April 22, 2025 • 38 mins
Poor order accuracy is a fast way to lose customers and gain one-star reviews, Ovation’s CEO and Founder Zack Oates tells Bloomberg Intelligence. In this episode of the Choppin’ It Up podcast, Oates sits down with BI’s senior restaurant and foodservice analyst Michael Halen to discuss why even though most customer complaints are about food, it’s more important for restaurants to address grievances about accuracy and service. He also comments on why a bad review is a gift.
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Speaker 1 (00:12):
Welcome to Chopping It Up.
Speaker 2 (00:13):
I'm your host, Mike Hallon, the senior Restaurant and Food
Service analyst at Bloomberg Intelligence. Our research and that of
bi's five hundred analysts around the globe can be found
exclusively on the Bloomberg terminal. If you enjoy the pod,
I'd love it if you could leave us a review
on Apple or Spotify. Today we're joined by Zach Oates,
founder and CEO of Ovation and hosts of the Given
(00:34):
Ovation podcast.
Speaker 1 (00:35):
Zach, what's up?
Speaker 2 (00:36):
My man?
Speaker 3 (00:37):
Just living the dream here?
Speaker 2 (00:39):
Mike, Dude, I uh saw doing a little background on you.
I dug up some interesting stuff. This is gonna be fun.
I've been looking forward to this, But after what I
dug up, this could go in different directions.
Speaker 3 (00:50):
Man.
Speaker 1 (00:50):
First of all, dude, First of all, you grew up
in Jersey.
Speaker 3 (00:54):
Yeah, Man, I'm a Jersey boy.
Speaker 1 (00:55):
Where did you grow up in Jersey?
Speaker 3 (00:57):
Morristown, Motown. Just to be clear for those who aren't
familiar with Jersey, I did say Morristown, which is different
than Moorestown, which is different than Norristown. So all three
of those places are like very different. And I grew
up in Morristown, which is. When I say the city,
(01:17):
I mean New York, I don't mean Philly.
Speaker 2 (01:20):
Yeah, for sure, Morristown's got a man it's got a
good food scene too, man.
Speaker 3 (01:26):
Yeah, good food scene. I mean it was awesome, Like
the town I grew up in. I grew up right
outside of Morristown, and they had duck crossing signs, and
I mean it's just in the middle of the forest,
and yet I could drive five minutes away and be
by a movie theater and be by you know, amazing
restaurants and so anyway, it's an awesome place to grow up.
Speaker 1 (01:46):
Yeah, Morris County's phenomenal.
Speaker 3 (01:47):
What uh, That's actually where I got my That's where
I got my like first foray into food. I was.
I worked at Friendlies there in Morristown.
Speaker 1 (01:57):
How was that experience, dude?
Speaker 3 (01:59):
It was great and like full circle moment when they
started working with us, and then super full circle moment
when they we got awarded Vendor of the Year with them,
and so it was just like super cool to have
that experience of going from you know, that's where I
got my start to like vendor of the Year of Friendlies,
and I was. I was just so popped. I had
(02:21):
no idea, So it was. It was quite the honor
and loved working there and basically like where I cut
my teeth in hospitality.
Speaker 1 (02:31):
That's very cool man.
Speaker 2 (02:32):
The chocolate almond chip ice cream is still one of
my all time favorites.
Speaker 3 (02:36):
Oh Man, that that peanut butter sauce. Oh yeah, and
so good.
Speaker 1 (02:41):
Yeah. That Reese's Pieces Sunday phenomenal. So where'd you go
to high school?
Speaker 3 (02:46):
Newark Academy, right down the street from Friendlies in Morristown.
Speaker 2 (02:49):
Yeah, yeah, all right, very cool man. Yeah, I grew
up in Ceedar Grove.
Speaker 3 (02:54):
Yeah, it was.
Speaker 1 (02:56):
After my time, but when my brother was.
Speaker 2 (02:58):
In high school, we were actually playing against NORC Academy
and some sports.
Speaker 1 (03:01):
I think we might have played them in basketball when
I was.
Speaker 3 (03:04):
Well, I was I'm I'm I'm older than you, Mike.
So yeah, we probably didn't crossover in high school.
Speaker 1 (03:11):
I don't think so.
Speaker 2 (03:13):
Also, your dad is very well known in New York
and New Jersey.
Speaker 1 (03:17):
Man.
Speaker 3 (03:18):
Yeah, he's very well known in very small circles.
Speaker 1 (03:21):
Yeah, he's.
Speaker 2 (03:23):
Well one, very big circle Giants fans. I mean he
won a lot of games, including three Super Bowls, two
with the Giants, two USFL championships.
Speaker 1 (03:33):
He won whatever he went, man, so you must have
learned a lot from him.
Speaker 3 (03:37):
I did. It was like one of those things I
tell people that my father was a professional athlete, my
mother was a model, and unfortunately I got my dad's
looks in mother's athletic ability, and so I was on
the you know, I had to work hard for what
I got. But no, it was it was really interesting
growing up with your dad. Not only you know, three
(04:00):
Super Bowls is great, but he also is a five
time pro bowler, you know, and so being the best
in the world at something and growing up with your
dad who is the best in the world, and you know,
we always talk about that in terms of like, oh,
you got to be the best in the world at
something and like, but growing up with a dad who
was is just really inspiring because it's it makes it
(04:22):
so much more real. And it's not like this you know,
trite phrase that people use, but it's like, no, that's
like the guy at the dinner table, you know, the
one driving me to church on Sunday. Like I mean,
like he's the best in the world at throwing a
football upside down backwards between his legs, but hey, best
in the world as something.
Speaker 1 (04:44):
Ah, that's very cool. Man. Yeah, I'm a Raider fan,
but my whole family of Giants fans. And you know, I.
Speaker 2 (04:50):
Actually got to go to a few regular season games
in nineteen eighty six, the first Super Bowl win. Yeah,
I missed the old Giant Stadium. There wasn't a bad
seat in the house, man.
Speaker 3 (05:02):
I mean yeah, I mean I also went to a
few a few Giants games growing up. Actually, do you
know my favorite part about the Giants games was on
the way home there was a Red Robin that we
would stop at, and I that's where I love Red
Robin and that was that was the place that I
would that was like my jam coming back from the games.
(05:23):
And when I got older, they would bribe me to
stay for the second half because I would always be like,
all right, halftime, let's go, like I'm done. And then
as I got older, they would bribe me and they say, Okay,
if you stay the second half, then in the third
quarter we can go and get nachos, and then after
the game we'll go to Red Robin. So that's how
they eventually uh bought me into staying at football games.
(05:45):
But you'd be hard, Mike you'd be hard pressed to
find me watching a football game nowadays. I'm not a
huge fan.
Speaker 2 (05:52):
I love football, but uh yeah, takes up takes up
a lot of time. All right, good stuff, man, And
I love that red robin on your tower.
Speaker 1 (06:00):
It's fantastic too good. Yeah, all right.
Speaker 2 (06:03):
So, how many companies have you started and were any
of them in or related to the restaurant industry before ovation?
Speaker 3 (06:11):
No. I started three companies and this is my third
company i've started. But I also did international nonprofit. I
lived in Ukraine for two years and I started and
ran an organization for eight years and we worked with
shelters in Ukraine for women and children, helping them with
job training and computer literacy and it was and group therapy, amazing.
