By Sally Huggins

Entrepreneurs: Jim Meredith, Gene Peters
Company: ROS Technology Services Inc. (ROSnet)
8500 N.W. River Park Dr.
Parkville, MO 64152
(816) 746-4100
www.rosnet.com
Type of Business: Technology
Year Founded: 1998
Number of Employees: 10
Keys to Success: "We decided early on that we would live within our means. We started in the dot-com era when all the venture capital was out there, but we decided not to go that route," Gene Peters

Once they say they work in a cave, all concerns from potential clients about being near the Land of Oz disappear.

Gene Peters and Jim Meredith, founders of ROSnet, a reporting and data management technology company for restaurants, said they often field questions from businesses about the security of their systems, because of the reputation for tornadoes in this part of the country.

Because their company provides electronic services to the restaurant industry, it is essential to clients that their systems are available around the clock every day, thus their servers must be well-protected from the vagaries of nature. After working out of a basement the first few years, Peters and Meredith decided that space in one of the underground facilities around Kansas City would resolve those concerns.

The company is located in Park Commercial Underground, a part of Park University in Parkville. ROSnet servers are well-protected by being underground, and systems are always available because of an arsenal of backup batteries and generators.

The decision to establish their office underground was proved correct when the tornado of 2003 actually passed very close to the facility. Inside ROSnet offices, it was business as usual.

Seizing an Opportunity
Meredith and Peters formed ROS Technology Services Inc. (now more commonly known as ROSnet) in 1998 after working together at Gilbert-Robinson restaurant group. Peters said he was involved with a big franchise push with the then Houlihan's restaurants and he was hearing from the franchisees that they wanted a system to handle their data needs.

"I went to the CFO of Houlihan's and said we could make a lot more money by doing this. The CFO said, 'This is a restaurant company and we are not interested in getting into that,'" Peters said. "Jim and I respectfully accepted that decision and we left."

That was July 15, 1998, and one month later they formed ROSnet. While the company now provides state-of-the-art systems to manage data and reports for multi-unit restaurants, in the beginning the company was not quite so focused.

"In the beginning, we didn't have our software. We were focused on restaurants, but more across-the-board services. Y2K was a big thing and we installed systems in new restaurants. We did a little of everything," Peters said.

But as the company evolved, the restaurant solutions software became the focus, Meredith said. In January 1999, the first ROSnet system was put in place for a Houlihan's franchisee with six restaurants in North Carolina. The franchisee was a contact they made while working at Houlihan's. The next month, another milestone was reached with the first Applebee's contract with four restaurants in northern Illinois and Wisconsin.

Today the company works with 688 restaurant locations and half of those are Applebee's restaurants. They also work with the corporate office of McCormick and Schmick's Seafood Restaurants and other multi-unit restaurant owners, such as Wendy's, IHOP and Carlos O'Kelly's Mexican Restaurant franchisees. They have clients all over the United States and Canada.
 
All Paths Lead to Kansas City
Meredith's career path began in Arkansas with Wal-Mart, where he worked in the operations systems department. In the early 1980s, he helped with point-of-sale (POS) scanning systems. He eventually moved to Squirrel Systems in Wichita, which provided POS for restaurants, and his work there led him into contact with Gilbert-Robinson. Eventually he moved to Kansas City and went to work at Gilbert-Robinson.

Peters started with Ponderosa restaurants where he was involved with the testing to see whether it made economic sense to put computers in restaurants. He could see that there was a future for PCs in the restaurant business, and landed at Gilbert-Robinson as a POS programmer at about the same time as Meredith. Over 10 years with the company, he worked his way up to director of restaurant systems.

"That's where our paths crossed," Meredith said.

When they decided to form a company, they made what they consider to be a momentous and prescient decision not to seek outside funding.

"We decided early on that we would live within our means," Peters said. "We started in the dot-com era when all the venture capital was out there, but we decided not to go that route."

That turned out to be a savvy decision after the dot-com collapse, which ushered two of their four major competitors out of business. The company still has not borrowed funds and has no plans to alter that philosophy.

"We don't owe any money," Peters said.

"We go home at night and we sleep well," Meredith said.

Bare Bones Beginning
In the beginning, they didn't always get a lot of sleep. For the first year, Peters and Meredith were the only employees. The data center was in Meredith's basement in Olathe and the general office was Peters' spare bedroom in North Kansas City.

"The office was across the hall from my bedroom," Peters said. "The phone would ring any time of the day or night and I would roll out of bed and answer the phone to provide customer support. We were available 24/7. People would say, 'Don't you ever sleep?'"

One of their first clients was a Canadian company. While they were wooing the business, the company decided that they needed to see the operation first hand. The potential client wanted to send a couple of technology guys and the chief financial officer to ROSnet to see if it was a solid company, Peters said.

"We decided that for this to work, I had to pick them up at the airport. If they drove into the neighborhood looking for us, they might just turn around and go home. I picked them up and as we were getting close to Jim's house, I could see them in the mirror looking at each other and shrugging.

"We went into Jim's basement so they could see our disaster recovery and backup procedures. I sat at the dining room table with the CFO and went over the financials. We figured we had done the best we could. They signed with us the next day."

