Herman Cain’s Restaurant Revenue Plan

Bob Krummert

Political commentators and rival candidates scoff at Herman Cain’s restaurant industry background, saying that being president is a lot more complex than running Godfather’s Pizza or a bunch of Burger King units, two of Cain’s previous posts. It may well be.

But no one—even Cain—mentions his time as c.e.o. at Stamford, CT-based Digital Restaurant Solutions (DRS), a company started by the same outfit (Walker Digital) that founded Priceline.com, That’s the job in which Cain displayed his more visionary side.

Cain left his post as c.e.o. of the National Restaurant Association to become c.e.o. and president of DRS in 1999, the height of the dot-com boom. He told Restaurant Hospitality then the DRS system would “revolutionize the economics of the restaurant industry and reorder the customer’s decision-making variables.” The idea, he said, was “to convert POS systems from order takers to money makers.”

Here’s an excerpt from Restaurant Hospitality detailing the way DRS worked back then. This story isn’t archived on the RH website, so we’re giving you a few highlights and what we wrote back in early 2000.

“The DRS scheme is designed to make the point of sale a point of selling in the quick-service part of the market. Cain described the process as, in part, a system in which a QSR unit’s POS system is programmed to prompt counter attendants to up-sell additional items after the customer places his order and tenders payment.

“So, if your order comes to $3.07 and you hand over $4.00, the DRS system prompts the counter person to suggest additional items which cost $.93 or less. The customer is put in the position of merely assenting to purchase more food without having to dig back into his pocket for more money. If you believe in the power of impulse purchasing, this system’s for you.

“Cain said restaurants return $20 billion in change to customers annually, and the DRS system is a way to capture a large part of that flow. Additionally, the system turns a store’s POS terminals into training devices, becoming a coaching aid for managers and a learning aid for counter workers and cashiers.”

DRS proved effective when used in real-world restaurants. In a pilot program, customers accepted the up-sell option 40-50 percent of the time, boosting the QSR store’s $3.45 check average by an additional $.45. Nearly half of the store’s customers agreed to buy the additional items suggested by the DRS system. More importantly, Cain told RH, repeat visits to the test store increased 36 percent because customers liked being offered these special deals.

So what happened? The dot-com bubble burst, causing money for and interest in snazzy tech solutions to dry up. Parent company Walker Digital had planned to cash in by eventually taking DRS public, just as it did with Priceline. That idea became a non-starter, and Cain moved on to new projects.

We don’t know how well Cain will do in the presidential race. But it’s hard to see how playing up his background as a hi-tech industry executive wouldn’t help him out. The DRS system seems to us that it could still work in certain restaurant settings, and Cain has am M.S, in computer science from Purdue. It’s a side of him that even his supporters know little about. Let’s hope Cain stops running from his restaurant technology background and starts to emphasize it instead.