(06:34):
The organization had a lot of incredible experiences there, but
with the war and everything, we had to kind of
put that on pause. So looking forward to picking that
back up off the shelf. But Ukraine's a near and
dear place to my heart. Love love that part of
the world. And then my other companies. One was in AI,
so before AI was really a thing. And what we
(06:57):
actually did was I developed an algorithm to translate social
media data into gift recommendations, and so we were featured
in you know, all sorts of publications and I won't
mention because someone might be competing, but uh, we were
you know, all over the place. Had a great run there,
sold the algorithms. The other one was a child safety wristband.
So it was hardware tech for kids, which is if
(07:20):
you want to do, like the hardest type of company
to start in the world besides a restaurant, uh, get
into hardware tech for kids, because that is just, I mean,
unbelievably challenging. But it was great. And then we ended
up selling the patents for that one. So the company
didn't like do phenomenal, but the patents sold and uh,
(07:42):
and so that was that was a great experience. And
then and then started ovation. And you know, this is
something where because I knew a lot about AI and
what AI can do, and I knew a lot about uh,
you know, growing up in the restaurant industry. It was
just a passion of mine. I mean, my dad when
he retired, he actually got a little bit into restaurants himself.
(08:03):
He was an investor in a restaurant right by us.
And we had some restaurant to our friends. Actually, the
guy that owned the Red Robin, he to this day,
every time I go home, he comes over and visits,
like we're such good friends to this day, and he
comes over to the house all the time for all
the holidays and everything, and so we've got some you know,
(08:26):
growing up with restaurants, it just was always a passion
of mine and seeing what algorithms can do. And then
I did some customer experience consulting for Fortune fifty companies
and realizing that there's an opportunity to there's a huge
dearth of information about the guests in restaurants and especially
(08:48):
around the guest experience, and it just seemed like bananas
to me that we're still doing fifty question surveys to
try to understand how our restaurants are doing. Like this
isn't this isn't the nineties. Like that's not how the
world works. That's not how consumers work. If you're gonna
if you're going to ask them to do you a
favor and tell you how things are, they don't want
(09:11):
to take twenty minutes to get a dollar off their taco,
Like that's just that's that's not how it works. And
if we're making business decisions based on what that demographic
of people want. Like if you have twenty minutes to
get a dollar off your next taco, I don't want
your opinion because I want people's opinions that that they
value their time a little bit more, you know what
(09:32):
I mean. And so that's that's really what got me
into starting Ovation. But having those other experiences starting those
other companies was amazing. I learned so many things and
it was great and from you know, the ups and
the downs of all of that and realizing that, you know,
I remember having one kid dm me on back in
(09:53):
the day Twitter, and he was from India and he said, Hey,
I just wanted to say thing, thank you for starting
your company because I didn't know what gift to get
from my girlfriend. I got onto your app, I used
it and I got the perfect gift and she loved it,
and I just wanted to say thank you. That was
like one of the most wild moments for me to realize,
(10:15):
Like here I was in this hotel at this conference
and this guy in India's messaging me to say thank
you for finding this gift, and I'm like, wow, like
we can we can do something, Like we could make
the world, even even like a little corner of the
world a better place. And man, that's powerful. And I
don't need to be like Steve Jobs or you know,
(10:38):
I guess elon Musk prior to this year and and
make all of these just like world shifting changes. I
could change my corner of the world, and that's that's great.
And if I could help the world move forward a
little bit and help people find a little bit of joy,
then I'm all about it. Let's build some value, baby.
Speaker 2 (10:58):
Yeah, that's that's fair, fantastic man that it's a great outlook.
And that kind of leads part of that leads into
my next question. You know, you talked about these long surveys,
you know on LinkedIn. You're the self proclaimed anti survey
survey or, so please talk a little bit more about that.
Speaker 3 (11:16):
Yeah. So, one of the things I always tell people
is everything that we do in hospitality, from the ingredients
to the training, to the ambiance, to the music, to
the furniture to the plates, everything is about what creating
a great guest experience hard stop right now. Obviously you
got a P and L in there, because you got
(11:38):
to make margins to create a great guest experience. I
think that's like self evident, because if you don't, if
you're not making money, then you can't create the experience anyway.
But it's all about the guest experience, and so it's
about how can I create the best guest experience with
my P and L. And when I think about that,
(11:58):
it's like then I said to myself, Okay, well, how
are we measuring that experience? And again it's up to
long surveys, which very few people do, or online reviews,
which very skewed people do. Right, the experience has to
be very skewed to leave an online review. And so
what we found is that if you make a survey simple,
(12:19):
and by simple I mean the ovation survey starts with
two questions, no matter how much people have paid us
to add questions to that survey, our answer is always
and will always be no. That survey is sacred. And
why we have done the studies. We have done the research.
(12:40):
If you want to get the data, you start with
that and you let us, with all the AI that
we've been doing with the millions of points of data,
let us tell you what that unstructured data means. And
it's not just pulling in from the ovation feedback, but
we pull in from Google, Yelp, Facebook, Door, dash up Hub.
(13:00):
Why Because all of that unstructured data is also guest feedback.
You can't treat it differently than your guests that are
giving you private feedback. So we we have adapted our
feedback to be in a similar context to what that
other unstructured review data is. And by bringing that all together,
(13:21):
you now have statistically significant data to make operational changes
at location basis, at menu basis, at ease of ordering basis,
Like you could know exactly what to fix where in
your operations without harassing your guests with fifty questions. Now, Mike,
I do want to have one like giant asterix here
(13:44):
while I am the anti survey survey guy, and I
think that that's like a very appropriate, very appropriate like title.
I do believe that long surveys have a place I
think of. I wrote a book about dating, and the
way that I think about long surveys, long surveys are
are like the first kiss, you know, like when you
(14:06):
go to pick up a blind date. You don't open
up the door and just kiss them on the doorstep
right when you go to pick them up. No, maybe
it was a really good first date. Maybe at the end,
you know, and I think that like, but the concept
is maybe later on, more more likely than not. But
the concept is it has a place, but its place
(14:28):
is not initially because when a guest wants to reach out,
they want to reach out for a reason, Mike. They
want to reach out because you forgot their sauce, you
forgot their fries, that the server, the server was rude.
There's something that is on their mind that is a
very emotional thing, and that's what they want to tell you.
(14:51):
And so I think that that's one of the very
key things that's critical to remember is that a survey
is not bad. It's just a survey upfront is And
what we say is let the guest get the feeling
off their chest, and then an hour later or the
next day, you can get the data that you want
(15:13):
that might not be structured in that in a in
a might not be included in unstructured feedback. For example,
we have customers right now that are asking about their ltos.
All right, Mike, you come into zach Shack and we're
doing a peanut butter and jelly hamburger, and I'll ask
you Mike, did you enjoy the peanut butter and did
you try the peanut butter and jelly hamburger. If you
(15:35):
say yes, I say great, tell me more about it.
If you say no, I say great, here's a here's
a five dollars off coupon to come and get that
lto So now we're driving you know, recency, and we're
driving spend and we're doing it all while collecting data.
And that's just like one example. Another example is if
(15:58):
you're you have a restaurant in Vega, and you want
to do text marketing, but you don't know who's local
and who's not. Great, ask a follow up question, do
you live in Vegas? And then you're not sending your
text messages to people who live in sheboygan that we're
there for a bachelorette party and so you know, or
if you want to ask about you know, how did
(16:19):
you hear about us? So you can measure the effectiveness
of different forms of marketing. Great, and so all of
these things are possible with long form surveys, and all
of these things are unlikely to come up in unstructured data.
