January 4, 2024 • 33 mins
A record number of restaurant-tech companies could shut their doors for good in 2024, Juan George, co-founder of 858 Partners, tells Bloomberg Intelligence. In this episode of the Choppin’ It Up podcast, George sits down with BI’s senior restaurant and foodservice analyst Michael Halen to discuss difficulties facing companies that make “nice to have” restaurant technology, including raising capital, stalling top-line growth and falling valuations. He also comments on all-in-one solutions and explains why building proprietary tech isn’t a serious consideration for most restaurant chains.
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Episode Transcript
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Speaker 1 (00:14):
Welcome to Chopping It Up.
Speaker 2 (00:15):
I'm your host, Mike Hallon, the senior restaurant and food
service analyst.
Speaker 1 (00:18):
At Bloomberg Intelligence.
Speaker 2 (00:20):
Today we're joined by Juwan George, co founder of eight
five eight Partners, an investment firm and consultancy focused on
restaurant tech.
Speaker 1 (00:28):
Thanks for doing this, Juwan.
Speaker 3 (00:30):
Yeah, thanks, Mike. Excited to chop it up with restaurant
tech with you today.
Speaker 1 (00:35):
For sure, Man, I've been looking forward to this.
Speaker 2 (00:37):
We've been talking about doing this for a while, so
let's just jump right in. There won't be an eight
five eight Partners if OLO didn't exist, So why don't
we start with your career experience at OLO?
Speaker 3 (00:48):
Yeah, for sure. So you know, my story is I
joined OLO during the senior year of college back in
March of two thousand and seven, and you know, had
just turned twenty one years old. Didn't know what I
was going to do post college, but saw a visionary
leader in Noah and a company that was chasing an
(01:08):
idea that I totally believed in. And it was the
idea that one day customers were going to treat their
phones as the remote controls for their lives and order
and pay for their food in advance. So for me,
it was a fifteen and a half year journey there
that I would break up into three chapters. This first
chapter is what I would label your kind of product
(01:29):
market fit, trying to find that, and it was a
seven year chapter in which it took to get to
one million dollars in arr and. So we were based
in New York City at that time, you know, one
of the earliest restaurant tech but just tech companies in
that ecosystem. And really during that seven year period, Olo
was predominantly this twelve person company of people in their
(01:52):
twenties who have now become friends of mine, and we
were just simply ahead of its time, right, you know,
they say you're twenty for learning. And we lost one
hundred more times than we won in that era, but
we held on to this Winston Churchill quote which was
never ever ever give up, and ultimately we found this
fast moving water in a customer out of Texas that
(02:16):
at that point in time helped us take this B
two C business into a B to B two C
business and we got our first major win with five
Guys burgers and fries that helped us get that elusive
product market fit that every startup, every technology company hopes for,
and that unlocked the second chapter, the rocket Ship years
(02:37):
a million to forty five million an arr and it
was a six year period in which we were doubling
the company every year. We had just hired our first
leadership team, including my mentor and current business partner, Marty Hantfeld,
this head of sales, and during that period of time
really Olo became the gold standard in enterprise e commerce
(03:00):
ordering and really introduced new modules that were groundbreaking for
the industry around third party delivery, a product called Dispatch,
a product called Rails, and that really helped propel our
lead forward past dozens of omline or green competitors in
that era, and we largely focused on what I call
the mighty middle of the market, right, so not the
(03:22):
SMB's mom and pops and not the big guys like McDonald's,
but rather fifty locations to three thousand locations, and we
worked exclusively with restaurant brand HQs. So I spent most
of those years on an airplane accruing all the status
points and going to hundreds of restaurant brand HQUS and
(03:43):
it unlocked the final chapter, Chapter three, an era of
which we took the company from a private offering to
a public offering. And this was you know, January twenty twenty,
I got the Jersey call to lead the enterprise sales team,
and so I was leading that team but also selling
and we all know what happened in March of that year.
Olo went from must have tech to mission critical tech.
(04:07):
And you know, still remembering this earnings call from Wyman
Roberts over at Brinker talking about seventy percent of transactions
coming through the OLO platform. That is what we were
seeing across the board for our customers. And so it
was a difficult time, you know, a busy time, and
I felt like I took a breadth in December of
(04:27):
twenty twenty, looked up at the scoreboard. There were fourteen
thousand new locations we added, and we doubled the company
from forty five to ninety eight million in arr and
it was really that which allowed us to take the
company public that March of twenty twenty one. So, you know,
a fifteen and a half year adventure, right the American
startup dream. You know, over the last really decade, there's
(04:51):
only been a few restaurant tech companies that have gone public.
Think about your toast, your DoorDash, your square, your uber
and Olo and Olo was the only one that did
it as an enterprise focus B to B two C company.
So I operated in that role for fifteen months. We
acquired two companies, we beefed up the team, and you know,
when it's time, it's time. I exited the company in
(05:13):
August of twenty two as we were approaching about two
hundred million ERA R and lots of stats that we
could be proud about there, but seventy one percent of
the enterprise market became customers. But the stat I'm proud
of us about was this ninety nine percent retention rate
of our customers. And it was really that retention rate
that allowed us to build the relationship capital to do
(05:35):
what we're doing today with eight five day partners.
Speaker 2 (05:39):
Very cool, man, It sounds like it sounds like it
was fun, you know, and the time to take your
shot is in your twenties, man, so it sounded like
it lined up pretty well for you and your friends
at all.
Speaker 3 (05:50):
It was a good ride and wouldn't have done it
any other way than doing the one company thing.
Speaker 2 (05:54):
For sure.
Speaker 1 (05:57):
Very cool.
Speaker 2 (05:57):
So what problems was eight five eight created to solve
and what opportunities can the firm and its clients take
advantage of right now.
Speaker 3 (06:07):
So I mean after leaving Olo last year, Marty, who
also lives in San Diego, I referenced earlier, had left
OLO forty five days prior, and we started just conversing
over cocktails and coffee in San Diego, and we started
calling the restaurant brand operators, the restaurant tech companies, and
(06:27):
the restaurant tech investors, and we kept hearing a lot
of pitches for what we consider to be nice to
have non essential tech, and we weren't hearing a lot
of themes and pitches for must have or mission critical
solutions to really solve the problems that our friends the
brands were anxious to address. So really to help our
(06:49):
own restaurant brand friends and technology companies, we formed eight
five A partners this year January to really invest in
one to three must have technology solutions, but also to
advise the next generation of restaurant technology winners that were
focused on that mid market and enterprise that we had
focused on. But you know, like most startups, not everything
(07:12):
has gone according to plan on the investment side. You know,
this side of the business has been challenging, no doubt.
It's not due to a lack of interest, but rather
due to the current state of the markets and valuations. Right,
it's a tough moment for a new investment platform to
put on the training wheels and try to figure out
what the right entry point and valuation is.
Speaker 1 (07:34):
So, you know, we.
