February 3, 2025 • 36 mins
In this episode of the Restaurant Technology Guys podcast, host Jeremy Julian is joined by Alicia Kelso, Executive Editor for Nations Restaurant News. They discuss a wide array of topics, including Alicia's extensive background in restaurant journalism, the current and future trends in the restaurant industry, and the impacts of automation and technology on restaurant operations. They also touch on the importance of providing value and a holistic experience to consumers, the challenges and strategies of labor management, and the benefits of loyalty programs. The conversation delves into macroeconomic challenges, such as inflation and labor shortages, and practical advice on how restaurant operators can adapt to a rapidly evolving landscape.
00:00 Audio of Alicia NRN
01:06 Introduction and Guest Introduction
01:41 Alicia Kelso's Background and Career
02:46 The Draw of the Restaurant Industry
05:33 Current Trends and Challenges in the Restaurant Industry
11:54 The Importance of Value and Experience
20:15 Role of Technology in the Restaurant Industry
30:31 Future Outlook and Conclusion
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:02):
This is the RestaurantTechnology Guys podcast.
Helping you run your restaurantbetter.
Jeremy Julian (00:12):
In today's episode, we are joined by Alicia
Kelso.
Alicia has been covering thespace since I think she said
2008 or 2009.
She is one of those reallyprolific writers writes from the
nation's restaurant news, whichis the industry's largest
publication.
Her.
And I go through a wide varietyof topics, including where
guests are spending more time,how to restaurants continue to
(00:34):
compete in such a weird marketspace.
The surprises that happen in2020 for the things that we
expect to see happen in 2025 andbeyond.
As well as just how automationand technology continues to
impact the ways that restaurantsoperate each and every day.
If you don't know me, my name isJeremy Julian.
I am the chief revenue officerfor custom business solutions.
(00:57):
We sell the north star on a cellsolution for multiunit
restaurants.
Check us out at CBSnorthstar.comand now on to our episode
Welcome back to the restauranttechnology guys podcast I thank
everyone out there for joiningus as I say each and every time
I know you guys got lots ofchoices So Thanks for hanging
out on the air with us today.
I am joined by a very specialguest I'm gonna leave I let
(01:18):
Alicia talk about herself herefor a second But I was sharing
with her prior to hitting therecord button I've been reading
some of the stuff that she'swritten for a long time pretty
much since she's been in thespace So Alicia, why don't you
introduce ourselves?
I am certain everybody on that'slistening here has seen
something you've written Butwhether they've seen the face
and know exactly who you are Whydon't you introduce yourself and
give us a little bit ofbackground about?
(01:40):
About where you came from
Alicia Kelso (01:41):
Thank you, Jeremy.
Journalism 101, don't talk aboutyourself, so I'm a little
uncomfortable doing but, Iappreciate you having me.
My name is Alicia Kelso.
I'm the Executive Editor forNations Restaurant News.
we are the largest tradepublication covering this one
trillion dollar industry now,which is thrilling to say
because I actually startedcovering this industry In the
throes of the Great Recession2009.
(02:03):
for fast casual.com QSR Web andPizza Marketplace.
in 2018, I jumped over to theconsumer side covering the
industry for Forbes.
I also contributed to RestaurantDive and I joined Nations
Restaurant News in October.
Of 2022 and have been there eversince as their executive editor.
love this industry so much.
(02:24):
My father was an independentrestaurant owner.
He, I had a steakhouse inFinley, Ohio called George's.
and so it's very near and dearto my heart.
And I left for two or threeyears when my kid was born to go
into higher ed.
And I realized how much Iregretted that and boomeranged
right back in with, withintensity.
So glad to be back here.
(02:44):
Yeah,
Jeremy Julian (02:46):
I've said it a few times I think there's
probably some therapy forrestaurant people that try and
get out and come back becauseIt's one of those things that
does end up sucking you back inand I guess I'd love a little
bit of opinion Why do you thinkthat is?
Why do you think it's such ait's such a draw because we I
see it all The time I see peoplethat once you've gotten in and
you've gotten the bug it doesn'tend up leaving and people end up
(03:06):
inevitably coming back
Alicia Kelso (03:08):
and that's a really great point because
whenever I share my personalstory, upon introduction or
otherwise, there's a lot ofpeople who have very similar
stories about boomeranging backin or trying something new.
And, for, I can't answer forthem, but for me personally, I
can tell you that It'sdefinitely the people, nothing
against higher ed, I, therestaurant industry is
(03:29):
energetic.
It's exciting.
it's a hospitality industry,service industry, people first
industry, and it just has thatsort of thrilling nature, to it
where there's always somethingexciting happening and we all
use it and we all, it's excitingto talk about my job because,
people really.
(03:50):
they can relate, it's sorelative, to, to them and their
daily lives.
and I think there's just, it'sjust so deep in who we are as a
society.
we talked about having a 1trillion industry.
There's a reason for that.
and so I think it's alsointeresting, Jeremy, because
it's certainly not for the faintof heart.
Yeah.
Jeremy Julian (04:15):
at the end of the day that, it's democratized.
The thing I love about therestaurant industry is everybody
gets in and a lot of people arereally successful.
We've got, presidents of brandsthat started as a dishwasher
years ago that have worked theirway up.
And it's one of the onlyindustries that you can do that
in, in today's day and
Alicia Kelso (04:29):
Yeah.
And I also love that almost, somany, I think it's like one in
six or seven Americans have beenemployed by a restaurant
industry.
we have higher levels ofdiversity within our workforce.
it is just such a, culturally,diverse, Landscape from the
workforce, perspective.
(04:50):
So I think that is reallyexciting, too.
and it's a good place for peopleto go when perhaps there's
really nothing else.
it's a great starter job and agreat like you said, we've done
a really good job in thisindustry.
Especially through the past fiveyears, really focusing on how
this can be a career and notjust a, a starter job in high
(05:11):
school.
And I've said, we're seeing morestories from our vantage point
of that coming to fruition,which is really exciting.
Jeremy Julian (05:18):
I love that.
And, I say it all the time.
I think the world would be abetter place if everybody worked
in a restaurant for at least sixmonths of their life, because
all of my kids are going to haveto work in the service industry
in some way and deal with thepublic because, I'm certain
it'll make it, make it betterfrom a macro perspective.
Alicia, you and I talked alittle bit pre show, talk to me
about what it is that you guysare saying, seeing in the
restaurant industry, becauseit's been, there's been so many
(05:41):
stories out there.
Obviously, there's some bigheadwinds in certain markets and
then there's some others thathave been, doing, that have got
tailwinds.
Talk to me from a macro level,what are you guys seeing at
Nations Restaurant News, just ofthe industry as a whole?
Because I think it'll reallyformat the rest of our
conversation for the next 20minutes or so, about where can
people impact them, their ownbusiness as they look back at
(06:03):
themselves and say, hey, how doI make some changes there?
Alicia Kelso (06:06):
Yeah, that's a really interesting question,
because I think, if we zoom outquick, 2024 was much bumpier
than anyone expected going intoit.
I think, 23, we had a little bitof a hangover.
late 23, we had a little bit ofa hangover from what we saw as a
real strong, Resurgence orrenaissance, if you will, in
(06:28):
late 22 into early 23, based onpent up demand from the
pandemic, based on recovery fromwhat was a historically low,
Employment pool, we had to closeour stores, our restaurants, and
trim hours and days in much of2021, because we just didn't
have an employee base, to keepthem operational.
