March 17, 2025 • 36 mins
It’s imperative for restaurant brands to use guest data to become more efficient with their marketing and drive profitable traffic, Olo’s CEO and Founder Noah Glass tells Bloomberg Intelligence. In this episode of the Choppin’ It Up podcast, Glass sits down with BI’s senior restaurant and foodservice analyst Michael Halen to discuss the company’s plans to grow with new and existing customers in its three product suites: online ordering, payment and personalized marketing. He also comments on Olo’s new partnership with FreedomPay and a sizable opportunity in catering order management.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:13):
Welcome to Chopping It Up. I'm your host, Mike Hanlon,
the senior restaurant and food service analysts at Bloomberg Intelligence.
Our research and that of bi's five hundred analysts around
the globe can be found exclusively on the Bloomberg terminal.
A quick PSA if you like the pod, we'd love
it if you could leave us a review on Apple
or Spotify. Today we're joined by Noah Glass, CEO and
(00:34):
founder of OLO.
Speaker 2 (00:35):
Welcome back to the pod, Noah, Mike, thank you for
having me, and thank you for having me back.
Speaker 3 (00:40):
This is super exciting.
Speaker 1 (00:42):
Yeah, of course. Man, listen, I appreciate you coming on.
You were I looked it up. You were episode ten
and it kind of brought us to another level. You
were the best performing episode for for quite a while,
so I appreciate you having the faith in me coming
on so early, before you know, we really had a name.
(01:04):
So I appreciate you, and you're welcome back anytime. A man, Well,
thank you.
Speaker 2 (01:09):
I have heard a rumor that now the best performing
podcast episode of all time on Chopping It Up was
my good friend Juwan George had five eight partners. I
think he started the rumor knowing what I know about him,
but I have a bit of a competitive streak, as
does he, and so I'm glad that ten episode ten
was like number one of the charts for a while.
(01:30):
I'm bummed it's no longer number one, so I hope
whatever episode this is can reconquer the number one spot.
Speaker 1 (01:38):
All right, cool man? Yeah, this is sixty six. And
Matt Tucker, he kind of he benefited from a little
luck on the terminal, so he's not like top ten
downloads online, but on the Bloomberg terminal, they they it
blew up. So Matt Tucker had a great, great episode two.
So you know, all these guys that previously worked with
(01:59):
you tend to do pretty well on the pod.
Speaker 3 (02:02):
Yeah.
Speaker 2 (02:02):
We're a lively bunch, and one of our core values
is that we laugh hard together, and I think that
comes out in our podcast appearances.
Speaker 1 (02:09):
So are you an NBA guy too, like the two
of them?
Speaker 2 (02:13):
Not really, mainly because I'm really bad at basketball.
Speaker 3 (02:16):
I don't know.
Speaker 2 (02:17):
My son, who's now eight, was just considering a basketball
camp this summer, and I was remembering back, you know,
the scarred experience of athletics in my youth, playing basketball,
Not really having played basketball before and as I don't
know if basketball was really like four people of our
size and athletic abilities. As we were talking before, I
(02:40):
played lacrosse. That was my game. I played soccer a
lot grown up, but basketball just never really. I really
like NCAA Final four basketball. I love I mean, having
played at the college level and just knowing how hard
these guys are working, these gals are working. That's super fun.
I love that NC DOUBLEA grit. I feel less passionate
(03:04):
about the NBA, although I admire, like incredibly skilled players
of Edie Craft.
Speaker 4 (03:09):
Yeah yeah, big big week for the NC DOUBLEA. But yeah,
both Matt and Joan are are big NBA guys and something.
You know, we like to bust each other about being,
you know, especially Matt being a Wizards fan. Well, let's
just you know, why don't you give a quick rundown
of OOLO just for any listeners that might be new
to the industry.
Speaker 2 (03:30):
Okay, So we talk about our mission at OLO as
hospitality at scale and what that means is, you know,
the way that we show up for enterprise restaurants across
emerging enterprise enterprise Top twenty five restaurant brands to help
them really meet the needs of their guests, and we
do that through an open software platform that has now
(03:53):
sixteen different modules that restaurant brands use. They're comprised of
really three suites, order, pay, and Engage, and we're really
well known in the industry for the order platform, and
that's what we built over the past twenty years. We're
coming up on our twenty year anniversary. Initially to enable
(04:15):
guests to order and pay and get their food faster
at the restaurant for takeout. That we added delivery to that,
first party delivery and third party delivery, and really from
the time of our founding in two thousand and five
up until our IPO, which is actually this day, March
seventeenth of twenty twenty one, so this is the four
year anniversary of the IPO, we were just that order platform.
(04:38):
We have since added two additional suites to what Olo does, Pay,
which has integrated payments into the order platform, enabling things
like Apple Pay and Google Pay, a better payment experience
for the guest and also a better experience for operators.
And I'll get into that a bunch, I'm sure now. Also,
olopay is not just for digital transactions, but also for
(04:59):
all in store transactions as well. And then engage and
Engage is from an acquisition that we did, our very
first acquisition in November of twenty twenty one, and that
was a company that was known as Wisely had been
a partner of ours for five years. And it's really
about taking all of the digital guest data, all the
(05:21):
different interactions that we have with a guest, bringing it
together into a unified guest profile, into a guest data
platform as we call it, or what's typically known as
a customer data platform, and then using all of that
data to do bespoke personalized marketing out to the guest
and to personalize the guest experience. So we think about
those things, Order, Pay and Engage as working really well
(05:44):
together together. We call them the OLO guest Data flywheel,
and really that's because Order and Pay throw off a
ton of data, transaction data tie back to the guest,
and then Engage is how you take that data and
use it to drive even more engagement from guests, more transactions,
more orders, more payments, and so the flywheel continues to
spin and spin. For a sense of scale, we are
(06:08):
now serving over seven hundred and fifty restaurant brands, including Denny's.
Kelly Valaid, who you had as your last guest. It
was fun to listen to her. Hear her voice this morning,
hear your voice this morning as I prepared for this.
But seven hundred and fifty plus brands. They represent eighty
six thousand locations across the US and Canada. On the
(06:30):
guest side of things, we see about ninety five million
guests who order through OLO on an annual basis. And
one fun fact that I'm particularly proud of is if
you aggregate all of the sales that go through OLO
in the past year. In twenty twenty four, our GMV
our gross merchandise volume was twenty nine billion dollars, And
(06:52):
to put that in perspective, if OLO were a restaurant,
that would make us the second largest out there. We
just passed Star. There are at twenty eight billion. To
take the number two slot. The silver medal Number one
is McDonald's. But I say that not just as a
vanity metric that's fun to say, but really as something
that demonstrates just how much volume is going through our platform,
(07:15):
how it's built for reliability at scale, and the other
really exciting thing is, that's just the digital sales that
are going through OLO.
Speaker 3 (07:22):
When you think about.
Speaker 2 (07:23):
Our customer base, those eighty six thousand restaurants digital and
non digital sales. If you take the stat that digital
is about eighteen percent of the industry overall, and you
extrapolate from that what they would be doing in total,
it's about one hundred and sixty one billion dollars of
sales volume, which is something around fifteen percent of overall
restaurant industry sales. So we're proud of that. We're excited
(07:46):
about that scale that we've achieved. At the same time,
as I always say to the team, I am grateful
for all of the things that led to this point,
and I'm hugely unsatisfied there. We have miles to go
before we sleep. There's so much opportunity for us to
have a massive impact on our customers and this industry
as a whole with the position that.
Speaker 3 (08:05):
We're in, with all the data that we have on
our platform. All right, good stuff. Yeah.
Speaker 1 (08:09):
One of the companies we covered, Jack in the Box,
they expanded their relationship with you recently. How much of
your twenty twenty five growth is expected to come from
deepening your current customer relationships versus onboarding new ones.
