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A Retail Spying Spree

Known as mystery shoppers and gaining use, they act like typical customers. But what they find can bring a worker praise--or dismissal.


Clad in gray sweats and a warmup jacket, Debbie Palty walks into a Taco Bell in Costa Mesa. She looks at her watch and makes a mental note of the long line ahead of her and the debris on the counter--seven straw wrappers, a couple of loose napkins.

She orders three tacos and a drink, listening for the cashier to repeat the order. When her food arrives, Palty grabs it and dashes for her car, where she jabs a thermometer into the tacos. Then she weighs the food on a digital scale. She checks the freshness of the tomatoes and finally bangs out a report on a laptop.

"They did pretty good," she says.

Palty is a mystery shopper, and she has never been busier. Her main clients are fast-food restaurants, but requests are pouring in from virtually every type of business. Mystery shoppers are checking into hotels and cruise lines, posing as potential renters at apartments, even going undercover as patients in doctors' offices.

She is part of an unprecedented boom in the ages-old practice of snooping on workers. An estimated 500 mystery shopping firms operate today--a 25% increase from three years ago--and weekly send out as many as 500,000 freelancers who work as amateur sleuths. Palty earns $10 to $20 a report, but she had enough volume last year to gross more than $50,000.

The driving force behind this growth is corporate America's heightened attention to customer service, which has slipped in recent years amid the nation's tight labor market, high worker turnover and layoffs of middle managers, who traditionally have played an important role in overseeing service.

The problem may be most severe at fast-food counters. Since the University of Michigan began compiling consumer surveys on service in 1994, fast food has consistently scored the lowest among several industries. At the bottom of the heap: McDonald's, which this year launched its systemwide use of undercover shoppers.

Other chains, such as Del Taco and El Pollo Loco, are returning to mystery shopping after abandoning it years ago because of the cost.

"If you manage a restaurant, after a while you might stop noticing that cashiers aren't smiling, tiles are missing and napkin and straw [dispensers] aren't filled," said El Pollo Loco Chief Executive Steve Carley, who has mandated a monthly inspection of each of the 136 company-owned stores. "That's why you need a fresh pair of eyes."

The Mystery Shopping Providers Assn. in Dallas estimates that 75% of the 95 biggest fast-food chains use mystery shoppers, up from 45% five years ago.

Palty, 40, is so busy that she frequently turns down work. She keeps a grueling schedule, working most weekends and routinely putting in 60 hours a week.

On a recent drizzly morning, she left her south Orange County home at 6:30 and over the next 11 hours circled Los Angeles County, visiting 17 restaurants in six cities. Much of the work was the same: ordering, observing, weighing and taking the temperature of food with electronic equipment.

"Hardly glamorous," she said, digging through a bean burrito with her fingers to make sure her order for no onions had been met.

But the occasional actress (she once had a small part on the soap opera "Days of Our Lives") likes the pay--she expects to earn $60,000 this year--and the freedom of being an independent contractor. The work appears to come naturally to her.

"I love to shop," Palty said.

Palty has an ironclad memory, so she can record details without the aid of notes. Over the years, her work has become more varied and high-tech.

One of her most unusual assignments, she said, was posing as a prospective buyer of a $3.8-million house to tape the sales pitch of the real estate agent. She used a microphone hidden in her bra. (The agent did a bang-up job touting the wine cellar, mountain view and large entertainment room and received a positive review.)

As mystery shopping has proliferated, so has the debate over its use, which in the United States dates back to the early 1900s, when businesses first hired undercover customers to watch for employee theft. Ever since then, workers have complained that the practice puts undue pressure on them, breeds mistrust and often fails to give an accurate or complete picture of what's going on.

That's precisely what worries Michael Muntzel, a McDonald's franchisee in Little Rock, Ark. Earlier this year, he said, the corporate office sent a mystery shopper to one of his four restaurants during the busy lunch hour. Because it took so long to fill orders, Muntzel recalls one of his employees giving that customer a free bag of fries and apologizing for the delay.

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