Restaurant Roadmap: Digital Strategies Disrupting the Restaurant Industry
Meredith Sandland and Carl Orsbourn, authors of the new book Delivering the Digital Restaurant: Your Roadmap to the Future of Food, take us through some of the topics they explore in their new book from consumer behaviors and the on-demand economy to emerging marketplaces, building loyalty, and more. Together, we discuss the benefits of going digital, transformational industry shifts, and what it truly takes to be successful in the world of digital hospitality.
- Having a great product and ordering system will make the transition from third-party deliveries to first-party deliveries smoother.
- Digital hospitality must be created with customers so they stay loyal to the brand.
- Current technology trends will shape the restaurant industry into a more efficient business.
Meredith Sandland: I am hopeful as I look out 10 years. You’re going to see a restaurant industry that is healthier and more sustainable because they were able to reinvest and reshape the business model.
Matt Levin: Inspirational stories, actionable business tips, and real-world strategies. Join us as today’s guest shares how you can make your business more resilient in an unpredictable world.
Journey to Kitchen United
Matt Levin: Hi everyone, I’m Matt Levin and you’re listening to The Resilient Restaurant podcast.
Today I’m joined by Meredith Sandland and Carl Orsbourn, authors of the new book Delivering the Digital Restaurant: Your Roadmap to the Future of Food. They take us through some of the topics they explore in their new book from consumer behaviors and the on-demand economy to emerging marketplaces, building loyalty, and more. Together, we discuss the benefits of going digital, transformational industry shifts, and what it truly takes to be successful in the world of digital hospitality.
Thank you both for joining us today. So I love to start with just a quick introduction and share a little bit more about your backgrounds and how you got to the point of writing your book.
Carl Orsbourn: Yeah. So my background’s largely in convenience retail, Matt. So I started at BP and I’ve had 18 years there, of which 15 years were in the c-store space. And that culminated in me running a thousand-unit chain over here on the West Coast of the US named ampm.
And it was really there where I saw just the change in impact of food upon our client base and the customers that would come in, and really their desire for better food, fresher food, and the changing dynamics through the entire ecosystem that was really affecting the way in which people were just having an expectation of higher quality.
And when I left ampm, I was looking to get into something a little bit more disruptive and a mutual friend of Meredith and ours introduced us. She introduced us and said, “You need to meet this lady because she’s done something similar. She’s just left the blue chip and she’s gone into something called ghost kitchens.” And I was like, “Well, what’s a ghost kitchen for goodness’ sake?” Anyway, I guess you can say the rest is history.
Meredith and I ended up working together at Kitchen United and helping build the operating model there and helping that scale out. But it was really from that standpoint where we started to see just the level of which restaurants were being disrupted and the change that was being bestowed upon them. And really, even for those that had the mindset of being inside a ghost kitchen, what they needed to do wasn’t particularly clear to them. How do they truly succeed, how do they truly thrive in this environment was something which really they were still struggling with.
I think Meredith and I were driving back from Pasadena one day and I said to Meredith, “Why don’t we write a book?” Or I think I actually said, “Meredith, why isn’t there a book?” And she said, “Well, if there isn’t one, we probably should write one.”
Meredith Sandland: Yeah. It’s one of those things that you wish someone would do it. And it turns out that someone is you. Actually, that’s how I ended up in ghost kitchens, also.
I was working at Taco Bell where I’d worked on the brand turnaround, and then worked in development, built a whole bunch of Taco Bells. Halfway through that journey, I’d realized, “Gosh, the omnichannel disruption is starting to affect our restaurants,” in particular in the very urban areas. And I wished that we could just be in a commissary delivering tacos, but of course, ghost kitchens didn’t exist at the time.
When I walked into Kitchen United, their very first location wasn’t open yet. I looked around and went, “Oh man, they’re making the thing that I wish existed.” And so I joined as employee number four, and together with Carl, we got the business model and the operating model all set up, raised the initial capital, all those good things.
