How to Modernize Your Brand's Finance Systems
In 2012, after some 22 years as Pizza Factory franchisees, Mary Jane Riva and her husband, Bob, added a new title to their business cards: franchisor. The pair purchased the then-34-year-old company from its founders.
Given their long history as Pizza Factory franchisees, the Rivas saw immediate opportunity for improvement and were eager to create a 21st century enterprise focused on moving more effectively and efficiently, specifically when it came to finances.
“It’s easy for any brand, but especially an older one, to become very complacent in business,” Mary Jane Riva says.
As the company’s new leaders, the Rivas began instituting financial processes and controls aimed at reducing operational costs.
But not everyone was sold on the changes. While about 50 percent of Pizza Factory’s franchisees embraced the shifts, the other half remained content with the status quo.
Still, the Rivas persisted in selling the more calculated focus, convinced that some fresh thinking to their financial approach would drive the brand’s performance. Five years later, the 112-unit Pizza Factory is better for the efforts.
“These changes have made a huge difference for us,” Riva says. “It’s not just about making good food, but about running the business the right way so you’re maximizing profitability.”
For any established brand like Pizza Factory, change can indeed be difficult. But evolving key business areas such as operations, marketing, branding, and, in particular, finance can drive bottom-line results.
“The fact of the matter is that no one comes to our restaurants because of our accounting department,” says Keith Davis, who is in his second year as the CFO at Captain D’s, the 520-unit, Nashville-based enterprise founded in 1969. “That said, we’re the guys behind the scenes that can help our stores optimize costs and be more profitable.”
When the Rivas took over Pizza Factory, there was no system-wide portion control program, few operators set scheduling or labor goals, and many stores used their point-of-sale (pos) system just as a glorified cash register.
Steadily over time, the Rivas educated store leaders on how to better manage food and labor costs, how to be more efficient with programs like QuickBooks, how to use pro formas to aid decision making, and how to leverage POS data to inform scheduling, inventory, delivery, and promotions.
“We had the tools to be better with our money. We just needed to get everyone on board,” Riva says.
The accounting system is another popular target for finance officers looking to make some change. When Davis arrived at Captain D’s in March 2016, he encountered an incredibly inefficient legacy accounting system that featured emailed PDFs and outdated reporting aspects that struggled to support the field.
Davis began outsourcing accounting to a cloud-based provider, a transition he oversaw at previous restaurant companies. That single change, he says, provided individuals across Captain D’s a readily available set of financials to drive decision making.
In addition to those antiquated systems, Davis also took aim at information silos. In many established companies, each department inhabits its own fiefdom and inter-department collaboration isn’t what it should be.
To combat this, Davis added three new finance positions to his department: one individual responsible for general and administrative expenses and two others charged to support the field. The latter two work closely with cost-center managers and operations.
While concerted efforts in the C-suite are necessary to revamp a legacy brand’s financials, managers and employees at the store level should also be empowered to drive those changes.
Like many established operations, Chicago-based Potbelly would establish a company-wide goal such as, say, a 5 percent jump in profitability. That top-down approach, while important to setting the company’s sights on constant improvement, didn’t fully consider how those changes would trickle down, says Potbelly senior director of franchising Chris Birkinshaw.
As such, Potbelly leadership, including members of its finance team, switched gears to a more bottom-up approach focused on improving throughput and purchasing or minimizing food waste, confident that a series of small gains at the bottom would spur big results for the 450-unit chain.
Ultimately, the key to charting a new, successful course requires a comprehensive, future-facing perspective. At Capriotti’s, president Jason Smylie says continual investments in the personnel and infrastructure of the company’s finance department have sparked an evolution of its role. Once a department largely focused on reporting, finance has evolved to support units across the company and assist in key areas such as planning, budgeting, and analysis.
That increased synergy has helped the 41-year-old brand surpass 100 units, secure multiunit development from franchisees, and capture average unit volumes above $715,000.
“Whereas some companies may be managing their finances for profitability today, we’re focused on driving growth, which will lead to a much bigger bottom line as our vision materializes,” Smylie says.