(06:51):
and so all of these things, thisconfluence of issues that were
created by the pandemic andextended started to dissipate.
A little bit in late 20, in late22, in early 23, that was this
insane sales year and trafficand entertainment everywhere.
And it was just this trueRenaissance.
(07:11):
and so going into 24, I rememberlate 23, there was a significant
amount of optimism and that justall went out the window.
And I think what the biggestissue from my vantage point,
Jeremy, was because we weredealing with historically high
inflation rates, generationallyhigh, if you will, we had to
price, we had to take a lot ofprice in this industry across
(07:33):
segments, across brands, and Iwould argue we probably
overpriced.
And so now, abruptly in thisyear, early this year, probably
late Q1, early Q2, traffic felloff a cliff.
And normally we start to seesome decent results in Q2 and
sustain through the summer, andthat just never came to
(07:54):
fruition.
So everybody, who's an operatoror proximate to an operator is
aware of this, right?
So what are we dealing with now,per your question?
Recovery from that.
I would argue that we, Probablyneeded to do and still have the
opportunity to do a better jobof communicating to our
customers why prices are alittle bit higher.
(08:16):
and a lot higher in someinstances, we probably could do
a better job menu engineering.
To get through some of those,food pressures that are weighing
on the cost of sales.
But we also have to recognizethat the P and L is never going
to look like it did in 2019.
and that's, I think we're allwanting it to get back to 2019.
(08:36):
It's not just food costs thataren't going back to now things
going back to 2019.
I think as long as we adjust ourmindset and our, Our operations,
our business model to understandthat the PNL is going to be
different and understand whatthat new normal means and work
our way through that the middleof the PNL a little bit better,
become more efficient, perhapsunderstand how tech is Can help
(09:01):
us in some circumstances, butnot go overboard on tech just
because there's a shiny bell andwhistle in front of us,
understand that, energyefficiency can be a really
viable, saving, tactic in themiddle of that P and L things
like that.
I think are just becomingsmarter, more sophisticated
operators, again, 2019.
Jeremy Julian (09:25):
Yeah.
No, I love all of those and I'mgoing to, I'm going to dig in a
little bit to some of thoseAlicia.
one of the other things that youalluded to is labor is hard to
come by.
It's still hard to come by in,in 2024 and even if you do get
labor, keeping them around ishard.
Keeping them employed andemployment costs have gone up.
Significantly as well.
through that last five yearperiod.
it's funny that you say,everybody came out of that
(09:46):
Renaissance and I think therewas a lot of people that are
like, Oh, it's good.
It's going to continue goinginto 2024.
But with the interest rates, Ithink the other thing I'm
hearing from restaurant brandsis they're not able to expand as
quickly into new venues becausethe cost of money to borrow
money to open up new venues, aswell as the construction costs
and the labor costs to openthose things.
In some instances has almostdoubled to open new brands.
(10:07):
Is that something you're hearingacross the
Alicia Kelso (10:09):
It is.
And I think that's where thechallenge is.
It's again, we're not justcontending with double digit
higher food costs.
It's everything.
It's energy costs are higherrent.
Occupancy costs are what 12 to15 percent higher.
it's across the board.
And to your point, to borrowmoney is more expensive.
I know that interest rates,we've had two or three
(10:31):
reductions recently that they'restill high, right?
Jeremy Julian (10:34):
they're still high historically from where
people were in 2019 where it wasalmost free to borrow money to
Alicia Kelso (10:39):
I, and again, we're, we got to stop comparing.
Oh, 2019 was, it was a goodthing for anyone who wanted the
capital, to borrow, to growtheir business.
What.
I think it is, again, what I'mseeing with all of that
confluence of issues happening,including, like you said,
(10:59):
higher, cost of money, cost ofborrowing is instead of
aggressive unit growth, isfocusing on four wall, four wall
profitability, reigning in sortof the ambitious, growth,
expansion plans that we mighthave signing huge deals out of
the gate, with a franchise grouphere or there and really getting
(11:21):
our unit economics in check andtaking a slower approach to
growth while we figure out howto work our way through these,
massively different material, adifferent, P and L situations
that we have an understanding,this is still very new.
So we have to understand whatnew normal is.
and while we're, instead ofwaiting to go back to 2019,
(11:44):
understanding what new normal isand how do we modernize our
business model to keep pace withthat new normal versus comparing
it to 2019, if that makes sense.
Jeremy Julian (11:53):
Absolutely.
I want to dig into tech in justa second, but you said something
that, that intrigued me.
You talked about educating ourconsumers as to why pricing has
increased.
I, long time listeners know I'ma family of six.
I have four children.
life is, going out to eat is aIt's expensive regardless of
where I'm going, and I'm notlooking to point any fingers at
any brand names, but at the endof the day, it's expensive.
(12:16):
And whether you go on fullservice or you're going quick
serve or you're going fastcasual, unfortunately, even in
my wallet share, those things,oftentimes for a family of six,
they're very close, outside of agratuity potentially.
I can oftentimes go out to avalue menu at a casual dining
brand.
I can go out to a fast casualbrand.
And the bottom line dollars arevery similar sometimes even in a
(12:37):
quick serve brand, if I'm not,if I'm doing it in certain ways.
And so across the board, howwould you recommend, or how have
you seen people be successful ateven educating their consumers?
Cause some people have figuredit out.
Some brands, whether it's,Wingstop or.
I don't say they're killing it,but they're doing really well
from a stock perspective, from asales growth perspective, and
their prices have increasedoftentimes in those same
(12:59):
percentages as some of the otherbrands.
We talked to, I talked withanother editor of a magazine
recently, we talked aboutChili's.
Chili's is doing really well.
And historically Chili's hasn'tbeen one of those brands that's
played in that space.
And so I'd love to know, how doyou recommend restaurant tours,
whether you're an individualoperator or you're a large
chain, how do you Help yourconsumers understand what has
happened macroeconomically tothe business to, to, so that
(13:22):
they understand that it's notjust that it's all going into
somebody's greedy pockets, butit's a cost of doing business.
Cause I think unfortunatelypeople go, ah, they're just,
they're raising the pricesbecause they're looking to make
more money.
Alicia Kelso (13:32):
and that, I think that depends on your concept.
I really, I think that, onething we saw this year that,
that sort of blew my mind alongthe lines of the question you're
asking is when the Wendy's CEOtalked about surge pricing,
versus dynamic pricing anddynamic you, you and I both know
dynamic pricing has been aroundfor forever.
(13:52):
we take a page from theairlines, we take a page from
hotels, we take a page fromUber, and Lyft and so on and so
forth.
And happy hour has been aroundfor forever.
So surge pricing or dynamicpricing is a great example here
of what the messaging needs tobe, to customers.
And it goes back to pushingthrough the message of what the
(14:14):
value is.
And it's not just price, Jeremy.
It's what, this is why Chipotlehas done so well.
This is why Texas Roadhouse hasdone so well because they are
messaging their valueproposition and it's not hinging
on a price.
with Texas Roadhouse, you getthe rolls, you get the two
sides, it's abundance, withChipotle, it's convenience, it's
(14:38):
a customization, it's a, thedigital.
to the brand that, that thebrand has really worked in
earnest to, to really improve.
and their portions, theyinvested in their getting their
portions back, chips and guac,that kind of stuff.
I think where we are starting toget a little better.
