Solutions by Industry

Restaurant Remodels: A Case Study

A national restaurant chain embarked on a significant remodel of its older locations.

  • The client had a history of testing but generally found results unsatisfactory.
  • APT updated test design to ensure proper representative test and control groups.
  • Most effective elements of the remodel were identified and costs were halved, resulting in an estimated $20MM lift.
The Company

A leading national restaurant company

The Challenge

A leading national restaurant chain was planning a significant remodel of its older locations. Due to the high cost per remodel, the chain had begun conducting a test on a predetermined number of stores with the expectation of expanding the test in the coming months. Testing had been used previously by this chain with unsatisfactory results. Determined not to repeat the mistakes of the past, the client was focused on choosing an appropriate test group to ensure that they would be able to obtain a statistically significant read of the business lift.

The Solution

The client looked to APT’s proprietary software to assist in designing the appropriate test, i.e. the initial remodels that would provide the understanding of program effectiveness and the business case for continuing the program.

Using APT's Test & Learn™ solution, the restaurant chain found that their current test design was insufficient but that only minor modifications were needed to ensure workable results. In particular, the chosen sites were not representative of an average group of locations.  APT identified a small number of additional stores to be added to the test group, thereby ensuring an accurate read on performance. A significant increase in test size was determined to be unnecessary, allowing the client to minimize investment before understanding the impact of the program.

Following the completion of the first remodels, APT examined the results and found which elements of the remodel were most effective. By identifying particular components of the remodel that weren’t generating lift, APT was able to significantly reduce the cost of each store remodel while maintaining the lift in sales associated with the refresh. In addition, APT was able to determine which types of locations had the greatest upside—those with certain demographics and a high degree of competition. Using the analysis, APT worked with the client to establish the highest ROI set of restaurants for the next wave of remodels.

The Results

Management used this targeted remodel strategy to generate millions in NPV, and the program was deemed a success. Using APT's Test & Learn™ approach, the client was able to nearly halve their rollout costs without significantly reducing sales lift, resulting in an estimated $20MM impact.