But what we found is that if you ask the
two question survey first, and you followed up with a
(16:40):
long form survey, you actually will get more long surveys
completed than if you start with a long form survey.
And so that's the Ovation way is we make sure
that the guest gets the emotion off. We make sure
that the restaurant can have a really easy path to
handle that guests and either through you know, if they
(17:01):
loved it, let's get them to drive more revenue. If
they didn't love it, let's have AI help us recover them.
But then you need to separate what is a one
off issue and what's a consistent problem. And so ovation
helps to bifurcate that with our AI to say, hey,
Mike had a problem with the service, and turns out
(17:23):
that nobody else complained about service this month, and so
let's apologize to Mike, but let's not beat up our
staff over service because one person complained about it. But
let's say that there's a specific location that has a
five percent higher incident rate, which is, if you take
the total number total pieces of feedback and you look
(17:47):
at what percentage of those had an incident about service,
if they are five percent higher than the average restaurant
in your group. Then yeah, you need to go talk
to that location about service and retrain them on the
Zach Shack way of being friendly and treating customers. And
then the final step to this piece here, Mike, is
(18:09):
that all of that data is great and I love
being able to share data with restaurants, but you gotta
do something with it. And so what we do is
we have this whole entire goals module that uses AI
to tell that GM, here's exactly what you need to
do to improve, here's what you should be focused on.
(18:30):
And then with the guest feedback, we track how well
that GM is doing, and we give the brands a
dashboard to easily view every location in one spot and
which ones are on track, off track, how are they doing,
what are they working on, and if you want them
to work on something different besides what the AI thinks
is going to be best, great, click a button and
(18:51):
override that. And so that's that's the power of collecting it,
taking action in the moment, finding the trends and fixing
those trends, and measuring that by collecting the feedback. Very cool,
And what was the question.
Speaker 1 (19:07):
I forget? But a quick aside Zach's Dating book has
phenomenal reviews on Amazon.
Speaker 2 (19:13):
Uh huh, talk to me a little bit about the
quantity of responses versus severity.
Speaker 3 (19:21):
Yeah, so this is something where a lot of times
people will get feedback, and especially when they're looking at
their unstructured feedback. And guess what the majority of feedback
is going to be about. Mike, we're in restaurants. What
do you think the majority of feedback is about food? Food?
And so people are sitting there in these offices just
(19:42):
pouring over this feedback about food, trying to understand. Okay,
Mike said it was too salty, but then somebody else
said it wasn't salty enough. You know, someone said it
was too spicy, someone said it wasn't spicy enough. Okay,
how do we tw tweak? Tweak, tweak. There absolutely is
a time and a place for that, and you've amazing.
Food is now table stakes. The problem that we find
(20:05):
is that food is not usually the reason that people
get most angry, and that anger is gonna yield to
negative reviews. That anger is gonna yield to I'm never
trying them again. That anger is gonna yield to Hey,
I'm telling fifteen of my friends not to go to
zach Shack. It's not the food, because food is very
(20:30):
it's very preferential based. The same exact food is gonna
be you know, it's gonna be great to someone and
terrible to somebody else. Right now, there are mistakes that
are made. Something is burnt, something is you know, the
rice is dry, like there may be some things like
that that, yeah, you can improve operationally. But then you
(20:54):
get to this middle ground of service, which is a
little more on the black and white of hey, were
you nice to me or not. Now, if I'm having
a bad day and I go into a restaurant and
somebody doesn't kind of go above and beyond, I may
think they're being rude. If I go into a restaurant
with four kids and I'm waiting for five minutes for
(21:16):
my food, that may feel like twenty minutes, right if
I'm by myself, or if I'm just like, if I'm
on a date and they bring me my food in
five minutes, I'm like, now, like, give me some more time, Like,
you know, we're still breaking the ice here, you know,
Or my wife and I were sitting down, we want
more time to talk because we're finally you know, the kids,
got a babysitter, so like, I'm not in a rush.
(21:38):
A little more subjective, but that's going to get you
angry reviews. If someone is believes that they were not
treated well, if someone was told that they are, if
someone like waited too long for their food, that's kind
of in that middle ground. But then on the far
right you have accuracy. And what we find is that
(22:00):
is completely black or white. I ordered fries, I didn't
get fries. I ordered a burger with mustard. I didn't
get mustard. Now the black and white may be they
ordered it wrong, but at the end of the day,
it's still black and white. What they either they placed
an order incorrectly, or they placed it or correctly and
(22:21):
they got an incorrect order. Either way, that accuracy is
going to represent a very small percentage. When you look
at food service accuracy, that accuracy represents a very small
percentage of feedback, and it represents the majority of negative reviews.
Of the worst reviews you get are about accuracy. So
(22:42):
someone can look at our ovation dashboard and say, ah, man, like,
you know, I'm getting fifteen percent complaints about food and
I only have six percent complaints about accuracy. I'm going
to focus on food. You're focusing on the wrong ship here,
because those are people where everything was great, but accuracy.
That's a fast way to lose customers and gain five
(23:06):
to gain one star reviews. And service is going to
be the next, uh, you know, the next ladder up
of You got to fix your service. You got to
make sure that people are are being treated the way
that they're expected to be treated, knowing that there is
some subjectivity there. And then with the food, yes, fix
(23:26):
the consistent problems, but again, don't be so concerned about
the ones that are completely opposite feedback just because the
fact is you're a restaurant, you're going to get most
of your complaints about food. So figure out, and this
is something that we help you to do. What about
that food needs to be changed? And what about that
(23:47):
food has been totally is totally preferenced And Mike just
might not like zach Shachsberger's and that's okay. And so anyway,
that's that's the advice I give people, is like, if
you're going to start with one thing, start with order accuracy,
because that makes I mean, last night, Mike, I ordered
from a restaurant I'm not gonna say who I ordered
from a restaurant. I got home and they didn't give
(24:11):
me two sides. Now I've got I just got back
from a crazy long conference, traveling all day. My wife
is with you know, the four kids by herself for
like four days. She's tired. I'm like, hey, I'll pick
up food on the way home. Don't worry about cooking tonight.
I get it. I get home, I open it up,
(24:33):
and what my wife wanted wasn't there. You better believe.
It was like so frustrating. And then when I call them,
they're like, okay, well, well we'll make that for you.
Just come by and pick it up. And I'm like,
that's not gonna happen. I'm not taking an additional thirty
minutes to go because you messed up my order. And
so I was very, very frustrated by that. And that
(24:56):
is what is going to really cause a a huge
concern for brands and going to cause those negative reviews.
So watch out for that. Don't be so consumed by
the loud or the many that you lose sight of
the few, but the important.
Speaker 2 (25:17):
Yeah, that's really interesting, And to your point, there's nothing
worse when you get a delivery order, you know, an
incorrect delivery order, so frustrating. Are there any trends right
now that are cropping up across your customer base.
Speaker 3 (25:30):
Yeah, I will say a lot of people talk about value,
and a lot of people are saying right now, like, hey,
you got to take price, take price, take price, but
it can't take price because you know, I you know cost,
you know, price sensitivity with customers. What we're finding is
that people are okay to spend more money. They just
(25:52):
want to get what they're paying for. They're everything has
gone up in price. People are not shot by prices
anymore other than I mean, there's a couple of burger
places that I've gone too lately and I got like
a burger, a small burger, a small fry, and a
small soda, and I spent twenty five bucks and I'm like,
I'm like, I'm not ordering door Dash, like I'm right here.