And I would argue this year wasa wake up call with all of this.
(15:00):
And I started to see this.
in Q3, the more earnings calls Isat on with public brands and a
lot of executives just fullyadmitted, Hey, we have to make
some adjustments.
We are seeing consumer behaviorslinger in a way where they don't
want us just to push limitedtime offers or 25 cent, 50 cent
(15:22):
mozzarella sticks.
They want full meal deals.
they want a comprehensive, aholistic approach to value.
Again, that's where Chili's Ithink has found it's, footing.
That's why Applebee's adjustedover to what sort of what
Chili's is doing.
And so I think if we continue todouble down on that message of
here's why this is valuable, Ithink we'll make a lot of
(15:43):
progress from where we've been,especially, this year, but we
have to make it really clear,that this is, This is a huge
value proposition.
I don't think we need to getinto the nitty gritty.
Hey, food costs are higher.
customers don't care.
Yeah, they know.
And they don't care.
They just want what's quick,easy and affordable for them.
And affordable right now, is waydifferent than it was when I
(16:05):
started covering the industry in20, in 2009.
Back then it was a price game,but now it's, Oh gosh, I'm
getting two sides and, And, androlls and peanuts.
And, these servers are theseservers are great to me.
They're really attentive and,they're quick and efficient.
that is a huge value propositionnow.
And I think the holistic thingis where we need to really focus
(16:27):
on.
Yeah,
Jeremy Julian (16:28):
and I think the other piece that I would say and
you guys recently wrote aboutit.
the Cracker Barrel group, largebrand there.
they were struggling for yearsand they're now, you know back
out Not only innovating, butalso sharing, but the one thing
I'd love for you to hit onbefore we jump to technology is
it's gotta be an experience,whatever that experience is.
We are hospitality.
(16:49):
It has to be an experience.
So when you talk aboutroadhouse, when you go into a
Texas roadhouse, there's energy,there's a vibe.
There's an attitude.
When you drive through the drivethrough at Chick fil A, you get
an experience.
When you go to.
I was recently at Portillo'sand, that brand it's, there's an
energy, there's a vibe when youwalk into the brand, a brand out
of the West coast, I just hadbreakfast at yesterday morning,
(17:11):
Huckleberry's, and the, it's,it, you feel it when you walk in
and you feel it the oppositeway.
And I'm not going to name anybrands, but you can feel it the
opposite way when it's notthere, when they're not, when
they're not trained, whenthey're not hospitable, when
they're not, when they, what doyou want, kind of attitude, you
realize that's not necessarilythe thing that, that you need.
I just had Uber, Uber direct on,on my phone.
(17:33):
On the latest podcast that wereleased, they talked about the
fact that even the drivers areguests of your restaurant.
You have to treat them as suchbecause they may be patrons in
the future.
And have you seen that besomething that, that you hear
CEOs talking about being part ofwhat they're doing, they're
creating an experience forvalue, but they also have to
make sure that their staff andtheir buildings and their food
(17:54):
is all, part of that equation.
Alicia Kelso (17:56):
And I think what's really interesting is we talked
about the issues we are workingour way through that were born
from the pandemic.
And I think what happened nowthat we've got almost five years
of hindsight, which is evenweird to say out loud, the
pendulum swung in a weird way.
It just upended so much aboutour day to day.
And what that meant in theindustry is it meant supply
(18:18):
chain issues, labor issues, foodcosts, in skyrocketing inflate
inflation, labor becoming, Sonecessary, they were, our
employees were deemed essentialworkers.
So how are we going to keepthem?
So the pendulum just reallyswung.
And I think what happened isbecause we had to go off
premises by mandate, and justfor comfort level, when people
(18:43):
felt unsafe to be in, to beoutside and out and about, we
became a little tootransactional.
And that is what I'm hearing nowin droves.
We're seeing it with, Starbuck'snew CEO, Brian Nichol has said
it.
Hey, this is one of the majorplaces we screwed up.
We became too trans, tootransactional.
We need to be digital, but wealso are trying, there's a lot
(19:05):
of concepts out there and a lotof executives out there really,
pushing this message that the,we are the hospitality to
industry to your point, and wedid become too transactional.
To survive in those, reallyawful, times.
But now we've got to get back tothat hospitality piece that
people piece that, communitypiece.
I'm hearing this all over theboard, whether it is from a
(19:27):
Texas roadhouse, to, toStarbucks, wanting to get back
there.
Subway just launched a newdesign prototype that they're
talking about how it's.
Improving Dine In.
That's not something I thinkabout with Subway, but even
Subway is talking about this.
Dutch Bros, Kava is really bigon this hospitality piece,
whether it's a digital customeror a Dine In customer.
(19:48):
So I think we're going to see apendulum swing back and
hopefully settle a little bitmore.
I think the brands that win arethe ones to your point, Jeremy,
that can, Provide some sort of,personalization, hospitality,
whether they, again, they are adigital or a dine in customer,
but it is something that thisindustry is really starting to
focus on a little bit more.
(20:09):
Again, to your point, because weprobably became too transact, we
took too much pricing and webecame too transactional.
Jeremy Julian (20:15):
and that really goes into, how does technology
play a part?
Because I think all too often,and I think about it from, we
were, because of the pandemicand just how fast everything
accelerated, we threw a lot ofsolutions at problems without
architecting them.
And unfortunately, when we throwa lot of solutions at those
problems, without architectingwhat the guest experience is
going to be like from start tofinish, whether that's digital
(20:37):
on a kiosk, that's digital onyour phone, that's through a
drive through without it.
And again, there's some brandsthat have done it really well,
and there's other brands thathave really struggled.
But how does technology play apart in that, Alicia?
Because I think all too often,and I say this to our listeners,
A lot, depending upon how I'minteracting with a brand.
There are times that I'm doingit just to satiate my family.
(20:59):
I'm driving home from baseballpractice and we need food.
We need it quick.
I don't want an experience.
I want it right.
I want it fast.
I want it hot and I want it inthe bag and I don't want to have
to go back a second time.
And then there's other times Iwant to have an experience and I
want to sit down.
How do we personalize thatexperience?
How do we even know what theguests are looking for in that
regard?
And how does it become, Part ofone of those things where you
(21:21):
can train that staff withoutthrowing because, again, more
and more brands have 10, 12, 15pieces of technology in the
front of the house.
And these staff members thathave been there for six months
or three weeks, they're havingto learn it all and deal with
it.
And how do they do it?
How do they do it effectively?
Alicia Kelso (21:36):
I think that's a bigger conversation, but I would
argue to your point, hot, quick,convenient, what you said is an
experience, right?
So accurate.
that is part of the experiencewith you being that digital
customer and satiating yourfamily.
and so I think where we'reseeing this the most as we have
this conversation ramping upabout experience and hospitality
(22:00):
and getting back to that,connection that the industry is
known for and was built on.
The biggest piece of that isloyalty programs.
And that, I think has a numberof, Tailwinds that it can
produce.
There were obviously nothingnew.
I had the little punch card atsubway back and back in the day,
but they've evolved so much tothe point where they now know
(22:23):
that you are coming in tosatiate your family at a certain
time of day.
and what you're probably goingto get for your, your four kids,
all your kids after baseballpractice or whatever.
And we're seeing that, move atthe speed of light right now.
In fact, I'm.