Speaker 2 (08:22):
Yeah, it's a great call out. Those are really the
two big vectors of growth for us. So I'll break
it down and then sort of compare them relatively. But
Jack in the Box just at sticking with that case
study they actually started with OLO just using our dispatch
module and Dispatch for those who are unfamiliar, it's enabling
(08:45):
brands to take delivery orders on their first party sites
or apps. So even if you don't have your own
delivery fleet, what dispatch does is a guest can order,
they can put in their delivery address, schedule a delivery.
We're then doing the matchmaking between that order and a
delivery service provider courier who can come collect the order
and deliver it to the guest. And it's a great
(09:07):
platform for enabling brands to keep profitability on delivery transactions,
meet the needs of that guest who wants delivery, and
very importantly, I would argue, perhaps more importantly in the
profitability component, keep that direct relationship with the guests. So
if I want delivery, I'm going direct to Jack in
the Box. I'm not going to a third party. Even
(09:28):
knowing that I want Jack in the box where they
don't get any of the data about me. So that's
how we started working with them. They had a homegrown
digital takeout platform, and then Dispatch took that homegrown platform
and augmented it to become also delivery, and then over time
they said, you know, this would make sense for us
to work with Olo to replace our homegrown ordering platform,
(09:52):
and we sold in sort of the core OLO order
module to them. This most recent announcement was there expanding
from that to also use Olo Rails, and that's the
third component of what we call the order suite, which
is ordering, Dispatch and Rails. What Rails enables is third
party marketplace enablement, so syndicating the menu and the prices
(10:16):
out to the third party marketplaces and then when orders
originate from guests on those marketplaces, having that flow through
the OLOAPI and directly.
Speaker 3 (10:24):
Into the kitchen at the restaurant. So that was an.
Speaker 2 (10:27):
Exciting development and not unusual. That's typically how we work
with brands in that top twenty five segment, which Jack
in the Boxes will land with one module of our
sixteen and expand the relationship from there.
Speaker 3 (10:39):
And I think that is.
Speaker 2 (10:40):
Maybe good lead into if you think about our ability
to expand with existing customers. We just announced that our
earnings call a couple weeks ago, we're at about three
point seven modules average. If you take total number of
modules used divided by total number of locations at eighty
six thousand, and we have sixteen, so it gives you
(11:03):
a sense of we're not even at twenty five percent
of the way to having our customers on all of
our modules. And that's a pretty good estimate of just
how much more revenue expansion there is with them. I'll
come back to that a second. And if you think
about locations and the ability to land more brands, new
brands and grow our location count, we're at eighty six thousand.
(11:26):
We think that's against the backdrop of around three hundred
thousand enterprise restaurant locations, and really that's how we define
our market.
Speaker 3 (11:33):
There's a couple of.
Speaker 2 (11:33):
Exceptions here and there of very very small, sub five
unit restaurant brands that work with those that really have
the ambition of scale, but typically it's five to five
plus unit locations and that's about three hundred thousand, So
eighty six thousand against three hundred thousand. That gives you
a sense of it's a little bit more than twenty
five percent, but they're both huge opportunities for us to
(11:55):
grow and scale. Just back to a brand.
Speaker 3 (11:58):
Using more of our modules.
Speaker 2 (11:59):
I look at a brand like honey Grow, and honey
Grow is an awesome brand. Uses US for takeout, uses
US for delivery, uses US for kiosks inside the restaurant,
so very digitally penetrated, and uses US for payments on
all of those ordering channels. If you look at what
we make from a gross profit perspective at honey Grow
(12:20):
locations versus our average engagement with the customer, we make
about six point twenty five times more with honey Grow
than we do with the average customer. And that's just
a good illustration of our ability to grow with existing customers.
And I'd say for twenty five our focus is not
one or the other, it's really both, really in equal parts.
There's a lot of opportunity for us in that top
(12:42):
twenty five segment, especially now with a lot of brands
who have built home Grown. Both think about it the
way the Jack in the Box did and say, do
I really want to continue supporting what is now like
a pretty old and dated platform, or do I want
to migrate over to OLO at a fraction of the
cost benefit from all of their innovation. We spend ninety
(13:02):
million dollars a year in R and D every single
year and benefit from a library of four hundred partners
in their partner network. And I think that approach is
showing to be the better approach. Obviously I'm biased, but
that seems to be when you look at over twelve
brands since our IPO migrating off of homegrown platforms and
(13:25):
onto OLO as a SaaS platform where they could benefit
from all of that innovation of our ecosystem. I think
you're seeing that that doesn't just make economic sense, it
makes innovation sense too.
Speaker 1 (13:36):
Yeah, you mentioned three point seven modules per location. That
was up from three point five the year prior. You
know you mentioned honey Grow and a shout out to
Justin We were emailing.
Speaker 3 (13:46):
Each other yesterday. I love that guy.
Speaker 1 (13:48):
You know, a place like honey a chain like honey Grow,
and some of your most active users of the users
that are using the most modules, about how many are
they using?
Speaker 2 (13:58):
Well, we had this quarter an example with Crisp and Green,
and I believe that they came on with nine modules
at the onset of the relationship, and I think that
might be a record. I don't know that to be true,
but I'm pretty sure that's a record of the initiation
of the relationship and a brand taking you know, the
(14:20):
majority at nine over half of the modules.
Speaker 3 (14:26):
You know, it's interesting.
Speaker 2 (14:27):
We think a lot less about module penetration. We think
more about the different suites, order, pay, and engage. And
one of the big focuses that I called out on
our earnings call a couple weeks back was having more
brands that we call flywheel customers. And Flywheel customers means
they're using OLO for order, for pay, and for engage,
(14:48):
and so they're benefiting from that Flywheel effective more orders,
more payments, that drives more guest data, that enables engaged
to drive more orders and more payments with that guest data.
And we had a bunch of brands that we announced
as Flywheel customers this quarter. We talked about some of
the success stories, but I think this year we're going
to see a pronounced growth in the number of Flywheel brands.
(15:13):
I just think it's meeting the moment that we're experiencing
as an industry and like listening into the conversation with
Kelly was a really good reminder of why it's imperative
that brands think about how they can use guest data
to get much more efficient and effective in their marketing
and drive traffic, but not just any traffic, drive profitable traffic.
Speaker 3 (15:37):
And I think that is.
Speaker 2 (15:38):
Going to be something we talk a bunch about today.
But I mean, that is this thing that I see
as I guess sickness in our industry, this dependence on
any tactic that is driving traffic, but even those and
often those that are eroding the bottom line for franchisees.
Speaker 3 (15:57):
And that is that has a road to ruin.
Speaker 1 (15:59):
Yeah, that's for sure.
Speaker 3 (16:00):
Man.
Speaker 1 (16:01):
Have you ever disclosed what percentage of your customers are
Flywheel customers using all three product suites?
Speaker 2 (16:07):
We haven't, And that's kind of a new concept. I
mean Flywheel came out, we started using that terminology think
about a quarter ago, and we talked about this quarter.
Brands like California Fish Grill, which is an awesome example,
like Honey Grow, they also use Kiosks with OLO and
so they have a huge amount of data from takeout,
(16:28):
from delivery, but also the in store transactions going across
the Kiosk. All of those transactions are tied back to
a guest identity and they just started to use Engage
and the Engage platform has been transformative for them. And
we have a great Cayse study up on our site.
Speaker 3 (16:45):
I'm excited.
Speaker 2 (16:46):
This week we have Mark Hardesan, who's the CMO a
California Fish Grill, speaking at or Beyond for customer conference.
But what they saw was that in a six month
period they were able to grow their database of guests
by forty one percent. They were able to grow their
percentage of guests that were contactable, meaning not only are
(17:07):
they known, but they have the permission from that guest
to send them a message by twenty one percent. And
then they used Engage to send out marketing. And marketing
for us is email, text, in at message. You pick
the right medium for the guest based on what we
know is effected with them with the right message personalized
for them at the right time. And they drove seven
(17:27):
million dollars of sales that they attribute to those marketing campaigns.