But it was clear that even for those forward-thinking restaurants who wanted to experiment with being in a ghost kitchen — I mean, this was so early, the very first location — they didn’t really understand all of the changes that it meant for their entire business model, and particularly for the national chains. I think they thought, “Oh, well, I just opened a location just like I open any other location, and sales will come because I’m me and I have my brand, and so people will show up.” And that, of course, is not at all how things work in a digital context.
Summarizing “Delivering the Digital Restaurant”
Matt Levin: Without spoiling too much for those that are planning to read the book, can you share just a quick summary of your core thesis?
Carl Orsbourn: The book does try to be all encompassing, Matt. It tries to take people on the journey, if you will, of what’s happening and why it’s happening. And we start with the consumer. The reason we start with the consumer is one of the sentiments we’re trying to address is that this isn’t technology being done to you. This is the consumer that is having experiences from other verticals, having this kind of interest now and saying, “Yes, this is how I want to experience it.”
We touch on themes around the “I want what I want when I want it,” and the idea that people are expecting this on-demand economy. But we also touch on just the way in which food is changing, in the sense that people now see food as an identity for themselves, and the way in which they are using food as a means to be able to demonstrate their belief system.
We track the history of what’s been going on in the delivery ecosystem. We talk about the emergence of the marketplaces. We even look outside the US and talk to the international markets. Just the ways in which we’re seeing, perhaps, those more mature markets give us an indication as to where things are heading over the course of the years ahead.
We touch on the profitability between third-party marketplaces and the importance of first party, and loyalty, and operational components around delivery drivers, and how to think about optimizing your menu in the best way possible.
And then we really move on to marketing — probably one of the most challenging aspects that I think restauranteurs are finding — and some of the important aspects to consider, not just about your brand, but also in the ways in which you communicate with your customers ongoing for building that loyalty in a digital context.
And then of course, we’ll be remiss if we didn’t include things around ghost kitchens and talking about the different models out there. And the thing that has really erupted like crazy this year in virtual brands.
Then one of my favorite chapters at the end was where we asked every one of the hundred different executives that we spoke to in research for the book, “Where’s this heading? Where is this actually heading over the course of the next 10 years?” And in many ways, the change that we’re seeing right now is only just the beginning. From that standpoint, hopefully the readers of the book, get a level of excitement, see this as a real opportunity for their business, but also recognize it’s about being agile, to be able to be flexible to the change in times that have still yet to really come to surface in their business.
Incentives to Build a Digital Restaurant
Matt Levin: My first question may be a little bit provocative. Do restaurant operators want to build a digital restaurant? Is this something that people are clamoring for and looking for guidance, or is there something else going on?
Meredith Sandland: That’s a great question. And first of all, I would say the restaurant industry is behind other verticals in digital adoption. Been in companies, done studies showing where different verticals are on their digital maturity curve, and restaurants are behind.
I think they’re behind for a number of reasons. One, because it’s such a fragmented industry, so it’s much harder to push tech adoption through the industry. Two, because it is, ultimately, a local industry and local industries are much harder to digitize than those that are consolidated at a single point. You have to produce food close to the people, and as a result, we have 600,000 locations in the US. So even for the big brands that have 10,000 locations, it’s very hard to roll something out across all those locations.
Then I think the third reason has a little bit to do with the reason that we’re all here. Everyone gets into restaurants because they love food, they love hospitality, they love people. Most people do not get into restaurants because they love technology. So the backgrounds that we come from tend to be less tech oriented.
So for all these reasons, the restaurant industry has been slower to adopt and push over to a more digitized version of itself. Doesn’t mean it won’t happen and it isn’t happening, just means that we’re a bit behind things like travel or manufacturing or what have you, right?
So then I think your follow-up question to that was, is this something that people even want? And, if I go back to what kind of people we are, who are drawn to this industry, it’s probably not something that most of us look for and think, “Oh, if only I could be more digital and there were this tool.”