(26:14):
But anyway, so that was a little bit surprising. But
the fact is that, like, people are used to spending
more money, and so they're okay with it, but you
gotta make sure you nail it. You cannot afford to
have a missing item, to have a missing ingredient. Especially
Oh my gosh, Mike, if you want to see people
who are really mad, you should read reviews of people
(26:38):
who paid seventy five cents for extra sauce and the
sauce didn't come that. Those reviews are fascinating to read
because it's just like the vending machine principle of if
I put a dollar in the vending machine and my
candy bar comes out, I'm like, well, yeah, I got
what I paid for. If I put a dollar in
and two candy bars come out, it's like, oh wow,
(27:00):
really cool. Like that, that's great. I'm like pleasantly surprised, right,
But I'm not like shouting it from the rooftops. Right.
But if I put in a dollar, mic and so
help that vending machine if that candy bar gets stuck
in there. Right, But I mean like we're going hulk
on that. We're grabbing that, we're shaking the vending machine,
(27:20):
we're smashing into it, because it's not about the dollar.
It's about not getting what you're paid for. And so
that's the thing we're seeing in our trends is that
the value discussions are tied to unmet expectations, not tied
to everything's getting more expensive. But what we are finding
(27:43):
too is that people are noticing shrinkflation and they're they're
hyper focused on that. So if you change your packaging,
we had a customer same you know, they weigh their food,
same exact food when they get it in store versus
when they get it delivered or get it to go.
But the to go complaints are all about how portion
(28:04):
sizes have gotten smaller, and people are hyper sensitive to that,
just because the packaging makes it look like it's smaller,
but it's the same weight. But the difference between eating
something on a plate and eating something in a you know,
to go container, it looks different, it's not as spread out.
And so think about that because perception is reality. And
(28:30):
if someone thinks they're getting less, guess what. I don't
care how much and how perfectly you weigh that to
the hundredth of the of a decimal for the ounce.
But if they think they got less, then they got less.
And so just keep that in mind as you're thinking
about your to go orders, especially because people are noticing
(28:52):
they are on the lookout for getting ripped off in
their words, and they want to get what they paid for.
So That's why, again, the accuracy comes into play so much,
because if I order from you and you mess up
my order, guess what. There's a lot of fried chicken
places out there, and I'm gonna give someone else a
(29:14):
shot to keep to get my business to put in
the rotation.
Speaker 1 (29:18):
Yeah, that's really interesting.
Speaker 2 (29:20):
And about the sauces, man, I'd imagine part of that
is to the fact that some competitors may give you
the sauce for free, right, And so if I'm paying
extra for something I feel like should be free and
then I don't get it, it just adds a little
more salt in the wound.
Speaker 3 (29:36):
Yeah, exactly, that's exactly right.
Speaker 2 (29:39):
Last time we spoke, we discussed the service recovery paradox.
Speaker 1 (29:43):
I think that is absolutely fascinating. Please please speak a
little bit about that.
Speaker 3 (29:48):
So a lot of people say that a bad review
is a gift, and it is, but if it's online,
the problem is you're unlikely to get it changed, and
you're unlikely to really be in contact with that guest.
And when you're giving stuff away in a response to
a negative review, that's basically just like teaching people, hey,
(30:09):
leave a review, we'll give you free stuff. So The
trick of this is getting a private feedback tool that
you're able to connect with that guest in real time
before they leave that negative review. But that negative guest,
when compared to the average guest, is actually worth more.
And they've done PhD studies about the service recovery paradox,
(30:33):
and basically the thesis is, and that's been proven out
time and time again, is a guest that has a
service failure and proper service recovery is more likely to
become loyal than a guest who never had a service
failure in the first place. So I went to our
data and I said, okay, we've got the data here.
I've never seen dollars like how much more valuable. What
(30:54):
we found is that the average guest, let's just talk
about retention rate. Average guest retention rate is thirty percent.
This is, by the way, we followed one hundred and
fifty thousand consumers over eighteen months to track this data.
Thirty percent retention rates average. If they have an amazing
experience and they're willing to go on and even take
(31:15):
an ovation survey and say I had a five out
of five experience, they have a sixty percent retention rate,
and if they had a negative experience with no service recovery,
they have a thirteen percent retention rate. Okay, so here
we are thirty average, sixty happy, thirteen upset. Now what
(31:36):
happens if they have an upset? If they're equally as upset,
but the only difference is that they get responded to.
And I'm going to put a caveat here, if they
get responded to using our AI, And I'll tell you
why in a second. What happens is that guest compared
to the average guest, they don't have a thirty percent
(31:58):
or even a sixty percent retention rate. They go from
thirteen percent to sixty eight percent retention rate. Not only that,
but they come in four times more frequently than the
average guest. Not only that they spend five dollars more
per visit than the average guest, and not only that
(32:19):
they are twelve times more likely to leave you a
five star review. So the recovered guest is actually worth
twenty four times the value of the average guest. And
the reason I say AI is because what we found
is that our AI is actually ten percent better at
winning back. The recovery rate is ten percent higher than
(32:40):
if you don't use AI, and there's a few reasons
for that, but one of the main reasons is because
they're actually you're taking some of the emotion out of it,
and so it's not a combative conversation, but it's a
understanding conversation. But also because you're using their name, and
a lot of times when we respond to guests, we
(33:02):
forget to use their name. If we're using like a
chat a chat tool, AI will always remember to say Mike,
and they'll say Zach, Mike. Hey, Mike's so sorry about
your experience with us and that our our rice was dry.
We always drive for excellent food. Seems like we missed
the mark this time. Let me give you five dollars
(33:24):
off and would love to welcome you back again. I'm Zach.
Let me know if I could do anything to help out,
you know, like and then we send them that you
could send them that offer. What is interesting though, is
that sending an offer it increases the retention rate a
little bit, but using a name increases the retention rate more,
(33:45):
and so it's less about giving people something, it's more
about giving them a feeling. It's helping them feel heard.
Whereas will Gadera puts it feel seen right, because my
definition of hospitality, after you know, seeing millions millions of
customers go through the ovation platform and see what they
(34:06):
care about the most, is hospitality is proving to the
guests that you care. And you can care by doing
a little bit extra and helping them feel Specially, you
can care by meeting their expectations consistently. You can care
by apologizing and making it right, and you could care
by fixing your operations and actually following up with people
(34:28):
to say, hey, you told us that the rice was dry.
We actually realized that we are cooking too much rice
in the afternoons. Thank you so much for helping us
out with that. We've made that change and hope that
you'll notice a difference. Those those customers who go like
above and beyond, they become not just lifelong fans, but
they become insane fans. And that's like you're catering my
(34:53):
wedding type fan. And that's what we need to have
staying power in this economy and this much competition, and
with the cost of getting a new guest being so
irrationally high nowadays that you almost can't afford to spend
the money required to get into someone's regular rotation, and
(35:15):
so you just you have to rely on being very
vigilant listening to your fans and making sure that that
you create experiences even when things go wrong, that make
them want to bring other people in. I love it.
Speaker 1 (35:33):
That's a perfect place to wrap it up. Thanks again, Zach.
Speaker 2 (35:35):
Where can listeners go to learn more about ovation and
find your podcast?
Speaker 1 (35:39):
Which is fantastic by the way.
Speaker 3 (35:41):
Well that's because you've been on it, Mike. You could
check us out at ovation up dot com or go
check out given ovation at anywhere your favorite podcast is found.
Speaker 2 (35:53):
All right, good stuff. I want to also thank the
audience for tuning in. If you liked our discussion, please
share with your friends and colleagues.
