Is 100% digital good for guests?

Is the clink of cutlery against plates soon to be replaced by the silent tap of digital orders? Join Meredith and me as we venture into the world of 100% digital restaurants, weighing the pros and cons of this tech-driven frontier. In the bustling realm of quick-service eateries, touch screens and kiosks are quickly becoming more than just a way to skip the line; they're pivotal in harvesting customer data and inflating check averages, all while striving to maintain that irreplaceable human touch in hospitality. We'll tackle the burning questions around the real price of customer contact info and the hefty investment needed to snag it. Get ready for a culinary journey that could change the way you think about your next dining experience.

This episode serves up a full course on the European restaurant scene, diving into the undercurrents of loyalty programs that seem to miss the mark and how data might just be the secret sauce to reinvigorate them. As we slice through the challenges of implementing new technology, like the backlash against dynamic pricing, we also sink our teeth into the evolving economics of the restaurant industry. From the magic number that makes a chain profitable to the revolution of central production units and tech at the heart of new dining concepts, we're peering into the kitchen of tomorrow. So, pull up a chair and savor the insights as we dissect the transformation of the food industry with a blend of skepticism and foresight.

Transcript

Speaker 1: 0:00

Is 100% digital good for guests? Are 80% of loyalty programs broken and what's on the minds of restaurant owners over in Europe? That's all ahead on this week's Digital Restaurant. The Digital Restaurant works like this we're going to ask each other five questions about headlines that affect the worlds of restaurants, off-premise and technology, but in some way tie back to our book series Delivering the Digital Restaurant. Are you ready? Let's go? Happy Monday, Meredith. How are you doing today? I'm very good. How are you, Carl? I'm okay. Thank you. Do you have a nice weekend? I did indeed Excellent. What did?

Speaker 2: 0:44

you get up to Cookbook launch party. Oh really.

Speaker 1: 0:46

What is a cookbook launch party?

Speaker 2: 0:47

I think you're going to have to put some photos out of that. That sounds like a lot of work.

Speaker 1: 0:55

We're all going to want to hear about. We're seeing your social feed.

Speaker 2: 1:02

All right, carl. Very interesting week this week with a lot of debates, I would say A lot of debates happening, and the very first one is a case for the 100% Digital Restaurant, which of course we're probably a little biased here, but it feels like people are coming around.

Speaker 1: 1:18

Yeah, you're right, this one isn't so much of a new story An opinion piece, I think is what they call it in the journalist world, and Joe Koskowski wrote a great column about this one, where he's saying that a lot of restaurants now start into target 100% digital transactions, and he was questioning is this going to be good for the consumer or not? And, of course, we know that Wingstop have talked about this. Firehouse subs, some of the largest QSR brands out there share the aspiration of 100% digital, and I think Patrick Doyle was quoted in the article, who's the chairman of Firehouse, and he said all we've got to do is rip out the front counter order points and replace it with Kiosk, and by 2025, we'll be 100% digital. So I guess he's right. The point here, though, isn't that digital isn't about delivery anymore, and I think really it's about customer data and the fact that if you can get more customer data and have it in a more plentiful fashion, you're going to get better insights about your customers. Now Joe points out the value comes, of course, from digitization around reducing labor costs, how Kiosks have higher check averages, and he definitely leans in heavily on the data perspective as well, but here's a theoretical question I've got for the and I'd love to hear what our restaurant operator friends think of this one and that is how much value do you place on knowing your customer's email address or cell phone number? And I guess the follow up question to that would be how much would you invest or pay to get that data? Because that answer may derive how much you should then invest into converting customers to getting more markets and attributed to encourage a guest to provide it.

Speaker 1: 2:52

And so, for me, we're seeing this drive towards guests wanting a more digital experience. We know that's definitely a theme. We know restaurants have an eagerness to be able to get more data and we know that digital provides more ease and convenience. And Joe quotes no glass of Olo, saying that digital orders also are proven to result in higher conversion and higher frequency. So Joe then says well, is 100% digital the right direction? He quotes in the National Restaurant Association's report that we talked about a few episodes ago, asking the question of limited service restaurants, where the split between customers prefer an ordering via a person versus a phone or a kiosk was actually a little bit more even, and so therefore, he finishes his piece by saying maybe 90% is more realistic. I think that's where I end up disagreeing, because building a fully digital restaurant from the ground up will be far easier than having to mesh together a mixture of different channels right, traditional channels and digital.

