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Dealing with Adversity: Making Tough Decisions, Quick Pivots, and Pandemic Partnerships


How Desi Saran, Founder of Sweetberry Bowls, found unexpected partnerships in the midst of the pandemic to prove that unanticipated pivots can give way to innovative business opportunities.


 

Key Takeaways

  1. Restaurants now have to focus on building ecommerce businesses and invest in the right technology. Customers will be ordering online more frequently even if the world returns to normalcy.

  2. Focus on building loyalty and returning customers. To be successful today you have to exceed your customers’ expectations inside your restaurant and outside of it. Start reaching out to your customers through social media, email lists, apps, or even text message promotions. Begin by emailing a survey out to your users: how do you prefer to contact us? How do you prefer to order? Do you prefer to order through Uber through DoorDash through GrubHub?  So understanding, being relevant and knowing what customers doing is important.

  3. Reconsider your physical location and think about how your customer is going to start ordering now. Even if there are good deals out there, be creative and mindful of what the world will look like in the next 6-12 months. Don’t look at a typical five-year option, because there’s a lot of offices that are completely out and it’s unlikely that customers are going to be crowding your restaurant anytime soon.


Transcript

Desi Saran: The world has dynamically shifted right now. I keep saying that over the past year, especially in restaurants, we’ve seen an expedite of innovation.

Matt Levin: Inspirational stories,  actionable business tips,  and real-world strategies. Join us as today’s guest shares how you can build a resilient restaurant fit for an unpredictable world. 

Matt Levin: Hi everyone. I’m Matt Levin and you’re listening to the Resilient Restaurant Podcast.  Today I am joined by Desi Saran, Founder and CEO of Sweetberry Bowls, a 20 location, healthy, fast-casual concept. We’ll be discussing all things ghost kitchen, surprising partnerships, and what to watch out for in the current restaurant landscape.

About Desi Saran & Sweetberry Bowls

Matt Levin: Desi, thank you so much for joining us today. I’m really excited to dive in. Can you tell us a little bit about your history coming into the hospitality industry? You’re not a restaurateur by trade, right?

Desi Saran: No, and thanks for having me on here. So for those that are listening, my name is Desi Saran. I’m the founder of Sweetberry bowls. We’re a healthy, fast-casual concept based out of New Jersey. I founded the company in 2017 and within two years we quickly opened 20 restaurants across the United States.

We have units across South Carolina, North Carolina, Virginia, and Pennsylvania as well. And I’ve probably been in the industry for about six or seven years now. This is actually the second restaurant chain I’ve been scaling. The first one I got bought out of in 2017 and oddly enough I have a tech startup background, so I kind of fell into restaurants.

The Pandemic & Initial Thoughts

Matt Levin: What was your first thought when it was clear that we were in a pandemic last year and these shutdowns were going to happen in the restaurant industry?

Desi Saran: Probably just shock. I don’t think anybody took this thing seriously last year. I was actually on a flight to LA like the week prior, I went to a restaurant conference out there.

As soon as I got back, it was probably mid-March or on March 15th. Pandemic hit our area in New Jersey and it was just a complete meltdown and shut down.  We shut down our locations right away. We didn’t really have a playbook in place. We didn’t know what to do.  It was the same thing for every small business and every state out there.

My CFO at the time went over the numbers and everything and our cash flow. And he was like, we have to shut down ASAP because the way this is going we’re not gonna be able to sustain this. So within three or four days, we shut down our entire corporate operation. I mean, 14 stores immediately. I’m the type of person I wanted to stay open obviously, and everybody was advising me not to, and we did the right thing at the time.

Matt Levin: When do you feel like you finally got your head around what was going on and what did you do next?

Desi Saran: Just like any entrepreneur, every business out there, we kind of had to adapt and just figure out what to do next. I think that the biggest thing for us was making sure that we had cash available. We shut down all our corporate stores, so there was no cash flow coming in and we knew that when or if we decided to open back up or our locations, we were going to need cash flow for payroll, for food costs, just operating expenses, rents. 

