How to find out how your customers are really treated

The hostess wasn't there.

The father and his two daughters, ages 8 and 10, had been waiting long enough for the kids to get antsy, and still nobody had come to seat them inside the restaurant in the Crystal Court mall in suburban Los Angeles. The father looked at his watch -- again -- tapped his foot some more, and finally, in disgust, led the kids away.

It's doubtful that the loss of lunch for three would be noticed in that day's sales. The restaurant, like the six others in the Ruby's chain, is always mobbed. But that unhappy family is exactly the kind of thing that Doug S. Cavanaugh and Ralph L. Kosmides constantly worry about. Not only was it possible that the family wouldn't be back, but odds are the father will tell his friends. Enough experiences like this, and Cavanaugh and Kosmides can forget about their expansion plans -- three more restaurants are scheduled to open this year -- or about repeating their 1988 Inc. 500 listing.

But what can you do to ensure that the next customers who show up are greeted quickly and with a big smile? When Cavanaugh or Kosmides appear at the door, the staff jumps to attention. That's fine. And while the chain's cofounders, both 33, appreciate that they can always get a table at their restaurants -- done up as 1940s-style diners, complete with big-band music and old Coca-Cola signs on the walls -- they'd be a lot happier if they knew their customers got the same kind of treatment.

How do you do it?

The answer for Ruby's and many other retailers is simple: mystery shoppers. These are people who are paid to be customers and report back about how well they are, or are not, treated.

"When you have one store, you don't need mystery shoppers," says Cavanaugh, who opened the first Ruby's with Kosmides nearly seven years ago. "You're always there. When we opened our second restaurant, we'd feed our friends for free if they'd check out the place. But the problem is they're your friends. They're reluctant to say anything bad. They can't be objective."

Neither can Kosmides and Cavanaugh. "There are some managers we really like, and it's only natural that we would give their places higher scores," Cavanaugh says. "What we really needed was another set of eyes, people who had no ax to grind, who didn't know us, and who could tell us what was really going on."

That's where a mystery-shopper service comes in. For about $30 a visit, not including the cost of the food, a market-research firm sends someone to the restaurants to find out how well Ruby's staff is meeting the corporate goal of "providing our guests with the best food, the best service, the best value in the cleanest, best organized, and most fun environment possible." Each shopper is armed with a checklist that Cavanaugh and Kosmides created.

"You can use prepackaged questions, but they may not test for things you think are important," says Cavanaugh. "We identified what makes Ruby's a success -- the cleanliness of the restaurant, the friendliness of our staff, and the quality of the food -- and designed a questionnaire so that the mystery shopper could check those areas. People do what you inspect, not what you expect."

Here's how that inspection works. The mystery shoppers -- often college students, retirees, or other people looking for a flexible work schedule -- appear at a Ruby's unannounced. Having studied the questionnaire ahead of time, they take mental notes about the restaurant and the service they receive. Then as soon as they pay the bill, they sit in their cars and review the 34 areas Cavanaugh and Kosmides asked them to grade as excellent, satisfactory, or poor.

"The idea is to catch people doing something right," says Cavanaugh. There are no trick questions. Indeed, not only does the staff know there will be periodic inspections, they are even told what the shoppers will be looking for. Says Cavanaugh: "We want them to do well; if they do well, Ruby does, too."

To ensure that that happens, employees are rewarded for passing the pop quiz. A waiter who scores well on the spot inspection receives $50 as soon as the survey is turned in. And a good score from the mystery shopper goes a long way toward helping managers earn their yearly bonus, which can equal as much as 100% of their salary.

The financial rewards also allow Cavanaugh and Kosmides to easily shift the staff's attention when they see a problem or opportunity. For example, the owners recently became concerned that managers were paying too much attention to the kitchen, delivery dock, and back room, and not enough to what was happening out on the restaurant floor. The question, "Was the manager frequently visible?" was added to the questionnaire, and when that failed to improve things quickly enough, the question was given double weight. Managers are now more visible.

Similarly, worried that the staff was not doing enough suggestive selling (see "Making the Most of Mystery Shoppers," below), Cavanaugh and Kosmides added questions that underscore the importance of getting the customer to order more. Waiters got the message, and the average check increased by 10%.

The areas of focus keep changing. The company has altered the survey four times in the past six months, based on what Cavanaugh and Kosmides see as they tour the restaurants or what they hear from customers or employees.

The mystery-shopper program has not replaced the traditional ways Ruby's executives keep an eye on what is going on. Managers are still responsible for the performance of their restaurants, and the chain has district managers as well. "But the mystery shopper has become part of our overall system of checks and balances," says Cavanaugh. "It's just another thing you can do to make sure you're getting the details right."


How to customize the program

When you have one location, quality control is simple. You're always there. But as you grow, it's hard to keep tabs on ev-erything. One solution: the use of mystery shoppers, people who pose as customers and then tell you how they were treated.

Here's how Ruby's restaurant chain goes about it:

* Think first. While mystery shoppers can answer a series of canned questions, that's not the best way to go. Only you know the variables truly important to your company's success. While the 1940s theme at Ruby's is fun, founders Doug S. Cavanaugh and Ralph L. Kosmides feel it's the food, friendliness of the staff, and cleanliness of the place that will keep people coming back. They stress those areas in creating questions for the mystery shoppers to answer.

* Be consistent. A key to making the program work is having a mystery shopper visit on a regular basis. For Ruby's that means calling on each of its seven restaurants about once a month, more often if there is a problem. At $30 a visit, the program costs Ruby's about $200 a month, plus the cost of the meal.

* Push hot buttons. You can use the shoppers to reinforce a particular program or idea. Cavanaugh and Kosmides have found that the easiest way to increase Ruby's sales is by suggestive selling. Asking a customer if she wants orange juice with her breakfast or fries with that burger can boost the average check. In the mystery-shopper survey, suggestive-selling questions carry extra weight.

* Make sure everybody has the answers. The idea behind the surveys is to reward the staff for doing what you want. Tell all employees what's on the survey and which questions are most important. While no one knows when the mystery shoppers will visit, everyone knows what they'll be looking for.