Speaker 2: 3:52

You mean, like, what restaurants are trying to do right now?

Speaker 1: 3:54

Which is exactly where they are today. We know how much complexity that the growth of the liver falls upon them right.

Speaker 1: 3:59

Absolutely yeah, and it's built upon an operational model and a design that was built to satisfy those specific channels. And so when, in this era now, only channel fulfillment? And so, therefore, if what we're talking about, about digital engagement on on-premise as well, I think we're going to get to a place where we need to ask ourselves do we need to change the operating model entirely? I mean, we're going to probably get to a point, if regulations change, where we'll end up with 100% cashless in restaurants as well. Right, of course, we can't assume that everyone's going to pick up an app or work a kiosk in the same way as the the more digitally forward youngsters amongst us, but we have to build a case, I think, with that ease of use in mind and create models of support that help.

Speaker 1: 4:41

The biggest challenge for me with 100% digital is if we let the efficiencies that it offers impact the hospitality and the experiences that I guess can enjoy, and so my hope is is that it opens up the chance for more human experiences and empowers our team members to use the data to have more personalized, enjoyable experiences. So I don't know. I guess my top tip for restaurant owners to think about as a result of this particular one is consider how much value you could derive from communicating to your customers every single one of them and what impact does sales with that make to your business. If you are able to do so, what do you think?

Speaker 2: 5:17

I agree. I would add to that how much easier would your life be if you had one system with all the data in one place and you weren't trying to stitch all this stuff together. That is a strong case for 100% digital. But here's where I do agree with Joe. I don't know that it's 90% digital at every single restaurant. I think it's probably a barbell where some restaurants will be 100% and some restaurants will be like 20% and then on average they'll be at 90, which I know we'll talk about a little later on another question. But yeah, I think he's right. I think that's where we're headed. The more that really advanced digital restaurants can show consumers what they get as a result of digitization, that's better. And what can I do with technology that I couldn't do with a human? The more this whole thing will just snowball and take off Exactly like we've seen in other channels. You wouldn't dream of calling a hotel, the book, a hotel room.

Speaker 1: 6:12

So true, you're right. When was the last time I called a hotel, absolutely All right. Well, let's move on. Let's talk about another theme here. Data optimization was the theme of this next article, but it also ties in quite closely to some interesting things that have been happening in Florida. Can you tell us more?

Speaker 2: 6:27

First of all, this article that Joanna Fantosie put out on Nations Restaurant News. The punchline of it is sort of like okay, now we're starting to have data, but we're not exactly sure how to use it. Really interesting in that nobody feels confident about their data and the folks that do there's a few digital leaders who do they're investing a ton of resources in making it happen. The other thing that I think is probably most fascinating here is if you go all the way down to which categories of customer data does your location or organization collect and share? 16% of them say I collect customer data shared by third party delivery aggregators. I just want to remind all the independent restaurants out there who are listening that you do not get the same treatment from Door to Out of Shinobu that everyone else gets the big guys. Those big guys are getting totally different deals than you are because they have big brands and they're bringing consumers with them to the platforms because of those big brands and all their marketing spend. So when you are super frustrated by the third parties, remember they treat you differently. That explains why it is that the third parties have been embraced so much by the big brands. You'll remember the story I told last time about going on to the McDonald's website and clicking order now, and it gave me like five different ways to order, only one of which was their own website. They were not prioritizing it in any way. That's because they don't care. They don't care, they've made the margins even across and they are getting the data across, and so they don't care. You do whatever you want. You do you consumer? The way that this ties to the Florida story Florida just passed a bill that said that restaurants will be able to communicate with the consumer for two hours post food going out the door.

Speaker 2: 8:11

Oh, wow, yeah. The intent of this bill is to try to make it easier for consumers and restaurants to resolve whatever issues they might have, because it is terribly confusing in a third party situation. Who is responsible? Is it the delivery platform? Is it the restaurant? Is it the driver? I'm not sure. What should I do when something inevitably goes wrong, as it probably will when there are that many handoffs, and so the state of Florida is requiring that the third party platforms make restaurants able to talk directly with consumers. Now, I think this is a big win for consumers, because it does make things more clear. I'm not sure. What do you think? Is it a bigger win for a restaurant or actually for the third parties, because I can see reasons why both would want this.