No discounts, no deals. It wasn't some sort of like
here's a free item, here's a bogo, none of that.
It was just about communicating with guests in a personalized way,
utilizing the guest data that we gathered through Engage, telling
that story and showing brands the light of like, there's
(17:49):
a better way to do this. Now you can drive
profitable traffic, not just traffic.
Speaker 3 (17:53):
At any expense.
Speaker 2 (17:54):
Is really I think going to be a big, big
focus of the week this week at Beyond four. Giving
the platform to the stage two brands like California Fishgrill
and leaders like Mark who can tell that story and
inspire other brands to try something new because the old
playbook is not working.
Speaker 3 (18:12):
Right now, no doubt.
Speaker 1 (18:14):
Alllo announced a new partnership with Freedom Pay last month.
How is this going to help you achieve your mission
of digitizing all restaurant transactions?
Speaker 2 (18:23):
Yeah, I'm really excited about this partnership. And let me
kind of frame it with some context. So about a
year ago, at last year's Beyond four events, we announced olopay,
leaving just the digital realm and be able to do
card present transactions as well, and we announced that with
POS partnerships, in other words, we would directly integrate to
(18:43):
POS and be a payment processor through Adyen with those
point of sale partners So we announced that with three
point of sale partners, with Q, with NCR, and with Trey,
that probably covered about thirty percent of our install base
of customers, and people were really excited about that because
the value proposition was not only will olpay make for
(19:05):
a better payment experience in the digital realm with things
like Apple Pay and Google Pay and card on file,
et cetera, it will also do all those things in
the non digital realm, and you will, as a brand,
not just make your guests happier by doing that, but
you will be able to tie all of the transactions
that are happening through olpay back to a guest identity
(19:26):
in the guest data platform. So this idea of payments
linked to guest data is critical to the value proposition
of olopay. So if you heard about this and you
were on one of those POS platforms, you were excited.
And if you heard about it and you weren't on
one of those POS platforms, the inevitable next question was, Okay,
but when are you going to get to my pos?
You just said three, but you work with thirty six
(19:49):
and what happened over the time from last year until
now is one of our longest standing payments partner in
Stripe Fords your relationship with Freedom Pay and Freedom Pay
is already in use in a lot of our restaurant
customers as a payment terminal sitting inside the restaurant that
the guest is interfacing with.
Speaker 3 (20:11):
Stripe signed to deal with them.
Speaker 2 (20:12):
Immediately after that happened, we jumped in and said, hey,
could we be the first big project that you work
on in this Olo pay realm of Stripe and Freedom
Pay enabling OLO to do Freedom pay broadly so we
don't have to go POS by POS. We can do
this kind of across the customer base to their credit
(20:33):
Stripe Freedom Pay. They jumped on this. They've been amazing
partners to one another, to us, and we were able
to announce this partnership a couple weeks back. I think
it was actually February fourth, if I'm remembering correctly. But
this unlocks that same value proposition for the vast majority
of our customers. So because Freedom Pay has already done
(20:55):
thousands of POS and payment gateway integrations, so now you
can instead of having the OLO going direct to your
POS method of OLO being the payments provider, you can
have Freedom Paid terminals there regardless of the pos that
you're using, and importantly, you can still get all that
guest data. You can get the transaction tied to the guests,
(21:19):
and importantly you can also get item level detail, what
did the guest order on this order. So you're right
to mention that our goal is we want to get
to one hundred percent digital, and traditionally that's meant every
transaction going through a digital channel, whether that's a Kiosk
or a digital order.
Speaker 3 (21:36):
In a way, that's kind of a dated.
Speaker 2 (21:39):
Notion because if you have the ability to pull a
digital level of data from every transaction, those that are
going through a digital channel and those that are the
vast majority eighty two percent that are going through a
non digital channel, you've effectively jump cut to that one
hundred percent digital future in one fil suite. That's why
(22:00):
we're so excited and why our customers are so excited
about ollapay card present, and why freedom Pay was. The
big unlock of that is it enables you as a
brand to see every guest in your guest data platform
and from a guest perspective, see every transaction they've placed,
digital and non digital, all collated back to the profile
(22:22):
that you have about that guest with the level of
detail of what items did Mike order, what ingredients did
he modify or ad or remove or substitute. That's a
really powerful level of data that if you think about
a world in which we have access to all of
this guest data and now we can unleash AI and
machine learning to do personalization to get to segment of
(22:44):
one is kind of the north star, like, how do
I speak to you in a way that is perfectly
tuned to appeal to you, not the same message out
to everybody, but one to one marketing. In reality, that's
what this enables, really for the first time in our industry,
and it's it's exactly this thing that we experience when
we use Spotify or we use Netflix and we're like, oh,
(23:04):
that's a banger of a song on my Discover weekly
this week.
Speaker 3 (23:08):
How do they know I would like this song so much?
Speaker 2 (23:09):
Well, it's because of the massive data set of other users,
other consumers that look just like you, and using what's
called collaborative filtering to find that lookalike audience to see
what they're listening to that you've never listened to, and say,
Mike's going to like this one, and the same thing
can now be done with restaurants. You know, what does
a restaurant They're going to show you your favorite order
(23:32):
that you've ordered every time, because most of the time
you're going to reorder that. But what's the next best
thing to show you? That has been a crapshoot. People
just say do you want fries? Do you want to drink?
It's just been generic. Now it can be intensely personalized,
hyper personalized just to you. And I think that's a
really powerful new tool for brands to expand the number
of cravings that they're guests, their best guests, every guest
(23:55):
has of their brand. That inherently is going to up
the frequency. If I'm craving things, not one thing from
your menu, I'm going to come more often for sure.
Speaker 1 (24:03):
Yeah, it's exciting because obviously one to one marketing has
got so much potential, right and we've been slowly moving
towards towards towards it. But yeah, it's exciting. When is
it going to be available for your customers?
Speaker 2 (24:17):
So we announced in our call it's midyear this year.
We are already out in the market our go to
market team talking to our customers about this. The concept
of olopay in cart present is not a new one
because we started talking about it a year ago.
Speaker 3 (24:32):
But the notion that.
Speaker 2 (24:33):
It's now available broadly, that's the new thing. And for
those call it seventy percent of our customers who weren't
on one of those direct pos relationships that we already announced,
they're the ones who are now going to and saying, hey,
you can now play in this realm too, And you
don't have to wait for us to go one by
one through a list of thirty six different point of
sale providers until we get to yours. You can do
(24:55):
it through Freedom Pay.
Speaker 1 (24:56):
All right, good stuff. And on the topic guest data
and personalization, who do you think is doing it right?
Out of maybe some of the large brands that are
doing it in house, Are there anyone that you know
you kind of look towards and say, I think they're
moving in the right direction and this is something that
we should try to emulate.
Speaker 2 (25:17):
Yeah, I mean, look to the speaker list at beyond
four and you'll see examples of the people that we
want to give the mic to because they're going to
educate the rest of the audience around how to do it. Right,
and I think first amongst those is Matt Eisenacher at
First Watch. It is just a clinic in how to
(25:37):
use guest data and personalization to drive the right messaging
to the right guests at the right time, over the
right medium. They do it best. They are shotting a
light in what's possible. I'm thrilled with the success that
they're having, the investment that they're making and marketing not
in like a yeah, we're going to run some Super
(25:57):
Bowl ads kind of lazy way, in a this thing
works and it's precise and it's efficient and it's effective.
We're going to dial it up and double down on this.
And he's just a remarkable leader. And then I mentioned
you know, Mark Hardison and a bunch of others, Justine
at Bartaco, smaller brand, but like they've really bought into
(26:19):
this idea of we all see personalization being an effective
thing in every other industry.
Speaker 3 (26:24):
Why not restaurants.
Speaker 2 (26:25):
We have all this data, why not collate it guests
by guest, identify the best guests, and think about how
we turn every guest into one of our best guests,
and go find more that look just like our best guests.
That's a superpower, and it's going to differentiate the brands
that thrive during this time and those that use the
old playbook and don't make it.