We also looked at what was going on in the restaurant industry. Where we are in New Jersey and  New York, everything was super strict. Today we still have indoor dining; only 35% of your customers can come in. And there was outdoor dining. Thankfully, we were prepared for pickup and delivery. Our customers at Sweetberry order from our website or app. That was the major pivot last year. You couldn’t come into the restaurant, you couldn’t eat indoors. So if you weren’t set up for that, you were out of luck, and this is something that we really looked at the past two to three years. I mean, I think we were kind of ahead of the curve and to date, everybody’s ordering pickup delivery.  

How Technology Helped with Pivots and Shifts

Matt Levin: Do you think your tech and startup background helped you think about and execute these types of pivots and shifts? 

Desi Saran: Prior to being in a restaurant, I worked in the tech startup world working for startups, apps, anything digital, software. So I come from that mindset of running as a lean startup instead of a restaurant. So as I built my restaurant companies, especially Sweetberry, I looked at it differently, not just a restaurant chain. I looked at it as a technology play because more and more customers are on their phone now. 

To me, this is an e-commerce play. Now, especially because of COVID the entire shift is online, it’s on your phone.  The average person spends probably eight to 10 hours per day on their phone now. So you need to capture their attention and you need to have a mechanism and an efficient and easy way for them to order your food online.

So now we have to look at how do we get the food to the customer, because they’re not coming in the door. As we’re looking at this as a digital play or an e-commerce play it’s where do we want to list our Sweetberry listings? Uber eats, DoorDash, GrubHub. And for our own internal listings, our own app, our Sweetberry website, how do we get the attention of our customers or new customers and how do we get them to sign up for our loyalty platform so that they come back and frequent us more?

Pre-COVID Investments That Paid Off

Matt Levin: So these mindset shifts were certainly accelerated with COVID of course, but were you making these types of investments pre- COVID too?

Desi Saran: Yeah, definitely. I would say I’m one of the smaller chains out there that’s really, really looking at our tech stack. From the technology that we use for labor tracking and clock-ins to our point of sale. We use Clover point of sale because they have so many third-party apps that we can integrate with.

Even with you guys with MarketMan, we did a huge migration to you guys, I think a year and a half ago, two years. So we can keep a really close eye on our food costs and our dynamic food costs because prices change.  I always tell people that, um, one of our biggest products that we buy our strawberries. It’s a, it’s a big, fresh topping people love, it goes on our blends. The price of strawberries fluctuates like Bitcoin. In season it can be like 99 cents a pint, out of season you’re talking like $5, $8. So like 8,000 X, which is pretty wild. Having and picking the right technology stack is super important, especially when you scale, and if you’re going the franchising route, because you need to have all of that in place. Once you start franchising, you need to be able to go to your franchisees and say, here is the exact technology and software programs that we have to use to run our business.

Desi-Saran-Online

Adapting During A Pandemic

Matt Levin: So do you feel like the combination of your tech background and these investments that you made, allowed you to move faster and adapt better when COVID hit?

Desi Saran: Yeah, I think so. I think that we’re one of these companies that we’re small enough where we can still test and experiment with different technology and different things. If we run an experiment and that works, we start rolling it out to other restaurants. 

One of our experiments that we ran a couple of years ago was the mode of communication with our customers. So right now, our customers will email us, they text message us, they talk to us online via live chat, and they’re messaging us on social media. So most of those channels are manual.

When you talk to us on our Facebook or our website, we have AI that answers your questions. And what we found was that most customers were asking the same things over and over. So we consolidated all that information, we built the chatbot on top of dialogue flow, which is a Google-based software; it’s AI software that helps answer questions and it gets smarter. What we could see is that it’s answering 80, 85% of questions that people are asking.

So that’s an easy way to make the customer super happy. They get the responses right away in case they’re trying to reach out to us and nobody’s available right at that time to answer that question. We can scale some of our customer service and our customers don’t mind the fact that they’re, you know, they might be talking to a bot. I think it’s because it was timing too because when you call a lot of customer service places or you’re on live chat with a lot of these big companies, they’re doing the same exact thing.

Fostering Culture and Tech Experimentation

Matt Levin: How can operators who aren’t necessarily super tech-savvy or come from a technology background, foster this type of culture and experimentation? 

