Holistic Technology: Build Digital Ecosystems for Growth - An Investor's Perspective with Anand Gala

Join Carl and Meredith in a fascinating discussion with Anand from Gala Enterprises, recorded at the CREATE conference for Nation's Restaurant News. This episode delves into the critical path to digital maturity for restaurants and the role of technology in this evolution.

Anand shares his unique perspective, having grown up in the restaurant industry and now investing in restaurant technologies. From the challenges of integrating disparate systems to the revolution brought on by cloud computing, Anand brings to light the profound impacts and ongoing needs for technology in restaurants.

Key points discussed in this episode:

[00:01:00] Anand’s journey from restaurant operations to investing in restaurant tech.

[00:02:00] Overcoming the challenge of non-integrated systems to create cohesive digital ecosystems.

[00:03:00] The transformative effect of technology on restaurant efficiency and data management.

[00:07:00] The role of APIs and the confusion surrounding technology selection for operators.

[00:09:00] The convergence trend in restaurant technology and the rise of 'all-in-one' solutions.

[00:09:00] Investment insights on distinguishing viable tech businesses from fleeting products.

[00:14:00] The shift to cloud-based POS systems and their future as the backbone of restaurant operations.

[00:15:00] Predictions on the simplification of technology and cost reduction as the industry matures.

[00:17:00] The distinction between machine learning applications and true artificial intelligence in the restaurant space.

Carl and Meredith explore these topics and more, offering valuable insights for both independent operators and multi-unit brands looking to navigate the digital landscape. Stay tuned as they draw parallels with other industries, highlighting potential future trends for the restaurant sector.

Subscribe to The Digital Restaurant Podcast to not miss out on expert interviews like this, where we unpack the latest in digital innovation shaping the future of dining.

For further engagement and insights, reach out to Anand on LinkedIn or visit www.GalaCapitalPartners.com. Follow us on YouTube and our social media channels to stay updated with the latest episodes and conversations.

Transcript

Speaker 1: 0:00

We're here at Create this week and recording some very special podcasts for Nations Restaurant News. We're going to be interviewing eight different executives from restaurants and also from the Ambassador Community to explore different themes of each of the chapters of the path to digital maturity.

Speaker 2: 0:52

Thank you so much for joining us.

Speaker 3: 0:53

Oh, my pleasure.

Speaker 2: 0:54

Thanks for having me so excited to have you here and, in particular, because your background, going all the way back to your childhood, is restaurants and technology. That's right, and we're all about restaurant technology, so it's perfect Password into your adulthood. Combine those into investing in restaurants and restaurant tech, and so we want to talk about the intersection of those things at your concepts and some of the investments that you're making and seeing today here at Create.

Speaker 3: 1:20

Fantastic. I can't wait. Let's dive in.

Speaker 1: 1:22

Within our last chapter we wrote to the technologists in the sense of saying to truly reach digital maturity, you've got to think about technology in a more holistic fashion. So we're fascinated to get your take on it because, of course, you've built digital ecosystems for many different concepts. A good place to start is what have you learned? What have you found challenging? What have been some of the successes as you've tried to build digital ecosystems through your own journey?

Speaker 3: 1:44

I would say, even going back to when I was an operator, the biggest challenge was that nothing worked with one another. Now, we had no idea that that was normal, that that was acceptable or unacceptable. It just was what it was. There was a point of sale and, if you were lucky, it was electronic. When I started in Jack in the Box there was no output. You would run a tape and it would print out every single transaction and then you would take this you know 14-foot register tape with all the information on it and then you'd go back to at the time it was Lotus 123, because Excel didn't even exist, and you would rekey the information or you would tabulate it on graph paper and you would figure out what you needed to know from the information that the PLS gave you.

Speaker 2: 2:29

Wow.

Speaker 3: 2:30

Fast forward. The technology revolution has really had a profound impact and effect on the restaurant space, which historically has not realized the importance that technology can give you, the leverage that it can give you in your business, meaning not that it puts more debt, but, on the contrary, it allows you to do more with less. So no longer do you have to tabulate the register tape, you can have the data come right out of your point of sale and into your payroll system or into your accounting system or into your inventory management system, and so things have come a very long way, but I will tell you that there is still a long way to go, and a big part of it is that technology can be very intimidating to many. In addition to the number of upstarts and players in the space, it is confusing and frustrating for many as to which product or solution do they choose, which do they use, which will work with everything else that they have, so that they, as the operator, do not have to become an IT specialist.