Speaker 1 (35:59):
Check back soon for
Speaker 2 (36:01):
An interview with Joe Keith Valver, managing partner at A
Line Public Strategics.
Welcome to Chopping It Up.
Speaker 2 (00:13):
I'm your host, Mike Hallon, the senior Restaurant and Food
Service analyst at Bloomberg Intelligence. Our research and that of
bi's five hundred analysts around the globe can be found
exclusively on the Bloomberg terminal. If you enjoy the pod,
I'd love it if you could leave us a review
on Apple or Spotify. Today we're joined by Zach Oates,
founder and CEO of Ovation and hosts of the Given
(00:34):
Ovation podcast.
Speaker 1 (00:35):
Zach, what's up?
Speaker 2 (00:36):
My man?
Speaker 3 (00:37):
Just living the dream here?
Speaker 2 (00:39):
Mike, Dude, I uh saw doing a little background on you.
I dug up some interesting stuff. This is gonna be fun.
I've been looking forward to this, But after what I
dug up, this could go in different directions.
Speaker 3 (00:50):
Man.
Speaker 1 (00:50):
First of all, dude, First of all, you grew up
in Jersey.
Speaker 3 (00:54):
Yeah, Man, I'm a Jersey boy.
Speaker 1 (00:55):
Where did you grow up in Jersey?
Speaker 3 (00:57):
Morristown, Motown. Just to be clear for those who aren't
familiar with Jersey, I did say Morristown, which is different
than Moorestown, which is different than Norristown. So all three
of those places are like very different. And I grew
up in Morristown, which is. When I say the city,
(01:17):
I mean New York, I don't mean Philly.
Speaker 2 (01:20):
Yeah, for sure, Morristown's got a man it's got a
good food scene too, man.
Speaker 3 (01:26):
Yeah, good food scene. I mean it was awesome, Like
the town I grew up in. I grew up right
outside of Morristown, and they had duck crossing signs, and
I mean it's just in the middle of the forest,
and yet I could drive five minutes away and be
by a movie theater and be by you know, amazing
restaurants and so anyway, it's an awesome place to grow up.
Speaker 1 (01:46):
Yeah, Morris County's phenomenal.
Speaker 3 (01:47):
What uh, That's actually where I got my That's where
I got my like first foray into food. I was.
I worked at Friendlies there in Morristown.
Speaker 1 (01:57):
How was that experience, dude?
Speaker 3 (01:59):
It was great and like full circle moment when they
started working with us, and then super full circle moment
when they we got awarded Vendor of the Year with them,
and so it was just like super cool to have
that experience of going from you know, that's where I
got my start to like vendor of the Year of Friendlies,
and I was. I was just so popped. I had
(02:21):
no idea, So it was. It was quite the honor
and loved working there and basically like where I cut
my teeth in hospitality.
Speaker 1 (02:31):
That's very cool man.
Speaker 2 (02:32):
The chocolate almond chip ice cream is still one of
my all time favorites.
Speaker 3 (02:36):
Oh Man, that that peanut butter sauce. Oh yeah, and
so good.
Speaker 1 (02:41):
Yeah. That Reese's Pieces Sunday phenomenal. So where'd you go
to high school?
Speaker 3 (02:46):
Newark Academy, right down the street from Friendlies in Morristown.
Speaker 2 (02:49):
Yeah, yeah, all right, very cool man. Yeah, I grew
up in Ceedar Grove.
Speaker 3 (02:54):
Yeah, it was.
Speaker 1 (02:56):
After my time, but when my brother was.
Speaker 2 (02:58):
In high school, we were actually playing against NORC Academy
and some sports.
Speaker 1 (03:01):
I think we might have played them in basketball when
I was.
Speaker 3 (03:04):
Well, I was I'm I'm I'm older than you, Mike.
So yeah, we probably didn't crossover in high school.
Speaker 1 (03:11):
I don't think so.
Speaker 2 (03:13):
Also, your dad is very well known in New York
and New Jersey.
Speaker 1 (03:17):
Man.
Speaker 3 (03:18):
Yeah, he's very well known in very small circles.
Speaker 1 (03:21):
Yeah, he's.
Speaker 2 (03:23):
Well one, very big circle Giants fans. I mean he
won a lot of games, including three Super Bowls, two
with the Giants, two USFL championships.
Speaker 1 (03:33):
He won whatever he went, man, so you must have
learned a lot from him.
Speaker 3 (03:37):
I did. It was like one of those things I
tell people that my father was a professional athlete, my
mother was a model, and unfortunately I got my dad's
looks in mother's athletic ability, and so I was on
the you know, I had to work hard for what
I got. But no, it was it was really interesting
growing up with your dad. Not only you know, three
(04:00):
Super Bowls is great, but he also is a five
time pro bowler, you know, and so being the best
in the world at something and growing up with your
dad who is the best in the world, and you know,
we always talk about that in terms of like, oh,
you got to be the best in the world at
something and like, but growing up with a dad who
was is just really inspiring because it's it makes it
(04:22):
so much more real. And it's not like this you know,
trite phrase that people use, but it's like, no, that's
like the guy at the dinner table, you know, the
one driving me to church on Sunday. Like I mean,
like he's the best in the world at throwing a
football upside down backwards between his legs, but hey, best
in the world as something.
Speaker 1 (04:44):
Ah, that's very cool. Man. Yeah, I'm a Raider fan,
but my whole family of Giants fans. And you know, I.
Speaker 2 (04:50):
Actually got to go to a few regular season games
in nineteen eighty six, the first Super Bowl win. Yeah,
I missed the old Giant Stadium. There wasn't a bad
seat in the house, man.
Speaker 3 (05:02):
I mean yeah, I mean I also went to a
few a few Giants games growing up. Actually, do you
know my favorite part about the Giants games was on
the way home there was a Red Robin that we
would stop at, and I that's where I love Red
Robin and that was that was the place that I
would that was like my jam coming back from the games.
(05:23):
And when I got older, they would bribe me to
stay for the second half because I would always be like,
all right, halftime, let's go, like I'm done. And then
as I got older, they would bribe me and they say, Okay,
if you stay the second half, then in the third
quarter we can go and get nachos, and then after
the game we'll go to Red Robin. So that's how
they eventually uh bought me into staying at football games.
(05:45):
But you'd be hard, Mike you'd be hard pressed to
find me watching a football game nowadays. I'm not a
huge fan.
Speaker 2 (05:52):
I love football, but uh yeah, takes up takes up
a lot of time. All right, good stuff, man, And
I love that red robin on your tower.
Speaker 1 (06:00):
It's fantastic too good. Yeah, all right.
Speaker 2 (06:03):
So, how many companies have you started and were any
of them in or related to the restaurant industry before ovation?
Speaker 3 (06:11):
No. I started three companies and this is my third
company i've started. But I also did international nonprofit. I
lived in Ukraine for two years and I started and
ran an organization for eight years and we worked with
shelters in Ukraine for women and children, helping them with
job training and computer literacy and it was and group therapy, amazing.
(06:34):
The organization had a lot of incredible experiences there, but
with the war and everything, we had to kind of
put that on pause. So looking forward to picking that
back up off the shelf. But Ukraine's a near and
dear place to my heart. Love love that part of
the world. And then my other companies. One was in AI,
so before AI was really a thing. And what we
(06:57):
actually did was I developed an algorithm to translate social
media data into gift recommendations, and so we were featured
in you know, all sorts of publications and I won't
mention because someone might be competing, but uh, we were
you know, all over the place. Had a great run there,
sold the algorithms. The other one was a child safety wristband.