As business increased, Peters and Meredith determined that they were stretched about as far as they could be. They hired Martha Schofield, whom they had worked with at Gilbert-Robinson, in May 1999. Today they have eight employees in addition to themselves.

Going Underground
By 2001, it was time to move to a real office, they said. They looked at most of the underground facilities in the Kansas City area, but liked the Park underground because it wasn't as industrial as the others-less truck traffic. Aside from the protection from the elements, the space had the added benefit of being more economical from a utilities perspective. Peters said the utilities are about one-third of what they would be for a surface space, even though they have to keep the room housing the servers on the cool end of room temperature.

Being in the underground facility eliminates the concerns of clients and prospective clients about safety of the data. Meredith said "The Wizard of Oz" truly does have a far-reaching effect and clients are concerned about the destructive potential of tornadoes.

"You have to keep in mind that we have East Coast and West Coast clients. Moving here was a very effective way to deal with that concern," he said.

While relatively few clients actually visit the office, ROSnet does get visitors. Because the company works with so many Applebee's franchisees and the Applebee's corporate headquarters is in Overland Park, the franchisees like to see where their data is stored when they come to town for corporate meetings, Peters said. And McCormick & Schmick's sends teams in for quarterly audits.

Recently, ROSnet doubled its space and extended its lease in the underground. Peters said the underground facilities are becoming more in demand and the company did not want to have to relocate as it needed to expand. So while the company has room to spare now, they anticipate eventually needing it all. In addition to the server room, which has its own climate control and fire suppression, the offices have a training room and an operations room with huge screens such as you might see for a NASA flight.

Restaurant Operations Support Network
ROSnet is short for "restaurant operations support network." The company provides its clients-all of which are restaurants-with data services, including accounting, payroll and cost analysis, and data backup.

"We interface files for accounting systems. We take the data from their point-of-sale and convert it to a system you can import to your accounting system or payroll system or to a third-party providing that," Peters said.

A basic service package includes reporting of sales and labor costs. Add-ons include payroll (taking the data from when employees time in and out and sending it to a payroll service), sales and cash, and food management.

"Often a company becomes a client because of one part and then adds the others," Meredith said.

ROSnet hasn't had to market itself because of the amount of referral business from its clients.

"If a restaurant owner finds something that works, he tells another franchisee. We just picked up a franchisee in New York with 25 Applebee's restaurants, including one in Times Square, through a referral," Peters said. "They talk among themselves and as long as we do a good job, we don't have to do any marketing."

To stay competitive, ROSnet is constantly looking for ways to tweak its systems or add new dimensions. Most recently, they added a food-costing system. That solution involves inputting all the costs of a restaurant's menu items so that when an order is placed at the point-of-sale, the ingredients are noted as having been used from inventory. The system knows the time the order was given to the kitchen, when it comes out and is delivered to the table, and how long before the table is turned and new patrons are seated. The time from order placement to arrival at a customer's table all is taken into account. All of the intricacies of the system make it possible for a client to see when costs increase and why. The information can be used as training opportunities for a restaurant manager with his staff, Meredith said.

"The food costing solution was built at the request of our clients. It has brought in a lot of new clients," Peters said. "We have to continue to evolve or we won't be around anymore. Food costing was one of those big evolutions."

For instance, the system knows how many glasses of beer should come from a keg. If glasses are being over filled or under filled, that becomes apparent, Peters said, because of when the keg runs out.

Meredith oversees the research and development efforts to keep the company on the cutting edge. Peters focuses on sales and administration and handles client training with another staff member. ROSnet doesn't charge for training because the company wants all of its clients to know how to use the software and be satisfied with it.

"That way, it's not a business decision for them as to whether they are going to pay for training for their staff. Everybody gets trained and so we have fewer support calls," Meredith said.

The company prides itself on still providing customer service 24 hours a day. A person-not a machine-answers all calls. Employees are not required to be at the office around the clock, but calls will roll to them during the night.

"Support is still very important to us. We are sensitive to the fact that we want people when they call to have a person to speak to, whatever time it is," Peters said. "We are fortunate that the system doesn't take a lot of support."

Forensics Help
A side benefit of the ROSnet system is that it can help restaurant owners detect, and prosecute, employees who are stealing,

"There are a lot of things that can be found in the data that point up certain issues. We can tell how much theft is occurring," Peters said. "Most people don't think they have a problem but once they realize it, they want to see how bad the problem was. We send alerts."

Recently the company's records helped in the prosecution of a manager who had stolen $50,000 over time, Meredith said.

The data alerts also can help a restaurant owner see that staffing may be inadequate at one of the locations because the orders are taking too long or there is a lot of overtime.

If an employee or former employee claims that he or she wasn't paid properly, the ROSnet system can provide the labor data to help a client avoid litigation. Because the system records when employees time in and out at a client's restaurant, all of the information is available about the actual time worked and the payroll, Peters said.

This Could Be the Year
As the company continues to add solutions, Peters and Meredith hope to eventually have 1,000 restaurant sites as clients. Thus far, 2007 has been a good year for the company. The owners think this may be the year the company reaches a major milestone. They expect to pass they $1 million mark in sales-a major accomplishment for a company that started in a basement and a spare bedroom.