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McCormick and Schmick's

National Seafood Restaurant Group Finds the Recipe for Success

The McCormick & Schmick's 39 seafood restaurants in 19 states across the country have increased in name recognition. This unique restaurant chain is adding restaurants each year at an increasingly rapid rate. Each one has its own regional flavor, featuring locally available seafood and original recipes of its chefs. Upscale but affordable, the restaurants have managed to capture the loyalty of local clientele with their anything-but-chain-like ambiance, food quality, and service.

By the time McCormick & Schmick's restaurant count was 14, they had outgrown their spreadsheet-based accounting system. Knowing they were positioning their business for future growth, they carefully researched 50 different solutions and settled on Microsoft Dynamics GP.

Now, 25 restaurants later, McCormick & Schmick's likes the flexibility and ease of use of their solution. Their company has "grown up" with Microsoft Dynamics, which helps them manage the growth they are enjoying in a time when other restaurants are struggling.

Situation
You may have dined at one of Bill McCormick and Doug Schmick's restaurants across the United States-McCormick & Schmick's Seafood Restaurant, M&S Grill, Jake's Famous Crawfish, McCormick's Fish House & Bar-to name a few of the affiliated restaurants. If you did, you may have found the restaurant in a building listed in the National Register of Historic Places. It very likely had ambiance and up-scale flavor, without a high entrée price. Forty different varieties of seafood are served, listed on a menu printed daily based on the product price and availability of their 85 to 110 menu items. Each chef creates dishes tailored to regional tastes and their own talents. In July 2003, Consumer Reports magazine listed McCormick & Schmick's as one of the best restaurant chains in the nation. The chain has continued to thrive post-9/11, when other restaurants have struggled.

The company now known as McCormick & Schmick's was begun modestly in the 1970s by Bill McCormick and Doug Schmick. Their growth in the early years was slow and steady. By 1996, McCormick & Schmick's operated 14 restaurants in four states.

Growth pains were being felt in the accounting area, which was unable to do a consolidated financial statement or actual-to-budget comparison with their homegrown, spreadsheet-based system. In the restaurant business, food costs are a critical component of profitability. The company operated on a four-week cycle. It took three weeks to produce financial statements for the previous quarter. By that time, they were three quarters of the way into the next period. If food costs for the preceding period were too high, it was too late to make adjustments.

They decided to check out all accounting software possibilities. In all, they looked at 50 financial and accounting software packages. They sought a scalable solution that would grow with their business. They needed a system that could handle multiple budgets, had a Microsoft® Windows® based graphical user interface, and one that would operate on the PCs in which they had already invested. They wanted a system that would service them for a minimum of ten years.

Solution
McCormick & Schmick's settled on Microsoft Dynamics with the help of Microsoft Reselling Partner, InterDyn. Early in the implementation, they realized a five-day reduction in month-end closing time. This reduction provided them with the ability to quickly produce financial statements and respond to cost overruns.

Since the 1996 implementation, Microsoft Dynamics GP has helped McCormick & Schmick's grow its business to the current 39 restaurants in 19 states.

J.D. Edwards Side-Stepped
Thomas Yee, Manager of Information Technology at McCormick & Schmick's reports that at one point in the restaurant chain's history, it was controlled by a publicly held company using the J.D. Edwards financial and accounting solution. During that time, the company was under tremendous pressure to switch to J.D. Edwards. They resisted. "There was no evidence that it was any better than what we already had," Yee says. "We wanted to stay nimble and independent. As a healthy and successful restaurant group, we were able to manage our concepts and procedures well. If it's not broke, don't fix it," Yee says. McCormick & Schmick's stalled on the J.D. Edwards conversion for four years as they grew to 35 restaurants. Eventually, they were sold by the publicly held company and are once again privately held, having stayed the course with Microsoft Dynamics.