So it was hardware tech for kids, which is if
(07:20):
you want to do, like the hardest type of company
to start in the world besides a restaurant, uh, get
into hardware tech for kids, because that is just, I mean,
unbelievably challenging. But it was great. And then we ended
up selling the patents for that one. So the company
didn't like do phenomenal, but the patents sold and uh,
(07:42):
and so that was that was a great experience. And
then and then started ovation. And you know, this is
something where because I knew a lot about AI and
what AI can do, and I knew a lot about uh,
you know, growing up in the restaurant industry. It was
just a passion of mine. I mean, my dad when
he retired, he actually got a little bit into restaurants himself.
(08:03):
He was an investor in a restaurant right by us.
And we had some restaurant to our friends. Actually, the
guy that owned the Red Robin, he to this day,
every time I go home, he comes over and visits,
like we're such good friends to this day, and he
comes over to the house all the time for all
the holidays and everything, and so we've got some you know,
(08:26):
growing up with restaurants, it just was always a passion
of mine and seeing what algorithms can do. And then
I did some customer experience consulting for Fortune fifty companies
and realizing that there's an opportunity to there's a huge
dearth of information about the guests in restaurants and especially
(08:48):
around the guest experience, and it just seemed like bananas
to me that we're still doing fifty question surveys to
try to understand how our restaurants are doing. Like this
isn't this isn't the nineties. Like that's not how the
world works. That's not how consumers work. If you're gonna
if you're going to ask them to do you a
favor and tell you how things are, they don't want
(09:11):
to take twenty minutes to get a dollar off their taco,
Like that's just that's that's not how it works. And
if we're making business decisions based on what that demographic
of people want. Like if you have twenty minutes to
get a dollar off your next taco, I don't want
your opinion because I want people's opinions that that they
value their time a little bit more, you know what
(09:32):
I mean. And so that's that's really what got me
into starting Ovation. But having those other experiences starting those
other companies was amazing. I learned so many things and
it was great and from you know, the ups and
the downs of all of that and realizing that, you know,
I remember having one kid dm me on back in
(09:53):
the day Twitter, and he was from India and he said, Hey,
I just wanted to say thing, thank you for starting
your company because I didn't know what gift to get
from my girlfriend. I got onto your app, I used
it and I got the perfect gift and she loved it,
and I just wanted to say thank you. That was
like one of the most wild moments for me to realize,
(10:15):
Like here I was in this hotel at this conference
and this guy in India's messaging me to say thank
you for finding this gift, and I'm like, wow, like
we can we can do something, Like we could make
the world, even even like a little corner of the
world a better place. And man, that's powerful. And I
don't need to be like Steve Jobs or you know,
(10:38):
I guess elon Musk prior to this year and and
make all of these just like world shifting changes. I
could change my corner of the world, and that's that's great.
And if I could help the world move forward a
little bit and help people find a little bit of joy,
then I'm all about it. Let's build some value, baby.
Speaker 2 (10:58):
Yeah, that's that's fair, fantastic man that it's a great outlook.
And that kind of leads part of that leads into
my next question. You know, you talked about these long surveys,
you know on LinkedIn. You're the self proclaimed anti survey
survey or, so please talk a little bit more about that.
Speaker 3 (11:16):
Yeah. So, one of the things I always tell people
is everything that we do in hospitality, from the ingredients
to the training, to the ambiance, to the music, to
the furniture to the plates, everything is about what creating
a great guest experience hard stop right now. Obviously you
got a P and L in there, because you got
(11:38):
to make margins to create a great guest experience. I
think that's like self evident, because if you don't, if
you're not making money, then you can't create the experience anyway.
But it's all about the guest experience, and so it's
about how can I create the best guest experience with
my P and L. And when I think about that,
(11:58):
it's like then I said to myself, Okay, well, how
are we measuring that experience? And again it's up to
long surveys, which very few people do, or online reviews,
which very skewed people do. Right, the experience has to
be very skewed to leave an online review. And so
what we found is that if you make a survey simple,
(12:19):
and by simple I mean the ovation survey starts with
two questions, no matter how much people have paid us
to add questions to that survey, our answer is always
and will always be no. That survey is sacred. And
why we have done the studies. We have done the research.
(12:40):
If you want to get the data, you start with
that and you let us, with all the AI that
we've been doing with the millions of points of data,
let us tell you what that unstructured data means. And
it's not just pulling in from the ovation feedback, but
we pull in from Google, Yelp, Facebook, Door, dash up Hub.
(13:00):
Why Because all of that unstructured data is also guest feedback.
You can't treat it differently than your guests that are
giving you private feedback. So we we have adapted our
feedback to be in a similar context to what that
other unstructured review data is. And by bringing that all together,
(13:21):
you now have statistically significant data to make operational changes
at location basis, at menu basis, at ease of ordering basis,
Like you could know exactly what to fix where in
your operations without harassing your guests with fifty questions. Now, Mike,
I do want to have one like giant asterix here
(13:44):
while I am the anti survey survey guy, and I
think that that's like a very appropriate, very appropriate like title.
I do believe that long surveys have a place I
think of. I wrote a book about dating, and the
way that I think about long surveys, long surveys are
are like the first kiss, you know, like when you
(14:06):
go to pick up a blind date. You don't open
up the door and just kiss them on the doorstep
right when you go to pick them up. No, maybe
it was a really good first date. Maybe at the end,
you know, and I think that like, but the concept
is maybe later on, more more likely than not. But
the concept is it has a place, but its place
(14:28):
is not initially because when a guest wants to reach out,
they want to reach out for a reason, Mike. They
want to reach out because you forgot their sauce, you
forgot their fries, that the server, the server was rude.
There's something that is on their mind that is a
very emotional thing, and that's what they want to tell you.
(14:51):
And so I think that that's one of the very
key things that's critical to remember is that a survey
is not bad. It's just a survey upfront is And
what we say is let the guest get the feeling
off their chest, and then an hour later or the
next day, you can get the data that you want
(15:13):
that might not be structured in that in a in
a might not be included in unstructured feedback. For example,
we have customers right now that are asking about their ltos.
All right, Mike, you come into zach Shack and we're
doing a peanut butter and jelly hamburger, and I'll ask
you Mike, did you enjoy the peanut butter and did
you try the peanut butter and jelly hamburger. If you
(15:35):
say yes, I say great, tell me more about it.
If you say no, I say great, here's a here's
a five dollars off coupon to come and get that
lto So now we're driving you know, recency, and we're
driving spend and we're doing it all while collecting data.
And that's just like one example. Another example is if
(15:58):
you're you have a restaurant in Vega, and you want
to do text marketing, but you don't know who's local
and who's not. Great, ask a follow up question, do
you live in Vegas? And then you're not sending your
text messages to people who live in sheboygan that we're
there for a bachelorette party and so you know, or
if you want to ask about you know, how did
(16:19):
you hear about us? So you can measure the effectiveness
of different forms of marketing. Great, and so all of
these things are possible with long form surveys, and all
of these things are unlikely to come up in unstructured data.
But what we found is that if you ask the
two question survey first, and you followed up with a
(16:40):
long form survey, you actually will get more long surveys
completed than if you start with a long form survey.
And so that's the Ovation way is we make sure
that the guest gets the emotion off. We make sure
that the restaurant can have a really easy path to
handle that guests and either through you know, if they
(17:01):
loved it, let's get them to drive more revenue. If
they didn't love it, let's have AI help us recover them.