Speaker 2: 3:42

So less people think that you are older than you are. I would like to clarify that 100 years old. When I started at Taco Bell, we still had a green screen computer in the back house. What you're describing is not because of your age. It is because of the restaurant industry and how new it is at all of this technology.

Speaker 3: 4:00

Very true, absolutely.

Speaker 1: 4:01

I'm not sure we've had Lotus notes ever mentioned on the podcast before, so you get that to stay with Shana.

Speaker 2: 4:07

How many concepts are you invested in?

Speaker 3: 4:09

So today we are invested in four brands that we own our control and two others that we are growth investor in. A total unit count is somewhere around five to 600 units across those brands. Some are reboots, where they are what I call fallen angels. They once were great brands and they fell by the wayside and we have since rebooted them and we've brought them back to prominence. Others are growth brands and others are somewhere in between. We enjoy all aspects of the restaurant space, but we focus on businesses that are 20 to 200 units approximately, where we think we can have a profound impact and catch the businesses while they're still smaller to implement the kind of technology and infrastructure and process that allows them to then grow very quickly and much, much larger.

Speaker 2: 4:59

And do you see across the different concepts, very different techniques, or they actually quite similar? Across the different concepts?

Speaker 3: 5:07

If you ask the brand presidents or the operators, they believe that there are fundamental differences between full service, quick service and fast, casual. However, having invested across the spectrum and and been an operator for many, many years in all of those categories, I'll tell you that 90 to 95 percent of the technology is exactly the same. Now there may be things, such as drive-through technology, that you may not use in casual dining, although I would say that's to be determined, because there is testing going on with brands like Applebee's, where they are testing drivers. Portillo's has had drivers for years, so don't count it out but what I would say is that the infrastructure and the systems that you would implement in any restaurant for the most part are pretty standard and pretty similar, and there's a lot that you can learn from fast food that could be applied to casual dining and vice versa.

Speaker 2: 6:05

That's very true. How many different types of technology does a typical restaurant utilize in its quote-unquote?

Speaker 3: 6:14

This is one of the most frustrating and challenging issues for operators today. There are many Very good marketers of restaurant technology that convince the operator that they really need all of it. There are easily 15 or 20 different solutions that could apply to any one restaurant and it's important to really understand how to prioritize that and how to determine what is critical. What does it need to have versus what is it nice to have? From a need to have stack, there's three to five things you probably need to have. The rest of it is a nice to have, but many people try to take on everything all at the same time and it just leads to a lot of frustration and disappointment. I think if you stage it properly, you can do very, very well.

Speaker 1: 6:57

I think that's one of the things that we've noticed that many of the conferences that we go to is that we Speak to many independent operators in particular and they just they don't know where to start, and it's why we wrote the second book about the path and to try and help them in this regard. But do you find there's an issue out there with the technology providers in being able to almost over promise what they are actually offering? I think one of the challenges is helping restaurants make an informed decision about the right technology that's a fit for them and for where they are at.

Speaker 3: 7:26

You know that's critical. It's critical in any restaurant operators consideration of what technology to use. Everyone will say that they have what are called APIs, which allow different solutions to integrate with one another, transfer data, communicate etc. And they may have APIs but they may not be fully integrated. Apis Meaning, you know, just by having an API doesn't necessarily mean that everything works seamlessly or smoothly or that it works automatically. Many API still requires somebody to do configuration, and that's where it can be misleading. To many restaurant operators it results in frustration for that, because they think that well, all of these things say that they work with one another and and how come nothing seems to be working? So it's important to do a little more homework and really to ask a lot of their peers, because Others have already gone through the gauntlet, so to speak, and and can help people figure out what does actually work well together.

Speaker 1: 8:22

Yeah, One of the things that we are seeing more now is the term consolidation of technology, and I think what we perhaps were a couple years ago we saw a lot of the API language, but now when you walk around the conference halls, you'll see a lot of folks saying, oh, we do this, we do this, we do this and this.