I was just going through thirdquarter transcripts and
marveling at this, this wholeconversation around we're
(22:44):
personalizing, and all of it'shappening through that loyalty
program, as well as through AIsystems, that can pull the data.
And glean the data and separatethe data, among consumer sets.
And to your point as it pertainsto personalizing from a
technology standpoint, I thinkthat is the biggest opportunity
is under the ability tounderstand who your customers
(23:07):
are, what they want, when theywant it, and then leveraging
that data.
A step further with a loyaltyprogram.
I will go one step further hereand say that technology is also
playing a big role in makingemployees lives significantly
easier and happy employees arehappy customers.
And thank God we finally figuredthat out in this industry.
(23:27):
And I think it took us a globalpandemic again, when our workers
became essential employees andthey were forced to go to work
in a really scary, unknown,uncertain time.
restaurant companies.
large, big and small stepped upand said, How can we make this
better for them?
And we have really refined thatto the point where labor
(23:48):
scheduling it is easier.
Kitchen display systems are nowa critical adoption at critical
mass right now, because all ofit makes, they're, Reshuffling
the back of house so that theycan take less steps and it's
less cluttered and it's moreefficient.
I talked to the Brinker CEO.
He changed the pickles becausethe jar was too hard to open.
And he said when they opened it,it splashed on them.
(24:11):
Why would he do that quote tohis employees?
And so little things.
Like that to make employeeslives easier.
And tech plays a huge role inthat.
and so I think it's a bouldermoving up a hill.
but I think that we are makingsome significant progress in
understanding that if we makeour employees lives easier,
they're gonna stick aroundperhaps a little bit longer, and
(24:32):
then they're gonna make ourcustomers happier.
And I think that the reallyquickly growing coffee shops
like Dutch Bros are doing areally great job at this
Jeremy Julian (24:40):
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Yeah, it's ironic because I,again, recently I had an
interview with somebody that'sdoing some automation for the
(25:22):
coffee industry and he wastalking about, he's got a
startup that is trying to helpwith the non coffee type
beverages.
He gave me a statistic that saidat Starbucks, 10 years ago, only
20 or 10 percent or 12 percentof beverages were cold now over
75 are and 75 percent of themare modified So whereas you used
to go in for a pike place dripcoffee, 10 years ago now No
(25:44):
longer does the pike place dripcoffee become the majority
almost every order is modifiedand they've got to do math And
they've got to do these things.
So technology is an enhancer.
You talked about the kitchen Iwas on with the COO of Bobby's
burgers and they're getting adouble sided grill to cook their
burgers faster and moreefficiently.
I know Chili's did somethingsimilar at Brinker to try and
(26:04):
help with those things.
What types of things do youthink, I guess as leaders in our
business, how do you pick theright thing to go do that?
Because there's so manycharlatans, there's so many
people in our industry.
I happen to be in the tech sideof things.
I have a podcast about it.
So what I do professionally.
And at the same time, I do thispodcast because I want to see
(26:25):
restaurants succeed, and I knowthat tech implemented well can
solve guest problems and staffproblems.
How do leaders figure out wherethe bottlenecks are to their
guest experience as well astheir staff
Alicia Kelso (26:35):
Yeah, that's a great question.
You'd probably be better suitedto answer that than I would, but
I will tell you this is not a,this is not an equal playing
field, so you look at a companylike Chipotle that has no debt
and fairly deep pockets andthey're in earnest automating.
Much of their work in thekitchen, on the make line and so
(27:00):
on and so forth.
So that is something that worksbest for Chipotle.
For smaller operators, I thinkit depends on the concept.
I think it depends on theclientele.
What's your percentage?
What's your mix on off premises?
things, of that nature.
Do you need a loyalty program?
I, and I think this is probablythe best.
Maybe one of the biggestchallenges that small restaurant
(27:22):
groups and independents have,right now is it's they know that
there's a need for technology tobecome more efficient, but
they're looking at a milliondifferent solutions and where to
start.
And it comes down to what is thepriority, what is the biggest
pain point and may, and not, andnot throwing spaghetti against a
(27:45):
wall, but just understandingwhat your biggest pain point is,
whether it's a call, you need acost savings, something along
those lines, and then I justbeing patient with the process,
Jeremy Julian (27:55):
it reminds me of a conversation I had with Chris
Demery from, from Blaze Pizzarecently.
He was on the show, a couple ofmonths ago, and he talked about
the fact when he first got tothe brand, they were treating
both the in person Yes, and thedigital guests exactly the same.
And I know Chapulte had some ofthose problems early on where
you can't serve both guests thesame way.
You've got to figure outdifferent levels of kitchen
(28:16):
automation and kitchenefficiency.
And he ended up doing two makelines and ultimately he solves
the digital guest differentlythan he solved the in person
guests.
And so you can focus on both thein person guests and His story
for those that didn't listen hewent back and listened to guest
surveys he looked at what thosefeedback mechanisms were and
said, okay How do I solve thisand then you go do site visits
(28:38):
and you go figure those thingsout?
I know that the Brinker guytalked about the some similar
things He was watching how hardit was to make the food and said
Where are those sticking points,whether it's the pickles or
their, chicken tenders,selfishly.
I loved Brinker's old, tempurachicken tenders.
They stopped because they weretoo hard to make and they
couldn't make them consistently.
And so because of that, whenthey were good, they were
(29:00):
fantastic.
And when they weren't good, I'mone of those people that ordered
them when they weren't good,they were awful.
And so they took them off themenu because they couldn't
produce them consistently.
But I love your idea that says,go look, go.
Spend the time to invest andthen pick one or two things and
keep your eye on the ball forthose one or two things To solve
them rather than trying to solveall of them at the same
Alicia Kelso (29:20):
and to your point, that's where the data comes back
into the picture.
And I think that's the mostcritical piece that we've got to
figure out.
We restaurant operators don'thave time.
They're too busy operatingrestaurants that are seven days
a week.
In most cases, breakfast toclose, who knows.
And so they don't time to minethis data, but that the answers
(29:42):
are typically in that data.
And if they're not in that dataabout your customers and what
the pain points are with them,then in the restaurants, in the
kitchen, talking to youremployees, Extensively, you will
find out the pain points reallyquickly.
And those are going to be thetwo best areas on what should
become your priorities in termsof tech investment.
Jeremy Julian (30:04):
Love that and I would also say that they should
read the magazine because youguys talk about lots of cool
Alicia Kelso (30:09):
try to,
Jeremy Julian (30:10):
And i'm saying it.
I know it's a shameless plug,but at the end of the day, I
oftentimes get ideas for whatbig brands are doing because you
guys write about it day in andday out And so there's people
that are out there that aremaking these investments And
many times they're paying off.
Obviously, there's sometimes itdoesn't pay off But when it does
you guys write about it and youguys talk about those successes.
So I love
Alicia Kelso (30:30):
I appreciate that.
Jeremy Julian (30:31):
yeah last question alicia, where is it
going?
Is it going back to and Irealize that's a really hard
question to answer I've beendoing this close to 30 years and
I, if somebody would have toldme where things were going to be
in 19 and then again in 20, Iwould have been like, yeah.
There's no way restaurants areall going to shut down.
and you're not gonna be able togo into them, but across the
board, where do you think thingsare going?
Do again, I, I see a convergenceof, price point within, I see
(30:55):
these brands that are succeedingbecause they're creating a good
value proposition.
But where do you see, continuedinvestment?
