Thursday, June 23, 2011

#ALGORITHMS: "Pizza Analytics Serves Bigger Slice of Pie"

IBM analytics can use data from nearly any source, from pizza ordering patterns to text sources like social media. (Source: IBM)

Business analytics is not what many think of when ordering pizza, unless perhaps when using Papa Gino's mobile app to take advantage of personalized special offers, ready in 30 minutes. Papa Gino's, a New England pizza chain, has boosted its average order total while simultaneously upping the frequency of orders per customer by turning to real-time analytics. The analytics effort was done through a collaborative venture with QueBIT Consulting, a business partner of IBM.

In the past, Papa Gino's was able to boost the average order total by virtue of customer loyalty programs. The programs rewarded customers who signed up with special offers encouraging them to add on additional items. Likewise, the pizza maker was able to boost the frequency of ordering by offering free downloadable apps for smartphones that made it easier for customers to place orders. However, it took business analytics to help unearth a formula that increased both total orders and their frequency, simultaneously.

One surprising factor that the company claims it would never have thought of on its own is how personalized special offers are delivered. Analytics revealed that 80 percent of pizza lovers in New England prefer to have personalized special offers delivered by text messages, rather than email or from in-app offers. Another example is that frequent customers prefer the freedom to redeem these offers for take-out or dine-in pizzas. As a result of these and other previously hidden trends among its loyal mobile customers, ordering frequency has been boosted, along with an average increase of order totals by 50 percent.

Medium-sized businesses like Papa Gino's--with 280 restaurants including its D'Angelo grilled sandwich shops--might have thought they were too small to harness business analytics being run on IBM's massive cloud computers, but by working with QueBIT, the chain has been able to reap a positive return on investment (ROI) right out of the (pizza) box.

"Being able to track and analyze customer feedback and response [has] grown our transaction count significantly as more and more people join our rewards program," said Paul Valle, CIO of Papa Gino's. "[These trends are] not something we would have been able to tell as easily [without analytics]."

Instead of spending 80 percent of their time just gathering data, and only 20 percent analyzing it as Papa Gino's did in the past, according to Valle, now management can spend the bulk of their time on analytics.

For the future, the pizza chain plans to begin minimizing labor costs with predictive analytics that match staff scheduling to projected customer demands throughout the chain. And if that goes well, Papa Gino's plans to extend analytics to tracking store inventories and all the other important aspects of pizza making, from hand tossing to boxing the pie.

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