Speaker 1: 8:55

There's a couple of things. One, I wonder whether it's going to help in terms of charge back costs. Right, Because now if the restaurant is more involved in resolving an issue, they've got a much better case to be able to fight any charge back costs. On the other side of it, the marketplaces are also going to be saving money on setting up these big customer success teams that are dealing with those issues through chatbots and the restaurant Totally so. Is a restaurant really going to be on hand to have someone available to resolve the issues?

Speaker 1: 9:18

Ultimately, we're getting to a situation where we have to still come back to the fact that if you can get the order right at the moment it's picked up, so that you're not having any issues as often as you possibly can avoid at least, then that's the best outcome. But look, I'm not a verse to seeing how it works out. I'd be intrigued to see how it works out. I think there's going to be a lot of restaurants that aren't even in Florida that are going to look at this and say, hmm, would this work for us?

Speaker 2: 9:44

I think it's interesting that the government had to even get involved. If I were a third party, I would much rather have questions and complaints go to the restaurant than come to me, much rather. And if I were a restaurant, frankly same thing. I would rather be able to talk to my consumer directly and, if they've got some kind of challenge, help resolve that challenge. The most loyal customers are the ones you win back when you correct a problem. I think it's very interesting that the government had to make this rule, and it wasn't a natural result of market forces and demands, but I'm very excited to see how it goes. Interestingly, though, although they get to talk to the consumer for two hours, they don't get their data. So the Florida law falls short of saying you can talk to them forever. They just have two hours. You guys can go back and forth messaging via the app. So Florida is not leveling the playing field between the big guys and the independent restaurants.

Speaker 1: 10:34

I'm surprised by that, I'm sure there'll be a technology solution that someone dreams of.

Speaker 2: 10:38

Yes, there will probably be another random piece of staff that you need, as a restaurant, to pay a monthly fee for in order to somehow intervene and capture that data and try to do something with it and then stitch it together, with all the rest of you Going back to where we started. All right, yes, goodness, it is much easier to just have all the data in one place from the get-go than to try to stitch it all together.

Speaker 1: 11:04

Is that your top tip?

Speaker 2: 11:06

Yes, that is my top tip. What that leads to our last question.

Speaker 1: 11:13

Hi Carl here, Just to interrupt the show briefly to remind you that if you have yet to get your copy of either of the delivering the digital restaurant books, now is the time to get one. If you head to the digital restaurant, you're going to be able to get the best price available. You can also listen to both books with yours truly talking about them on an audible. You can get a copy of Amazon if you'd prefer to order through them, but if you haven't got the books yet, get them. They really are going to transform the way in which you look at the restaurant industry and the way in which technology is disrupting it.

Speaker 2: 11:46

All right, q State of the Industry Report just came out. Are they talking about what's going on in digital? They've done this five years running, which I always love, because then you can see trends over time. But the big story that came out here was that loyalty seems to be broken in the restaurant industry. What do you make of this?

Speaker 1: 12:03

Well, this is one that I have to bring up on screen for sure, meredith, so I'll shrink us and bring this up here, because you're right. First of all, before I talk about loyalty, thank you to Jane Kern. She gave us a sneak peek of this a few weeks back and it's a pretty substantial study, I think it's fair to say 62,000 enterprise QSR fast casual locations represented 180 brands and the majority actually aren't Q customers. So that's kind of refreshing to hear. Usually, we get these studies from companies that are supporting the industry and a lot of them are talking about the virtues of the particular platform they're working with. So great to be able to see this from Q. So let's move through these, because there's a few topics. Loyalty is definitely the big one, but first of all, let's go to this here about digital sales. The good news is is that digital sales are on the rise, as you can see now. The majority of those respondents actually said about 42 percent have digital sales in the range of 26 to 50 percent right now, and no surprise perhaps to see that actually it's in the fast casual category where you're seeing a much larger proportion than what you're seeing in QSR, with 50 percent in the 26 to 50 percent and 43 percent for QSR in the 11 to 25 percent range. So as we move on deeper into this, it then talks about the fact that people continue to see that level of increase happening. And then the one we talked about in our new year predictions kiosks, they say, make a comeback, but I think they've been on the rise for quite a while. But in terms of new ordering channels, nearly 50 percent of folks are saying that is what they're adding in to their business this year. Look further on this list here Meredith, where you'll see 25 percent to mobile app, expanded delivery partners, and then phone AI and voice ordering, also represented here as well.