Where do you see people, doingthose things in 2025 and beyond?
Yes.
Alicia Kelso (31:06):
ball, I'd be on a beach right now with a drink in
my hand.
but I've had several of theseconversations, within the past
several weeks and I alwaysappreciate, picking everybody's
brains, because I thinkcollectively we're all either on
the same page or near the samepage.
And I think what I can tell youin terms of where it's going in
the near term, I think 2025 willmore stable than 24.
(31:31):
Thank God.
less bumpy, if you will.
I think that investors will comeoff the sideline.
a little bit more than, 24 waspretty much silent, for the most
part, but I think that theinvestments will open up a
little bit more because of thatstabilization.
I think value is going tocontinue to play out, and
(31:52):
consumers are going to continueto be, a little bit, Discerning.
I think that is absolutely goingto continue because there's
still a lot of uncertainties.
right now.
One thing that intrigues meabout this industry from a macro
perspective, is we'reretrenching.
We've seen a lot ofbankruptcies.
We've seen mass closures amongbrands that didn't file for
(32:12):
bankruptcy.
And I don't want that to beperceived as just negative
because I don't that can be thatmeans we're getting Our system
is getting healthier.
Our industry is gettinghealthier.
it's much bigger.
There are far more brands thanthere were 10 years ago, and
that's always going to be ebband flow.
And I think that, to thatearlier conversation we had is
(32:33):
just becoming smarter on the Pand L and just focusing on four,
for a while.
Profitability versus aggressivegrowth just for growth's sake.
I think that will become abigger conversation.
One thing that does intrigue methat I think is really happening
is the blurring of the lines.
So we're seeing c stores gainshare of, market share away from
QSRs in many instances.
(32:54):
To your point earlier or evenprior to this call, The price
point between casual and fastcasual and QSR isn't as stark as
it used to be.
we sit, we're seeing Pizza Hutat a drive thru.
We're seeing Chipotle push thegas on their drive thrus.
There's just a blurring of thelines now, and I think that is
(33:15):
going to continue where we justhave a big blurred industry and
I think it's going to be marketto market on what is successful
and what is not And I think thatyou could have the best
Performing restaurant of alltime that's going to work here,
but not here because our youknow Our demographics our
markets are becoming morebifurcated than they've ever
been And so I think you knowWhere does it go from here?
(33:38):
I think it's all over the map.
Jeremy Julian (33:40):
Yeah.
and the thing I would say that,that I've heard you say is this,
Consumers are going to be morediscerning with where they spend
their dollars.
And if they don't find thevalue, they're not going to come
back.
If they don't have a goodexperience, they're not going to
come back.
I think the days of being ableto screw up a meal because
you're the only casual diningplace in town, but it doesn't
matter because that's the onlyplace you can go on a Friday
night for a date night.
(34:01):
Those days are gone.
People will end up, makingchoices with their wallets and
ultimately if you don't fix youroperations, which some of that's
technology, some of that'straining, some of that's
staffing, all of the things thatwe talked about, I think
consumers are so much morediscerning.
They're going to choose withtheir wallet and it's going to
show in your P& L if you don'tdeal with
Alicia Kelso (34:20):
A hundred percent, and it's, and they're not just
more discerning, they're moresophisticated.
So they know when something's alittle off.
They have way more choices thanthey used to, and they don't
need you.
So block, to your point,blocking and tackling, is, has
to be priority number one.
Jeremy Julian (34:37):
Love it.
How do people stay in touchAlicia?
How do they, get to themagazine?
How do they get to thepublications you guys have
because I want everybody outthere to read what you guys are
writing
Alicia Kelso (34:45):
yes, we're at NRN.
com and if want to reach out tome directly, it's Alicia, A L I
C I A dot Kelso, K E L S O atInforma, dot com.
Of course, we're on all socialsas well.
I'm personally on LinkedIn,invite anybody to connect and,
always happy to have,conversations.
The more conversations we have,the better the ideas.
(35:06):
the better ideas manifest and,moving this industry forward is
our priority at NationsRestaurant News.
We're a trade publication.
We love it here.
we want everybody to succeed.
Jeremy Julian (35:15):
and again, that's I know we talked about it prior
to hitting the record buttonThat's really why the restaurant
technology guys podcast existsis I've you know made a career
and I've gotten it Do somereally cool things in the
restaurant industry.
So selfishly, I want to seerestaurants succeed.
I want to see them make goodchoices.
I want to see guests experienceget increased through the use of
technology.
I want to see all of the thingsthat you talked about.
So thank you for taking time.
(35:35):
Thank you for reaching out.
I've been a fan of, of what itis that you guys have been doing
for a long time.
So thank you for being on to ourlisteners, guys.
thank you guys for, forlistening and make it a great
day.
Thanks for listening to theRestaurant Technology Guys
podcast.
Visit www.
RestaurantTechnologyGuys.
com for tips, industry insights,and more to help you run your
(35:55):
restaurant better.
This is the RestaurantTechnology Guys podcast.
Helping you run your restaurantbetter.
Jeremy Julian (00:12):
In today's episode, we are joined by Alicia
Kelso.
Alicia has been covering thespace since I think she said
2008 or 2009.
She is one of those reallyprolific writers writes from the
nation's restaurant news, whichis the industry's largest
publication.
Her.
And I go through a wide varietyof topics, including where
guests are spending more time,how to restaurants continue to
(00:34):
compete in such a weird marketspace.
The surprises that happen in2020 for the things that we
expect to see happen in 2025 andbeyond.
As well as just how automationand technology continues to
impact the ways that restaurantsoperate each and every day.
If you don't know me, my name isJeremy Julian.
I am the chief revenue officerfor custom business solutions.
(00:57):
We sell the north star on a cellsolution for multiunit
restaurants.
Check us out at CBSnorthstar.comand now on to our episode
Welcome back to the restauranttechnology guys podcast I thank
everyone out there for joiningus as I say each and every time
I know you guys got lots ofchoices So Thanks for hanging
out on the air with us today.
I am joined by a very specialguest I'm gonna leave I let
(01:18):
Alicia talk about herself herefor a second But I was sharing
with her prior to hitting therecord button I've been reading
some of the stuff that she'swritten for a long time pretty
much since she's been in thespace So Alicia, why don't you
introduce ourselves?
I am certain everybody on that'slistening here has seen
something you've written Butwhether they've seen the face
and know exactly who you are Whydon't you introduce yourself and
give us a little bit ofbackground about?
(01:40):
About where you came from
Alicia Kelso (01:41):
Thank you, Jeremy.
Journalism 101, don't talk aboutyourself, so I'm a little
uncomfortable doing but, Iappreciate you having me.
My name is Alicia Kelso.
I'm the Executive Editor forNations Restaurant News.
we are the largest tradepublication covering this one
trillion dollar industry now,which is thrilling to say
because I actually startedcovering this industry In the
throes of the Great Recession2009.
(02:03):
for fast casual.com QSR Web andPizza Marketplace.
in 2018, I jumped over to theconsumer side covering the
industry for Forbes.
I also contributed to RestaurantDive and I joined Nations
Restaurant News in October.
Of 2022 and have been there eversince as their executive editor.
love this industry so much.
(02:24):
My father was an independentrestaurant owner.
He, I had a steakhouse inFinley, Ohio called George's.
and so it's very near and dearto my heart.
And I left for two or threeyears when my kid was born to go
into higher ed.
