El pollo loco hatches ASP strategy
The El Pollo Loco restaurant chain, best known for its quick-service chicken burritos, needed a little quick service itself on some new financial applications. By using an application service provider for its Lawson Software financial apps, the Irvine, Calif., company was able to meet a tight deadline, and do it under budget.
Spun off from Advantica Restaurant Group, the holding company that owns Dennys, El Pollo Loco had scores of restaurants in operation, but no applications of its own. To make the job even more challenging, data had to be extracted from Advanticas database and fed to the new companys applications before the separation was completed late last year.
"We had no infrastructure, no staff. We had unique needs, and we had to go live in 90 days," says Wendy Jacobson, director of information technology (IT) at El Pollo Loco. "We would have had to hire three or four more full-time people to do it ourselves."
Several months after switching over to the Lawson applications, which are hosted and managed by Agilera and implemented with help from the ASPs services partner, DigiTerra, El Pollo Loco is focusing on ways beyond its need for speed that application services can support its multiple-location business model.
"We are moving toward a virtual private network that will allow our corporate office to monitor financial performance at different restaurants on a daily or even real-time basis, and that has to be facilitated by a third party," says Chris Slaughter, the restaurant chains chief financial officer. El Pollo Loco will likely sign with another ASP, Apigent Solutions, to provide applications for a business intelligence system.
ASPs and restaurant chains are a logical fit, according to Bill Potts, vice president of marketing at Mirus, a Houston ASP focused on the market.
"Franchisee groups really like the quick return on investment and low cost of ownership," Potts says. "We can do it 30 [percent] to 50 percent cheaper for them than they can do it themselves. We can upgrade once across an entire chain, and we can provide best-of-breed applications that are more complex and expensive than they would have taken on in the first place."
Lane Horstmann, vice president of IT at the Saltgrass Steak House chain in Houston, says he is about to sign with Mirus to provide back-office applications that will support his companys 23 restaurants. "Its a natural for us on things other than point-of-sale applications. We can work off a centralized model to consolidate and communicate operating metrics rapidly across the chain," Horstmann says.
Agilera is also eyeing the restaurant vertical market, having learned the ropes from El Pollo Loco and another customer, Einstein/Noah Bagel, says Todd Sterrenberg, the ASPs vice president of strategic alliances. "Both of those were more opportunistic than strategic on our part, but were working with Lawson to put together a repeatable model for the industry," Sterrenberg says.
The ASP is also working with other application vendors to offer business-to-business and business-to-consumer services to four or five verticals in the retail business.
At El Pollo Loco, the decision to go with the ASP model in general and Agilera in particular came after some careful research.
"We talked to the people at Einstein/Noah Bagel and to IHOP, another Lawson customer," says El Pollo Locos Jacobson, who supports 130 company-owned restaurants with a staff of three.
Another 150 or so restaurants are franchised; the company may offer franchisees access to hosted services in the future.
El Pollo Locos Slaughter says that despite the quick implementation, he took his time when choosing a service provider. "You have to manage the risk in any important project," he says. "In this case, hosting was more secure in terms of disaster recovery, and Agilera can provide us with a bit more vision than we would have internally because they are connected to rest of Lawson world."
Still, Slaughter says, there was plenty of work to do.
"You have to make certain you have a good service-level agreement, and to get that you have to spend the time and make the effort to negotiate very thoroughly," Slaughter says. "That also sets the stage for the idea that this is a service relationship."