Speaker 3 (07:35):
Also had a big offset in the form of demand
in the advisory practice, so that's where the focus has
been and really will go for the foreseeable feature, so
you know, to really fill that demand, we brought on
in mid year Sep Hall, who was the former head
of sales at OLO on the East Coast, and Jackie Berg,
(07:56):
who was the former head of marketing at OLO, to
lead this goat to market and marketing and brand practice
here at A five eight, And between the four of us,
we're responsible for closing more enterprise software deals than anyone
in this industry over the past decade, right, So that's
what we bring and so in a nutshell, A five
eight helps launch and scale mid market and enterprise sales,
(08:19):
marketing and customer success programs for restaurant tech companies. And
so we're sitting here now at the end of December,
we've helped close to a dozen restaurant technology companies on
their playbooks for enterprise and mid market, and we're excited
to double down on this industry that we love and
help this next generation. So we'll bring on new resources,
(08:43):
new customers going into twenty twenty four, and yeah, we've
never been more fired up.
Speaker 1 (08:49):
That's cool, man.
Speaker 2 (08:50):
It seems like there's a huge opportunity for you there
because the companies that have had successful exits seem to
have great sales teams, and I feel like they're there's
some really good products out there that took a long
time to gain traction, and they really couldn't make traction
until they brought on some experienced salespeople.
Speaker 1 (09:13):
To be clear, you.
Speaker 3 (09:14):
Know, it took a long time for Holo to get
to where it got to, and it doesn't need to
take fifteen and a half years for the next company
to reach a milestone. You know, at Olo, we went
through two sales leaders in that first chapter until we
got it right with Marty, and I think about those learnings, frankly,
the mistakes that we made way more mistakes than wins
(09:36):
to guide those companies and not making the same mistakes.
Speaker 1 (09:39):
That we did. Yeah.
Speaker 2 (09:42):
Cool, So who is the ideal customer for your advisory business?
Speaker 3 (09:47):
Yeah, so we think about the ideal customer profile as
you know, a must have restaurant tech platform, right, companies
that ultimately we're hearing themes for. And so backing up,
you know, we've created an advisory board of roughly thirty
operators that represent forty thousand locations, right, So we have
(10:10):
that benefit to hear firsthand from those operators what they're
working on, what problems they're having, who they're having the
problems with, what solutions they're looking for, and we act
as a trusted back channel to those brand and resource
So we take those themes ultimately and try to map
those two solutions in our advisory practice. So to answer
(10:31):
your question, I think we're hearing a lot of themes
this go around largely to do with the back of
the house than the front of the house. And so
we've mapped ourselves to close again a dozen technology platforms
that are addressing those problems.
Speaker 1 (10:46):
That we're here. Okay, cool, you answer my next question.
Speaker 2 (10:51):
Yeah, I was wondering if it was going to be
consumer facing tech back of the house front of the house.
So Yeah, we've come across some interesting solutions on the
back of the house through our research, you know. So
it's interesting how that that's evolving. Anything that you find interesting,
maybe things that you're not invested in right now or
but in that back of the house area.
Speaker 3 (11:12):
Yeah, I think, you know, kind of thinking about an example,
third party delivery reconciliation. Right, So this was a problem
that we heard over and over while at OLO, which
was we now are omni channel businesses that accept orders
from first party transactions, but now third party transactions for
(11:36):
both catering for now takeout for delivery, and all of
these different parties pay us on different increments, and our
settlements aren't adding up to what our accounting teams say
should or shouldn't be in there, right and so interesting
that's such a pain point, and again we saw it,
didn't address it during those years. But now we've seen
(11:59):
half a dozen let's call it best of breed solutions
pop up in that market, and so we've backed one
called loop AI in our practice, which we believe has
the best product but is attacking that head on as
let's call it a delivery intelligence tool of sorts to
capture offline customers. Right, so stores being offline when they shouldn't,
(12:20):
stores to recapture chargeback data, marketplace facilitator taxes. And so
that's just an example overwhelmingly that we're hearing from that
advisory board.
Speaker 1 (12:31):
Okay, cool.
Speaker 2 (12:33):
Another one I found interesting recently was a company using
cameras and AI to get order accuracy.
Speaker 3 (12:41):
Right, Yeah, no doubt, We've looked at that space extensively.
AI is no doubt a buzzword here. Can't tell what's
actually AI and what's actually not. So for example, you know,
we got a pitch for a restaurant technology AI video
(13:02):
surveillance company that was ultimately looking to fight that same
issue that I referenced earlier with chargebacks, And when we
drilled into it, the AI was actually people in the
Philippines that were watching the camera and would flag when
an issue happened. Right, So I didn't realize AI meant
to glorified security guards, but that's what it meant. And
(13:24):
that specific.
Speaker 2 (13:25):
Example, Yeah, yeah, some of that news hit the wires. Man,
it is pretty wild, right, so yeah, it makes you
you know, it's it's funny, man. But when you see
you know what we will call it a bubble and
at least the use of the term AI. Right, Like
when you see bubbles, you know, you have people that
(13:46):
are trying to take advantage.
Speaker 1 (13:48):
Of some of the things they're seeing.
Speaker 2 (13:50):
But if somebody can make that technology work, man, it
sounds like it sounds it sounds pretty interesting for sure.
Speaker 1 (13:57):
You know.
Speaker 2 (13:57):
Obviously, helping food waste and making your customers a lot
happier is key for these restaurant chains that are doing
heavy delivery business.
Speaker 3 (14:05):
You know, to be clear, we're bullish on that use case.
We just don't think it's the first generation of companies
that will win.
Speaker 1 (14:15):
Yeah. Yeah, interesting.
Speaker 2 (14:19):
You know, as we you know, all know, restaurant chains
have been aggressively updating their tech stax post pandemic. I guess,
big picture, where are we right now? Where's the restaurant
industry with restaurant tech at the moment.
Speaker 3 (14:31):
Yeah, so I think about, you know, the years leading
up to twenty twenty three, and they were really the
years that I'd labeled the California gold Rush of restaurant tech. Right,
So there was a wave of companies, some new, some old,
that hit the market primed with solutions to sell to
this massive total addressable market of SMB mid market and
(14:55):
enterprise restaurant brands. And it's also i'd call it that
zurp right, the zero interest era. So restaurant technology companies
could raise capital at rich valuations from the venture capital community,
they could hire staff by the dozens, and they could
just burn through the cash in the bank, knowing that
there was more at the end of that. And so
(15:16):
again I remember seeing some of these pitch decks. Right,
we worked with Burger King, we worked with KFC, We're
in deep discussions with Chick fil A, when in reality
it was random franchisees of those chains and they had
one conversation with the innovation department at Chick fil A. So,
you know, fast forward to today, you know, it's an
incredibly difficult time to raise capital. Your companies have been
(15:39):
forced to do more with less. This past year has
been plagued with reductions and forces in the headlines from
the large enterprise companies. Valuations have come back to earth.