Speaker 2: 8:38

Oh, a lot of all in one yes, yes all in one once.

Speaker 3: 8:42

Well, so this, this is going to continue for at least the next several years, and this also comes back to from an investment perspective, by investor hat on. I want to look at solutions that are actual businesses, not just products, and there are lots of people who can tinker with some of the Soccer development tools that are available today and can create a great single solution for or product. Let's call it for a dashboard, a KPI dashboard, or for just for food cost or just for labor management or just for something. The problem is that the bigger companies, the bigger ecosystems, don't necessarily have a vested interest in Doing all of the deep integration work to make that little company and that little product successful. They're looking at it and saying, wait a minute, if they could put that together in six to twelve months, so can we, and so we're just going to come up with something and offer it ourselves.

Speaker 3: 9:40

That's not a bad thing if you look at analogs, like Microsoft, for many, many years they bought solutions. They did not develop PowerPoint. They bought PowerPoint from some other company and they integrated it into Microsoft Office. And for many years, excel was not the best spreadsheet. Eventually it got there. My point to all of this is. They created a holistic Ecosystem and everything worked very, very well together. It didn't have to be the best, because for the most part, people will use utilize somewhere between 20 and 80 percent of the solution, never a hundred, and so long as they can deliver that much and it all worked well together it was better than the best in class solutions that you then had to stitch together.

Speaker 2: 10:24

That makes total sense. We are fond of looking at other verticals to say what is likely to happen in the restaurant industry. Looking at the history of Microsoft and how they brought that functionality in increasingly over time Tells us that likely it'll happen here.

Speaker 3: 10:39

Yeah, I think that there's an old saying that says history doesn't repeat itself, but it sure does rhyme. And so what you've seen in other industries whether it's travel and leisure, whether it's other software companies and how they've grown and how they've acquired other solutions and integrated them in to deliver a holistic suite of applications, I think you're going to see more and more of that. The concern will be how many of these larger software solution providers become what they call walled gardens, where they no longer want to work with third parties on integrations. How many of them become a told of where they charge significant fees for those integrations. All of these things come back to really just understanding what is the best solution for the restaurant operator. I will tell you that the smaller you are as an operator, the better off you are going with a one stop shop. Yeah, even if it's not the best, because it'll all work together and you don't have the time nor the money to put against becoming a IT expert.

Speaker 2: 11:43

Correct, and I think so many restaurants think, oh, I just have to do this one time and then, once it's done, it's done, and of course, that's not how it is. There's continuing innovation. You're constantly having to upgrade these systems, add a new piece, someone comes out with something new that you want the integration's changed, and so it breaks and you have to redo it. So I think that's very good advice, particularly for the smaller guys, to think about. How can I have one restaurant that's doing at least most of it?

Speaker 1: 12:07

for me there's a familiarity associated to user interface as well. I think, right, we talk about the Microsoft products. We all know under the view menu, regardless of whether you're on PowerPoint or Excel, what's gonna be under the view menu. So I think there's an element of helping the restaurant owner operate. So that's not generally particularly interested in investing and learning a huge amount of time about technology and to be able to get to what they need to get to as easy as possible.

Speaker 3: 12:28

I think you're absolutely correct there. I think it's familiarity, I think it's ease of use, I think it's predictability you know what you're gonna get. You know where to find things. All of us have a day job. If we go back and we put our operator hats on from when we ran restaurants or even when we just trained in restaurants, there's so many different things to do in any given day and even if it only takes five or 10 minutes to use a solution, that's five or 10 minutes that you don't have in the day because you're already over committed at 150%, whether it's managing people, schedules, customers, product, the inventory arrived late and you have to check it in. There's just so many different functions that need to occur in any given day that time is really very valuable and that extra 10 minutes just doesn't exist.

Speaker 2: 13:15

So historically in the restaurant industry, restaurant had a POS and a back out system and the world sort of revolved around those two systems. As we move forward, it seems likely that these companies, as they consolidate, will create some kind of restaurant operating system that does the backbone I would call it of the restaurant and then perhaps has some other functionality that's integrated either inside that system or that they integrate with externally. How do you see that playing out? And how do you think about what kind of technology you want to invest in?