Speaker 1 (26:46):
And ol pay is growing very fast. Obviously that's more
of a volume business, so i'd imagine it'd be a
nice boost to your operating margin dollars, but not necessarily
the margins. Have you spoken about the impact to your
margins and twenty five.
Speaker 2 (27:00):
Yeah, I mean so just to cover off on that.
Ola pay has grown really quickly and the opportunity ahead
is massive, So we grew In twenty twenty two, we
did two hundred and fifty million dollars of payments volume
through olipay. In twenty three we did a billion, and
then last year in twenty four we did two point
eight billion, So from two fifty to two point eight billion,
(27:23):
at more than ten x, more than eleven x in
that two year period. But again that's against a backdrop
of twenty nine billion dollars in gross merchandise volume two
point eight over over twenty nine, so we're not even
at ten percent penetrated for olopay card not present meaning
transactions that are digital transactions, and we've just unlocked that
(27:44):
full one hundred and sixty one billion in gross merchandise
volume that our eighty six thousand restaurants do as addressable sellable,
addressable market SAM for olpay Card Now Present and Card
Present went from twenty nine bills to an additional one
hundred and thirty two one hundred and sixty one billion.
(28:05):
So from that perspective, two point eight billion. We're thrilled
about the progress, but we're not even at two percent
of the total opportunity. And like I said, there's a
reason why brands want to do this. It's not oh,
it's a great revenue opportunity for OLO. It is this
is uniquely helping you to harvest guest data with the
guest permission into that guest data platform and compete on
(28:26):
a whole different level with your competition. From a margin perspective,
you're right, payments is a volume game. The more volume
you do, the better you're economics, the lower your costs,
and so the better your economics, the higher your margin.
It's also true that in the card present realm.
Speaker 3 (28:48):
You have a mix.
Speaker 2 (28:49):
Sometimes people are using debit cards and you have a
better lower cost than those debit cards for processing. You
have better spread on those but look, I think honey
Grow is a perfect example for that as well. I
mean they are using OLO pay for their digital transactions
inclusive of all of their in restaurant transactions that are
done through Kiosk in the way that their service model works,
(29:11):
and that's in large part why from a revenue perspective,
from a gross profit perspective, there's six and a half
times the average restaurant the gross profit per unit of
a Honey Grow versus the typical gross profit that we
receive per unit. So it just illustrates that there's a
lot of business opportunity for OLO in payments. It's a
(29:31):
lower margin revenue stream, of course, but there's meaningful margin,
meaningful gross profit dollars within payments, and there's huge runway
for us to grow into while being on the restaurant
side and helping them do something that is going to
make their business better.
Speaker 3 (29:46):
All right, good stuff, and we covered a lot.
Speaker 1 (29:48):
But are there any other twenty twenty five growth opportunities
or priorities that they're focused on.
Speaker 3 (29:53):
Yeah?
Speaker 2 (29:53):
I think the only other big focus area for us
is in catering, and I talked to about this a
lot on the earnings call A couple weeks back. But
catering is just this like sleeping giant. It is currently
a sixty billion dollar end market. I think it's growing.
In grand View Research, if I'm remembering correctly, is the
(30:14):
source of this data. I think it's growing to one
hundred and thirty two billion over the coming years five
six years, So it's already really big. It's doubling. It's
found money for so many brands. I mean, all they
need is a tool to enable them to serve catering customers,
and that is what that's the gap that we filled
with our Catering Plus module. So it is a purpose
(30:37):
built for catering module that enables brands to take large
format orders and then all of our other modules connect
in to it. So if you want to deliver those orders,
dispatch fits in there. If you want to get delivery sorry,
if you want to get catering demand from a marketplace,
we have a partnership with easy cater that plugs in there.
If you want to do payments, O to pay, if
(30:59):
you want to do marketing out to those catering customers, engage.
I mean, it's really cool to see the power of
OLO as a modular platform. A new beachhead and catering
and then how all those modules can attach to it.
And I'd say one thing that I love about catering.
We talked about expanding the relationship with existing customers and
(31:22):
landing new brands. Catering has been great on both fronts.
It's great to expand existing relationships. It's an easy upsell,
it's a layup to stick with the basketball theme. For
Top twenty five brands, especially who have built a homegrown
tech stact, many of them have not built a catering solution,
and if we can cozy up to them with a
catering solution, show what we can do in the catering realm,
(31:45):
we think that's a great way to initiate relationships with
those brands. Hugely active pipeline of conversations in the Top
twenty five and really everywhere with catering. And then when
they see, wow, look at what Olo is able to
do as a SaaS platform that's reliable, that's at scale,
then they can really start to actively have the debate
internally of does it really make sense for us to
(32:07):
be spending hundreds of millions of dollars annually to support
a homegrown platform when we could do it for half
the cost or less if we moved over to Olo
for the core ordering platform and just repurpose our finances
to build on top. I think that is the most
exciting thing about catering to me, and just an industry
that is looking for, you know, found money, they'll take it,
(32:30):
and catering is a big pot of found money for
so many brands who have whether it's offices with return
to office, or school groups or churches or sports teams,
just a massive audience of folks that want their food
in that format and we can make it easy, like
a giant easy button for enabling a catering program.
Speaker 1 (32:51):
Yeah, we're seeing more families catering holidays. Crackerbile just reported
a really nice quarter and they credited they're catering business
for Thanksgiving and Christmas.
Speaker 2 (33:04):
I have seen some things in this industry that amaze me.
At at top of that list is the cracker barrel
Thanksgiving demand and execution. It is unbelievable how many people
are using cracker barrel in that way and how they
nail it year after year. And it's been fun for
us to be that sort of wind beneath their wings
(33:24):
from a digital perspective to take this massive demand and
make it easy for them to operationalize with things like,
you know, what is their capacity management strategy? How do
we throttle orders appropriately?
Speaker 3 (33:36):
There's just a lot of you know, x's.
Speaker 2 (33:39):
And o's strategy perspective to make that work the way
that it does, and they nail it every year.
Speaker 3 (33:45):
It's crazy.
Speaker 1 (33:47):
Yeah, it's exciting what they're what they're doing over there.
Are you growing the sales team?
Speaker 2 (33:53):
We are, Yeah, And one thing that's been fun for
me personally is that I have gotten much more. I've
been much more on the road with the sales team
over the past quarter. And that's everything from pitches to
new customers, you know, or talking to existing customers about
(34:14):
new things.
Speaker 3 (34:14):
That we're doing.
Speaker 2 (34:15):
And I think a lot of the time it's like,
you know us as the ordering platform, and we're so
much more than that. Now, let us reintroduce all the
things that we're doing and why what we've done with
you and ordering oftentimes for many years is like the
seed crystal for this much larger guest engagement opportunity we're
(34:36):
now thinking about as ultimately guest data leading to guest
intelligence and then leading to guest experience management as a practice.
That's really what OLO is today. So it's been fun
for me. It's sort of like a new founding moment
to be out with customers, telling that much larger story
and explaining to them, why again say this to my
(34:57):
team all the time. We've come a long way. It's
been twenty years, but we're not at the top of
Everest right now. Like right now we're at base camp.
Like it's been hard, we're catching our breath, but like
I see the mountaintop and it's beautiful up there, and
that's where we're going to go over the next twenty years.
And it's all around this guest data, guest intelligence, guest
experience management vision. So telling that story to our customers
(35:21):
and having the credibility of the relationship that we've built
over that time, but showing them what's next is super
energizing for me.
Speaker 3 (35:31):
So I'm having fun.
Speaker 1 (35:33):
That's awesome, man, I think that's a perfect place to
wrap it up. Thanks again for doing this, man. I
love I love following OLO and following the story, and
I'm looking forward, you know, to continuing tracking your progress.
Speaker 2 (35:48):
Thanks Mike, Thank you for chopping it up with me.