And I realized how much Iregretted that and boomeranged
right back in with, withintensity.
So glad to be back here.
(02:44):
Yeah,
Jeremy Julian (02:46):
I've said it a few times I think there's
probably some therapy forrestaurant people that try and
get out and come back becauseIt's one of those things that
does end up sucking you back inand I guess I'd love a little
bit of opinion Why do you thinkthat is?
Why do you think it's such ait's such a draw because we I
see it all The time I see peoplethat once you've gotten in and
you've gotten the bug it doesn'tend up leaving and people end up
(03:06):
inevitably coming back
Alicia Kelso (03:08):
and that's a really great point because
whenever I share my personalstory, upon introduction or
otherwise, there's a lot ofpeople who have very similar
stories about boomeranging backin or trying something new.
And, for, I can't answer forthem, but for me personally, I
can tell you that It'sdefinitely the people, nothing
against higher ed, I, therestaurant industry is
(03:29):
energetic.
It's exciting.
it's a hospitality industry,service industry, people first
industry, and it just has thatsort of thrilling nature, to it
where there's always somethingexciting happening and we all
use it and we all, it's excitingto talk about my job because,
people really.
(03:50):
they can relate, it's sorelative, to, to them and their
daily lives.
and I think there's just, it'sjust so deep in who we are as a
society.
we talked about having a 1trillion industry.
There's a reason for that.
and so I think it's alsointeresting, Jeremy, because
it's certainly not for the faintof heart.
Yeah.
Jeremy Julian (04:15):
at the end of the day that, it's democratized.
The thing I love about therestaurant industry is everybody
gets in and a lot of people arereally successful.
We've got, presidents of brandsthat started as a dishwasher
years ago that have worked theirway up.
And it's one of the onlyindustries that you can do that
in, in today's day and
Alicia Kelso (04:29):
Yeah.
And I also love that almost, somany, I think it's like one in
six or seven Americans have beenemployed by a restaurant
industry.
we have higher levels ofdiversity within our workforce.
it is just such a, culturally,diverse, Landscape from the
workforce, perspective.
(04:50):
So I think that is reallyexciting, too.
and it's a good place for peopleto go when perhaps there's
really nothing else.
it's a great starter job and agreat like you said, we've done
a really good job in thisindustry.
Especially through the past fiveyears, really focusing on how
this can be a career and notjust a, a starter job in high
(05:11):
school.
And I've said, we're seeing morestories from our vantage point
of that coming to fruition,which is really exciting.
Jeremy Julian (05:18):
I love that.
And, I say it all the time.
I think the world would be abetter place if everybody worked
in a restaurant for at least sixmonths of their life, because
all of my kids are going to haveto work in the service industry
in some way and deal with thepublic because, I'm certain
it'll make it, make it betterfrom a macro perspective.
Alicia, you and I talked alittle bit pre show, talk to me
about what it is that you guysare saying, seeing in the
restaurant industry, becauseit's been, there's been so many
(05:41):
stories out there.
Obviously, there's some bigheadwinds in certain markets and
then there's some others thathave been, doing, that have got
tailwinds.
Talk to me from a macro level,what are you guys seeing at
Nations Restaurant News, just ofthe industry as a whole?
Because I think it'll reallyformat the rest of our
conversation for the next 20minutes or so, about where can
people impact them, their ownbusiness as they look back at
(06:03):
themselves and say, hey, how doI make some changes there?
Alicia Kelso (06:06):
Yeah, that's a really interesting question,
because I think, if we zoom outquick, 2024 was much bumpier
than anyone expected going intoit.
I think, 23, we had a little bitof a hangover.
late 23, we had a little bit ofa hangover from what we saw as a
real strong, Resurgence orrenaissance, if you will, in
(06:28):
late 22 into early 23, based onpent up demand from the
pandemic, based on recovery fromwhat was a historically low,
Employment pool, we had to closeour stores, our restaurants, and
trim hours and days in much of2021, because we just didn't
have an employee base, to keepthem operational.
(06:51):
and so all of these things, thisconfluence of issues that were
created by the pandemic andextended started to dissipate.
A little bit in late 20, in late22, in early 23, that was this
insane sales year and trafficand entertainment everywhere.
And it was just this trueRenaissance.
(07:11):
and so going into 24, I rememberlate 23, there was a significant
amount of optimism and that justall went out the window.
And I think what the biggestissue from my vantage point,
Jeremy, was because we weredealing with historically high
inflation rates, generationallyhigh, if you will, we had to
price, we had to take a lot ofprice in this industry across
(07:33):
segments, across brands, and Iwould argue we probably
overpriced.
And so now, abruptly in thisyear, early this year, probably
late Q1, early Q2, traffic felloff a cliff.
And normally we start to seesome decent results in Q2 and
sustain through the summer, andthat just never came to
(07:54):
fruition.
So everybody, who's an operatoror proximate to an operator is
aware of this, right?
So what are we dealing with now,per your question?
Recovery from that.
I would argue that we, Probablyneeded to do and still have the
opportunity to do a better jobof communicating to our
customers why prices are alittle bit higher.
(08:16):
and a lot higher in someinstances, we probably could do
a better job menu engineering.
To get through some of those,food pressures that are weighing
on the cost of sales.
But we also have to recognizethat the P and L is never going
to look like it did in 2019.
and that's, I think we're allwanting it to get back to 2019.
(08:36):
It's not just food costs thataren't going back to now things
going back to 2019.
I think as long as we adjust ourmindset and our, Our operations,
our business model to understandthat the PNL is going to be
different and understand whatthat new normal means and work
our way through that the middleof the PNL a little bit better,
become more efficient, perhapsunderstand how tech is Can help
(09:01):
us in some circumstances, butnot go overboard on tech just
because there's a shiny bell andwhistle in front of us,
understand that, energyefficiency can be a really
viable, saving, tactic in themiddle of that P and L things
like that.
I think are just becomingsmarter, more sophisticated
operators, again, 2019.
Jeremy Julian (09:25):
Yeah.
No, I love all of those and I'mgoing to, I'm going to dig in a
little bit to some of thoseAlicia.
one of the other things that youalluded to is labor is hard to
come by.
It's still hard to come by in,in 2024 and even if you do get
labor, keeping them around ishard.
Keeping them employed andemployment costs have gone up.
Significantly as well.
through that last five yearperiod.
it's funny that you say,everybody came out of that
(09:46):
Renaissance and I think therewas a lot of people that are
like, Oh, it's good.
It's going to continue goinginto 2024.
But with the interest rates, Ithink the other thing I'm
hearing from restaurant brandsis they're not able to expand as
quickly into new venues becausethe cost of money to borrow
money to open up new venues, aswell as the construction costs
and the labor costs to openthose things.
In some instances has almostdoubled to open new brands.
(10:07):
Is that something you're hearingacross the
Alicia Kelso (10:09):
It is.
And I think that's where thechallenge is.
It's again, we're not justcontending with double digit
higher food costs.
It's everything.
It's energy costs are higherrent.
Occupancy costs are what 12 to15 percent higher.
it's across the board.
And to your point, to borrowmoney is more expensive.
I know that interest rates,we've had two or three
(10:31):
reductions recently that they'restill high, right?
Jeremy Julian (10:34):
they're still high historically from where
people were in 2019 where it wasalmost free to borrow money to
Alicia Kelso (10:39):
I, and again, we're, we got to stop comparing.