In many cases, it's half or less of what the
last valuation that was previously assigned to them, and growth
has frankly stalled right from the past year, and in
(16:02):
some cases, by the way, it's negative because of churn
with their customer base. So ultimately, at the end of
the day, restaurant tech companies are dealing with a buying
freeze from the operators on all nice to have tech
that the operators instituted in twenty twenty three. And so
these restaurant tech companies that are nice to have are
(16:23):
running out of cash and they're running out of time,
and so this go around, there's not endless capital that's
going to be supplied to them when they run out
of cash. So it reminds me of the two thousand
and nine to twenty twelve timeframe. Going back in restaurant tech,
there were companies like Exit forty one that's going to
(16:44):
be a throwback to some of your audience, but it
was an online ordering company, a competitor of Oolo's at
the time. They raised over fifty million dollars in that
era and it just evaporated overnight. And so, you know,
I think about the Brita Rosenheim Wheel right this like
twenty twenty three restaurant Tech Ecosystem wheel that she put out,
(17:05):
and there's over two hundred and fifty restaurant tech companies.
Speaker 1 (17:08):
On that wheel.
Speaker 3 (17:09):
So there's a lot of solutions to a lot of problems,
and most of that wheel, we believe just doesn't need
to exist and represents nice to have solutions in the market.
So there's data recently that has come out of Karta,
which is a table management software, and it showed in
Q three of twenty twenty three that there were over
(17:30):
two hundred startups that shut down and that's been steadily
increasing quarter over quarter over the last four quarters. And
so we expect in twenty twenty four for there to
be a record number of restaurant technology companies that'll shut
their doors for good. And I think in parallel, the
next twelve months should actually prove super interesting from an
(17:53):
M and A and consolidation perspective. You know, starting with
the publicly traded restaurant tech companies, these companies spent the
last year getting fit and now they're seeing their valuations
rise just a little bit. Those companies DoorDash, for example,
they've got four plus billion dollars sitting in the bank
toast a billion dollars sitting on the bank. And we
(18:16):
know companies like par have been known to be acquisitive
over the last three to four years. So from my perspective,
it's a great time for these operating platforms to put
some of that cash and some of that equity to work.
There's going to be companies that are available at a
fraction of their value and really could help them do
more with their existing customer base and push their lead further.
(18:39):
And I think in the same vein there's going to
be many private companies that realize that M and A
is going to be the only option for them. Right.
That should also make for some interesting deals. But think
about as anario, Right, there's two competitors in the same space.
They're both not getting meaningful traction. They could join forces
and attack an operating platform together and they probably be
(19:01):
better off than worse. Right, So it's an area that
we're watching closely and looking to contribute in for twenty
twenty four.
Speaker 1 (19:09):
Cool.
Speaker 2 (19:09):
Yeah, it it sounds like it. It'll provide you with
some opportunities. But there's a lot of parallels with you know,
my world with the restaurant space, you know, in terms
of s sloads significantly, but you know, as those private
valuations have come down and lending costs of risen, But
the strategics with those those strong balance sheets especially seem
(19:33):
to be poised to do most of the deals next year, right, All.
Speaker 1 (19:39):
Right, good stuff.
Speaker 2 (19:40):
So what issues are restaurant tech companies having with their
go to market strategy at the moment?
Speaker 3 (19:46):
Yeah, well, you know, restaurant operators are dealing with serious
tech fatigue at both the brand and the store level.
There's multiple dashboard fatigue. There's one hundred and ninety nine
dollars per month per service fatigue. There's finger pointing fatigue
amongst all these different providers, and in many cases, with
(20:08):
the solutions they're purchasing, the operators they're only using a
sliver of the services, they're over paying for them, and
there's a steep learning curve to both getting them up
and running from a deployment perspective and maintaining them. So,
you know, at the same time, I think about from
an operator perspective. Operators these days could barely open up
(20:30):
their emails without literally getting dozens of new emails from
vendors every single day trying to sell them something. You know,
they try and find solace and go to LinkedIn and
connect with their peers, and they're greeted by a bunch
of people in an ever escalating social media contest. Who
(20:50):
could yell louder and they go to a restaurant conference
and get accosted by half a dozen sales guys that
are selling them some AI solution. So I think restaur
operators are fed up, you know. So here's the big
problem for restaurant tech companies. You know, Ultimately, they're banging
their heads against the wall because they're not selling anything, right,
and they believe the solution is to send more emails.
(21:14):
And these same companies show up to that restaurant conference
praying for a different outcome, but they show up with
little to no preparation. They're staring at operator badges, and
they're just hanging out in the lobby bar with all
the other restaurant tech people that are not selling anything.
So it's just not working. And so this is part
(21:34):
of the work that we're doing in this go to
market advisory and marketing and brand practice here at eight
five eight, you know, we've entered a new market and
a new era of go to market. It's all about
if at least you're serious about mid market and enterprise.
That's my qualifier. Focus segmentation and creative messaging, your quality
(21:55):
over quantity, that's what's going to win and restaurantech tech
companies that want to win in this market need to
align themselves, in our view, with influencers and advisors that
can help them understand the accounts and really create these
multi threaded game plans on their ideal customer profile accounts.
So that's what we're doing here at eight five eight,
(22:15):
and we feel like we're we're seeing that trend overwhelmingly
very interesting.
Speaker 2 (22:23):
So the restaurant chains on the advisory board, should they
be looking for an all in one tech solution or
would they be better off cobbling together a bunch of
best of breed options or is it?
Speaker 1 (22:35):
Is it you know, case specific?
Speaker 3 (22:38):
Yeah, So I think overwhelmingly going back to that advisory board,
you know, we hold calls with that group once a
quarter and so it's just individual calls and we hear
from them what they're working on, what's must have, what's
nice to have. And I think the themes that we're
hearing a lot of are around all in one versus
best and breed, and then back of the house versus
(23:00):
front of the house. So I'll start with the all
in one versus best of breed. I think about my
first decade in the industry, going back to the two
thousand and seven you know, kind of those few years,
companies like NCR Micros. You know, they were the one
boat to choke operating platforms that ruled the industry, and
(23:20):
as they signed up to play a bigger role, this
is when the first generation of POS companies really started
to tumble, right. The contracts became too big, the products
that they released to compete with the best of REED
solutions didn't keep up with the times. And it's like
the dreaded TV VCR combo of the nineties, right, you know,
(23:42):
when the VCR stops working, you hate the whole device.
And so, you know, fast forward to today. I think
we're amidst an economic slowdown akin to two thousand and
eight to twenty ten, and there's a new wave of
operating platforms out there, companies like par toast Olo, Door Dash,
and everyone of those companies is in a digital arms
(24:06):
race and trying to do more with their existing customers.