Speaker 1 (35:50):
Yeah, sure thing man. I'm sure I'll see you out
and about on the restaurant conference circuit this year. I
want to thank the audience for tuning in. Go to
olo dot com to find out more about the company.
If you liked our discussion, please share it with your
friends and colleagues. Check back next week for an interview
with Liz Williams, CEO of l Poyo Loco
Welcome to Chopping It Up. I'm your host, Mike Hanlon,
the senior restaurant and food service analysts at Bloomberg Intelligence.
Our research and that of bi's five hundred analysts around
the globe can be found exclusively on the Bloomberg terminal.
A quick PSA if you like the pod, we'd love
it if you could leave us a review on Apple
or Spotify. Today we're joined by Noah Glass, CEO and
(00:34):
founder of OLO.
Speaker 2 (00:35):
Welcome back to the pod, Noah, Mike, thank you for
having me, and thank you for having me back.
Speaker 3 (00:40):
This is super exciting.
Speaker 1 (00:42):
Yeah, of course. Man, listen, I appreciate you coming on.
You were I looked it up. You were episode ten
and it kind of brought us to another level. You
were the best performing episode for for quite a while,
so I appreciate you having the faith in me coming
on so early, before you know, we really had a name.
(01:04):
So I appreciate you, and you're welcome back anytime. A man, Well,
thank you.
Speaker 2 (01:09):
I have heard a rumor that now the best performing
podcast episode of all time on Chopping It Up was
my good friend Juwan George had five eight partners. I
think he started the rumor knowing what I know about him,
but I have a bit of a competitive streak, as
does he, and so I'm glad that ten episode ten
was like number one of the charts for a while.
(01:30):
I'm bummed it's no longer number one, so I hope
whatever episode this is can reconquer the number one spot.
Speaker 1 (01:38):
All right, cool man? Yeah, this is sixty six. And
Matt Tucker, he kind of he benefited from a little
luck on the terminal, so he's not like top ten
downloads online, but on the Bloomberg terminal, they they it
blew up. So Matt Tucker had a great, great episode two.
So you know, all these guys that previously worked with
(01:59):
you tend to do pretty well on the pod.
Speaker 3 (02:02):
Yeah.
Speaker 2 (02:02):
We're a lively bunch, and one of our core values
is that we laugh hard together, and I think that
comes out in our podcast appearances.
Speaker 1 (02:09):
So are you an NBA guy too, like the two
of them?
Speaker 2 (02:13):
Not really, mainly because I'm really bad at basketball.
Speaker 3 (02:16):
I don't know.
Speaker 2 (02:17):
My son, who's now eight, was just considering a basketball
camp this summer, and I was remembering back, you know,
the scarred experience of athletics in my youth, playing basketball,
Not really having played basketball before and as I don't
know if basketball was really like four people of our
size and athletic abilities. As we were talking before, I
(02:40):
played lacrosse. That was my game. I played soccer a
lot grown up, but basketball just never really. I really
like NCAA Final four basketball. I love I mean, having
played at the college level and just knowing how hard
these guys are working, these gals are working. That's super fun.
I love that NC DOUBLEA grit. I feel less passionate
(03:04):
about the NBA, although I admire, like incredibly skilled players
of Edie Craft.
Speaker 4 (03:09):
Yeah yeah, big big week for the NC DOUBLEA. But yeah,
both Matt and Joan are are big NBA guys and something.
You know, we like to bust each other about being,
you know, especially Matt being a Wizards fan. Well, let's
just you know, why don't you give a quick rundown
of OOLO just for any listeners that might be new
to the industry.
Speaker 2 (03:30):
Okay, So we talk about our mission at OLO as
hospitality at scale and what that means is, you know,
the way that we show up for enterprise restaurants across
emerging enterprise enterprise Top twenty five restaurant brands to help
them really meet the needs of their guests, and we
do that through an open software platform that has now
(03:53):
sixteen different modules that restaurant brands use. They're comprised of
really three suites, order, pay, and Engage, and we're really
well known in the industry for the order platform, and
that's what we built over the past twenty years. We're
coming up on our twenty year anniversary. Initially to enable
(04:15):
guests to order and pay and get their food faster
at the restaurant for takeout. That we added delivery to that,
first party delivery and third party delivery, and really from
the time of our founding in two thousand and five
up until our IPO, which is actually this day, March
seventeenth of twenty twenty one, so this is the four
year anniversary of the IPO, we were just that order platform.
(04:38):
We have since added two additional suites to what Olo does, Pay,
which has integrated payments into the order platform, enabling things
like Apple Pay and Google Pay, a better payment experience
for the guest and also a better experience for operators.
And I'll get into that a bunch, I'm sure now. Also,
olopay is not just for digital transactions, but also for
(04:59):
all in store transactions as well. And then engage and
Engage is from an acquisition that we did, our very
first acquisition in November of twenty twenty one, and that
was a company that was known as Wisely had been
a partner of ours for five years. And it's really
about taking all of the digital guest data, all the
(05:21):
different interactions that we have with a guest, bringing it
together into a unified guest profile, into a guest data
platform as we call it, or what's typically known as
a customer data platform, and then using all of that
data to do bespoke personalized marketing out to the guest
and to personalize the guest experience. So we think about
those things, Order, Pay and Engage as working really well
(05:44):
together together. We call them the OLO guest Data flywheel,
and really that's because Order and Pay throw off a
ton of data, transaction data tie back to the guest,
and then Engage is how you take that data and
use it to drive even more engagement from guests, more transactions,
more orders, more payments, and so the flywheel continues to
spin and spin. For a sense of scale, we are
(06:08):
now serving over seven hundred and fifty restaurant brands, including Denny's.
Kelly Valaid, who you had as your last guest. It
was fun to listen to her. Hear her voice this morning,
hear your voice this morning as I prepared for this.
But seven hundred and fifty plus brands. They represent eighty
six thousand locations across the US and Canada. On the
(06:30):
guest side of things, we see about ninety five million
guests who order through OLO on an annual basis. And
one fun fact that I'm particularly proud of is if
you aggregate all of the sales that go through OLO
in the past year. In twenty twenty four, our GMV
our gross merchandise volume was twenty nine billion dollars, And
(06:52):
to put that in perspective, if OLO were a restaurant,
that would make us the second largest out there. We
just passed Star. There are at twenty eight billion. To
take the number two slot. The silver medal Number one
is McDonald's. But I say that not just as a
vanity metric that's fun to say, but really as something
that demonstrates just how much volume is going through our platform,
(07:15):
how it's built for reliability at scale, and the other
really exciting thing is, that's just the digital sales that
are going through OLO.
Speaker 3 (07:22):
When you think about.
Speaker 2 (07:23):
Our customer base, those eighty six thousand restaurants digital and
non digital sales. If you take the stat that digital
is about eighteen percent of the industry overall, and you
extrapolate from that what they would be doing in total,
it's about one hundred and sixty one billion dollars of
sales volume, which is something around fifteen percent of overall
restaurant industry sales. So we're proud of that. We're excited
(07:46):
about that scale that we've achieved. At the same time,
as I always say to the team, I am grateful
for all of the things that led to this point,
and I'm hugely unsatisfied there. We have miles to go
before we sleep. There's so much opportunity for us to
have a massive impact on our customers and this industry
as a whole with the position that.
Speaker 3 (08:05):
We're in, with all the data that we have on
our platform. All right, good stuff. Yeah.
Speaker 1 (08:09):
One of the companies we covered, Jack in the Box,
they expanded their relationship with you recently. How much of
your twenty twenty five growth is expected to come from
deepening your current customer relationships versus onboarding new ones.
Speaker 2 (08:22):
Yeah, it's a great call out. Those are really the
two big vectors of growth for us. So I'll break
it down and then sort of compare them relatively. But
Jack in the Box just at sticking with that case
study they actually started with OLO just using our dispatch
module and Dispatch for those who are unfamiliar, it's enabling
(08:45):
brands to take delivery orders on their first party sites
or apps. So even if you don't have your own
delivery fleet, what dispatch does is a guest can order,
they can put in their delivery address, schedule a delivery.
