Fast-casual upstart bets on lean IT and the cloud

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Being lean and growing wildly would seem to be polar opposites.

For any company, lean means the need to operate efficiently and hold down costs. Growing wildly means finding success in an all-out market push to establish the company and its brand.

That tells the story of Seattle-based MOD Pizza, whose rapid rise as a retail dining destination in the fast-casual food segment has been off the charts.

To marry its opposites, MOD is aggressively syncing up technology solutions. It’s the only way to keep pace — putting its trust into the deployment of an enterprise-level public cloud architecture to empower stores and line managers, stabilize its operations and drive future growth.

Scalable infrastructure

MOD has enjoyed truly electric growth since 2015. That year, revenue grew 220 percent, positioning MOD to tout the brand as the pioneer of fast-casual pizza, where customers can create their own made-to-order pizzas with healthy ingredients and a selection of 30 toppings.

The company added 100 new stores system-wide during 2016 and another 110 in 2017, expanding its footprint to some 300 corporate and franchise locations across the country and internationally.

While the quick-service category represents the lion’s share of restaurants in the United States, the fast-casual segment has been a beacon for an overall growth-starved industry. The NPD Group reports the industry saw a 5 percent increase in fast-casual chain restaurants (to 19,043 total units) in 2016 and fast-casual customers increased their visits by 6 percent; total foodservice traffic increased only by 1 percent.

MOD, founded in 2008 by husband and wife Scott and Ally Svenson, now has more than 6,000 employees — or “MOD Squaders.” The moniker for its workers is a testament to MOD’s avowed culture of putting people first and providing opportunities to those within the organization who often have faced impediments to steady employment.

Inherent in the MOD culture is the emerging discipline of “conscious capitalism,” where corporations seek to reap the benefits of being in business while seeking to make a positive impact on society. The company announced last November, for instance, that it had donated more than $364,000 to an organization that provides meals to children beset by hunger.

That backdrop has moved the company to where it is today, yet growth and market attention also highlight an urgency for a high-achieving business to mature its corporate functions and operations.

Tara Gambill, MOD’s director of information technology, says a question facing MOD through its growth, as well as its focus on an ethos to help people, was the need to create an infrastructure “that can help you to continue to scale.”

Gambill says while the MOD approach showcases the value of hard work, it was essential for the company to begin to work smarter. Invariably, what that means today is technology investment.

“How you are able to balance the growth with the efficiencies of technology with business processes really becomes one of the core challenges,” she says. “Meanwhile, you still are producing a top-notch, amazing product. You’re working on hiring amazing people that you are continuing to coach and grow. You need to bring in some tools to support all that.”

Directing focus

In today’s digital technology fast lane, working smarter is synonymous to moving processes to the cloud, which fundamentally equates to the notion of deploying software-as-a-service rather than doing it all in house.

MOD consolidated its IT systems under the umbrella of the S/4HANA Cloud, an enterprise resource planning platform from SAP. Transitioning to a cloud-only enterprise with a minimal internal IT organization, Gambill says, means MOD needed quickly to achieve flexibility in its operations, from human resources and sourcing to inventory and financial management.

For instance, store managers can order their own inventory as the company sources product from the local communities in which the stores operate. But that swells vendor lists and invoicing. The S/4HANA Cloud providing the platform to manage such a process frees up the organization’s people to focus on customers, Gambill says.

“It becomes in some ways a differentiator. If we can bring in the right tools at the right scale and at the right cost, then it allows our people to focus on the right things. It allows us to focus on how we’re running our restaurants and how we’re able to interact with our customers. That’s a huge part of MOD. The minute you walk in the door, it’s a partnership with the customer that should be fun as well,” she says.

MOD also delegated human resources to SAP’s Human Capital Management Platform in the cloud. With its focus on people, Gambill said the step was vital because of the nature of job turnover in a restaurant industry that is a magnet for young people.

“It’s a dynamic workforce,” she says. “In order to manage that dynamic nature, a success factor will be to bring a lot of different tools to the table. We see a really rich roadmap of features with that platform.”

“It becomes in some ways a differentiator. If we can bring in the right tools at the right scale and at the right cost, then it allows our people to focus on how we’re running our restaurants and how we’re able to interact with our customers.”
— Tara Gambill, MOD Pizza

Turnkey operations

Sal Laher, chief operating officer of SAP’s S/4HANA Cloud, says retailers like MOD Pizza understand that they no longer can afford to provide internal IT to their organizations like in the past — where the IT shop would be responsible for securing and managing hardware, software, data center, networking, training and support.

“With the digital transformation that is happening to retailers, retailers have to get their products out to consumers very quickly,” Laher says. “The way to get the product out there very quickly is to not have an IT system that is totally complex and archaic.”

With a fully managed, browser-based public cloud configuration, “you just consume it by paying a subscription. You can consume and access it from any device, anywhere,” he says.

“It is almost something akin to a gym membership. You would buy your gym membership and all you would need to do is pay your monthly subscription and you come to the gym and everything is done for you. There are classes, equipment, a shower, a swimming pool. Everything is provided for you on the subscription. You do not need to do anything.”

A key benefit to cloud platforms is deployment time: Organizations can be up and running in weeks rather than spread over many months or years in traditional IT settings. Laher says MOD Pizza’s cloud configuration went live in about 28 weeks.

“Going to the cloud, [MOD Pizza] could define the process once in the cloud for all their stores. They want these stores to pretty much look the same and operate the same,” he says.

Gambill says an enterprise cloud service brings with it a comfort level, which is vital for a company managing super-fast growth.

“They can do the heavy lifting and we can benefit from their experience and guidance through maintaining these environments,” she says. “A cloud product was a requirement for us.”

M.V. Greene is an independent writer and editor based in Owings Mills, Md., who covers business, technology and retail.

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