Keeping IT 'real' and in 'focus' are key after M&A action

Nation's Restaurant News,  Nov 12, 2007  by Julie Ritzer Ross

• E-mail
• Print
• Link

Developing and executing a successful information technology strategy can be challenging under the best of circumstances, but the IT drill is further complicated when a company acquires or is acquired by another.

Sorting out IT issues is one of several tasks restaurant companies undertake in the wake of an acquisition or merger. In most, if not all, cases, management of the newly combined operations must decide whether to integrate disparate systems or standardize on a single platform. Some companies, such as Real Mex Restaurants Inc. of Cypress, Calif., opt for a combination approach, while others, including Focus Brands Inc. of Atlanta, follow the standardization route.

"It's all a very subjective process," said John Koontz, Real Mex's senior vice president and chief information officer. "There's no one formula that works for every company, because so many factors figure into the equation."

Acquired from private-equity firm Bruckmann, Rosser, Sherrill & Co. in 2006 by an affiliate of Boca Raton, Fla.-based Sun Capital Partners Inc., Real Mex operates 158 restaurants in California and 33 additional company-owned restaurants in 13 other states. Its holdings include 69 company-owned El Torito stores, 68 company-owned Chevys Fresh Mex restaurants, 10 units John Koontz, Real of the upscale El Torito Grill, 35 chief information of Acapulco Mex restaurants and LAS Brisas restaurant in Laguna Beach, Calif., as well as regional eateries Who-Song and Larry's, Casa Gallardo, El Paso Cantina and GuadalaHarry's.

Real Mex's most recent move on the acquisition front was its purchase of Chevys Fresh Mex in January 2005. Early in the process, a decision was made to keep a lid on costs and pave the way for smoother operations going forward by consolidating departments at the corporate level, maintaining, for example, a single IT department rather than one at Chevys and another at El Torito.

"We knew that to make this work, standardization was, for the most part, the way to go," Koontz said.

On the enterprise front, Real Mex had in place the Core2 accounting package from Catalpa Systems Inc. of Chicago, while Chevys was using the Microsoft Great Plains--now Microsoft Dynamics GP--solution. Koontz and his team concluded that because Core2 already was "heavily integrated" with Catalpa's back-office and distribution modules, Chevys would migrate to that system from Great Plains rather than vice versa. With assistance from third-party contractors, the chain built a series of proprietary integration tools for exporting data from Chevys' old application and importing it into the Real Mex system.

Koontz said that portion of the transition went off as planned because more than enough time had been allotted for executing it.

"We started working on getting the data out of Chevys' system a full 60 days before its stores came" under the Real Mex umbrella, he said. "We took over Chevys on a Wednesday and five days later were up and running with the first payroll."

Far more complicated an endeavor was determining whether to scrap Chevys' SquirrelOne point-of-sale system or integrate it with Real Mex's longstanding application from Columbia, Md.-based Micros Systems Inc. Although integrating the two systems would require time and money, Koontz said, replacing the Chevys application with the same technology used elsewhere within the chain obviously would cost more, because Chevys' original system was 10 years old. As such, it was deemed inadequate to satisfy Real Mex's IT needs.

"Squirrel offers a great product, but the version Chevys had was about 10 years old and was DOS-based," Koontz said. "We didn't think the hardware and software would support our integrated point-of-sale model."

That model, he explained, enables granular data--for example, at store X, at X time, an order for two margaritas with salt were entered into the point-of-sale system by X employee--to be extracted from the point-of-sale system and imported into other applications. It also automatically adjusts to reflect menu variances.

Other issues came into play as well. Notably, Real Mex has its own help desk.

"We had to ask ourselves whether the desk could really support two platforms and at what cost," Koontz said. "We figured out that it just wouldn't work."

After several months of evaluation, Real Mex executives concluded that phasing out Vancouver, British Columbia-based Squirrel Systems' SquirrelOne POS system constituted its best course of action. To prepare for the migration to the Micros platform, new data cables had to be installed in many stores and quite a number of units needed entirely new electrical systems. "These," said Koontz, "are the things you tend to forget about but shouldn't."

Even more importantly, existing and new proprietary homegrown data Mex Restaurants' extraction tools were employed to pull ficer transaction data from the Squirrel application and roll it up into Real Mex's data warehouse for later use chainwide. The "new" solution was piloted in a limited number of stores beginning in January 2005, with the remainder coming online throughout the year.