We're then doing the matchmaking between that order and a
delivery service provider courier who can come collect the order
and deliver it to the guest. And it's a great
(09:07):
platform for enabling brands to keep profitability on delivery transactions,
meet the needs of that guest who wants delivery, and
very importantly, I would argue, perhaps more importantly in the
profitability component, keep that direct relationship with the guests. So
if I want delivery, I'm going direct to Jack in
the Box. I'm not going to a third party. Even
(09:28):
knowing that I want Jack in the box where they
don't get any of the data about me. So that's
how we started working with them. They had a homegrown
digital takeout platform, and then Dispatch took that homegrown platform
and augmented it to become also delivery, and then over time
they said, you know, this would make sense for us
to work with Olo to replace our homegrown ordering platform,
(09:52):
and we sold in sort of the core OLO order
module to them. This most recent announcement was there expanding
from that to also use Olo Rails, and that's the
third component of what we call the order suite, which
is ordering, Dispatch and Rails. What Rails enables is third
party marketplace enablement, so syndicating the menu and the prices
(10:16):
out to the third party marketplaces and then when orders
originate from guests on those marketplaces, having that flow through
the OLOAPI and directly.
Speaker 3 (10:24):
Into the kitchen at the restaurant. So that was an.
Speaker 2 (10:27):
Exciting development and not unusual. That's typically how we work
with brands in that top twenty five segment, which Jack
in the Boxes will land with one module of our
sixteen and expand the relationship from there.
Speaker 3 (10:39):
And I think that is.
Speaker 2 (10:40):
Maybe good lead into if you think about our ability
to expand with existing customers. We just announced that our
earnings call a couple weeks ago, we're at about three
point seven modules average. If you take total number of
modules used divided by total number of locations at eighty
six thousand, and we have sixteen, so it gives you
(11:03):
a sense of we're not even at twenty five percent
of the way to having our customers on all of
our modules. And that's a pretty good estimate of just
how much more revenue expansion there is with them. I'll
come back to that a second. And if you think
about locations and the ability to land more brands, new
brands and grow our location count, we're at eighty six thousand.
(11:26):
We think that's against the backdrop of around three hundred
thousand enterprise restaurant locations, and really that's how we define
our market.
Speaker 3 (11:33):
There's a couple of.
Speaker 2 (11:33):
Exceptions here and there of very very small, sub five
unit restaurant brands that work with those that really have
the ambition of scale, but typically it's five to five
plus unit locations and that's about three hundred thousand, So
eighty six thousand against three hundred thousand. That gives you
a sense of it's a little bit more than twenty
five percent, but they're both huge opportunities for us to
(11:55):
grow and scale. Just back to a brand.
Speaker 3 (11:58):
Using more of our modules.
Speaker 2 (11:59):
I look at a brand like honey Grow, and honey
Grow is an awesome brand. Uses US for takeout, uses
US for delivery, uses US for kiosks inside the restaurant,
so very digitally penetrated, and uses US for payments on
all of those ordering channels. If you look at what
we make from a gross profit perspective at honey Grow
(12:20):
locations versus our average engagement with the customer, we make
about six point twenty five times more with honey Grow
than we do with the average customer. And that's just
a good illustration of our ability to grow with existing customers.
And I'd say for twenty five our focus is not
one or the other, it's really both, really in equal parts.
There's a lot of opportunity for us in that top
(12:42):
twenty five segment, especially now with a lot of brands
who have built home Grown. Both think about it the
way the Jack in the Box did and say, do
I really want to continue supporting what is now like
a pretty old and dated platform, or do I want
to migrate over to OLO at a fraction of the
cost benefit from all of their innovation. We spend ninety
(13:02):
million dollars a year in R and D every single
year and benefit from a library of four hundred partners
in their partner network. And I think that approach is
showing to be the better approach. Obviously I'm biased, but
that seems to be when you look at over twelve
brands since our IPO migrating off of homegrown platforms and
(13:25):
onto OLO as a SaaS platform where they could benefit
from all of that innovation of our ecosystem. I think
you're seeing that that doesn't just make economic sense, it
makes innovation sense too.
Speaker 1 (13:36):
Yeah, you mentioned three point seven modules per location. That
was up from three point five the year prior. You
know you mentioned honey Grow and a shout out to
Justin We were emailing.
Speaker 3 (13:46):
Each other yesterday. I love that guy.
Speaker 1 (13:48):
You know, a place like honey a chain like honey Grow,
and some of your most active users of the users
that are using the most modules, about how many are
they using?
Speaker 2 (13:58):
Well, we had this quarter an example with Crisp and Green,
and I believe that they came on with nine modules
at the onset of the relationship, and I think that
might be a record. I don't know that to be true,
but I'm pretty sure that's a record of the initiation
of the relationship and a brand taking you know, the
(14:20):
majority at nine over half of the modules.
Speaker 3 (14:26):
You know, it's interesting.
Speaker 2 (14:27):
We think a lot less about module penetration. We think
more about the different suites, order, pay, and engage. And
one of the big focuses that I called out on
our earnings call a couple weeks back was having more
brands that we call flywheel customers. And Flywheel customers means
they're using OLO for order, for pay, and for engage,
(14:48):
and so they're benefiting from that Flywheel effective more orders,
more payments, that drives more guest data, that enables engaged
to drive more orders and more payments with that guest data.
And we had a bunch of brands that we announced
as Flywheel customers this quarter. We talked about some of
the success stories, but I think this year we're going
to see a pronounced growth in the number of Flywheel brands.
(15:13):
I just think it's meeting the moment that we're experiencing
as an industry and like listening into the conversation with
Kelly was a really good reminder of why it's imperative
that brands think about how they can use guest data
to get much more efficient and effective in their marketing
and drive traffic, but not just any traffic, drive profitable traffic.
Speaker 3 (15:37):
And I think that is.
Speaker 2 (15:38):
Going to be something we talk a bunch about today.
But I mean, that is this thing that I see
as I guess sickness in our industry, this dependence on
any tactic that is driving traffic, but even those and
often those that are eroding the bottom line for franchisees.
Speaker 3 (15:57):
And that is that has a road to ruin.
Speaker 1 (15:59):
Yeah, that's for sure.
Speaker 3 (16:00):
Man.
Speaker 1 (16:01):
Have you ever disclosed what percentage of your customers are
Flywheel customers using all three product suites?
Speaker 2 (16:07):
We haven't, And that's kind of a new concept. I
mean Flywheel came out, we started using that terminology think
about a quarter ago, and we talked about this quarter.
Brands like California Fish Grill, which is an awesome example,
like Honey Grow, they also use Kiosks with OLO and
so they have a huge amount of data from takeout,
(16:28):
from delivery, but also the in store transactions going across
the Kiosk. All of those transactions are tied back to
a guest identity and they just started to use Engage
and the Engage platform has been transformative for them. And
we have a great Cayse study up on our site.
Speaker 3 (16:45):
I'm excited.
Speaker 2 (16:46):
This week we have Mark Hardesan, who's the CMO a
California Fish Grill, speaking at or Beyond for customer conference.
But what they saw was that in a six month
period they were able to grow their database of guests
by forty one percent. They were able to grow their
percentage of guests that were contactable, meaning not only are
(17:07):
they known, but they have the permission from that guest
to send them a message by twenty one percent. And
then they used Engage to send out marketing. And marketing
for us is email, text, in at message. You pick
the right medium for the guest based on what we
know is effected with them with the right message personalized
for them at the right time. And they drove seven
(17:27):
million dollars of sales that they attribute to those marketing campaigns.
No discounts, no deals. It wasn't some sort of like
here's a free item, here's a bogo, none of that.
It was just about communicating with guests in a personalized way,
utilizing the guest data that we gathered through Engage, telling
that story and showing brands the light of like, there's
(17:49):
a better way to do this. Now you can drive
profitable traffic, not just traffic.