It feels a little bit, when we talk to restaurants, like this is something happening to them, not something that they want to be a part of. But that is changing, and I think as restaurants see how much easier digital tools make things, particularly on the operating side where there’s maybe a bit less controversy, the restaurants start to engage in the benefits, realize the benefits, and want to see more.
Carl Orsbourn: Restaurant operators don’t have a lot of time. So it’s a capacity challenge, as well, for them. So it’s dealing with change, it’s learning new things, and it’s finding the time to do these things, which is becoming the big challenge, I think for many.
The Math behind Third-Party Collaborations
Matt Levin: There’s definitely this aspect of pulling people forward, kicking and screaming a little bit or maybe against their better nature, in terms of technology adoption. But you address that in the book, certainly you addressed that now. And I think that you address it in one of the most, what I would say, provocative chapters, in Chapter Seven. I think the way you frame it, “Going Digital on Your Own Terms,” is kind of a sobering message.
It is certainly a message of like, “Look, this thing is,” like you said, “happening to you, so you can either let it happen to you, you can have the wave crash over your head, or you can learn to surf it a little bit.”
The way I summarize that is basically, you walk through a math exercise, and you say “Here’s the P&L for your average restaurant, and the 30% take rate, ultimately, for the digital services. You can get that down a little bit, but for the most part, you have to figure out how to work with it. It’s a cost of business, but it’s also an opportunity.”
Without spoiling too much of the secret sauce, can you share a little bit about how you think operators should think about this?
Meredith Sandland: It is absolutely. This delivery stuff, you can’t just close your eyes and pretend that it goes away. And I have had so many restaurant operators say to me things like, “The platforms take too much and they’re taking all our data and all our money, and we operate on such thin margins. How could they take more than we make in margins?” Things like that, which I’m sure you’ve also heard.
I have a couple of things to say to this. Number one, pizza figured out how to make delivery work and the rest of the restaurant industry can figure it out, too. So before we reject the notion entirely and say, “It can’t possibly be profitable,” let’s look at a segment of our industry who’s figured it out and done very well.
Going back to what Carl said about the drive-thru, I would argue that in delivery, we are at the very beginning, much like early drive-thru where people slapped a window on the side and were like, “Yay, we’re going to get incremental sales.” And it was a disaster, right? Like the parking lots were a disaster. We really had to go through a lot of innovation to think through, how do you customize the restaurant for that drive-thru experience to have it make sense? And once we went that, drive-thru is now incredibly profitable, right? And I think the same thing will happen in delivery, too, as we figure out those tools.
The next thing I would say to that is that our consumer today has changed so much on many dimensions — we spend the first three chapters talking about all the ways in which the consumer has changed — but one of the most notable ones is that they want delivery. And so being a restaurant that wants to stick its head in the sand and say, “This isn’t fair. I don’t want to do it,” is turning your back on a whole bunch of people who want delivery.
So for all those reasons, I think that brought us to Chapter Seven, which is, well let’s really talk about the math because that’s where restaurants are having the most heartache. So I’ll turn it over to Carl to walk through that a bit.
Carl Orsbourn: Yeah, between us, we call it the “elephant in the room” chapter, Matt, because every conference you go to, every time when you’re sat in the middle of this whole discussion, it’s the one that doesn’t get enough coverage. So I’m glad you highlight it, quite honestly.
And there are different schools of thought, I’ll put that out there straight away. What Meredith and I put forward in this chapter is the fact that the third parties do play a role. They do play a role largely because you’re never, ever going to be able to compete with the millions of dollars they put toward marketing and their ability to efficiently acquire customers.
But the trick from this chapter, hopefully, is that you need to be able to have a first-party platform to be able to acquire them across your first-party platform as quickly as you possibly can. And then I think the other side of this chapter, and you both have just talked about it, is just the framing of the P&L, and the way in which most financial discussions around a restaurant are, “Well, this percentage of sales or this percentage of sales is the way you discuss the component parts of your business.”