Desi Saran: Yeah, there’s a lot of great groups out there. Prior to COVID, there was a lot of great conferences. There’s Food on Demand, I think that’s run by Franchise Times. When you go there, you’re probably going to deal with like, a founder, like myself, if it’s a smaller chain. Or the bigger guys, like a McDonald’s or Panera. It’s cool to like, see what they’re working on. What are some of the initiatives that you guys are looking at as a gigantic, billion dollar, trillion dollar, conglomerate? What do the customers want and what are you guys building now? Because, you know, even if you’re a smaller chain, there’s a million things that you could do to make your business better. 

So that’s how we kind of look at things when we’re implementing new tech, especially now that all of our stores are built on certain software that we’ve chosen, right? And now we can come across something different that can make our business better. We’re not going to roll that across the entire chain. We’re going to test that in one store to see if that works for us and then continue to roll that out later if it makes sense.

Tech Advice for Restaurant Operators

Matt Levin: If you had to give one piece of advice to fellow operators on how to develop this type of experiment culture, what would it be? 

Desi Saran: So right now the big thing is being online. Having a presence where your customers can order from you through your website, through DoorDash, through GrubHub. 

Desi-Saran-world-shifting

You need to be online right now. There’s no way around it. If you were an old school mom and pop player, and you’re doing everything, you know, the old way cash, business within the brick and mortar only, can’t access online, you’re not going to make it through this. The world has dynamically shifted right now. I keep saying that over the past year, especially in restaurants we’ve seen an expedite of innovation.  Other restaurants out there that didn’t adapt to technology, they had to, they were forced to in the past year. And we’ve seen a lot of creative and innovative technology come out, and new software companies specifically for restaurants because this is the thing now.

QR codes; it’s gigantic right now. Any restaurant that you go to that sit down, they don’t have paper menus anymore. In fact, in New Jersey it’s law. We’re not allowed to give out paper menus. So you need to have that digital presence and everybody’s using the QR code.

So the entire way that the consumer does business in person has shifted. If you’re a creative restaurant, and you know, you can utilize this QR code, why just use it for your menu? There’s so many different things that you could use for, I use it for customer acquisition, right? You scan the QR code instead of sending the link to my menu, the first thing you gotta do is put your name, your email, maybe your phone number.

So I collect your data, then right after I’m sending you a link to my menu or something else. So use that as an opportunity right now, because think of how many people are coming in and scanning that because they have to or they think they need to right away. So use that as an opportunity.

Desi-Saran-customers-quote

Loyalty is gigantic. Even prior to COVID, this is something that every restaurant chain should have been on.  It’s great to get new customer acquisition in the door. But the first thing we have to look at is you need to have your customer data. You need to know who’s coming to your restaurant, who they are, where they’re coming from, how often they’re coming.

You need to have a really good loyalty platform. So you’re collecting that info, their email, their phone number, so you can reach back out. 

I can tell you that my average customer comes in at least once a month. If I can acquire a new customer and they sign up for my loyalty platform, I know that most likely they’re probably gonna come into one of my restaurants, prior to COVID, once per month. So our goal is to make sure that no matter what when they’re coming into the store or ordering online, that we’re signing them up.

Pandemic Partnerships

Matt Levin: Are there any other adaptations or changes you did or partnerships you looked at to help stay afloat and diversify your revenue stream?

Desi Saran: So knowing that our retail sales were down, we made a huge pivot last year with a partnership with 1-800-FLOWERS. 

They have an edible bouquet product. So we make a bouquet made out of fruit. Naturally, we carry all those ingredients and with 1-800-FLOWERS, they actually don’t produce or manufacture their own products; they partner with a local florist or a local restaurant like mine to produce their orders. Prior to COVID, we had a partnership with them for, I think, one store. And when their customers were putting in orders through the phone, online for edible bouquets, our partnership with them in that particular city, we would produce it and we would deliver it. We would deliver it out with our own delivery drivers within maybe a 10 to 20-mile radius.

We did it in one store, we didn’t think much about, you know, expanding. And then they called us over the summer last year and said to us, Hey, our business is up. So we onboarded, I think five more stores with them in New Jersey took, you know, three, four, five months.