Speaker 1: 13:46

Now got to get on to loyalty, because that's the big one. You're right, 80 percent of respondents say loyalty is not working for their brand 80 percent. Now, big caveat here when I dug into this and asked Jen about the perspective of who was answering the questions, about 50 percent of those that responded were CTOs. About 15 percent were CMOs 15 percent CMOs. So there's certainly a technology oriented bias to some of the perspectives here, but nevertheless there's a number of angles I think we could perceive this.

Speaker 1: 14:17

One, of course, is that the loyalty programs that worked maybe 10 years or so ago are not the right fit today. But if I answer this more from the CTO perspective, I wonder whether it's more about data and the way in which data again is flowing through, and albeit that loyalty programs do indeed get you closer to understanding your customer, if you can't use it in an effective way, then clearly you're not going to be able to harness the true benefits of your loyalty platform. So no surprise then to see where folks are focusing their attention in terms of investment 46 percent are focusing their attention to loyalty. Menu boards are up here, pos, of course, kiosks, as you can see represented.

Speaker 2: 14:56

Say that again Loyalty is broken. But my top investment is loyalty. Tell me.

Speaker 1: 15:00

Well, exactly, I mean that's basically saying they're having to change it up. They're having to change it up because they're saying it's not working today.

Speaker 2: 15:07

So they believe it can work. They just don't think it's working today.

Speaker 1: 15:11

Yeah, I think it's basically reflecting on the current loyalty programs, right, and a lot of these brands will have had loyalty programs in place for many years and transitioning from one to another isn't an easy exercise. But I can see why they're now saying well, actually, if we can turn to having more digital transactions which, of course, is beyond just off premise and start to entertain this through kiosk orders as well, then that data richness that we have been talking about already today is something that's going to enable them to be able to create a much better guest experience. So, moving on from that, let's go a little deeper into the report. I'm not going to cover everything here, but you'll also see this one, which I don't know how many times we have to keep talking about it, but 64 percent said order accuracy is mediocre or weak. I mean, that's crazy, isn't that? When you, when you look at that, they're saying that not the top investment area.

Speaker 2: 16:02

That is just unacceptable.

Speaker 1: 16:04

It's terrible. And 57 percent of what they're saying is the problem is training. How many more times do we need to talk about training and helping employees understand this? Now you could argue it's again associated to the operating model, the fact that you've got all these channels operating in a business and an operating model that was developed and shaped not to be able to accommodate this high level of volume coming through off premise channels. And, of course, 16 percent of the issues they're saying are coming as a result of driver and customer pickup issues. But look, training accuracy, my goodness. This is an ongoing issue that seems to rear up every time we look at these different studies. Any thoughts yourself on this particular study here, meredith?

Speaker 2: 16:45

Anything caught your eye. Thank you to Q for putting this together. I love the perspectives of all the restaurants summarized in one place. That loyalty point is very interesting to me. I think again, if we go back to the 100% digital transactions, you know who everybody is and they're all in the same piece of software, regardless of which channel they came from. Why do you need a loyalty program, do you? I don't know you might not.

Speaker 1: 17:09

Well, one thing I do think you need my big tip from this one is if you are a fast, casual or QSR brand out there and you're sitting on the fence about embracing kiosks and there's still obviously a chunk out there that are not using the kiosk at the moment, I think this is an obvious trend to be part of Every time I see data about them. It's certainly helping with check averages, helps with time, helps with labor. There's a lot of benefits. So I'm sure that if you're not looking at it, you should be OK. Next question it's almost an old article. I think it's fair to say, because we know Wendy's have indeed been in the news over the last few weeks. But I thought we should approach this from a slightly different perspective, and that is when tech is being introduced to the industry or to the consumer base. How should execs think about treating them? What's your take on this one?