And so later in the marketing, we talk about customer acquisition costs in more detail, but the idea here is to be able to say, yes, it might seem extremely expensive to spend 30% on a marketplace to be able to acquire that customer. But if you were to take the component parts that would typically be capitalizing your business, like the huge expensive sign outside the front of your brick-and-mortar restaurant, and bring that into the same kind of context, suddenly you’d say, “Well actually, paying 30% to acquire one customer actually isn’t too bad.”
Transitioning to First Party
Matt Levin: That translation from third party to first party, what do I need to do to really make that successful? Is it just like I got to capture emails and then I’m going to send them information and specials and they’re going to do a lot more pickup? I’m going to have to build my own delivery infrastructure. I’ve got to partner with other folks. What else has to happen to make that transition work in my business beyond just a little bit of software and maybe a change in mindset?
Meredith Sandland: Well, I think that at the very most basic level, the first thing is you have to be excellent. You have to deliver great food, right? To get a consumer to come back and order from you again, it starts with you just have to make an excellent product. So I would not say, oh, the digital world has changed things so much that consumers don’t care about that. That is step one.
Step two is having a first party for them to go to. And you can do this pretty easily today with apps that are out there that you just wrap with your own skin and load your own menu into, but it needs to be pretty frictionless.
So then the next question you need to ask yourself is, what is the consumer journey as they go through the first part of your order? Is it easy? Is it easier than going to DoorDash? How much effort do they have to put in to order from me versus just ordering from Uber Eats or Grubhub? And if the answer is, “it’s a lot harder,” then all but your most loyal customers are never going to be bothered to do it, yeah?
So now once you’ve hit those two hurdles — great food, frictionless ordering process — the next question is getting people to flip over and try it. We argue that the third-party platforms absolutely have a part to play, in part because that’s where consumers are. So if you’re going to acquire consumers, you get them from there. In part because some consumers are never going to leave those platforms.
But then the question becomes, for those that are really loyal to you and do use you often enough to have first party make sense, how do you get them to come over? And here, I think, we’ve hit on great food, we’ve hit on frictionless. The next thing is give them a reason. If you explain to them that you’re available. If you explain to them that there are specials that they’re not going to get on the third party, they’re going to start to come over.
We were at a conference last week where one of the data providers put up a slide showing the percent first-party ordering for all the major national chains, and it was fascinating. We’re talking about big brands like Chipotle and Chick-Fil-A and Starbucks, you know, the ones that are really known for being very digitally forward, and they all had, I would say, between 70 and 95% of their digital orders coming first party. Well, that’s amazing. That’s absolutely incredible.
And they’re still incredibly reliant on the third parties, right? They use them on the backend for white-label delivery. They are very, very close partners with them, but they’re working on bringing the consumer over to their first party. And how do they do that? For most of them, it is some kind of benefit for ordering first party that they don’t get when they order third party, whether that’d be a price or a promotion or a loyalty program, some reason to give to the consumer to show up on that first-party platform.
Carl Orsbourn: We talk about the importance of packaging and the communication after that third-party capture of a customer, how do you actually tell them about the first-party channel? And I would almost go to the point of saying that on that second interaction, hopefully channeling the customer through your first-party channel, you give them lots of leading promotions. Something that’s so enticing that the idea of them being enticed across your first-party channel comes back to something called data, right? You don’t know who your customer is when they come from a third party. You don’t know their name — well you know the name, that’s probably the only thing you know — but beyond that it’s really difficult to be able to form a digital relationship with them from that point.
So make sure your packaging is situated in such a way. So it’s clear who the brand is, that it really resonates. So you’ve created that great experience that Meredith just wonderfully articulated. But then from that point, how do you encourage them to think, “Okay, I remember, next time I want to order this dish, I’m going to go to this first-party platform”?