Speaker 3 (17:53):
At any expense.
Speaker 2 (17:54):
Is really I think going to be a big, big
focus of the week this week at Beyond four. Giving
the platform to the stage two brands like California Fishgrill
and leaders like Mark who can tell that story and
inspire other brands to try something new because the old
playbook is not working.
Speaker 3 (18:12):
Right now, no doubt.
Speaker 1 (18:14):
Alllo announced a new partnership with Freedom Pay last month.
How is this going to help you achieve your mission
of digitizing all restaurant transactions?
Speaker 2 (18:23):
Yeah, I'm really excited about this partnership. And let me
kind of frame it with some context. So about a
year ago, at last year's Beyond four events, we announced olopay,
leaving just the digital realm and be able to do
card present transactions as well, and we announced that with
POS partnerships, in other words, we would directly integrate to
(18:43):
POS and be a payment processor through Adyen with those
point of sale partners So we announced that with three
point of sale partners, with Q, with NCR, and with Trey,
that probably covered about thirty percent of our install base
of customers, and people were really excited about that because
the value proposition was not only will olpay make for
(19:05):
a better payment experience in the digital realm with things
like Apple Pay and Google Pay and card on file,
et cetera, it will also do all those things in
the non digital realm, and you will, as a brand,
not just make your guests happier by doing that, but
you will be able to tie all of the transactions
that are happening through olpay back to a guest identity
(19:26):
in the guest data platform. So this idea of payments
linked to guest data is critical to the value proposition
of olopay. So if you heard about this and you
were on one of those POS platforms, you were excited.
And if you heard about it and you weren't on
one of those POS platforms, the inevitable next question was, Okay,
but when are you going to get to my pos?
You just said three, but you work with thirty six
(19:49):
and what happened over the time from last year until
now is one of our longest standing payments partner in
Stripe Fords your relationship with Freedom Pay and Freedom Pay
is already in use in a lot of our restaurant
customers as a payment terminal sitting inside the restaurant that
the guest is interfacing with.
Speaker 3 (20:11):
Stripe signed to deal with them.
Speaker 2 (20:12):
Immediately after that happened, we jumped in and said, hey,
could we be the first big project that you work
on in this Olo pay realm of Stripe and Freedom
Pay enabling OLO to do Freedom pay broadly so we
don't have to go POS by POS. We can do
this kind of across the customer base to their credit
(20:33):
Stripe Freedom Pay. They jumped on this. They've been amazing
partners to one another, to us, and we were able
to announce this partnership a couple weeks back. I think
it was actually February fourth, if I'm remembering correctly. But
this unlocks that same value proposition for the vast majority
of our customers. So because Freedom Pay has already done
(20:55):
thousands of POS and payment gateway integrations, so now you
can instead of having the OLO going direct to your
POS method of OLO being the payments provider, you can
have Freedom Paid terminals there regardless of the pos that
you're using, and importantly, you can still get all that
guest data. You can get the transaction tied to the guests,
(21:19):
and importantly you can also get item level detail, what
did the guest order on this order. So you're right
to mention that our goal is we want to get
to one hundred percent digital, and traditionally that's meant every
transaction going through a digital channel, whether that's a Kiosk
or a digital order.
Speaker 3 (21:36):
In a way, that's kind of a dated.
Speaker 2 (21:39):
Notion because if you have the ability to pull a
digital level of data from every transaction, those that are
going through a digital channel and those that are the
vast majority eighty two percent that are going through a
non digital channel, you've effectively jump cut to that one
hundred percent digital future in one fil suite. That's why
(22:00):
we're so excited and why our customers are so excited
about ollapay card present, and why freedom Pay was. The
big unlock of that is it enables you as a
brand to see every guest in your guest data platform
and from a guest perspective, see every transaction they've placed,
digital and non digital, all collated back to the profile
(22:22):
that you have about that guest with the level of
detail of what items did Mike order, what ingredients did
he modify or ad or remove or substitute. That's a
really powerful level of data that if you think about
a world in which we have access to all of
this guest data and now we can unleash AI and
machine learning to do personalization to get to segment of
(22:44):
one is kind of the north star, like, how do
I speak to you in a way that is perfectly
tuned to appeal to you, not the same message out
to everybody, but one to one marketing. In reality, that's
what this enables, really for the first time in our industry,
and it's it's exactly this thing that we experience when
we use Spotify or we use Netflix and we're like, oh,
(23:04):
that's a banger of a song on my Discover weekly
this week.
Speaker 3 (23:08):
How do they know I would like this song so much?
Speaker 2 (23:09):
Well, it's because of the massive data set of other users,
other consumers that look just like you, and using what's
called collaborative filtering to find that lookalike audience to see
what they're listening to that you've never listened to, and say,
Mike's going to like this one, and the same thing
can now be done with restaurants. You know, what does
a restaurant They're going to show you your favorite order
(23:32):
that you've ordered every time, because most of the time
you're going to reorder that. But what's the next best
thing to show you? That has been a crapshoot. People
just say do you want fries? Do you want to drink?
It's just been generic. Now it can be intensely personalized,
hyper personalized just to you. And I think that's a
really powerful new tool for brands to expand the number
of cravings that they're guests, their best guests, every guest
(23:55):
has of their brand. That inherently is going to up
the frequency. If I'm craving things, not one thing from
your menu, I'm going to come more often for sure.
Speaker 1 (24:03):
Yeah, it's exciting because obviously one to one marketing has
got so much potential, right and we've been slowly moving
towards towards towards it. But yeah, it's exciting. When is
it going to be available for your customers?
Speaker 2 (24:17):
So we announced in our call it's midyear this year.
We are already out in the market our go to
market team talking to our customers about this. The concept
of olopay in cart present is not a new one
because we started talking about it a year ago.
Speaker 3 (24:32):
But the notion that.
Speaker 2 (24:33):
It's now available broadly, that's the new thing. And for
those call it seventy percent of our customers who weren't
on one of those direct pos relationships that we already announced,
they're the ones who are now going to and saying, hey,
you can now play in this realm too, And you
don't have to wait for us to go one by
one through a list of thirty six different point of
sale providers until we get to yours. You can do
(24:55):
it through Freedom Pay.
Speaker 1 (24:56):
All right, good stuff. And on the topic guest data
and personalization, who do you think is doing it right?
Out of maybe some of the large brands that are
doing it in house, Are there anyone that you know
you kind of look towards and say, I think they're
moving in the right direction and this is something that
we should try to emulate.
Speaker 2 (25:17):
Yeah, I mean, look to the speaker list at beyond
four and you'll see examples of the people that we
want to give the mic to because they're going to
educate the rest of the audience around how to do it. Right,
and I think first amongst those is Matt Eisenacher at
First Watch. It is just a clinic in how to
(25:37):
use guest data and personalization to drive the right messaging
to the right guests at the right time, over the
right medium. They do it best. They are shotting a
light in what's possible. I'm thrilled with the success that
they're having, the investment that they're making and marketing not
in like a yeah, we're going to run some Super
(25:57):
Bowl ads kind of lazy way, in a this thing
works and it's precise and it's efficient and it's effective.
We're going to dial it up and double down on this.
And he's just a remarkable leader. And then I mentioned
you know, Mark Hardison and a bunch of others, Justine
at Bartaco, smaller brand, but like they've really bought into
(26:19):
this idea of we all see personalization being an effective
thing in every other industry.
Speaker 3 (26:24):
Why not restaurants.
Speaker 2 (26:25):
We have all this data, why not collate it guests
by guest, identify the best guests, and think about how
we turn every guest into one of our best guests,
and go find more that look just like our best guests.
That's a superpower, and it's going to differentiate the brands
that thrive during this time and those that use the
old playbook and don't make it.
Speaker 1 (26:46):
And ol pay is growing very fast. Obviously that's more
of a volume business, so i'd imagine it'd be a
nice boost to your operating margin dollars, but not necessarily
the margins. Have you spoken about the impact to your
margins and twenty five.