They just send us all the orders. In the morning we manufacture all of the, uh, the bouquets and now we have a partnership with DoorDash. Actually, that partnership is directly with 1-800-FLOWERS. 

Now we’re in the business of just fulfilling their orders and manufacturing it. And these are guaranteed sales coming in. In some of these months, these winter months, we were really slow because of COVID and it’s snowing. And our sales were down like 50%. 1-800-FLOWERS floated us; it added another like 50% on top or more. So we made up for the lost retail sales from Sweetberry. 

Matt Levin: Was this experience with 1-800-FLOWERS your kind of first ghost kitchen experience?

Desi Saran: Regarding ghost kitchens, I was looking at this a couple of years ago when all this first came out. 

And I actually spoke at a lot of conferences on the subject matter. Since COVID hit, ghost kitchen has blown up. I mean, completely exploded. Now what most operators don’t realize is like, there’s all these different models that you can do and you can experiment with.  One of the first experiments we did was opening a completely separate ghost kitchen. A couple of years ago, we rented out a kitchen,  just for preparing foods and products.

We listed Sweetberry on it, just for delivery. And what I didn’t realize there was that prior to COVID third-party delivery only consisted of maybe 20% of my sales. Having another kitchen or another real estate without brick and mortar, without customers coming in and just delivery; it didn’t make up what we had to pay in terms of labor and rent, it didn’t make any sense.

For that model to work, if I’m going to sign another lease, and just for a ghost kitchen, I needed more concepts under my roof. 

We’re seeing, um, operators share kitchens and add more concepts. So knowing that today, what we’re doing is, we’re adding other third-party concepts into our existing restaurants. 

We have a kitchen, we can add a third party concept in there and, fulfill their orders. An example of that is another restaurant chain, I think you’re familiar with it: Wow Bao. Really great chain out of uh, Chicago and it’s all cold kitchen. Like we don’t have kitchens in Sweetberry’s. So their model fit with ours. And we’re about to go live with our first Sweetberry restaurant. We’re going to list Wow Bao on Uber, DoorDash, GrubHub, and fulfill their orders.

Optimizing Your Restaurant and Ghost Kitchens

Matt Levin: So there’s an interesting article that came out today in The New Consumer, which is a digital publication by Dan Frommer.

He’s a longtime journalist. He looks at the intersection of culture, business and brands. Um, he’s writing about the restaurant industry. So he wrote and I quote: “Something that’s been driving me crazy for the last year. Seeing some of my favorite restaurants, popular, successful ones, go out of business because of a lease. Because of a contract signed years ago, which tied their fate to a specific room in a building.”

So kind of a fascinating concept. And he makes a complimentary point as well. ” Restaurants are so much more than kitchens and dining rooms and chefs and restaurateurs have built many of the world’s most beloved and influential brands, but they haven’t captured nearly a proportional amount of the value.”

I think it’s such a fascinating construct, like restaurateurs every day do phenomenal jobs at building brands. You know both local and global and brands are inherently these ephemeral constructs; that can exist anywhere in any medium, really right. They believe in exist in people’s minds. Yet, how they mostly execute is that they’re chained to this anachronistic commercial lease structure.

So given this inherent conflict, how are you thinking about your business going forward? 

Desi Saran: You really have to assess things and figure out what’s best for you. Think about bringing in another third-party ghost kitchen. Because you’re already paying for the real estate. That’s not going to change. Your labor, you already have it there, and if they’re not busy, utilize them. 

You’re optimizing now for again, off-premise, you know, we wanna assume that customers are not going to come into the restaurant as much. So what this really means in layman terms, just look at smaller sizes, smaller sized restaurants. My restaurants are small already. You know, we’re only like 1200 square feet, but if the tables, the dining room tables are not being used as much in it.

And the majority of people are picking up or, or the food’s going out for delivery, you don’t even need that space. Right. I think every restaurant, even, especially the bigger chains, this is what they’re looking at right now. They want to optimize and have smaller spaces. In high traffic locations and the really big chains that can are building pad sites, that have drive-thru. The industry. Has completely changed now, and now consumers are more accustomed to ordering online and getting their food quickly and fast. As this restaurant experience is changing. Like, how’s it going to change the actual customer experience and it’s completely shifted?