Once you’ve got them captured, once you’ve got them into a place where their email address is something that’s known to you, you can then start to work for them to help them understand why they should come back to first policy versus third party next time.
Matt Levin: In the practical implementation of this, are you suggesting that people have, I’m just thinking about it now, I can’t recall the last time I ordered delivery and I saw a QR code or an offer in the bag or the box that like “scan this, get 20% off next time,” or “scan this, get a special.” It’s very disconnected from that experience, and yet your conversion on that rate, it would be, I think, very high, right? I have to consume the food.
Carl Orsbourn: Sure.
Matt Levin: Are you suggesting that there are a bunch of missing opportunities to take advantage of in this consumer journey?
Carl Orsbourn: It’s the number one opportunity. The conference that Meredith was just talking about around packaging. Packaging isn’t getting talked about enough either, quite honestly, in the space right now.
Absolutely. It really is about that ability to attract the customer and part of the challenge though, Matt, is again, if we go back to our earlier conversation about profitability, it’s like, “Well, hold on a second, I’m already paying 30% on the fee. And so you want me to invest in better quality packaging or extra marketing material, are you kidding me? Why am I going to spend even more money? And then you want me to give a deal away, which is going to perhaps be even more than 30%. This is nuts. I hate delivery.”
That’s the kind of conversation that we’re talking about. But the point is is that if you capture that customer and you can create a great, consistent experience, then you’ve got them. Then you’ve got that ability to use all the wonderful capabilities and features of how digitization can create an even better relationship with that customer that, by the way, is likely to be an omnichannel customer, right? A customer that orders delivery or takeout through a third party and then a first party. They’re likely to come in and dine in with you at some points as well.
Meredith Sandland: Yeah, one of the things we say in the book is that the worst possible outcome is for a consumer to remember, “Oh, I ordered it from Grubhub.” “Oh, what’d you have?” “I don’t know, some Chinese place. Some pizza place. I don’t know.”
That’s the worst possible outcome, they remember the platform, but they can’t remember your restaurant. And so at the most basic level, it’s about being able to convey your restaurant’s brand and hospitality in that delivery format. And it’s tricky because your package is going out the door with some third-party driver that has nothing to do with your brand. It might even get left on the doorstep and that driver might never even speak to the consumer, right? It’s a very, very separate transaction.
And so thinking through how you can make sure that your brand is not forgotten, whether it’s the packaging, a thank-you note, whatever it might be so that your brand comes through that experience and people remember, “Oh, I ordered from this restaurant.” And that’s what you’re trying to accomplish with the packaging and with the great execution at the very most basic level, before you even get into, do you give them an offer to come over? You want a consumer to remember their positive experience and tie that back to your brand.
Carl Orsbourn: One of the words we haven’t used yet, Matt, is hospitality. And we often try to bring that into our conversations around this and the art of digital hospitality. And that’s because at times it feels, “Well, hold on a second. How close am I to this customer? I don’t even get to know who they are. I don’t get to give them their dish. So how on earth can I be hospitable to them?” And I think that is something which can be done, but it needs to be thought through around the overall ecosystem of folks.
We actually raised this in the drivers chapter, where we talk about the importance of tracing drivers, right? Because for all intents and purposes, they are your new server. They are the person that is taking your dish to the customer’s table. And if you create the right mentality for them, and arm them with the right understanding about your food, and give them the right mindset, then they are more likely to give your customer, when they see the driver with the food, a better experience.
Marketing Costs and Third-Party Fees
Matt Levin: So you hit on a point I wanted to go back to about like, “Okay, so I’m paying this much in a take rate to the marketplaces. You’re asking me to spend more money on promotions, but you’re also saying I need to spend some money on software. I need to spend on packaging, maybe more people to figure out how to stitch this all together.”
Is this something I should be thinking about when I’m like 10 locations and I just shouldn’t worry about it in the beginning, or is this something that I need to be thinking about like I’m a new burger place or I’m a new Thai food place, got one location. When do I start putting all these pieces together? And what pieces when?