Speaker 2 (27:00):
Yeah, I mean so just to cover off on that.
Ola pay has grown really quickly and the opportunity ahead
is massive, So we grew In twenty twenty two, we
did two hundred and fifty million dollars of payments volume
through olipay. In twenty three we did a billion, and
then last year in twenty four we did two point
eight billion, So from two fifty to two point eight billion,
(27:23):
at more than ten x, more than eleven x in
that two year period. But again that's against a backdrop
of twenty nine billion dollars in gross merchandise volume two
point eight over over twenty nine, so we're not even
at ten percent penetrated for olopay card not present meaning
transactions that are digital transactions, and we've just unlocked that
(27:44):
full one hundred and sixty one billion in gross merchandise
volume that our eighty six thousand restaurants do as addressable sellable,
addressable market SAM for olpay Card Now Present and Card
Present went from twenty nine bills to an additional one
hundred and thirty two one hundred and sixty one billion.
(28:05):
So from that perspective, two point eight billion. We're thrilled
about the progress, but we're not even at two percent
of the total opportunity. And like I said, there's a
reason why brands want to do this. It's not oh,
it's a great revenue opportunity for OLO. It is this
is uniquely helping you to harvest guest data with the
guest permission into that guest data platform and compete on
(28:26):
a whole different level with your competition. From a margin perspective,
you're right, payments is a volume game. The more volume
you do, the better you're economics, the lower your costs,
and so the better your economics, the higher your margin.
It's also true that in the card present realm.
Speaker 3 (28:48):
You have a mix.
Speaker 2 (28:49):
Sometimes people are using debit cards and you have a
better lower cost than those debit cards for processing. You
have better spread on those but look, I think honey
Grow is a perfect example for that as well. I
mean they are using OLO pay for their digital transactions
inclusive of all of their in restaurant transactions that are
done through Kiosk in the way that their service model works,
(29:11):
and that's in large part why from a revenue perspective,
from a gross profit perspective, there's six and a half
times the average restaurant the gross profit per unit of
a Honey Grow versus the typical gross profit that we
receive per unit. So it just illustrates that there's a
lot of business opportunity for OLO in payments. It's a
(29:31):
lower margin revenue stream, of course, but there's meaningful margin,
meaningful gross profit dollars within payments, and there's huge runway
for us to grow into while being on the restaurant
side and helping them do something that is going to
make their business better.
Speaker 3 (29:46):
All right, good stuff, and we covered a lot.
Speaker 1 (29:48):
But are there any other twenty twenty five growth opportunities
or priorities that they're focused on.
Speaker 3 (29:53):
Yeah?
Speaker 2 (29:53):
I think the only other big focus area for us
is in catering, and I talked to about this a
lot on the earnings call A couple weeks back. But
catering is just this like sleeping giant. It is currently
a sixty billion dollar end market. I think it's growing.
In grand View Research, if I'm remembering correctly, is the
(30:14):
source of this data. I think it's growing to one
hundred and thirty two billion over the coming years five
six years, So it's already really big. It's doubling. It's
found money for so many brands. I mean, all they
need is a tool to enable them to serve catering customers,
and that is what that's the gap that we filled
with our Catering Plus module. So it is a purpose
(30:37):
built for catering module that enables brands to take large
format orders and then all of our other modules connect
in to it. So if you want to deliver those orders,
dispatch fits in there. If you want to get delivery sorry,
if you want to get catering demand from a marketplace,
we have a partnership with easy cater that plugs in there.
If you want to do payments, O to pay, if
(30:59):
you want to do marketing out to those catering customers, engage.
I mean, it's really cool to see the power of
OLO as a modular platform. A new beachhead and catering
and then how all those modules can attach to it.
And I'd say one thing that I love about catering.
We talked about expanding the relationship with existing customers and
(31:22):
landing new brands. Catering has been great on both fronts.
It's great to expand existing relationships. It's an easy upsell,
it's a layup to stick with the basketball theme. For
Top twenty five brands, especially who have built a homegrown
tech stact, many of them have not built a catering solution,
and if we can cozy up to them with a
catering solution, show what we can do in the catering realm,
(31:45):
we think that's a great way to initiate relationships with
those brands. Hugely active pipeline of conversations in the Top
twenty five and really everywhere with catering. And then when
they see, wow, look at what Olo is able to
do as a SaaS platform that's reliable, that's at scale,
then they can really start to actively have the debate
internally of does it really make sense for us to
(32:07):
be spending hundreds of millions of dollars annually to support
a homegrown platform when we could do it for half
the cost or less if we moved over to Olo
for the core ordering platform and just repurpose our finances
to build on top. I think that is the most
exciting thing about catering to me, and just an industry
that is looking for, you know, found money, they'll take it,
(32:30):
and catering is a big pot of found money for
so many brands who have whether it's offices with return
to office, or school groups or churches or sports teams,
just a massive audience of folks that want their food
in that format and we can make it easy, like
a giant easy button for enabling a catering program.
Speaker 1 (32:51):
Yeah, we're seeing more families catering holidays. Crackerbile just reported
a really nice quarter and they credited they're catering business
for Thanksgiving and Christmas.
Speaker 2 (33:04):
I have seen some things in this industry that amaze me.
At at top of that list is the cracker barrel
Thanksgiving demand and execution. It is unbelievable how many people
are using cracker barrel in that way and how they
nail it year after year. And it's been fun for
us to be that sort of wind beneath their wings
(33:24):
from a digital perspective to take this massive demand and
make it easy for them to operationalize with things like,
you know, what is their capacity management strategy? How do
we throttle orders appropriately?
Speaker 3 (33:36):
There's just a lot of you know, x's.
Speaker 2 (33:39):
And o's strategy perspective to make that work the way
that it does, and they nail it every year.
Speaker 3 (33:45):
It's crazy.
Speaker 1 (33:47):
Yeah, it's exciting what they're what they're doing over there.
Are you growing the sales team?
Speaker 2 (33:53):
We are, Yeah, And one thing that's been fun for
me personally is that I have gotten much more. I've
been much more on the road with the sales team
over the past quarter. And that's everything from pitches to
new customers, you know, or talking to existing customers about
(34:14):
new things.
Speaker 3 (34:14):
That we're doing.
Speaker 2 (34:15):
And I think a lot of the time it's like,
you know us as the ordering platform, and we're so
much more than that. Now, let us reintroduce all the
things that we're doing and why what we've done with
you and ordering oftentimes for many years is like the
seed crystal for this much larger guest engagement opportunity we're
(34:36):
now thinking about as ultimately guest data leading to guest
intelligence and then leading to guest experience management as a practice.
That's really what OLO is today. So it's been fun
for me. It's sort of like a new founding moment
to be out with customers, telling that much larger story
and explaining to them, why again say this to my
(34:57):
team all the time. We've come a long way. It's
been twenty years, but we're not at the top of
Everest right now. Like right now we're at base camp.
Like it's been hard, we're catching our breath, but like
I see the mountaintop and it's beautiful up there, and
that's where we're going to go over the next twenty years.
And it's all around this guest data, guest intelligence, guest
experience management vision. So telling that story to our customers
(35:21):
and having the credibility of the relationship that we've built
over that time, but showing them what's next is super
energizing for me.
Speaker 3 (35:31):
So I'm having fun.
Speaker 1 (35:33):
That's awesome, man, I think that's a perfect place to
wrap it up. Thanks again for doing this, man. I
love I love following OLO and following the story, and
I'm looking forward, you know, to continuing tracking your progress.
Speaker 2 (35:48):
Thanks Mike, Thank you for chopping it up with me.
Speaker 1 (35:50):
Yeah, sure thing man. I'm sure I'll see you out
and about on the restaurant conference circuit this year. I
want to thank the audience for tuning in. Go to
olo dot com to find out more about the company.
If you liked our discussion, please share it with your
friends and colleagues. Check back next week for an interview
with Liz Williams, CEO of l Poyo Loco
Host
Michael Halen
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!