Small Business Profile: Secret Shoppers
For 30 years, Hilli Dunlap Enterprises has worked incognito
by hiring out “mystery” customers to rate business servicep
By CLAUDIA PESCHIUTTA
Staff Reporter
Whenever the cashier at the drive-thru asks “Would you like fries with that?” or “Do you want to make that a large?” there’s a good chance Hilli Dunlap Enterprises Inc. may have something to do with it.
The North Hollywood firm has been conducting “mystery shopping” surveys at restaurants and retailers throughout the U.S. and abroad since 1972. And while the phrase conjures up images of anonymous snitches, founder Hilli Dunlap says her company seeks to reward a client’s workers.
“In no way was this ever a spy program. It was always a motivation program,” she said. “The whole mystery-shopping program is based on recognition for the employee.”
Hilli Dunlap got her first experience in what was then an undeveloped industry when she was managing a group of temporary employment offices in the early 1970s. After helping some fast-food chains conduct worker evaluation programs, interested clients kept calling her, so she and her now deceased husband, Al Dunlap, decided to make a business of it.
The couple soon moved the company out of their home and into a small office in North Hollywood that looks more like an apartment building. Since then, the mystery shopping firm has worked with Ann Taylor, The Body Shop, McDonald’s Corp. and T.G.I. Friday’s.
Midwest location
Now a $3.6 million-a-year business with 74 employees, the company has taken over most of the top floor of the two-story building it moved into nearly 30 years ago (with a second location in Iowa).
“We actually grew into a national company very, very quickly because we were working with clients who had locations all over the country,” Hilli Dunlap said.
The company has developed a database of 50,000 mystery shoppers nationwide, according to Doug Dunlap, the company’s president (also Hilli Dunlap’s son and a weekend traffic reporter for KABC-AM). Shoppers get paid $5 to $10 for each “shop,” or evaluation visit, in which they are usually asked to critique a locale’s cleanliness, service and, sometimes, products.
For example, a questionnaire for a drive-thru restaurant asks:
– Were you acknowledged at the menu board within five seconds?
– Were the employees whom you saw neatly groomed and wearing clean uniforms with name badges?
– Was the beverage good tasting?
“We’re very careful about who does (an evaluation) and they have to follow our rules,” Hilli Dunlap said.
While the company gives shoppers specific guidelines for clients, general rules include remaining anonymous and turning in a receipt with the survey. Field representatives usually know the people they are working with and can tell if survey answers have been fabricated.
Though the shoppers remain anonymous, workers at locations are told that evaluations will be conducted. The employee who was “mystery shopped” is later given a copy of the evaluation.
Hilli Dunlap said the food industry is so close knit that word-of-mouth drums up more than enough business. “Almost every company in America has a mystery shopping program of some sort so there’s lots and lots (of work) to go around,” Doug Dunlap said.
Slowdown in growth
The Sept. 11 attacks slowed the industry’s growth as restaurants cut back on expenses. Hilli Dunlap was dealt a temporary blow by the slump and laid off 14 employees last year. Yet business began to pick up in January and the company recently hired four people and plans to add six more to its consumer line division.
“There were companies that wanted to slow down,” Doug Dunlap said. “I think the reason we’re not affected as much is that mystery shopping is really not expensive… and the benefits are huge because it helps to maintain a high customer-service level and high food-quality levels.”
Hilli Dunlap accounts vary from $5,000 to $700,000 a year, depending on the number of locations involved, frequency of shopper visits and the complexity of the surveys. Each “mystery shop” can cost a client between $27 and $35.
“When you’re talking about a fast-food restaurant spending $30 a month, that’s a miniscule amount,” Doug Dunlap said. “If you get the counter people in that company for an entire month to suggest french fries because one of those guests might be the mystery shopper, then you’re going to sell tons more french fries than you normally would.”
PROFILE: Hilli Dunlap Enterprises Inc.
Year Founded: 1972
Core Business: Mystery shopping
Revenues in 2000: $3.5 million
Revenues in 2001: $3.6 million
Employees in 2000: 85
Employees in 2001: 71
Goal: To help businesses maintain a high level of customer service and to grow the company about 10 percent annually
Driving Force: Having an impact on the business of the clients they serve