So it's a very tense time in the world of
restaurant tech. It's what we refer to as frenemy behavior
technology companies that are actually true competitors but have to
partner in many of the same accounts, so it's going
(24:27):
to lead to a lot of deception and confusion, frankly
amongst the operators who are hearing mixed messages from various parties.
So with all this front of meb behavior that's happening
in the background using a single provider, But at the
same time, those same operators want the cost efficiencies that
come with bundled solutions and don't want to have to
(24:48):
manage all these different relationships and dashboards and partnerships. So
I think the best of breeding solutions, no doubt, they
have a shot, but they're up against a wall that's
compared to three to five years ago. So there's an
argument that the pendulum has already swung to the operating
platforms because of that advantage on distribution. They've got large
(25:11):
balance sheets, they've got large R and D development teams,
and again they've got the existing customer relationships that the
best of breed companies just don't have. So our prediction
here is the cycle continues, and operators are going to
choose to do more business with fewer providers if and
when they choose to open their wallets.
Speaker 2 (25:32):
Cool very interesting proprietary tech versus SaaS solutions should restaurants
build or buy?
Speaker 3 (25:41):
Yeah, well, there's a story that has come out recently
with relation to Wingstop, and you know, disclosure, I'm a
little close to that story. I helped architect the Holo
and Wingstop deal a decade ago and no doubt one
of my favorite projects and deals of all time. So
if you missed the news, Wingstop announced on their last
(26:03):
earnings call that they were leaving OLO in lieu of
a build your own system called my Wingstop and they've
to date spent fifty million dollars on that built. So
backing up, you know, OLO helped Wingstop really become a
digital ordering juggernaut over the past decade. When they came
to Olo, they were at seven and a half percent
(26:25):
of sales, about forty million dollars of sales annually, and
up until this announcement, they've gotten to sixty six percent
of sales, which is two billion dollars annually coming through
that platform. So it was no doubt a success. And
OLO came out and into that system at a time
when their previous digital ordering platform it crashed on Super
(26:48):
Bowl Sunday. Imagine that to twenty thirteen, probably the worst
day in the brand's history totally right, like no, imagine
how many parties got ruined that day. And you know
they came to Olo for reliability, for stability, and for innovation,
and that's exactly what was delivered. I think it was
a true partnership. Somewhere along the way, though, Wingstop believed
(27:12):
that it was such an important channel to them to
outsource that they could do a better job than Olo
to really digitize the remaining third of the customer base
that was still analog. So I think time will tell
if that was a good move. I'm grateful for the
bonds that were forged between the companies, and I wish
the companies handled it differently from a breakup perspective. But
(27:36):
you know, in my opinion, the new generation of digital
leaders are Panera, Chipotle, Sweet Green Shakeshack, and Wingstop, and
up until now, only two of them have successfully built
their own platforms, while the others have outsourced that to
best of breed providers. And you know, I'll kind of
(27:56):
use Dominoes right now as a punching bag. People talk
about them being a leader, but I don't know if
you've used the Dominoes app recently. You know, if you
haven't take a look at it. It sucks. Frankly, it
feels like it was last updated in twenty sixteen, and
they just announced this month this massive investment that they're
(28:16):
making and a partnership with Microsoft to improve things. But
it just goes to show you how tough it is
right for restaurant restaurant companies to keep up with tech,
even for the you know, I guess appointed technology company Dominoes,
and so there's just way more examples of failed programs there,
(28:37):
and there are successful ones appointed Jack in the Box,
Papa Murphy, Sweet Green, Brinker, Cheesecake Factory. These were all
customers that we had during OLO that had tried to
and in some cases did build their own platform and
then came to a SaaS platform because it just wasn't
working out. So I think, you know, for the rest
(29:00):
of the industry that's minority digital, the idea of building
your own digital platform is just crazy. You know, OLO,
for example, spends ninety million dollars a year on R
and D. Now that's hundreds of engineers, product managers, customer
success managers. So it's just tough to recreate. But there
(29:21):
is a sliver of brands I think those brands that
are majority digital that absolutely should keep an eye on
what Wingstop is doing. And it's no doubt easier to
build than buy than it was a decade ago. So
there are a whole host of things that those companies
are going to have to consider. But right now, again,
I think this build versus buy dynamic really applies to
(29:45):
let's call it five to ten restaurant brands. So the
bottom line for most operators, there's just so many must
have low hanging fruit opportunities around labor, employer retention inventory. Again,
aroun themes in the back of the house that build
your own is just not a serious consideration.
Speaker 2 (30:06):
Very cool, Yeah, it's fascinating how fast the technology has changed.
You know, they mentioned Dominoes in twenty it feels like
twenty sixteen, or in twenty sixteen it was like Dominoes, Starbucks, Panera,
and like, yeah, nobody was even close, right for sure?
Speaker 3 (30:21):
And again at that point in time, Panera had spent
five million or sorry, five years and forty two million
dollars to build their own OLO at that point in time,
and Starbucks something like a few hundred million dollars to
build their own platform. So again a big spend that
comes with that. And you know, I don't think frankly,
(30:43):
you could tell me that Sweet Green is a or
Panera is a better program than Sweet Green, right, and
that's a bill versus by decision.
Speaker 2 (30:52):
Yeah, good stuff, man. All right, last question, are you
happy with the direction our Knicks are taken?
Speaker 3 (30:59):
I have never been more optimistic, is what I'll tell you. Man,
talk about pain. I feel like the last twenty five
years have just been painful to be a Knicks fan.
Excited about the direction. I feel like we're one superstar
away from being a contender. Hint, hint, we should just
trade Randle or something and get one of the superstars.
(31:22):
But yeah, I'm liking it. And not a great time
to be a Giants fan, but a good time I
think to be a Knicks fan.
Speaker 1 (31:28):
Yeah, for sure, man, I agree.
Speaker 2 (31:30):
I think we're one in the big wing stud score
that can play some defense and create his own shot away.
Speaker 1 (31:38):
Yeah.
Speaker 2 (31:38):
So I'm with you, man, I'm happy. I love Brunson
and come on over and be right and yeah, and
you know, the Nick Giants and the Jets stink. But
I grew up in Cedar Grove and Tommy DeVito's from
Cedar Grove. So there's a lot of Tommy DeVito and
chicken cutlet hype.
Speaker 1 (31:58):
Going on around here.
Speaker 2 (32:00):
All the all the restaurants are are creating Tommy DeVito
pizzas and Tommy Da Vito chicken cutlet sandwiches.
Speaker 1 (32:05):
It's fun, man, to.
Speaker 3 (32:08):
Be happy about, you know, despite a four win team, right.
Speaker 2 (32:12):
Something something to be happy about, you know. But listen, man,
this is great. Thank you so much for doing it.
And you know, I'm very excited about what you and
already have created and I'm looking forward to to continuing
to follow you guys, and I wish you nothing but
success man, And thank you Mike.
Speaker 1 (32:36):
Sure thing.
Speaker 2 (32:36):
So I'd also like to thank the audience for listening in.