Oh, 2019 was, it was a goodthing for anyone who wanted the
capital, to borrow, to growtheir business.
What.
I think it is, again, what I'mseeing with all of that
confluence of issues happening,including, like you said,
(10:59):
higher, cost of money, cost ofborrowing is instead of
aggressive unit growth, isfocusing on four wall, four wall
profitability, reigning in sortof the ambitious, growth,
expansion plans that we mighthave signing huge deals out of
the gate, with a franchise grouphere or there and really getting
(11:21):
our unit economics in check andtaking a slower approach to
growth while we figure out howto work our way through these,
massively different material, adifferent, P and L situations
that we have an understanding,this is still very new.
So we have to understand whatnew normal is.
and while we're, instead ofwaiting to go back to 2019,
(11:44):
understanding what new normal isand how do we modernize our
business model to keep pace withthat new normal versus comparing
it to 2019, if that makes sense.
Jeremy Julian (11:53):
Absolutely.
I want to dig into tech in justa second, but you said something
that, that intrigued me.
You talked about educating ourconsumers as to why pricing has
increased.
I, long time listeners know I'ma family of six.
I have four children.
life is, going out to eat is aIt's expensive regardless of
where I'm going, and I'm notlooking to point any fingers at
any brand names, but at the endof the day, it's expensive.
(12:16):
And whether you go on fullservice or you're going quick
serve or you're going fastcasual, unfortunately, even in
my wallet share, those things,oftentimes for a family of six,
they're very close, outside of agratuity potentially.
I can oftentimes go out to avalue menu at a casual dining
brand.
I can go out to a fast casualbrand.
And the bottom line dollars arevery similar sometimes even in a
(12:37):
quick serve brand, if I'm not,if I'm doing it in certain ways.
And so across the board, howwould you recommend, or how have
you seen people be successful ateven educating their consumers?
Cause some people have figuredit out.
Some brands, whether it's,Wingstop or.
I don't say they're killing it,but they're doing really well
from a stock perspective, from asales growth perspective, and
their prices have increasedoftentimes in those same
(12:59):
percentages as some of the otherbrands.
We talked to, I talked withanother editor of a magazine
recently, we talked aboutChili's.
Chili's is doing really well.
And historically Chili's hasn'tbeen one of those brands that's
played in that space.
And so I'd love to know, how doyou recommend restaurant tours,
whether you're an individualoperator or you're a large
chain, how do you Help yourconsumers understand what has
happened macroeconomically tothe business to, to, so that
(13:22):
they understand that it's notjust that it's all going into
somebody's greedy pockets, butit's a cost of doing business.
Cause I think unfortunatelypeople go, ah, they're just,
they're raising the pricesbecause they're looking to make
more money.
Alicia Kelso (13:32):
and that, I think that depends on your concept.
I really, I think that, onething we saw this year that,
that sort of blew my mind alongthe lines of the question you're
asking is when the Wendy's CEOtalked about surge pricing,
versus dynamic pricing anddynamic you, you and I both know
dynamic pricing has been aroundfor forever.
(13:52):
we take a page from theairlines, we take a page from
hotels, we take a page fromUber, and Lyft and so on and so
forth.
And happy hour has been aroundfor forever.
So surge pricing or dynamicpricing is a great example here
of what the messaging needs tobe, to customers.
And it goes back to pushingthrough the message of what the
(14:14):
value is.
And it's not just price, Jeremy.
It's what, this is why Chipotlehas done so well.
This is why Texas Roadhouse hasdone so well because they are
messaging their valueproposition and it's not hinging
on a price.
with Texas Roadhouse, you getthe rolls, you get the two
sides, it's abundance, withChipotle, it's convenience, it's
(14:38):
a customization, it's a, thedigital.
to the brand that, that thebrand has really worked in
earnest to, to really improve.
and their portions, theyinvested in their getting their
portions back, chips and guac,that kind of stuff.
I think where we are starting toget a little better.
And I would argue this year wasa wake up call with all of this.
(15:00):
And I started to see this.
in Q3, the more earnings calls Isat on with public brands and a
lot of executives just fullyadmitted, Hey, we have to make
some adjustments.
We are seeing consumer behaviorslinger in a way where they don't
want us just to push limitedtime offers or 25 cent, 50 cent
(15:22):
mozzarella sticks.
They want full meal deals.
they want a comprehensive, aholistic approach to value.
Again, that's where Chili's Ithink has found it's, footing.
That's why Applebee's adjustedover to what sort of what
Chili's is doing.
And so I think if we continue todouble down on that message of
here's why this is valuable, Ithink we'll make a lot of
(15:43):
progress from where we've been,especially, this year, but we
have to make it really clear,that this is, This is a huge
value proposition.
I don't think we need to getinto the nitty gritty.
Hey, food costs are higher.
customers don't care.
Yeah, they know.
And they don't care.
They just want what's quick,easy and affordable for them.
And affordable right now, is waydifferent than it was when I
(16:05):
started covering the industry in20, in 2009.
Back then it was a price game,but now it's, Oh gosh, I'm
getting two sides and, And, androlls and peanuts.
And, these servers are theseservers are great to me.
They're really attentive and,they're quick and efficient.
that is a huge value propositionnow.
And I think the holistic thingis where we need to really focus
(16:27):
on.
Yeah,
Jeremy Julian (16:28):
and I think the other piece that I would say and
you guys recently wrote aboutit.
the Cracker Barrel group, largebrand there.
they were struggling for yearsand they're now, you know back
out Not only innovating, butalso sharing, but the one thing
I'd love for you to hit onbefore we jump to technology is
it's gotta be an experience,whatever that experience is.
We are hospitality.
(16:49):
It has to be an experience.
So when you talk aboutroadhouse, when you go into a
Texas roadhouse, there's energy,there's a vibe.
There's an attitude.
When you drive through the drivethrough at Chick fil A, you get
an experience.
When you go to.
I was recently at Portillo'sand, that brand it's, there's an
energy, there's a vibe when youwalk into the brand, a brand out
of the West coast, I just hadbreakfast at yesterday morning,
(17:11):
Huckleberry's, and the, it's,it, you feel it when you walk in
and you feel it the oppositeway.
And I'm not going to name anybrands, but you can feel it the
opposite way when it's notthere, when they're not, when
they're not trained, whenthey're not hospitable, when
they're not, when they, what doyou want, kind of attitude, you
realize that's not necessarilythe thing that, that you need.
I just had Uber, Uber direct on,on my phone.
(17:33):
On the latest podcast that wereleased, they talked about the
fact that even the drivers areguests of your restaurant.
You have to treat them as suchbecause they may be patrons in
the future.
And have you seen that besomething that, that you hear
CEOs talking about being part ofwhat they're doing, they're
creating an experience forvalue, but they also have to
make sure that their staff andtheir buildings and their food
(17:54):
is all, part of that equation.
Alicia Kelso (17:56):
And I think what's really interesting is we talked
about the issues we are workingour way through that were born
from the pandemic.
And I think what happened nowthat we've got almost five years
of hindsight, which is evenweird to say out loud, the
pendulum swung in a weird way.
It just upended so much aboutour day to day.
And what that meant in theindustry is it meant supply
(18:18):
chain issues, labor issues, foodcosts, in skyrocketing inflate
inflation, labor becoming, Sonecessary, they were, our
employees were deemed essentialworkers.
So how are we going to keepthem?
So the pendulum just reallyswung.