Support for Growth Opportunities
The company now finds itself in a period of particularly rapid growth. "The opportunities are approaching us every day-we have lots of growth potential." Yee says. To support that growth, in 2002, McCormick & Schmick's upgraded their Microsoft Dynamics GP solution. "To upgrade to the next version was a big step in our efficiency so we could expand without making our internal centralized processing more cumbersome," Yee says.

Managing Restaurant Construction
McCormick & Schmick's has found an additional use for its Microsoft Dynamics GP solution-one that helps them manage the construction growth they are experiencing. In the past, they had used Peachtree's ACCPAC to manage the construction accounting portion of their operations. As a single-user system, it was inadequate to support their growth at the rate of three to six restaurants per year. The decision was made to move their construction accounting to Microsoft Dynamics GP as well. They use a different database to keep the construction management part of the business separate. Now they can have one person cutting checks, another coding invoices, and another posting journal entries. "It has helped manage our growth," Yee says.

Favorite Modules and Features
Along with their upgrade, McCormick & Schmick's added the functionality of Integration Manager. Yee has this to say about Integration Manager, "I consider Integration Manager a staple in doing the GL, and soon the payables. It has opened the doors to everything. We have an intranet site that gathers our restaurant information. I couldn't do restaurant dailies now without that integration."

They have also added Intercompany Processing. "Intercompany has opened a few doors. We're looking at electronic 1099s for the first time and considering payment via integrated credit card from Bank One."

They also like Modifier, Report Writer, and Safe Pay. "I couldn't live without Report Writer or Modifier. Safe Pay is used every day, and it's just a requirement for me. The products I'm using every day, I love," says Yee.

In the past McCormick & Schmick's needed to hire temporary labor for two weeks to rekey the budget data from Microsoft Excel spreadsheets. Using the budgeting tool, they are now able to automatically import spreadsheet-based budgets.

The SmartLists feature allows them to review report information more quickly.

Benefits

Ease and Flexibility
McCormick & Schmick's likes the ease and flexibility of the Microsoft Dynamics GP solution. When new staff members are hired, existing staff are able to easily provide training. Because of the Modifier tool, customizations remain transparent to the staff.

Cost Savings in Reporting
McCormick & Schmick's was ready to purchase 17 new file cabinets this year to house their posting reports. Considering the cost of the file cabinets, hanging folders, and three-hole punch paper, they estimated the potential cost for equipment and supplies at $15,000. When they began using Microsoft Dynamics for Analytics-FRx®, they were able to modify forms using Report Writer, generate electronic documents as output using Acrobat Distiller, and e-mail the reports as attachments. With no need to produce and mail hard copy reports and store the printouts, both labor costs as well as equipment and supply costs have been avoided.

Improved Decision Making
The power of Microsoft Dynamics has saved time and labor costs for McCormick & Schmick's. And because reporting is now quicker, the company is better able to react to cost overruns and can be more proactive in their cost containment efforts.

A Valued Partner Relationship
Yee is complimentary of Reselling Partner InterDyn. "They are the lifeblood of our organization. I wouldn't be able to do the things I do if I didn't have a partner I could trust who knows my business like I know my business." He reports that InterDyn is always watching for opportunities that allow the company to manage its business better.

Overall Impressions
McCormick & Schmick's is happy with their 1996 software choice, their decisions to upgrade and add functionality, and their partnership with Microsoft. "I wouldn't have a job if we didn't have that product. I'm so glad we made the decision to go with Microsoft Dynamics GP in 1996-it was the right choice. Microsoft has stepped up to the plate-there's always been a partnership there. It was evident when we implemented the solution, but it's even more evident now in the last two years because of the fact that you have a big name [Microsoft] stepping behind another big name [Dynamics GP]. It's a universal acceptance program."

Yee couldn't convince his company to buy computers in the past. It was the Microsoft Dynamics GP accounting package's functionality that paved the way for greater acceptance and use of technology. "The only reason we crossed that bridge was that they saw what we were doing with our accounting package," Yee says.