If you like the podcast, please like and subscribe. Be
on the lookout for a special episode.
Speaker 1 (32:45):
Next week.
Speaker 2 (32:45):
We'll be recording from the RCR conference in sunny Orlando, Florida.
Speaker 3 (33:00):
Muh
Welcome to Chopping It Up.
Speaker 2 (00:15):
I'm your host, Mike Hallon, the senior restaurant and food
service analyst.
Speaker 1 (00:18):
At Bloomberg Intelligence.
Speaker 2 (00:20):
Today we're joined by Juwan George, co founder of eight
five eight Partners, an investment firm and consultancy focused on
restaurant tech.
Speaker 1 (00:28):
Thanks for doing this, Juwan.
Speaker 3 (00:30):
Yeah, thanks, Mike. Excited to chop it up with restaurant
tech with you today.
Speaker 1 (00:35):
For sure, Man, I've been looking forward to this.
Speaker 2 (00:37):
We've been talking about doing this for a while, so
let's just jump right in. There won't be an eight
five eight Partners if OLO didn't exist, So why don't
we start with your career experience at OLO?
Speaker 3 (00:48):
Yeah, for sure. So you know, my story is I
joined OLO during the senior year of college back in
March of two thousand and seven, and you know, had
just turned twenty one years old. Didn't know what I
was going to do post college, but saw a visionary
leader in Noah and a company that was chasing an
(01:08):
idea that I totally believed in. And it was the
idea that one day customers were going to treat their
phones as the remote controls for their lives and order
and pay for their food in advance. So for me,
it was a fifteen and a half year journey there
that I would break up into three chapters. This first
chapter is what I would label your kind of product
(01:29):
market fit, trying to find that, and it was a
seven year chapter in which it took to get to
one million dollars in arr and. So we were based
in New York City at that time, you know, one
of the earliest restaurant tech but just tech companies in
that ecosystem. And really during that seven year period, Olo
was predominantly this twelve person company of people in their
(01:52):
twenties who have now become friends of mine, and we
were just simply ahead of its time, right, you know,
they say you're twenty for learning. And we lost one
hundred more times than we won in that era, but
we held on to this Winston Churchill quote which was
never ever ever give up, and ultimately we found this
fast moving water in a customer out of Texas that
(02:16):
at that point in time helped us take this B
two C business into a B to B two C
business and we got our first major win with five
Guys burgers and fries that helped us get that elusive
product market fit that every startup, every technology company hopes for,
and that unlocked the second chapter, the rocket Ship years
(02:37):
a million to forty five million an arr and it
was a six year period in which we were doubling
the company every year. We had just hired our first
leadership team, including my mentor and current business partner, Marty Hantfeld,
this head of sales, and during that period of time
really Olo became the gold standard in enterprise e commerce
(03:00):
ordering and really introduced new modules that were groundbreaking for
the industry around third party delivery, a product called Dispatch,
a product called Rails, and that really helped propel our
lead forward past dozens of omline or green competitors in
that era, and we largely focused on what I call
the mighty middle of the market, right, so not the
(03:22):
SMB's mom and pops and not the big guys like McDonald's,
but rather fifty locations to three thousand locations, and we
worked exclusively with restaurant brand HQs. So I spent most
of those years on an airplane accruing all the status
points and going to hundreds of restaurant brand HQUS and
(03:43):
it unlocked the final chapter, Chapter three, an era of
which we took the company from a private offering to
a public offering. And this was you know, January twenty twenty,
I got the Jersey call to lead the enterprise sales team,
and so I was leading that team but also selling
and we all know what happened in March of that year.
Olo went from must have tech to mission critical tech.
(04:07):
And you know, still remembering this earnings call from Wyman
Roberts over at Brinker talking about seventy percent of transactions
coming through the OLO platform. That is what we were
seeing across the board for our customers. And so it
was a difficult time, you know, a busy time, and
I felt like I took a breadth in December of
(04:27):
twenty twenty, looked up at the scoreboard. There were fourteen
thousand new locations we added, and we doubled the company
from forty five to ninety eight million in arr and
it was really that which allowed us to take the
company public that March of twenty twenty one. So, you know,
a fifteen and a half year adventure, right the American
startup dream. You know, over the last really decade, there's
(04:51):
only been a few restaurant tech companies that have gone public.
Think about your toast, your DoorDash, your square, your uber
and Olo and Olo was the only one that did
it as an enterprise focus B to B two C company.
So I operated in that role for fifteen months. We
acquired two companies, we beefed up the team, and you know,
when it's time, it's time. I exited the company in
(05:13):
August of twenty two as we were approaching about two
hundred million ERA R and lots of stats that we
could be proud about there, but seventy one percent of
the enterprise market became customers. But the stat I'm proud
of us about was this ninety nine percent retention rate
of our customers. And it was really that retention rate
that allowed us to build the relationship capital to do
(05:35):
what we're doing today with eight five day partners.
Speaker 2 (05:39):
Very cool, man, It sounds like it sounds like it
was fun, you know, and the time to take your
shot is in your twenties, man, so it sounded like
it lined up pretty well for you and your friends
at all.
Speaker 3 (05:50):
It was a good ride and wouldn't have done it
any other way than doing the one company thing.
Speaker 2 (05:54):
For sure.
Speaker 1 (05:57):
Very cool.
Speaker 2 (05:57):
So what problems was eight five eight created to solve
and what opportunities can the firm and its clients take
advantage of right now.
Speaker 3 (06:07):
So I mean after leaving Olo last year, Marty, who
also lives in San Diego, I referenced earlier, had left
OLO forty five days prior, and we started just conversing
over cocktails and coffee in San Diego, and we started
calling the restaurant brand operators, the restaurant tech companies, and
(06:27):
the restaurant tech investors, and we kept hearing a lot
of pitches for what we consider to be nice to
have non essential tech, and we weren't hearing a lot
of themes and pitches for must have or mission critical
solutions to really solve the problems that our friends the
brands were anxious to address. So really to help our
(06:49):
own restaurant brand friends and technology companies, we formed eight
five A partners this year January to really invest in
one to three must have technology solutions, but also to
advise the next generation of restaurant technology winners that were
focused on that mid market and enterprise that we had
focused on. But you know, like most startups, not everything
(07:12):
has gone according to plan on the investment side. You know,
this side of the business has been challenging, no doubt.
It's not due to a lack of interest, but rather
due to the current state of the markets and valuations. Right,
it's a tough moment for a new investment platform to
put on the training wheels and try to figure out
what the right entry point and valuation is.
Speaker 1 (07:34):
So, you know, we.
