Technology | June 2008

Improving the Experience

Subway’s new chief technology officer works to answer the question: “How do you leverage technology to improve foodservice?”

In February, Subway announced Thys (pronounced Tice) J. Van Hout as the company’s new chief technology officer. Van Hout seized the opportunity to work with the international restaurant chain for a variety of reasons, the least of which include “leveraging technology to enhance the Subway experience at the store level and help increase franchisee profitability.”

Subway boasts almost 29,000 locations in 86 countries, but Van Hout points out that each and every franchisee at heart is an entrepreneur. And Van Hout has some experience in that arena. After working for many years in foodservice industry logistics, technology, and statistical analysis for well-known brands such as Procter & Gamble and Kraft Foods, Van Hout decided it was time to put his skills to use in a new way. He wanted to answer the question, “How do you leverage technology to improve foodservice?”

So in 1989, Van Hout founded Oak Brook Associates, where he worked with clients such as Burger King, Cold Stone Creamery, and Dr Pepper to find answers and solutions to that question. Approximately three years ago, he began working with Doctor’s Associates Inc., the parent company of Subway restaurants. When co-founder Fred DeLuca asked Van Hout if he’d be willing to work for Doctor’s Associates, Van Hout didn’t hesitate.

“To meet and work with Fred DeLuca is an enormous opportunity for me,” says Van Hout, who felt strongly enough about the opportunity to turn the reins of his own company over to someone else. “It was right for me because I basically had done the things I wanted to do [at Oak Brook Associates],” Van Hout says.

So what does Van Hout envision for Subway’s technology future? Right now he’s looking at the big picture, or charting “the overall vision of where we want to go, the strategy to get us there, and meet the needs of Subway owners.”

While he has no specific projects on the board right now, Van Hout is looking at several possibilities. “We have a lot of potential initiatives,” he says. These include such options as finding alternative ways to conduct the POS process and trying to standardize processes for data. Van Hout says smaller initiatives probably will roll out during the months ahead, while the larger ones will appear during the years ahead.

One of the biggest technological challenges Van Hout sees for the quick-serve industry is streamlining multiple data across the marketplace. “Within the whole foodservice industry, the lack of common nomenclature within the supply chain is very [problematic],” he says. For example, multiple food distributors have their own coding and numbers. However, he says, “Groceries use a standardized system, but that has not occurred in the foodservice industry. It’s a great challenge.”

Van Hout believes a number of alternatives could exist to meet this challenge. One such example focuses on creating standard product numbers for everyone’s use and incorporating them using an all-electronic method. Right now, he says, “Pieces are done electronically but not connected in a way of seamless flow of information. Over time, [we need to] create a uniform electronic commerce supply chain.”

But Van Hout knows this effort will not happen overnight and requires a large monetary investment. “Computers, particularly in the supply chain, provide very little margin for profit,” he says. “Making capital investments takes a long time.”

Likewise, while technology is popping up all over the place in the quick-serve restaurant industry, don’t expect every trend to take root. For instance, while Europeans have utilized their cell phones to pay for any number of services, Van Hout doesn’t see that becoming the norm in the U.S. The reason? It’s about people changing their habits, he says, and this would require people to think and use their cell phones in a new way.

Van Hout is also exploring kiosks. He believes the machines have many positives, but one negative is that they can take away from human interaction. “From a technology standpoint, we’re very interested, but we have to look at it from a consumer standpoint.”

Text messaging also rates a bit of Van Hout’s attention. “Folks are getting experienced with that,” he says. “If it seems to make sense, we’ll be looking at it. We’re constantly experimenting with all sorts of options and will continue to in the future.”

In fact, Van Hout says many suggestions come in from Subway’s franchisees. “A company of entrepreneurs, having so many … it’s a creative lab for technology,” he says. Of course, not every idea works for the entire company, but it certainly sparks ideas and brainstorming throughout the process.

Right now Van Hout is satisfied with Subway’s progress in the technology area. “We’re neither far behind nor necessarily far ahead,” he says. “We’re in the sweet spot where we can leverage technology and do the things for franchisees that [help improve sales, profits, and the customer experience]. We see specific ways that can be done. It’s a real honor to be asked to participate in this way with this company.”

In the coming months and years, Van Hout hopes he is able to make a positive impact throughout the Subway family. “I see myself working very closely not only with Doctor’s Associates, but also closely with our sister organizations, IPC (Independent Purchasing Cooperative) and SFAFT (Subway Franchisee Advertising Fund Trust), creating results that benefit the entire enterprise,” he says.

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