Speaker 2: 17:54

Wendy's really went through the wringer in the last two weeks. They came out with a message around dynamic pricing and the press just had a field day calling it surge pricing and the internet blew up. So consumers were understandably upset with the idea that what they perceived to be Wendy's saying we're really busy, we're going to gouge you, I think, is what people took from the way that it was called surge pricing, and I think we all remember the early days of Uber when you would get crazy quotes for rides during a rainstorm and everyone felt that was terribly unfair. No, prices still go up during a rainstorm and this is one of the advantages of pricing. A price is a signal in a market when supply and demand are imbalanced that help bring them back into balance, so it's a very helpful little thing. In general, I think it can help restaurants push volume to where they need it, and restaurants have been doing this forever.

Speaker 2: 18:45

I know you've said many times things like BluePlate Specials and LTOs and Happy Hours. All of these things are, in a way, dynamic pricing, using, in those cases, a lower price to push consumers to a time when maybe the restaurant's not as busy. Restaurants also do it for holidays. Think of having to pay in advance to do a prefix menu on New Year's Eve at a restaurant that you normally would never have to do that at. Everyone wants to go out and therefore the price is higher. So the idea of changing the price based on supply and demand is not new in restaurants and in fact, as it relates to specifically delivery, of course I think you pointed out before Dordache has been doing it for a long time. They'll say, on a Friday night at 6 o'clock when you order, hey, you want to wait two hours and get $2 off, and for some people that's totally fine.

Speaker 2: 19:35

They're not super hungry and they don't need to eat right away and yeah, I'll wait till there's more drivers available and it's not crazy busy, that's fine. But as much as all of this makes sense, I think your question is the right one. When you introduce a new concept, particularly a new type of tech, to consumers, you've got to tell them what's in it for them and that has to be the primary message. And let's go back to our kiosk example. We're just talking about kiosk. How great they are, how they increase check, they increase frequency, they reduce labor costs.

Speaker 2: 20:04

All those things are great benefits for the restaurant. What's the benefit for the consumer? Well, they can take longer thinking about what they want without feeling like they're tying up somebody's time. They can explore the menu. They can do some upsells and add-ons that maybe they would feel awkward telling another person that I want double chicken, but I feel fine telling a computer that I want double chicken, that's OK.

Speaker 2: 20:27

There's all kinds of benefits in terms of frictionlessness, ease of ordering for our younger consumers out there. You don't have to talk to anyone as restaurants roll these things out. They really need to be mindful that, yes, there's a lot of benefits for them, but there's a lot of benefits for the consumer too. And in the case of dynamic pricing. I think there are tons of benefits for the consumer To be able to get a better deal when things are slow, to be able to pay more to prioritize my order when things are busy. These are great consumer benefits. All right, my European friend, Can you tell us about what's going on in European restaurants? They came out with a state of the industry report. They being, who Tell us about?

Speaker 1: 21:09

it. Epic base Our friends over at Epic base which help restaurant with optimizing their ingredients, saving on food cost, things like that. So a technology platform. Most of their customers are over in Europe. As you say Now, meredith, this was a 73-page state of the industry report, so I'm going to go through every single slide. No, I'm not. Oh, thank God.

Speaker 1: 21:28

I'm going to bring it up. I'm going to bring up six, if I may, six different ones as things that I picked out from the report. The first one here is from a very wonderfully named Carl Henrik Forsbeck Forsbeck, I think you say his name. He's the CEO of Boars and Ruth. I think that's how you pronounce his restaurant.

Speaker 1: 21:47

But what's interesting for me is talking again about this theme which has been central to today's podcast, and that is data. And what he's saying is consumer patterns have changed. It's much harder to predict when customers decide to eat at our restaurants out of nowhere. A random Tuesday can have high revenue, while the following Thursday is much below average. You know, I think that's a really interesting point. We sometimes forget that these moments of not search pricing but search orders can happen, and that is also a function of being able to understand how and where you're advertising and making sure that you are indeed in a place where you can make sure you've got the necessary resources in place in terms of your workforce and ingredients to be able to accommodate those challenges. But this is the challenge of being in an omnichannel environment.