Speaker 3 (07:35):
Also had a big offset in the form of demand
in the advisory practice, so that's where the focus has
been and really will go for the foreseeable feature, so
you know, to really fill that demand, we brought on
in mid year Sep Hall, who was the former head
of sales at OLO on the East Coast, and Jackie Berg,
(07:56):
who was the former head of marketing at OLO, to
lead this goat to market and marketing and brand practice
here at A five eight, And between the four of us,
we're responsible for closing more enterprise software deals than anyone
in this industry over the past decade, right, So that's
what we bring and so in a nutshell, A five
eight helps launch and scale mid market and enterprise sales,
(08:19):
marketing and customer success programs for restaurant tech companies. And
so we're sitting here now at the end of December,
we've helped close to a dozen restaurant technology companies on
their playbooks for enterprise and mid market, and we're excited
to double down on this industry that we love and
help this next generation. So we'll bring on new resources,
(08:43):
new customers going into twenty twenty four, and yeah, we've
never been more fired up.
Speaker 1 (08:49):
That's cool, man.
Speaker 2 (08:50):
It seems like there's a huge opportunity for you there
because the companies that have had successful exits seem to
have great sales teams, and I feel like they're there's
some really good products out there that took a long
time to gain traction, and they really couldn't make traction
until they brought on some experienced salespeople.
Speaker 1 (09:13):
To be clear, you.
Speaker 3 (09:14):
Know, it took a long time for Holo to get
to where it got to, and it doesn't need to
take fifteen and a half years for the next company
to reach a milestone. You know, at Olo, we went
through two sales leaders in that first chapter until we
got it right with Marty, and I think about those learnings, frankly,
the mistakes that we made way more mistakes than wins
(09:36):
to guide those companies and not making the same mistakes.
Speaker 1 (09:39):
That we did. Yeah.
Speaker 2 (09:42):
Cool, So who is the ideal customer for your advisory business?
Speaker 3 (09:47):
Yeah, so we think about the ideal customer profile as
you know, a must have restaurant tech platform, right, companies
that ultimately we're hearing themes for. And so backing up,
you know, we've created an advisory board of roughly thirty
operators that represent forty thousand locations, right, So we have
(10:10):
that benefit to hear firsthand from those operators what they're
working on, what problems they're having, who they're having the
problems with, what solutions they're looking for, and we act
as a trusted back channel to those brand and resource
So we take those themes ultimately and try to map
those two solutions in our advisory practice. So to answer
(10:31):
your question, I think we're hearing a lot of themes
this go around largely to do with the back of
the house than the front of the house. And so
we've mapped ourselves to close again a dozen technology platforms
that are addressing those problems.
Speaker 1 (10:46):
That we're here. Okay, cool, you answer my next question.
Speaker 2 (10:51):
Yeah, I was wondering if it was going to be
consumer facing tech back of the house front of the house.
So Yeah, we've come across some interesting solutions on the
back of the house through our research, you know. So
it's interesting how that that's evolving. Anything that you find interesting,
maybe things that you're not invested in right now or
but in that back of the house area.
Speaker 3 (11:12):
Yeah, I think, you know, kind of thinking about an example,
third party delivery reconciliation. Right, So this was a problem
that we heard over and over while at OLO, which
was we now are omni channel businesses that accept orders
from first party transactions, but now third party transactions for
(11:36):
both catering for now takeout for delivery, and all of
these different parties pay us on different increments, and our
settlements aren't adding up to what our accounting teams say
should or shouldn't be in there, right and so interesting
that's such a pain point, and again we saw it,
didn't address it during those years. But now we've seen
(11:59):
half a dozen let's call it best of breed solutions
pop up in that market, and so we've backed one
called loop AI in our practice, which we believe has
the best product but is attacking that head on as
let's call it a delivery intelligence tool of sorts to
capture offline customers. Right, so stores being offline when they shouldn't,
(12:20):
stores to recapture chargeback data, marketplace facilitator taxes. And so
that's just an example overwhelmingly that we're hearing from that
advisory board.
Speaker 1 (12:31):
Okay, cool.
Speaker 2 (12:33):
Another one I found interesting recently was a company using
cameras and AI to get order accuracy.
Speaker 3 (12:41):
Right, Yeah, no doubt, We've looked at that space extensively.
AI is no doubt a buzzword here. Can't tell what's
actually AI and what's actually not. So for example, you know,
we got a pitch for a restaurant technology AI video
(13:02):
surveillance company that was ultimately looking to fight that same
issue that I referenced earlier with chargebacks, And when we
drilled into it, the AI was actually people in the
Philippines that were watching the camera and would flag when
an issue happened. Right, So I didn't realize AI meant
to glorified security guards, but that's what it meant. And
(13:24):
that specific.
Speaker 2 (13:25):
Example, Yeah, yeah, some of that news hit the wires. Man,
it is pretty wild, right, so yeah, it makes you
you know, it's it's funny, man. But when you see
you know what we will call it a bubble and
at least the use of the term AI. Right, Like
when you see bubbles, you know, you have people that
(13:46):
are trying to take advantage.
Speaker 1 (13:48):
Of some of the things they're seeing.
Speaker 2 (13:50):
But if somebody can make that technology work, man, it
sounds like it sounds it sounds pretty interesting for sure.
Speaker 1 (13:57):
You know.
Speaker 2 (13:57):
Obviously, helping food waste and making your customers a lot
happier is key for these restaurant chains that are doing
heavy delivery business.
Speaker 3 (14:05):
You know, to be clear, we're bullish on that use case.
We just don't think it's the first generation of companies
that will win.
Speaker 1 (14:15):
Yeah. Yeah, interesting.
Speaker 2 (14:19):
You know, as we you know, all know, restaurant chains
have been aggressively updating their tech stax post pandemic. I guess,
big picture, where are we right now? Where's the restaurant
industry with restaurant tech at the moment.
Speaker 3 (14:31):
Yeah, so I think about, you know, the years leading
up to twenty twenty three, and they were really the
years that I'd labeled the California gold Rush of restaurant tech. Right,
So there was a wave of companies, some new, some old,
that hit the market primed with solutions to sell to
this massive total addressable market of SMB mid market and
(14:55):
enterprise restaurant brands. And it's also i'd call it that
zurp right, the zero interest era. So restaurant technology companies
could raise capital at rich valuations from the venture capital community,
they could hire staff by the dozens, and they could
just burn through the cash in the bank, knowing that
there was more at the end of that. And so
(15:16):
again I remember seeing some of these pitch decks. Right,
we worked with Burger King, we worked with KFC, We're
in deep discussions with Chick fil A, when in reality
it was random franchisees of those chains and they had
one conversation with the innovation department at Chick fil A. So,
you know, fast forward to today, you know, it's an
incredibly difficult time to raise capital. Your companies have been
(15:39):
forced to do more with less. This past year has
been plagued with reductions and forces in the headlines from
the large enterprise companies. Valuations have come back to earth.