Meredith Sandland: Yeah. That’s a great question. I would start with: third-party platforms actually offer an incredible amount of stuff. And in many ways, they’re a great deal because they make it so that you can just suddenly be accessible to consumers without having to hire new people or get a first-party platform or think about all these other things. And so that really is the best place to start.
We talk about one of the main benefits of these third-party platforms in the industry is being a reference design. They’re teaching us all how to do this. And so that is a wonderful place to get in and understand, how do consumers behave? What do they order? When are the peak times? Do they want different things? Should I change my packaging? Like all the really basic stuff. It’s a great place to learn.
The third-party platforms also offer, we talk about in the book, three things: logistics, technology, and marketing. And those are three things that restaurants maybe have done in different ways in the past, or haven’t done at all, right? If you’ve never delivered, the odds that you’re going to go out and create your own delivery? Super low. If you’ve never had a digital ordering platform, the odds that the first thing you’re going to do is go out and create a big website that allows digital ordering? Pretty low. The third-party platforms, in this way, do offer a great starting point for restaurants. And I would say, at minimum, the first thing is to do that. Even if that fee seems really high, that’s the place to start.
Carl Orsbourn: I think one of the things that you’d also get through the onboarding experience with the third parties and anyone that knows anything about digital marketing is: simplicity matters.
And so it’s not a case of just taking your current menu and sticking it onto the third-party marketplace. It’s really thinking about exactly which menu items are best optimized for off premise, which items can be created easily or without a huge amount of complexity, which ones travel well.
And then also when you think about the setup on those third parties, and obviously later with your first-party platform, the real importance of great photography and that people eat with our eyes. And I think sometimes that is lost on a lot of restaurant owner-operators, or perhaps again, it’s a prohibitive cost in some way.
The general theme of your question, Matt, is also something which I think is one of the most exciting things that’s happening in the industry right now. Meredith and I call it the Saas-ification of the toolkits out there. And I think that’s ability now for an independent restaurant to be able to get access to various different technology platforms and tools. Not just in terms of consumer engagement in ordering, but across the entire operation of your business, can be actually garnered and be able to be utilized at a very low rate that only five, 10 years ago would have been costing hundreds of thousands, if not millions from the big restaurant chains, to actually deploy.
And so this availability of toolkits also enables you to be able to say, “Well, where are my biggest problems right now? Where are my biggest opportunities for my particular business? And how can I start utilizing these various different sources to help me address those?”
Small Brands with First-Party Platforms
Matt Levin: I’m going to put you on the spot a little bit here. Do you have any examples of smaller brands — and when I say smaller, I’m talking like not hundreds of locations, five, 10, 15 type of locations — you’re aware of that are doing a really good job here? People who have maybe taking a loan out or raised money from family and friends, or just funded from customers and doing a lot of blood, sweat, and tears, and maybe they got five or six locations. Is there anyone like that that you feel has been very technology forward, has built this stack and operating model together well? And could you share your thoughts about what’s been able to make them be successful?
Carl Orsbourn: We were just talking about packaging a moment ago, and we talk about a company called Din Tai Fung. And when you receive their food, it’s like an Apple unboxing experience. It’s a beautiful experience. The packaging is completely customized to them. The food is set up in such a way where you can see just the way in which it’s been put inside the packaging, it’s been laid out in such a way so that it doesn’t move around. When you order sushi, there are these little sushi cooling packs on it to ensure sashimi stays nice and cold there.
And I wouldn’t go any more complex than that. I mean that right there has a huge impression upon me every time I order from them.
Meredith Sandland: I think that’s very important. I would also add a local brand here in LA that you probably haven’t heard of, but Panini Kabob Grill, I think has done a fantastic job very early in this transition. And now what I described, you can probably say, “Well, that’s what you should be doing.”