Speaker 1: 22:33

The next one here, this is a CFO perspective, mads Benson, who's the CFO at Oli Oli and he's talking about the shift in what we've seen in the capital markets. He said the capital markets have increasingly shifted their focus from Kegel to a bit of margins and the question is how do we position ourselves to that shift to successfully maintain the growth that we want? And the text really to the right there is just emphasizing the fact that now that we're in a slightly more difficult capital environment, actually we're having to turn our attention to profitability. Now, I don't know you're more the financier than me, but it's an interesting one for me. This, because I would have thought profitability should be a central focus all of the time.

Speaker 1: 23:13

But clearly this is something which we've seen in the restaurant technology space. How can we get the best models coming through to support restaurants? The ones that have got a good case to be able to make are the ones that are certainly seeing more investment and certainly seeing more chances of surviving through a capital-to-tie environment. But it seems like it's applying also to restaurants here as well. Any thoughts on that one?

Speaker 2: 23:32

Certainly, as interest rates go up, there is more focus on profitability.

Speaker 2: 23:37

The unit level focus on profitability should have always been there, and for any brand for which it wasn't, that is an unusual state of affairs.

Speaker 2: 23:46

There was a time when everyone thought above restaurant, where that G&A is, you need to spend what you need to spend to do the things you need to do in marketing and technology in particular, and as you add stores, you will grow into paying for that corporate level, even though Right, and that's really where the change has come is that now folks are looking at those entities not just at the unit level and saying, great, you make money at the unit level, but how can you make money at the corporate level too?

Speaker 2: 24:17

And I think this will turn into a very interesting thing for technology, because at some point, all of these restaurants who have been trying to build their own custom tech stacks and are employing a fleet of people trying to figure all this stuff out, they'll say, ooh, I don't know if it makes sense for us to have so many people above restaurant trying to figure out all this technology stuff and so many different types of technology that we're paying for. Maybe we need to have the technology that our store count can afford, whether that's 10, 20, 50, 80 stores and that might mean buying more off the shelf things, buying more holistic technology rather than trying to stitch together a bunch of pieces. I think that is definitely something that will come out of this.

Speaker 1: 24:58

I think that's fascinating and you've always said about the idea of the magic 100, in terms of once you get to 100 units, that's when you start to see those kind of returns coming through a little bit better. I wonder whether that number will reduce in time with technology efficiencies that come through. Any thoughts on that? Do you think that we might get to a point where 50 might be the magic number because of technology?

Speaker 2: 25:21

I do. That's a fascinating question. 100 number is based on a typical AUV and the real thing that changes, that is, if your AUV is much, much higher than your unit level, cash flow is going to be much, much higher. The more cash you're generating per unit, the fewer units you need to make the whole thing make sense. The way that technology will inform that, for the most part, is going to be around figuring out how to drive up the average unit volume of a restaurant and we already see this in some of the newer concepts either having multiple brands under one roof or even, in the case of Chick-fil-A, superhigh Volumes just doing one thing really, really well, over and over and over again, but having lots of different channels that they do it through. Right, they're doing tons of catering, tons of online sales, lots of different ways that they're going to market in addition to the drive-through. So I think that's one way that technology will will absolutely change that number. And then the other question is can technology actually reduce the above unit cost required to run a chain?

Speaker 1: 26:22

Interesting. Well, that's actually a little bit of a segue into this next one, which I thought was interesting Central production units. I guess for some of us we might call that Hauverns spoken away. But the idea here that Jeremy Dean, who's the operations manager at a German vegan donut shop, says the economies of scale and simplified logistics are most important to us Simplified logistics when would you hear a restaurant operations manager talk about that? Right, with our centralized kitchen we can order ingredients in larger quantities at better prices and have them all delivered to one location.

Speaker 1: 26:53

That one sounds really interesting to me, because that seems to be a theme that we're starting to see in some of these emerging models that are coming through. And, of course, if you can, as they say here, streamline back of house operations and improve product consistency, you're going to be able to give restaurant managers more time to focus on that guest experience, which, of course, is what we all want. And so, if you are developing a restaurant network in a particular area, thinking about that idea of having a central commissary in a place and being able to distribute from it is certainly something that the folks over in Germany here are looking at.

