compare with the previous week, previous year, the rest of country, and year-to-date numbers so they can see if they're keeping up, falling behind, and make changes if necessary," says Scherer. The executive-level reports are the same as the franchisees get, but consolidated at the group and national levels.

In 2004, Scherer was an outside vendor working on the company's accounting and mail systems. At the time, Jersey Mike's had about 230 stores - all with standalone cash registers, the legacy of a brand that started in 1956. Only a dozen years ago, sales reports still were being faxed to corporate. The next year, he was named CIO but still worked as a consultant, with the goal of developing a POS system to deploy in all the stores.

The brand started with a system from a small company that eventually proved unworkable, so they began developing their own code. At first, Scherer says, it was more of an electronic cash register, but working with operations, marketing, and other departments, he and his team continually added features until it became a total technology package that today provides everyone in the company a view of the business - whichever specific view they need for their department.

Franchisees had been complaining about all the different systems used in the stores, so to further encourage them to adopt the new system, corporate provided an incentive: about $8,000 per store for the company's approximately 300 stores when it rolled out. As the company continues to grow, new features are added - as long as they solve a real problem and are economically justified. Scherer has a "wish list" of requested improvements from across the company, but anyone who makes a request must prove its ROI, or it comes off the list. "They're not the ones who pay for it - the franchisees do," he says.

Scherer and his 15-person IT team work most directly with Hope and the marketing department, and the two meet almost daily. He also works closely with the executive team, including the senior vice president of strategic initiatives.

Over the years, when looking to add new features for marketing and to better serve customers, Hope would ask Scherer, "Can we add this? Can it come out of your budget?" Says Hope, "That was the impetus to get us to work together - we both had limited budgets and needed to compete with other brands." Because of that, he says, "We're very open with every project. We have a tight-knit executive team here who enjoys working with each other."

Budgeting for IT projects is generally allocated into two areas: 1) customer-facing technology, with two people working in Hope's marketing department (supervised by Scherer) who focus on the brand's website, text messaging, etc.; and 2) franchisee-facing technology (e.g., POS system, food and labor, and reporting systems for sales), paid for by monthly technology fees from the franchisees.

"We have employees now who overlap - regardless of whether they're on the IT, technology, or marketing budget," says Hope. "My people couldn't live without the database people on the tech side, drawing from all the massive databases we have. It's a CMO's dream to have real-time data on sales and tie all our data together. It really allows us to better serve customers because we have all this data about them."

In-house or outsource?

Both Scherer and Hope were outside vendors when they began working with Jersey Mike's. Now inside, they continue to employ third-party vendors - as long as those vendors are willing to work with its API. "We now require our vendors to code to our standards," says Scherer.

Scherer uses third-party tech vendors for two purposes: when the company needs something rolled out quickly, and for functions outside his team's core competencies. That includes online ordering, network security, and video analytics for the restaurants. He had used an outside vendor for the Monday morning reports for about a year, but has since brought that inside; and, after 18 months of using a third party for text messaging, the company was preparing to bring that in-house as well.

To manage food and labor at the restaurants, the company uses software from CrunchTime. "We'll never bring that in-house," says Scherer. "It not only increases top-line sales and reduces costs, but also helps us with quality control and keeps labor costs as low as possible without sacrificing service." In 2014, the brand was recognized with a Breakthrough Award from in the Enterprise Innovator category for integrating CrunchTime into its POS system.

In its ongoing effort to better use the data collected through the POS system, Jersey Mike's continues to seek out tech vendors who can integrate that data for them. "Almost everything we do has some kind of technology application," says Hope. And while the POS remains the hub, he is now preparing for the next stage: figuring out how to use that data more effectively. "We haven't looked at it in terms of executing marketing strategies. We hope to employ that in 2016."

Yet, Hope told the audience of 300 franchise marketers and technology suppliers last June at the 2015 Franchise Consumer Marketing Conference (where he served as chair), "Some things don't change. Technology doesn't change strategy." Instead, he said, it's a tool - a powerful tool, but still only a means to a strategic end.

"They tell me what they want to collect and what they want the screen to look like. The brains of the design is from the marketing guys," says Scherer. "Having our own software, hardware, and operators here allows us to be agile. We own it, we control it, and if something comes down from above we can do it."

CIO Advice

• Make sure you include all of the stakeholders - operations, purchasing, marketing, development, and of course the executive team.
• It's good to have an IT roadmap, as well as a wish list, but make sure that whatever you do has a clear ROI.