Speaker 3: 13:48

Yes and no. I think that the future, over the next five to 10 years, within our space, will go from restaurant POS solutions being in a store to being in the cloud Period, end of story. What that allows you to do is then engage with lots of different applications and you can simplify the data exchange. You can do things more in real time and your POS is really just connected to the cloud. You know the concept that we have of the terminals in the store are just connected to the cloud. The cloud is actually where your server sits and everything else can connect into that, whether it's your back office, your time in attendance, your payroll system, your inventory management, you know, whatever it may be, everything connects into the cloud. That's where things are headed. I think.

Speaker 3: 14:39

From a backbone perspective, it becomes almost like you just turn on your water in your house and it works.

Speaker 3: 14:46

No one is trenching and building this one mile of plumbing and piping to your home from the central water supply any longer, so I think that's where all of these things end up. I think that that allows us to really be thoughtful when we're looking at new solutions, new investment opportunities, is how have they been designed? Have they been designed to sit on a computer and run? Have they been designed to sit in the cloud and run? How scalable are they? Can they support more than 500 restaurants using the solution at one time? Those are all things that we think about, because today you may be one unit or five units, tomorrow you may be 50 units, but that software company cannot survive on just you. So they're going to go find 100 or 1000 companies, just like you, and you want them to, but you also then want the software to be able to grow and handle that amount of volume all at the same time. So there's a thousand companies that all have 50 units.

Speaker 2: 15:45

This is not going to bring the system down.

Speaker 3: 15:46

That's right, because otherwise everybody's out of it. So we do think about that a lot.

Speaker 2: 15:51

Now I feel like you're offering the industry hope, because what I am hearing is that we are on the front end of all this digitization, and the front end is the most complicated part. There's so much innovation. There's just an explosion of options, and that can be very overwhelming. But as we settle into the future, it sounds like you're saying things will get easier or not hurt.

Speaker 3: 16:11

Things always get easier. They always get cheaper. It's very predictable. The problem is that we all are looking at a timeline of 12 to 18 months, not 10 years. So we all want to do more in less time and we all want it now. And that's just the nature of human beings is we're very impatient.

Speaker 1: 16:29

We're talking of impatience. I was speaking to a few CTOs recently and they said the amount of CEOs that are coming to them saying, oh yeah, we need to do more with artificial intelligence. Now we often will say the amount of solutions out there that are saying that they're using AI actually isn't true. It's not true artificial intelligence today. But when we take the topic of holistic technology and actually more position it as holistic data because ultimately it's about all these data threads coming together and whether you use terms like predictive forecast and machine learning or whatever way you want to categorize it, isn't that the future that's going to make this super exciting? Isn't that the thing that's going to drive efficiencies in our restaurant and create a wonderful guest experience?

Speaker 3: 17:09

I do agree with that statement. Most people confuse artificial intelligence with machine learning. The most common and prominent application today is machine learning and that's just feeding algorithm lots and lots and lots of data and it gives you trends, it gives you predictions. The actual application of artificial intelligence requires a lot more dimensions to consider and most restaurant companies do not fundamentally understand what to do with artificial intelligence, how to ask it the right questions, how to program it appropriately, and so I think it's still some time off.

Speaker 3: 17:48

We're all trying to get to the very end very, very quickly, and the reality is this is a crawl, walk, run scenario, and we're just getting to the place where we're past crawl and now we're starting to walk, we're running. Let's utilize what's readily available. What's for the most part inexpensive, is readily integratable into all of our solutions and our technology, which is machine learning. And let's just start to understand forecasting, let's start to understand trends, let's start to use the information appropriately before we get to having some elaborate artificial intelligence solution. If we just do the basics, there's so much to gain, there's so much low hanging fruit.

Speaker 1: 18:28

Great stuff, well listen. Thank you so much for your time today. It's been great to listen to the polls of wisdom you're able to share with us If people want to reach out to you and hear more what's the best way?

Speaker 3: 18:37

You know best way. I'm in LinkedIn and you can always just email me directly or go to our website at gollicapitalpartnerscom. I look forward to it. Great stuff, Thanks everybody, Thanks.

Speaker 1: 18:48

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