Speaker 2: 27:24

It's kind of like prep right or proper foods. They very much have a similar model and the big chains here in the US they do, in a way, have centralized commissaries. They just have giant, giant manufacturing plants that are putting a lot of the stuff together for them and they're doing a lot of reheat and assembly at the actual kitchen level. What's happening here is the consumer is changing and they want things that are more freshly prepared and they want access to these newer flavors of vegan bagel. Come on, that's a new trend, those newer trends as newer consumers. They can't get to the scale of a 10,000 unit QSR chain overnight. So how do you get the best of the scale with the best of the freshness? It's probably these. It's almost like a little edge factory.

Speaker 1: 28:07

That's right. Yeah, exactly. The other thing here which I thought was interesting and this is leaning more into the technology piece is what Peter Schimpel here, who's the VP of digital IT at Losteria. He was saying instead of forcing new technology on traditional processes, with rethinking our internal workflows to align with technology, not the other way around. Now there's an image, also in the deck, which I haven't got here to show you, but it basically positions technology in the middle of the entire operating model and, of course, as we said, right at the top, right as we've been trying to force fit technology on top of current operations. If you are starting a new Rache Don today, if you start with technology in the middle of that, you can build your operational workflows around it, which I think is what Peter is referring to here.

Speaker 2: 28:56

That's so true. There are so many things that, because we were doing them with our finite human brains previously, there was only so much that we could do, and so that caused us to say well, the operations need to work like this, in a very simple way, because of our finite human brains. But once you access the infinite brain of a computer, those limitations go away. So if you design, as he's saying, around the infinite brain of a computer and what it's capable of, you get a very different operational answer than if you say you know what. It is way too hard for a human to remember a menu that has 300 things on it and 800 different ingredients and five different cooking processes and infinite number of cook times. A human can't do that, but a computer can.

Speaker 1: 29:40

Yeah, exactly. Otherwise, a lot of the themes within the deck represented what we've seen here in the US, right. So the compound annual growth rate is about 9.5%. In Europe it's about 10.5%. 11%, I think, in the US are slightly behind, but things are moving in the right direction. But there's also the concern associated to ongoing inflation, albeit somewhat less than where it was a couple of years ago. So not many macro shifts, I don't think from that perspective.

Speaker 1: 30:08

But here was an interesting one because you and I were having a conversation offline before we started recording about some of the differences of the US versus Europe. And if you look at this chart here, I was curious for your reaction to it, because obviously QSRs are a dominant form of restaurant category here in the US where you could use the word convenience to basically summarize what they represent. But you'll also see in Europe, I think the experiential restaurants, the smaller chains or even independence themselves certainly focus very much more on the experience and the deck digested. Look, what consumers are after now isn't an either, or they want to be able to get 50% convenience, 50% experience, which I think is exactly what we're seeing here in the US as well. Albeit, it's not moving from experience to convenience. It's going from convenience to experience, but in Europe it's the other way around a little bit. So it's interesting how these things are almost converging, with the consumer driving the attention to say I want it all.

Speaker 2: 31:07

Well, they want it all, but I don't know that they want it all from the same place, and that's what I take from this chart is that the Michelin star restaurant is never going to be super convenient and a QSR is never going to be super amazing experience. They're just different things and so the consumer might want both those things, but they want them at different times in different places from different restaurants, and it feels very much like the industry is pulling to these two extremes, whereas before, for the last 30 years, it felt like we're trying to average those two extremes. You think about casual dining they were bringing the best of a sit down restaurant with servers and all those things, but they were making it more convenient. It was a little bit cheaper, it was a little bit faster, it was a little bit more consistent and it was bringing those things together. Now it feels like we're in an era where we're pulling those things apart.

Speaker 1: 31:53

Thank you to Epic Base for being able to share that with us. Always interesting to get perspectives from other places other than here in the US, and I would also be very keen to hear any of you over there in Europe for your take on that there. But we have gone on a while. This is probably our longest episode yet of one of our little news run throughs, but thank you for bearing with us if you're still there. But, as ever, thank you for joining us. Leave us your questions, your comments and we'll see you next time. The Digital Restaurant podcast is available for you to follow and subscribe. Wherever you listen to your podcasts, watch us, rate us and subscribe to the Digital Restaurant on YouTube and follow along on all our social media Digital Restaurant channels. Thanks for listening.