In many cases, it's half or less of what the
last valuation that was previously assigned to them, and growth
has frankly stalled right from the past year, and in
(16:02):
some cases, by the way, it's negative because of churn
with their customer base. So ultimately, at the end of
the day, restaurant tech companies are dealing with a buying
freeze from the operators on all nice to have tech
that the operators instituted in twenty twenty three. And so
these restaurant tech companies that are nice to have are
(16:23):
running out of cash and they're running out of time,
and so this go around, there's not endless capital that's
going to be supplied to them when they run out
of cash. So it reminds me of the two thousand
and nine to twenty twelve timeframe. Going back in restaurant tech,
there were companies like Exit forty one that's going to
(16:44):
be a throwback to some of your audience, but it
was an online ordering company, a competitor of Oolo's at
the time. They raised over fifty million dollars in that
era and it just evaporated overnight. And so, you know,
I think about the Brita Rosenheim Wheel right this like
twenty twenty three restaurant Tech Ecosystem wheel that she put out,
(17:05):
and there's over two hundred and fifty restaurant tech companies.
Speaker 1 (17:08):
On that wheel.
Speaker 3 (17:09):
So there's a lot of solutions to a lot of problems,
and most of that wheel, we believe just doesn't need
to exist and represents nice to have solutions in the market.
So there's data recently that has come out of Karta,
which is a table management software, and it showed in
Q three of twenty twenty three that there were over
(17:30):
two hundred startups that shut down and that's been steadily
increasing quarter over quarter over the last four quarters. And
so we expect in twenty twenty four for there to
be a record number of restaurant technology companies that'll shut
their doors for good. And I think in parallel, the
next twelve months should actually prove super interesting from an
(17:53):
M and A and consolidation perspective. You know, starting with
the publicly traded restaurant tech companies, these companies spent the
last year getting fit and now they're seeing their valuations
rise just a little bit. Those companies DoorDash, for example,
they've got four plus billion dollars sitting in the bank
toast a billion dollars sitting on the bank. And we
(18:16):
know companies like par have been known to be acquisitive
over the last three to four years. So from my perspective,
it's a great time for these operating platforms to put
some of that cash and some of that equity to work.
There's going to be companies that are available at a
fraction of their value and really could help them do
more with their existing customer base and push their lead further.
(18:39):
And I think in the same vein there's going to
be many private companies that realize that M and A
is going to be the only option for them. Right.
That should also make for some interesting deals. But think
about as anario, Right, there's two competitors in the same space.
They're both not getting meaningful traction. They could join forces
and attack an operating platform together and they probably be
(19:01):
better off than worse. Right, So it's an area that
we're watching closely and looking to contribute in for twenty
twenty four.
Speaker 1 (19:09):
Cool.
Speaker 2 (19:09):
Yeah, it it sounds like it. It'll provide you with
some opportunities. But there's a lot of parallels with you know,
my world with the restaurant space, you know, in terms
of s sloads significantly, but you know, as those private
valuations have come down and lending costs of risen, But
the strategics with those those strong balance sheets especially seem
(19:33):
to be poised to do most of the deals next year, right, All.
Speaker 1 (19:39):
Right, good stuff.
Speaker 2 (19:40):
So what issues are restaurant tech companies having with their
go to market strategy at the moment?
Speaker 3 (19:46):
Yeah, well, you know, restaurant operators are dealing with serious
tech fatigue at both the brand and the store level.
There's multiple dashboard fatigue. There's one hundred and ninety nine
dollars per month per service fatigue. There's finger pointing fatigue
amongst all these different providers, and in many cases, with
(20:08):
the solutions they're purchasing, the operators they're only using a
sliver of the services, they're over paying for them, and
there's a steep learning curve to both getting them up
and running from a deployment perspective and maintaining them. So,
you know, at the same time, I think about from
an operator perspective. Operators these days could barely open up
(20:30):
their emails without literally getting dozens of new emails from
vendors every single day trying to sell them something. You know,
they try and find solace and go to LinkedIn and
connect with their peers, and they're greeted by a bunch
of people in an ever escalating social media contest. Who
(20:50):
could yell louder and they go to a restaurant conference
and get accosted by half a dozen sales guys that
are selling them some AI solution. So I think restaur
operators are fed up, you know. So here's the big
problem for restaurant tech companies. You know, Ultimately, they're banging
their heads against the wall because they're not selling anything, right,
and they believe the solution is to send more emails.
(21:14):
And these same companies show up to that restaurant conference
praying for a different outcome, but they show up with
little to no preparation. They're staring at operator badges, and
they're just hanging out in the lobby bar with all
the other restaurant tech people that are not selling anything.
So it's just not working. And so this is part
(21:34):
of the work that we're doing in this go to
market advisory and marketing and brand practice here at eight
five eight, you know, we've entered a new market and
a new era of go to market. It's all about
if at least you're serious about mid market and enterprise.
That's my qualifier. Focus segmentation and creative messaging, your quality
(21:55):
over quantity, that's what's going to win and restaurantech tech
companies that want to win in this market need to
align themselves, in our view, with influencers and advisors that
can help them understand the accounts and really create these
multi threaded game plans on their ideal customer profile accounts.
So that's what we're doing here at eight five eight,
(22:15):
and we feel like we're we're seeing that trend overwhelmingly
very interesting.
Speaker 2 (22:23):
So the restaurant chains on the advisory board, should they
be looking for an all in one tech solution or
would they be better off cobbling together a bunch of
best of breed options or is it?
Speaker 1 (22:35):
Is it you know, case specific?
Speaker 3 (22:38):
Yeah, So I think overwhelmingly going back to that advisory board,
you know, we hold calls with that group once a
quarter and so it's just individual calls and we hear
from them what they're working on, what's must have, what's
nice to have. And I think the themes that we're
hearing a lot of are around all in one versus
best and breed, and then back of the house versus
(23:00):
front of the house. So I'll start with the all
in one versus best of breed. I think about my
first decade in the industry, going back to the two
thousand and seven you know, kind of those few years,
companies like NCR Micros. You know, they were the one
boat to choke operating platforms that ruled the industry, and
(23:20):
as they signed up to play a bigger role, this
is when the first generation of POS companies really started
to tumble, right. The contracts became too big, the products
that they released to compete with the best of REED
solutions didn't keep up with the times. And it's like
the dreaded TV VCR combo of the nineties, right, you know,
(23:42):
when the VCR stops working, you hate the whole device.
And so, you know, fast forward to today. I think
we're amidst an economic slowdown akin to two thousand and
eight to twenty ten, and there's a new wave of
operating platforms out there, companies like par toast Olo, Door Dash,
and everyone of those companies is in a digital arms
(24:06):
race and trying to do more with their existing customers.
So it's a very tense time in the world of
restaurant tech. It's what we refer to as frenemy behavior
technology companies that are actually true competitors but have to
partner in many of the same accounts, so it's going
(24:27):
to lead to a lot of deception and confusion, frankly
amongst the operators who are hearing mixed messages from various parties.