But then you need to separate what is a one
off issue and what's a consistent problem. And so ovation
helps to bifurcate that with our AI to say, hey,
Mike had a problem with the service, and turns out
(17:23):
that nobody else complained about service this month, and so
let's apologize to Mike, but let's not beat up our
staff over service because one person complained about it. But
let's say that there's a specific location that has a
five percent higher incident rate, which is, if you take
the total number total pieces of feedback and you look
(17:47):
at what percentage of those had an incident about service,
if they are five percent higher than the average restaurant
in your group. Then yeah, you need to go talk
to that location about service and retrain them on the
Zach Shack way of being friendly and treating customers. And
then the final step to this piece here, Mike, is
(18:09):
that all of that data is great and I love
being able to share data with restaurants, but you gotta
do something with it. And so what we do is
we have this whole entire goals module that uses AI
to tell that GM, here's exactly what you need to
do to improve, here's what you should be focused on.
(18:30):
And then with the guest feedback, we track how well
that GM is doing, and we give the brands a
dashboard to easily view every location in one spot and
which ones are on track, off track, how are they doing,
what are they working on, and if you want them
to work on something different besides what the AI thinks
is going to be best, great, click a button and
(18:51):
override that. And so that's that's the power of collecting it,
taking action in the moment, finding the trends and fixing
those trends, and measuring that by collecting the feedback. Very cool,
And what was the question.
Speaker 1 (19:07):
I forget? But a quick aside Zach's Dating book has
phenomenal reviews on Amazon.
Speaker 2 (19:13):
Uh huh, talk to me a little bit about the
quantity of responses versus severity.
Speaker 3 (19:21):
Yeah, so this is something where a lot of times
people will get feedback, and especially when they're looking at
their unstructured feedback. And guess what the majority of feedback
is going to be about. Mike, we're in restaurants. What
do you think the majority of feedback is about food? Food?
And so people are sitting there in these offices just
(19:42):
pouring over this feedback about food, trying to understand. Okay,
Mike said it was too salty, but then somebody else
said it wasn't salty enough. You know, someone said it
was too spicy, someone said it wasn't spicy enough. Okay,
how do we tw tweak? Tweak, tweak. There absolutely is
a time and a place for that, and you've amazing.
Food is now table stakes. The problem that we find
(20:05):
is that food is not usually the reason that people
get most angry, and that anger is gonna yield to
negative reviews. That anger is gonna yield to I'm never
trying them again. That anger is gonna yield to Hey,
I'm telling fifteen of my friends not to go to
zach Shack. It's not the food, because food is very
(20:30):
it's very preferential based. The same exact food is gonna
be you know, it's gonna be great to someone and
terrible to somebody else. Right now, there are mistakes that
are made. Something is burnt, something is you know, the
rice is dry, like there may be some things like
that that, yeah, you can improve operationally. But then you
(20:54):
get to this middle ground of service, which is a
little more on the black and white of hey, were
you nice to me or not. Now, if I'm having
a bad day and I go into a restaurant and
somebody doesn't kind of go above and beyond, I may
think they're being rude. If I go into a restaurant
with four kids and I'm waiting for five minutes for
(21:16):
my food, that may feel like twenty minutes, right if
I'm by myself, or if I'm just like, if I'm
on a date and they bring me my food in
five minutes, I'm like, now, like, give me some more time, Like,
you know, we're still breaking the ice here, you know,
Or my wife and I were sitting down, we want
more time to talk because we're finally you know, the kids,
got a babysitter, so like, I'm not in a rush.
(21:38):
A little more subjective, but that's going to get you
angry reviews. If someone is believes that they were not
treated well, if someone was told that they are, if
someone like waited too long for their food, that's kind
of in that middle ground. But then on the far
right you have accuracy. And what we find is that
(22:00):
is completely black or white. I ordered fries, I didn't
get fries. I ordered a burger with mustard. I didn't
get mustard. Now the black and white may be they
ordered it wrong, but at the end of the day,
it's still black and white. What they either they placed
an order incorrectly, or they placed it or correctly and
(22:21):
they got an incorrect order. Either way, that accuracy is
going to represent a very small percentage. When you look
at food service accuracy, that accuracy represents a very small
percentage of feedback, and it represents the majority of negative reviews.
Of the worst reviews you get are about accuracy. So
(22:42):
someone can look at our ovation dashboard and say, ah, man, like,
you know, I'm getting fifteen percent complaints about food and
I only have six percent complaints about accuracy. I'm going
to focus on food. You're focusing on the wrong ship here,
because those are people where everything was great, but accuracy.
That's a fast way to lose customers and gain five
(23:06):
to gain one star reviews. And service is going to
be the next, uh, you know, the next ladder up
of You got to fix your service. You got to
make sure that people are are being treated the way
that they're expected to be treated, knowing that there is
some subjectivity there. And then with the food, yes, fix
(23:26):
the consistent problems, but again, don't be so concerned about
the ones that are completely opposite feedback just because the
fact is you're a restaurant, you're going to get most
of your complaints about food. So figure out, and this
is something that we help you to do. What about
that food needs to be changed? And what about that
(23:47):
food has been totally is totally preferenced And Mike just
might not like zach Shachsberger's and that's okay. And so anyway,
that's that's the advice I give people, is like, if
you're going to start with one thing, start with order accuracy,
because that makes I mean, last night, Mike, I ordered
from a restaurant I'm not gonna say who I ordered
from a restaurant. I got home and they didn't give
(24:11):
me two sides. Now I've got I just got back
from a crazy long conference, traveling all day. My wife
is with you know, the four kids by herself for
like four days. She's tired. I'm like, hey, I'll pick
up food on the way home. Don't worry about cooking tonight.
I get it. I get home, I open it up,
(24:33):
and what my wife wanted wasn't there. You better believe.
It was like so frustrating. And then when I call them,
they're like, okay, well, well we'll make that for you.
Just come by and pick it up. And I'm like,
that's not gonna happen. I'm not taking an additional thirty
minutes to go because you messed up my order. And
so I was very, very frustrated by that. And that
(24:56):
is what is going to really cause a a huge
concern for brands and going to cause those negative reviews.
So watch out for that. Don't be so consumed by
the loud or the many that you lose sight of
the few, but the important.
Speaker 2 (25:17):
Yeah, that's really interesting, And to your point, there's nothing
worse when you get a delivery order, you know, an
incorrect delivery order, so frustrating. Are there any trends right
now that are cropping up across your customer base.
Speaker 3 (25:30):
Yeah, I will say a lot of people talk about value,
and a lot of people are saying right now, like, hey,
you got to take price, take price, take price, but
it can't take price because you know, I you know cost,
you know, price sensitivity with customers. What we're finding is
that people are okay to spend more money. They just
(25:52):
want to get what they're paying for. They're everything has
gone up in price. People are not shot by prices
anymore other than I mean, there's a couple of burger
places that I've gone too lately and I got like
a burger, a small burger, a small fry, and a
small soda, and I spent twenty five bucks and I'm like,
I'm like, I'm not ordering door Dash, like I'm right here.
