As Originally Published in Inc. Magazine
Dining a la Data
The owner of a chain of Chinese restaurants explains how and why he turned to technology to automate his eateries.
From: Inc., Dec 1995 | By: Hal Plotkin
When customers stopped coming to him, Roger Kao automated his Chinese eatery so he could go to them
When it comes to Chinese food, familiarity breeds contentment — not to mention big bucks. At least that’s the philosophy of Roger Kao, the 45-year-old owner of Golden Wok, a $3-million chain of four Chinese restaurants in Mountain View, Calif., that uses technology to keep its finger on customers’ gastronomic pulse.
Despite the popularity of food franchises, the world’s most digested cuisine remains mostly a mom-and-pop single-location industry. Pundits speculate on the reasons: too much competition, too few standardized dishes, inventory shrinkage (a retail euphemism for theft or the otherwise unexplained loss of foodstuffs), and low profit margins. But Roger Kao knows better. The real problem, he says, is that most purveyors of Chinese food have been reluctant to embrace technology. Not Kao. Now that he’s wired his business, he can deliver high-quality Chinese fare at top speed from four locations.
Kao didn’t set out to be a high-tech pioneer; he was just trying to stay in business. It was either expand and deliver, he says, or close up shop, as many neighboring eateries did six years ago, when a prolonged street-beautification project in Mountain View nearly ruined his business. “If the people cannot come,” Kao recalls reasoning, “then I will have to go to them.”
How to make it happen? First stop: Domino’s Pizza. Unlike most of the pizza chain’s customers, Kao ate his pie right there. Slowly. “I admired Domino’s approach,” he says. He took note of how the staff partially prepared food in advance and then, when the calls came, finished the cooking and made speedy deliveries. “But I saw that I could do some things even better, like moving personnel to meet demand.” Next, he shopped around and found the right technology, including a real-time order- and inventory-management system called the Hospitality Management System (HMS) 3000, from ISSI, in Deerfield Beach, Fla. He also bought 20 PCs that he networked via a leased 75K phone line. The whole package, including software and hardware, cost him about $70,000 and took about a year to get up and running.
Kao’s customers are archived by phone number — as they are at Domino’s, which also has gone high tech. A delivery address and directions become part of the database the first time a customer calls. New orders can be compared with old ones. (“No egg rolls tonight?”) And customers can call any Golden Wok location: the HMS 3000 automatically routes incoming orders to the Golden Wok nearest a customer’s street address. The system then sends requests to the right person: to the prep cook, to the fryer, or — if an order calls for an already-prepared dish — directly to the dispatcher, all of whom have terminals at their workstations.
Kao can monitor all four outlets from any terminal. Because the restaurants are not even seven miles apart, he can move cooks and drivers from store to store in less than 10 minutes, as volume dictates. There are usually 10 employees at the original, largest site and fewer than 6 at the smaller sites.
“I can tell you exactly how much cash is in each register,” Kao says proudly. And he never has to wonder, for instance, where the beef is because the system automatically deducts, say, seven ounces from inventory each time an order of broccoli beef moves out the door. The HMS 3000 also houses a “modifier” database, which calculates the prices of special orders — items that are not on the menu — based on their ingredients. And Kao can generate hourly sales reports, bar graphs that help him identify dishes that should be prepared in advance to meet customer demand. “Other places don’t know where to start,” Kao points out. “We know exactly where we’re going.” Indeed, Kao has already selected the site for his fifth outlet and plans five more within the next five years.
Kao, who allowed his Silicon Valley restaurant to be used as an HMS 3000 beta site, traces his technical side to his days as an engineering student at Brigham Young University, in Provo, Utah, where he landed in 1968, a Chinese immigrant with just $300 in his pocket. He has financed all his restaurants with a minimal line of credit and personal savings; he will do the same for the six new locations.
Kao has one problem, though. Every few hours he’s hungry again for new technology. So while his wife, Pearl, helps run the expanding Golden Wok empire, Kao now spends much of his time traveling. He has a second career with a distributor of CAT-scan equipment, supporting customers in the Asian Pacific Rim. “I have to work,” Kao explains, looking around the bustling kitchen. “And there’s not much for me to do here anymore.”
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Hal Plotkin (firstname.lastname@example.org) is a freelance writer based in Palo Alto, Calif.
This work is licensed under a Creative Commons Attribution 4.0 International License.