DTT Surveillance
Founded:
April 1999
Core Business:
Digital surveillance systems for restaurants
Employees in 2006:
100
Employees in 2007:
175
Goal:
To become a leading digital surveillance product for the restaurant industry
Driving Force:
Fast-food franchises looking for a surveillance product that not only serves as a standard security system but also
monitors employees and business operations
From two computer screens at his home office, Bob Grewal can monitor exactly how much change his customers get back at his 12 Subway stores in L.A.
Data from his cash registers roll across the screen like subtitles, as images captured from four cameras at each store flow in on streaming media.
“Our money never comes up short now,” Grewal said. “Employees know they’re being watched 24-7.”
He uses a digital security system developed by DTT Surveillance, a rapidly growing business that operates out of a nondescript red brick building in an industrial neighborhood on Main Street north of downtown L.A. It manufactures and services surveillance systems for more than 18,000 fast-food and restaurant franchises across the country.
This includes about 5,000 McDonald’s and 2,000 Subway stores. Its clients include national brands such as Burger King, Domino’s Pizza, Panera Bread, Dunkin’ Brands and Panda Express.
More and more restaurant franchises are turning to surveillance technology designed specifically for them, said Sam Naficy, the company’s founder and chief executive.
“A lot of our competitors are in securities with no focus,” Naficy said. “They do buildings, airports, parking lots and they might do a McDonald’s. There’s no specialization in equipment.”
DTT Surveillance targets three critical points of restaurant operations the cash register, employee time cards, and temperature control for food storage. Anytime a wrong change is given, an employee puts in overtime, or the temperature level is out of compliance, a text message is sent to the owner’s cell phone. The images and corresponding data can then be searched and pulled up on the computer.
The technological shift from analog to digital storage has opened up a huge business opportunity, said Randy Andrews, who founded a similar company called Eyes-there in Dallas. It plans to roll out 20 new franchises of the security company in Los Angeles in the next few years.
“Once you take video security, digitize it and put it on a computer, you can do a lot of things,” Andrews said. “You can store months of video instead of days. Everything is available on a calendar so you can just click immediately to the event.”
Digitizing surveillance has also allowed security systems to be used as a productivity and management tool.
A manager who oversees a dozen stores no longer needs to make a dozen trips to the sites. He can monitor employees and keep stores in check by sitting in front of the computer.
But it also works like a traditional security system when it comes to break-ins. The cameras helped the Los Angeles Police Department investigate a robbery case at Grewal’s 24-hour Subway on Figueroa and 28th streets last year when there was a shoot out at 3 a.m. The images showed clearly that the robber pulled out a gun first before being shot by the officers.
Self-starter
In 1999, Naficy launched DTT Surveillance with $2 million in seed money from a private investor. Since then, revenue has climbed to $14 million, while the company’s debt has hovered around $2 million. He has never received venture capital.
Two other similar companies reportedly backed heavily by venture money have since entered the market. They are called Digital Witness of Dallas in 2004 and Envysion of Denver last year.
DTT Surveillance struggled financially the first couple of years until it landed deals with about two dozen McDonald’s franchises in 2001. While many stores lease DTT’s equipments, most of the McDonald’s owners had purchased $12,000 worth of servers and cameras per store.
“To this day, whenever I talk to an operator at McDonalds, I tell them God bless you. I owe this business to you,” Naficy said. “I personally owe my house to McDonald’s, my wedding and my wife’s ring.”
Naficy, who emigrated from Tehran when he was 8 years old, says fast-food chains have always fascinated him. “It’s such an all-American concept. You don’t see it anywhere else in the world,” Naficy said. “I think it’s the entrepreneurial spirit and the amazing sense of organization in this country.”
Naficy was finishing his final year at USC Law School when Leonard Makowka, then chairman of Cedars Sinai Hospital and a renowned liver transplant surgeon, offered $1 million to start a business with him. Naficy never returned to law school.
Instead of setting out to own an assortment of fast-food stores, as he once dreamed, Naficy and his partner decided to service millions of franchises with cutting edge surveillance technology.
Makowka is no longer a part of the company. Naficy’s father-in-law, Steve Pazuk, a retired partner of Wellington Management Company, is the sole investor and chief financial officer.
As DTT Surveillance begins to enjoy a robust stream of revenue, Pazuk says he is phasing out of his role as the guarantor and becoming more of an advisor.
“I see my role as someone who instills in Sam a sense of real leadership,” Pazuk said. “The company is in the best place it’s ever been, with good people heading every department with Sam at the top, and I, of course, standing behind him.”