(26:14):
But anyway, so that was a little bit surprising. But
the fact is that, like, people are used to spending
more money, and so they're okay with it, but you
gotta make sure you nail it. You cannot afford to
have a missing item, to have a missing ingredient. Especially
Oh my gosh, Mike, if you want to see people
who are really mad, you should read reviews of people
(26:38):
who paid seventy five cents for extra sauce and the
sauce didn't come that. Those reviews are fascinating to read
because it's just like the vending machine principle of if
I put a dollar in the vending machine and my
candy bar comes out, I'm like, well, yeah, I got
what I paid for. If I put a dollar in
and two candy bars come out, it's like, oh wow,
(27:00):
really cool. Like that, that's great. I'm like pleasantly surprised, right,
But I'm not like shouting it from the rooftops. Right.
But if I put in a dollar, mic and so
help that vending machine if that candy bar gets stuck
in there. Right, But I mean like we're going hulk
on that. We're grabbing that, we're shaking the vending machine,
(27:20):
we're smashing into it, because it's not about the dollar.
It's about not getting what you're paid for. And so
that's the thing we're seeing in our trends is that
the value discussions are tied to unmet expectations, not tied
to everything's getting more expensive. But what we are finding
(27:43):
too is that people are noticing shrinkflation and they're they're
hyper focused on that. So if you change your packaging,
we had a customer same you know, they weigh their food,
same exact food when they get it in store versus
when they get it delivered or get it to go.
But the to go complaints are all about how portion
(28:04):
sizes have gotten smaller, and people are hyper sensitive to that,
just because the packaging makes it look like it's smaller,
but it's the same weight. But the difference between eating
something on a plate and eating something in a you know,
to go container, it looks different, it's not as spread out.
And so think about that because perception is reality. And
(28:30):
if someone thinks they're getting less, guess what. I don't
care how much and how perfectly you weigh that to
the hundredth of the of a decimal for the ounce.
But if they think they got less, then they got less.
And so just keep that in mind as you're thinking
about your to go orders, especially because people are noticing
(28:52):
they are on the lookout for getting ripped off in
their words, and they want to get what they paid for.
So That's why, again, the accuracy comes into play so much,
because if I order from you and you mess up
my order, guess what. There's a lot of fried chicken
places out there, and I'm gonna give someone else a
(29:14):
shot to keep to get my business to put in
the rotation.
Speaker 1 (29:18):
Yeah, that's really interesting.
Speaker 2 (29:20):
And about the sauces, man, I'd imagine part of that
is to the fact that some competitors may give you
the sauce for free, right, And so if I'm paying
extra for something I feel like should be free and
then I don't get it, it just adds a little
more salt in the wound.
Speaker 3 (29:36):
Yeah, exactly, that's exactly right.
Speaker 2 (29:39):
Last time we spoke, we discussed the service recovery paradox.
Speaker 1 (29:43):
I think that is absolutely fascinating. Please please speak a
little bit about that.
Speaker 3 (29:48):
So a lot of people say that a bad review
is a gift, and it is, but if it's online,
the problem is you're unlikely to get it changed, and
you're unlikely to really be in contact with that guest.
And when you're giving stuff away in a response to
a negative review, that's basically just like teaching people, hey,
(30:09):
leave a review, we'll give you free stuff. So The
trick of this is getting a private feedback tool that
you're able to connect with that guest in real time
before they leave that negative review. But that negative guest,
when compared to the average guest, is actually worth more.
And they've done PhD studies about the service recovery paradox,
(30:33):
and basically the thesis is, and that's been proven out
time and time again, is a guest that has a
service failure and proper service recovery is more likely to
become loyal than a guest who never had a service
failure in the first place. So I went to our
data and I said, okay, we've got the data here.
I've never seen dollars like how much more valuable. What
(30:54):
we found is that the average guest, let's just talk
about retention rate. Average guest retention rate is thirty percent.
This is, by the way, we followed one hundred and
fifty thousand consumers over eighteen months to track this data.
Thirty percent retention rates average. If they have an amazing
experience and they're willing to go on and even take
(31:15):
an ovation survey and say I had a five out
of five experience, they have a sixty percent retention rate,
and if they had a negative experience with no service recovery,
they have a thirteen percent retention rate. Okay, so here
we are thirty average, sixty happy, thirteen upset. Now what
(31:36):
happens if they have an upset? If they're equally as upset,
but the only difference is that they get responded to.
And I'm going to put a caveat here, if they
get responded to using our AI, And I'll tell you
why in a second. What happens is that guest compared
to the average guest, they don't have a thirty percent
(31:58):
or even a sixty percent retention rate. They go from
thirteen percent to sixty eight percent retention rate. Not only that,
but they come in four times more frequently than the
average guest. Not only that they spend five dollars more
per visit than the average guest, and not only that
(32:19):
they are twelve times more likely to leave you a
five star review. So the recovered guest is actually worth
twenty four times the value of the average guest. And
the reason I say AI is because what we found
is that our AI is actually ten percent better at
winning back. The recovery rate is ten percent higher than
(32:40):
if you don't use AI, and there's a few reasons
for that, but one of the main reasons is because
they're actually you're taking some of the emotion out of it,
and so it's not a combative conversation, but it's a
understanding conversation. But also because you're using their name, and
a lot of times when we respond to guests, we
(33:02):
forget to use their name. If we're using like a
chat a chat tool, AI will always remember to say Mike,
and they'll say Zach, Mike. Hey, Mike's so sorry about
your experience with us and that our our rice was dry.
We always drive for excellent food. Seems like we missed
the mark this time. Let me give you five dollars
(33:24):
off and would love to welcome you back again. I'm Zach.
Let me know if I could do anything to help out,
you know, like and then we send them that you
could send them that offer. What is interesting though, is
that sending an offer it increases the retention rate a
little bit, but using a name increases the retention rate more,
(33:45):
and so it's less about giving people something, it's more
about giving them a feeling. It's helping them feel heard.
Whereas will Gadera puts it feel seen right, because my
definition of hospitality, after you know, seeing millions millions of
customers go through the ovation platform and see what they
(34:06):
care about the most, is hospitality is proving to the
guests that you care. And you can care by doing
a little bit extra and helping them feel Specially, you
can care by meeting their expectations consistently. You can care
by apologizing and making it right, and you could care
by fixing your operations and actually following up with people
(34:28):
to say, hey, you told us that the rice was dry.
We actually realized that we are cooking too much rice
in the afternoons. Thank you so much for helping us
out with that. We've made that change and hope that
you'll notice a difference. Those those customers who go like
above and beyond, they become not just lifelong fans, but
they become insane fans. And that's like you're catering my
(34:53):
wedding type fan. And that's what we need to have
staying power in this economy and this much competition, and
with the cost of getting a new guest being so
irrationally high nowadays that you almost can't afford to spend
the money required to get into someone's regular rotation, and
(35:15):
so you just you have to rely on being very
vigilant listening to your fans and making sure that that
you create experiences even when things go wrong, that make
them want to bring other people in. I love it.
Speaker 1 (35:33):
That's a perfect place to wrap it up. Thanks again, Zach.
Speaker 2 (35:35):
Where can listeners go to learn more about ovation and
find your podcast?
Speaker 1 (35:39):
Which is fantastic by the way.
Speaker 3 (35:41):
Well that's because you've been on it, Mike. You could
check us out at ovation up dot com or go
check out given ovation at anywhere your favorite podcast is found.
Speaker 2 (35:53):
All right, good stuff. I want to also thank the
audience for tuning in. If you liked our discussion, please
share with your friends and colleagues.
Speaker 1 (35:59):
Check back soon for
Speaker 2 (36:01):
An interview with Joe Keith Valver, managing partner at A
Line Public Strategics.
Host
Michael Halen
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