We’re expanding Sweetberry as a ghost kitchen model. So we’re putting Sweetberry’s into other third-party host kitchens or restaurants. So if you’re Joe’s Burgers right in the middle of New York City, we can put a Sweetberry in your kitchen, list you on Uber Eats, DoorDash, and GrubHub. When those orders come in, they go into your kitchen. You fulfill the orders for us, delivery, drivers just shows up, picks up the order in a bag, and that’s it. If you’re an operator, I think that’s the first thing to look at.

There’s a lot of companies out right now that are specifically doing this. They’re trying to partner with ghost kitchens. This is really big with like influencers, too. They’re creating their own virtual-only concept and they’re utilizing the power of their social media to promote it.

We just signed a big contract with Kitopi. They’re one of the largest ghost kitchen operators in the world right now. We’re going to be in five ghost kitchens in Dubai, which is very exciting for us because we don’t have an international presence. We’re going there next month to train their staff on how to make all our product, you know, making sure that they’re using the right ingredients, helping them source and procure the ingredients.

And once they go live and we’re in these different platforms, they’re going to pay us a royalty. So for us, this is a really excellent business model because as an operator, we’re not spending money on CapEx except, the travel and the training and all that. Going forward, they’re going to be able to scale us out in different cities that they’re in and they’re in London, they’re going into Malaysia, uh, other parts of Asia. Thinking about how you can expand your brand, if you’re a franchisor, or even if you’re not, you’re a small mom-and-pop operator, and, you know, you want to put your brand in other locations and places and, retain or take a small royalty from sales, this is a really savvy way to do it.

Matt Levin: How do you think operators could get ahead and take advantage of these changes to build a business that grows faster and scales better?

Desi Saran: I think the main thing here is, you know, kind of like what I said before is making sure that you stay relevant. You understand your consumer and you understand what the, what the consumer is doing, how they’re buying, what the preferences are. 

Email a survey out to your users: how do you prefer to contact us? Right. List out a million things: texts, email, live chat, you know, Facebook. How do you prefer to order? Do you prefer to order through Uber through DoorDash through GrubHub?  So understanding, being relevant and knowing what customers doing is important. 

What to Avoid As a Restaurateur Moving Forward

Matt Levin: What’s the one thing that people should avoid doing moving forward in this new world?

Desi Saran: I would be very careful about opening brick-and-mortar restaurants. I mean, for those ambitious operators out there, there’s definitely deals to be had. You have a lot of vacancies. So that’s good in the sense that, you know, if you really need to open a restaurant or you need a retail space, there are deals, but be very careful in the deal that you sign. Be creative. Don’t look at a typical five-year option. Why lock yourself in because we don’t know what’s going to happen tomorrow.

Desi-Saran-uncertainty

I mean, this world has changed so much. I would look at a two or three-year lease, even a one-year if you could pull that off. See if you can build in clauses that would protect you if a pandemic happens or there’s a government shutdown that says you can’t, you know, you can’t serve food, you’re not liable to pay the rent. So, think about these things as you look at these commercial leases. 

Look at smaller spaces, you know, smaller square footage. And think about how your customer is going to start ordering now. It may not be what you thought prior to COVID where you just get a ton of customers coming in. That doesn’t exist anymore. There’s a lot of offices that are completely out. Everyone’s working from home, so you’re not going to get those crowds anymore. 

Then the other thing is, how long is this going to last? Is there going to be a time where we go back to normal? I don’t think there’s going to be a time where we don’t have masks like anytime soon. I think we’re going to have it for the next one to two years. So how’s that going to continue to affect business? 

Outro

Matt Levin: Desi, thank you so much for this. There’s a ton to learn from your experience, both as a two-time restaurant operator and as a technology entrepreneur. We’re certainly excited to see what you do next and, uh, watch how the business continues to grow both domestically and internationally and take over the world. 

Desi Saran: I really appreciate you having me on here. If anybody out there wants to contact me, you can find me at Desi Saran, D- E- S- I- S- A- R- A- N. That’s my Twitter and Instagram. Shoot me an email if you have a question about anything it’s [email protected] I always love helping aspiring restaurateurs or even the existing ones.

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.