But the first thing that they did was they actually oriented their menu toward takeout. And now this is very common because of what we’ve been through in the last year with the pandemic, but they were one of the first brands to create a family-style meal that really made sense for off-premises consumption. You would never order it in the restaurant. It’s a totally separate menu item that makes a ton of sense for off prem.
They did this a long time ago, and once they had that, and so many people were calling to order it, then the question naturally became, “Okay, well, how do we make it easier for people to get that?”
It was at that point that they introduced first-party ordering on their website. That was actually before all of this craziness that’s happened in the last few years occurred. And so they had a first-party website before they even had third party, which is crazy, right? Like the whole thing was kind of backward.
I think everyone else starts with third party then thinks, “Oh, I need first party,” then thinks, “Oh, maybe I should reengineer my menu so that it makes more sense for delivery.” They went the opposite way. And that I think is a really neat pattern to watch because they were solving a consumer problem, which is, “What do I eat at home?” And they started with that. And then backwards engineered their way into, “Gosh, we’re taking on an awful lot of phone orders and it’s very difficult,” right, which I think has been neat to see.
Predictions for Upcoming Shifts
Matt Levin: Do you have any predictions for industry shift, particularly when it comes to technology, either new pieces of technology that you expect to be adopted more broadly, maybe things that you think people are using now that won’t be used in the future? If you were to rub your crystal ball a little bit and give me your technology trend predictions, what would they be?
Carl Orsbourn: I’ll take that one.
Meredith Sandland: I know, Carl loves this question.
Carl Orsbourn: I love this question. I mean, how long we got, Matt? As I mentioned earlier, we asked everyone that we interviewed this question as well, and we tried to break it down into a number of different themes.
One of the ones that I think is just around the corner is that of robotics and automation. It’s going to come to life in different ways. It depends on where you actually are based.
Only last week at the conference that we were at, we saw just how these drones are now becoming very much a part of day-to-day operations for certain locations where they’re being tested. And the exciting thing is that food is being transported within five minutes from the place where it is produced to the place where it’s being consumed and it’s saving 30% in terms of delivery costs relative to what it would cost normally.
And I think the way in which automation, whether it be through flying drones, whether it be through automated vehicles that are either on the road or on the sidewalk, and of course there are plenty out there. These technologies are on the cusp of going mainstream and there are some regulatory approvals that obviously still need to go through. There’s probably still a whole bunch of testing that’s happening. But I think when we start to see that emerge, it’s going to completely transform the way in which people have an expectation around delivery and therefore the expectation around how soon they can get certain things.
And as a result of that, because of those cost savings, it’s either going to be put into the food, it’s either going to increase the quality of the food, or it’s going to be able to reduce the price of the food. And I do think we’re going to find delivery costs, and therefore food delivery, drop in price.
Matt Levin: One of the things that has characterized the restaurant industry, I think this may be globally and in particular in the last 20, 30, 40, 50 years is that it’s a very, very tough business with tons of blood, sweat, and tears, 80-hour work weeks, relatively low wages, and huge amount of turnover, both with employees and with the businesses themselves.
Do you think that there is going to be a change in this dynamic with the way that people are adopting technology and for the first time developing maybe stronger financial muscles, marketing muscles, that’s necessary to survive? I guess my question really is, do you think that we’re going to continue to see this churn, and this is going to continue to be a tough industry, it’s just the barrier to entry is higher and you got to do all these things? Or do you think that there’s maybe a better place in the future where these investments in this technology and these new capabilities result in an industry that’s maybe not as tough, meat-grinder type of place to work, live, and found a business?
Meredith Sandland: What my crystal ball would say is, right now, there’s a lot of fragmented technology out there. You know, you go to these conventions. And there’s this little piece that does this and this little piece that does that. And you don’t know where to start, honestly, because there are so many different things.
And I think what will happen over the next five to 10 years is a lot of consolidation until we see the emergence of what I would call almost like a restaurant operating system. So, you know, someone like a Toast would start with that cloud-based POS nugget that they have and they would add on all these capabilities around it until what they’re offering to an independent restaurant is almost like, “Okay, here’s how to do everything you need to do in a box.”