So with all this front of meb behavior that's happening
in the background using a single provider, But at the
same time, those same operators want the cost efficiencies that
come with bundled solutions and don't want to have to
(24:48):
manage all these different relationships and dashboards and partnerships. So
I think the best of breeding solutions, no doubt, they
have a shot, but they're up against a wall that's
compared to three to five years ago. So there's an
argument that the pendulum has already swung to the operating
platforms because of that advantage on distribution. They've got large
(25:11):
balance sheets, they've got large R and D development teams,
and again they've got the existing customer relationships that the
best of breed companies just don't have. So our prediction
here is the cycle continues, and operators are going to
choose to do more business with fewer providers if and
when they choose to open their wallets.
Speaker 2 (25:32):
Cool very interesting proprietary tech versus SaaS solutions should restaurants
build or buy?
Speaker 3 (25:41):
Yeah, well, there's a story that has come out recently
with relation to Wingstop, and you know, disclosure, I'm a
little close to that story. I helped architect the Holo
and Wingstop deal a decade ago and no doubt one
of my favorite projects and deals of all time. So
if you missed the news, Wingstop announced on their last
(26:03):
earnings call that they were leaving OLO in lieu of
a build your own system called my Wingstop and they've
to date spent fifty million dollars on that built. So
backing up, you know, OLO helped Wingstop really become a
digital ordering juggernaut over the past decade. When they came
to Olo, they were at seven and a half percent
(26:25):
of sales, about forty million dollars of sales annually, and
up until this announcement, they've gotten to sixty six percent
of sales, which is two billion dollars annually coming through
that platform. So it was no doubt a success. And
OLO came out and into that system at a time
when their previous digital ordering platform it crashed on Super
(26:48):
Bowl Sunday. Imagine that to twenty thirteen, probably the worst
day in the brand's history totally right, like no, imagine
how many parties got ruined that day. And you know
they came to Olo for reliability, for stability, and for innovation,
and that's exactly what was delivered. I think it was
a true partnership. Somewhere along the way, though, Wingstop believed
(27:12):
that it was such an important channel to them to
outsource that they could do a better job than Olo
to really digitize the remaining third of the customer base
that was still analog. So I think time will tell
if that was a good move. I'm grateful for the
bonds that were forged between the companies, and I wish
the companies handled it differently from a breakup perspective. But
(27:36):
you know, in my opinion, the new generation of digital
leaders are Panera, Chipotle, Sweet Green Shakeshack, and Wingstop, and
up until now, only two of them have successfully built
their own platforms, while the others have outsourced that to
best of breed providers. And you know, I'll kind of
(27:56):
use Dominoes right now as a punching bag. People talk
about them being a leader, but I don't know if
you've used the Dominoes app recently. You know, if you
haven't take a look at it. It sucks. Frankly, it
feels like it was last updated in twenty sixteen, and
they just announced this month this massive investment that they're
(28:16):
making and a partnership with Microsoft to improve things. But
it just goes to show you how tough it is
right for restaurant restaurant companies to keep up with tech,
even for the you know, I guess appointed technology company Dominoes,
and so there's just way more examples of failed programs there,
(28:37):
and there are successful ones appointed Jack in the Box,
Papa Murphy, Sweet Green, Brinker, Cheesecake Factory. These were all
customers that we had during OLO that had tried to
and in some cases did build their own platform and
then came to a SaaS platform because it just wasn't
working out. So I think, you know, for the rest
(29:00):
of the industry that's minority digital, the idea of building
your own digital platform is just crazy. You know, OLO,
for example, spends ninety million dollars a year on R
and D. Now that's hundreds of engineers, product managers, customer
success managers. So it's just tough to recreate. But there
(29:21):
is a sliver of brands I think those brands that
are majority digital that absolutely should keep an eye on
what Wingstop is doing. And it's no doubt easier to
build than buy than it was a decade ago. So
there are a whole host of things that those companies
are going to have to consider. But right now, again,
I think this build versus buy dynamic really applies to
(29:45):
let's call it five to ten restaurant brands. So the
bottom line for most operators, there's just so many must
have low hanging fruit opportunities around labor, employer retention inventory. Again,
aroun themes in the back of the house that build
your own is just not a serious consideration.
Speaker 2 (30:06):
Very cool, Yeah, it's fascinating how fast the technology has changed.
You know, they mentioned Dominoes in twenty it feels like
twenty sixteen, or in twenty sixteen it was like Dominoes, Starbucks, Panera,
and like, yeah, nobody was even close, right for sure?
Speaker 3 (30:21):
And again at that point in time, Panera had spent
five million or sorry, five years and forty two million
dollars to build their own OLO at that point in time,
and Starbucks something like a few hundred million dollars to
build their own platform. So again a big spend that
comes with that. And you know, I don't think frankly,
(30:43):
you could tell me that Sweet Green is a or
Panera is a better program than Sweet Green, right, and
that's a bill versus by decision.
Speaker 2 (30:52):
Yeah, good stuff, man. All right, last question, are you
happy with the direction our Knicks are taken?
Speaker 3 (30:59):
I have never been more optimistic, is what I'll tell you. Man,
talk about pain. I feel like the last twenty five
years have just been painful to be a Knicks fan.
Excited about the direction. I feel like we're one superstar
away from being a contender. Hint, hint, we should just
trade Randle or something and get one of the superstars.
(31:22):
But yeah, I'm liking it. And not a great time
to be a Giants fan, but a good time I
think to be a Knicks fan.
Speaker 1 (31:28):
Yeah, for sure, man, I agree.
Speaker 2 (31:30):
I think we're one in the big wing stud score
that can play some defense and create his own shot away.
Speaker 1 (31:38):
Yeah.
Speaker 2 (31:38):
So I'm with you, man, I'm happy. I love Brunson
and come on over and be right and yeah, and
you know, the Nick Giants and the Jets stink. But
I grew up in Cedar Grove and Tommy DeVito's from
Cedar Grove. So there's a lot of Tommy DeVito and
chicken cutlet hype.
Speaker 1 (31:58):
Going on around here.
Speaker 2 (32:00):
All the all the restaurants are are creating Tommy DeVito
pizzas and Tommy Da Vito chicken cutlet sandwiches.
Speaker 1 (32:05):
It's fun, man, to.
Speaker 3 (32:08):
Be happy about, you know, despite a four win team, right.
Speaker 2 (32:12):
Something something to be happy about, you know. But listen, man,
this is great. Thank you so much for doing it.
And you know, I'm very excited about what you and
already have created and I'm looking forward to to continuing
to follow you guys, and I wish you nothing but
success man, And thank you Mike.
Speaker 1 (32:36):
Sure thing.
Speaker 2 (32:36):
So I'd also like to thank the audience for listening in.
If you like the podcast, please like and subscribe. Be
on the lookout for a special episode.
Speaker 1 (32:45):
Next week.
Speaker 2 (32:45):
We'll be recording from the RCR conference in sunny Orlando, Florida.
Speaker 3 (33:00):
Muh
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