Rita's Water Ice
started out in 1984 as a tiny business intended to augment founder Bob
Tumolo's income as a Philadelphia firefighter. Water ice, also known
locally as "Italian ice," is a frozen treat akin to ice cream. In 1989,
Tumolo decided to franchise the concept, and when he sold the company
in 2005, there were hundreds of Rita's Water Ice stores open in nine
states. He sold Rita's to McKnight Capital Partners, a company with
extensive franchise experience; the number of franchises continued to
grow and stores are now found in 15 states. The plan at this point is
to expand the number of stores to 1,500 and double the average sales by
With expansion plans that aggressive, it was inevitable that Rita's
Water Ice would turn to geospatial technology to help plan, manage and
grow the network. The company, which had purchased various reports and
services from geoVue
in the past, recently contracted with geoVue to bring
geospatially-based network management tools in-house. Directions
Magazine's Nora Parker interviewed Tom Spadea, Rita's director of
Franchising and Real Estate, to learn more about the plan and the
Nora Parker (NP): What was the challenge that needed to be addressed?
Tom Spadea (TS): The main challenge we have as a franchise company
is finding the proper density of stores in any given market. If we have
too few stores we are under-serving the market and not getting the
brand to the critical mass needed for maximum success. If we overbuild
the market and put stores too close to one another it could have an
adverse effect by cannibalizing sales of sister stores. As a franchise
company this "cannibalization," or encroachment, is a huge issue. By
moving forward with geoVue we can get a clearer and more objective view
of what will happen to sister stores as we add more stores to a mature
market, and where we should be putting the first stores in a new market.
NP: Why was geoVue selected? What other solutions were considered?
TS: We have been a geoVue customer [e.g. accessing their services
as opposed to acquiring their products for in-house use] for a number
of years for basic demographic data and mapping software. We looked at
a handful of other vendors, some very large and some very small, and
felt that geoVue was the right size to have the necessary talent on
their team, but not so big that we as a client were unimportant. We all
feel we made the right decision.
NP: What is geoVue providing? How does it blend with your existing
IT and other systems?
TS: We have a custom online portal [built by geoVue] that maps out
our entire system and available areas to help us manage our growth.
From that system we can run predictive sales reports for any location
we are considering for a Rita's [store]. The system outputs clean and
simple PDF reports we use with our CRM system. The PDF reports are five
page "macro approval reports" that will generate a "pass/fail" decision
for a specific address. The first three pages are maps (small, medium
and large scale) and the last two pages are numeric reports with
demographics, traffic counts, etc. These are viewed via the CRM system
by senior management, who give each site approval for further analysis.
If an address is approved, then a site visit will take place so that
the site's characteristics (traffic, visibility, etc.) can be further
analyzed for suitability. The system has proved [to be] an invaluable
piece of our decision making process, of whether or not we approve
specific real estate locations. It has streamlined our process of
evaluating new areas to target our growth. It is the creator of our
data and we have integrated it into other systems such as our "public"
online opportunities maps.
NP: Are there any results yet? Any proven return on investment?
TS: We just started [using the system in-house] in the 4th quarter
of 2006 so it is still too early to tell. Putting aside the obvious
metrics of the time the system saves us, the streamlined evaluation of
real estate and the other tangible advantages, the real value of geoVue
is as a tool for better decision making.
Over time, the system will also improve with our feedback of what is
working and what is not working. It becomes a powerful and unique tool
and really differentiates us from our competition. The uniqueness of
any brand and retail concept makes a tool like this a necessary part of
doing business. To not use a tool like this is like working without a
Web site. Can you be in business? Sure. But are you really a company
that understands what is going on in the marketplace? The true ROI on
geoVue will be in profitable locations and happy franchisees, which is
a far greater economic return than the investment in time and money
into the system.
NP: What are the lessons learned?
TS: I joined the project late, and if I was running it from the
beginning I would have spent more time on what we wanted the
deliverables and reports to look like at the end and then worked
backward to build the system. Integrating the actually users of the
system, in our case the real estate managers in the field, earlier in
the project could have saved some time.
NP: What are the next steps?
project will never end, which is the power of the system. Now that we
have a baseline and are getting real predictions out of the system we
will track how accurate the predictions are and continually make course
adjustments. As the year ends we will load in the sales data on our
stores, and also we are working on a numerical evaluation of both site
characteristics and operator characteristics to help the system do a
better job of predicting success using a neutral baseline "typical"
store front and franchisee.
For instance, we [may] have a perfect partner doing everything right
everyday - who markets like crazy, wins awards, is known in the
community, etc. He or she is very likely outperforming the demographics
of his or her location and we need to adjust that into the model. On
the flip side, a partner who is not as engaged in the business may be
underperforming his location and by inputting the efficiency and
quality of the store, we will vastly improve the model. This will also
help us see who is a great performer and who faces challenges; although
mathematically that logic starts to get circular. Over time, this
system will keep getting better, but that is as much up to us as a
company as it is up to geoVue.