And I think when that happens, many of the facets of running a restaurant will actually get easier. Because right now, you own a restaurant, you have to be a great menu architect, you have to be a great chef, you have to be a great head of human resources, you have to be great coach of a team, you have to understand finance. Now you have to understand tech too, right?
You’re really a very broad generalist when you run a restaurant. And I think as some of those things get consolidated into tools that restaurants can use, where they’re saying, “I’m going to pick this one, that one, or the other one, and have that suite of tools available at my fingertips,” it will actually get easier.
We can use automation. We can use software, hardware to do jobs that today humans are doing in restaurants. And as that happens, as Carl said, we can reinvest in the quality of the food. We can reinvest in the price to the consumer, but we can also reinvest in the people that remain in the restaurants by augmenting them and making their productivity much, much higher.
So I’m hopeful, as I look out 10 years, that’s what’s going to happen. You’re going to see a restaurant industry that is healthier and more sustainable because they were able to reinvest and reshape the business model.
Matt Levin: Any final words you’d like to share with the audience?
Meredith Sandland: Well, I guess I would leave with where we started, which is that this really is about the changing consumer and for anyone who’s probably my age or older, understanding what millennials and Gen We are truly like is a useful thing to do. They have different expectations when it comes to things like personalization and their ability to get what they want when they want it. Different expectations about food quality and what they choose to eat. So many of them are water drinkers only, they’re vegetarians. And I think it is very important to recognize just how different these young people are, so that we can shape our restaurants to meet their needs.
Carl Orsbourn: Yeah, I would agree. I think the era of what has been called Personalization 3.0 or Loyalty 3.0 is going to enable restaurants to be able to treat every single guest like it’s your best service speaking to your most loyal customer, because you’ll be able to use the data that you know about that customer to be able to give them the best experience possible each and every time they come and visit you. And if that isn’t exciting you, my goodness, what will? Because this is the way in which things are going.
And so I’m glad we’re finishing today’s conversation with the position of hope and promise, because I think the outlook is very, very exciting for restaurant owner-operators. Hopefully, our book is going to give them that same sense of hope. Hopefully, it’s going to demonstrate some of the best practices that we’ve identified from the people that we’ve spoken to in our research for the book.
And yeah, we think it’s going to be something which is only going to continue to get better over time because of the consolidation, that’s going to happen with the technology players, but also the time that will help restaurant owner-operators enhance their level of capabilities and knowledge about what’s happening.
Matt Levin: And if folks that are listening want to get in touch with you to find out more about your thinking in your book, where can they find you?
Carl Orsbourn: Well, first of all, they can get a copy of the book through our first-party platform on DeliveringTheDigitalRestaurant.com. In fact, we’d love to offer your listener base a 20% discount on the book by using the coupon code MARKETMAN20.
So please go to DeliveringTheDigitalRestaurant.com to be able to get that. However, if you are someone that loves the third-party marketplaces, there’s a small little site out there called Amazon. You’ll be able to go and get a copy from them, too. And there’s a Kindle version. And very soon there’ll be an audio book version, if you like to listen to my dulcet tones read the book to you, that’s going to be available to you soon.
Matt Levin: Wonderful. Well, thank you gain for for joining us today. This is super insightful and I think incredibly valuable for people trying to navigate this digital world. I think you’ve laid out a blueprint and whether people want to get crushed by the wave or figure out how to surf it, I think you’ve made the choice pretty clear for folks and give them a way to navigate. So thank you.
Thanks for listening to The Resilient Restaurant. Sign up for our podcast newsletter at marketman.com/podcast to receive bonus content and exclusive podcast announcements. You can also find articles on marketman.com/blog for more content related to the restaurant industry and restaurant management.
This podcast was produced and edited by MarketMan. Music by Joseph McDade.