And I think what happened isbecause we had to go off
premises by mandate, and justfor comfort level, when people
(18:43):
felt unsafe to be in, to beoutside and out and about, we
became a little tootransactional.
And that is what I'm hearing nowin droves.
We're seeing it with, Starbuck'snew CEO, Brian Nichol has said
it.
Hey, this is one of the majorplaces we screwed up.
We became too trans, tootransactional.
We need to be digital, but wealso are trying, there's a lot
(19:05):
of concepts out there and a lotof executives out there really,
pushing this message that the,we are the hospitality to
industry to your point, and wedid become too transactional.
To survive in those, reallyawful, times.
But now we've got to get back tothat hospitality piece that
people piece that, communitypiece.
I'm hearing this all over theboard, whether it is from a
(19:27):
Texas roadhouse, to, toStarbucks, wanting to get back
there.
Subway just launched a newdesign prototype that they're
talking about how it's.
Improving Dine In.
That's not something I thinkabout with Subway, but even
Subway is talking about this.
Dutch Bros, Kava is really bigon this hospitality piece,
whether it's a digital customeror a Dine In customer.
(19:48):
So I think we're going to see apendulum swing back and
hopefully settle a little bitmore.
I think the brands that win arethe ones to your point, Jeremy,
that can, Provide some sort of,personalization, hospitality,
whether they, again, they are adigital or a dine in customer,
but it is something that thisindustry is really starting to
focus on a little bit more.
(20:09):
Again, to your point, because weprobably became too transact, we
took too much pricing and webecame too transactional.
Jeremy Julian (20:15):
and that really goes into, how does technology
play a part?
Because I think all too often,and I think about it from, we
were, because of the pandemicand just how fast everything
accelerated, we threw a lot ofsolutions at problems without
architecting them.
And unfortunately, when we throwa lot of solutions at those
problems, without architectingwhat the guest experience is
going to be like from start tofinish, whether that's digital
(20:37):
on a kiosk, that's digital onyour phone, that's through a
drive through without it.
And again, there's some brandsthat have done it really well,
and there's other brands thathave really struggled.
But how does technology play apart in that, Alicia?
Because I think all too often,and I say this to our listeners,
A lot, depending upon how I'minteracting with a brand.
There are times that I'm doingit just to satiate my family.
(20:59):
I'm driving home from baseballpractice and we need food.
We need it quick.
I don't want an experience.
I want it right.
I want it fast.
I want it hot and I want it inthe bag and I don't want to have
to go back a second time.
And then there's other times Iwant to have an experience and I
want to sit down.
How do we personalize thatexperience?
How do we even know what theguests are looking for in that
regard?
And how does it become, Part ofone of those things where you
(21:21):
can train that staff withoutthrowing because, again, more
and more brands have 10, 12, 15pieces of technology in the
front of the house.
And these staff members thathave been there for six months
or three weeks, they're havingto learn it all and deal with
it.
And how do they do it?
How do they do it effectively?
Alicia Kelso (21:36):
I think that's a bigger conversation, but I would
argue to your point, hot, quick,convenient, what you said is an
experience, right?
So accurate.
that is part of the experiencewith you being that digital
customer and satiating yourfamily.
and so I think where we'reseeing this the most as we have
this conversation ramping upabout experience and hospitality
(22:00):
and getting back to that,connection that the industry is
known for and was built on.
The biggest piece of that isloyalty programs.
And that, I think has a numberof, Tailwinds that it can
produce.
There were obviously nothingnew.
I had the little punch card atsubway back and back in the day,
but they've evolved so much tothe point where they now know
(22:23):
that you are coming in tosatiate your family at a certain
time of day.
and what you're probably goingto get for your, your four kids,
all your kids after baseballpractice or whatever.
And we're seeing that, move atthe speed of light right now.
In fact, I'm.
I was just going through thirdquarter transcripts and
marveling at this, this wholeconversation around we're
(22:44):
personalizing, and all of it'shappening through that loyalty
program, as well as through AIsystems, that can pull the data.
And glean the data and separatethe data, among consumer sets.
And to your point as it pertainsto personalizing from a
technology standpoint, I thinkthat is the biggest opportunity
is under the ability tounderstand who your customers
(23:07):
are, what they want, when theywant it, and then leveraging
that data.
A step further with a loyaltyprogram.
I will go one step further hereand say that technology is also
playing a big role in makingemployees lives significantly
easier and happy employees arehappy customers.
And thank God we finally figuredthat out in this industry.
(23:27):
And I think it took us a globalpandemic again, when our workers
became essential employees andthey were forced to go to work
in a really scary, unknown,uncertain time.
restaurant companies.
large, big and small stepped upand said, How can we make this
better for them?
And we have really refined thatto the point where labor
(23:48):
scheduling it is easier.
Kitchen display systems are nowa critical adoption at critical
mass right now, because all ofit makes, they're, Reshuffling
the back of house so that theycan take less steps and it's
less cluttered and it's moreefficient.
I talked to the Brinker CEO.
He changed the pickles becausethe jar was too hard to open.
And he said when they opened it,it splashed on them.
(24:11):
Why would he do that quote tohis employees?
And so little things.
Like that to make employeeslives easier.
And tech plays a huge role inthat.
and so I think it's a bouldermoving up a hill.
but I think that we are makingsome significant progress in
understanding that if we makeour employees lives easier,
they're gonna stick aroundperhaps a little bit longer, and
(24:32):
then they're gonna make ourcustomers happier.
And I think that the reallyquickly growing coffee shops
like Dutch Bros are doing areally great job at this
Jeremy Julian (24:40):
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Yeah, it's ironic because I,again, recently I had an
interview with somebody that'sdoing some automation for the
(25:22):
coffee industry and he wastalking about, he's got a
startup that is trying to helpwith the non coffee type
beverages.
He gave me a statistic that saidat Starbucks, 10 years ago, only
20 or 10 percent or 12 percentof beverages were cold now over
75 are and 75 percent of themare modified So whereas you used
to go in for a pike place dripcoffee, 10 years ago now No
(25:44):
longer does the pike place dripcoffee become the majority
almost every order is modifiedand they've got to do math And
they've got to do these things.
So technology is an enhancer.
You talked about the kitchen Iwas on with the COO of Bobby's
burgers and they're getting adouble sided grill to cook their
burgers faster and moreefficiently.
I know Chili's did somethingsimilar at Brinker to try and
(26:04):
help with those things.
What types of things do youthink, I guess as leaders in our
business, how do you pick theright thing to go do that?
Because there's so manycharlatans, there's so many
people in our industry.
I happen to be in the tech sideof things.
I have a podcast about it.
So what I do professionally.
And at the same time, I do thispodcast because I want to see
(26:25):
restaurants succeed, and I knowthat tech implemented well can
solve guest problems and staffproblems.
How do leaders figure out wherethe bottlenecks are to their
guest experience as well astheir staff
Alicia Kelso (26:35):
Yeah, that's a great question.
You'd probably be better suitedto answer that than I would, but
I will tell you this is not a,this is not an equal playing
field, so you look at a companylike Chipotle that has no debt
and fairly deep pockets andthey're in earnest automating.
Much of their work in thekitchen, on the make line and so
(27:00):
on and so forth.
So that is something that worksbest for Chipotle.
For smaller operators, I thinkit depends on the concept.
I think it depends on theclientele.
What's your percentage?
What's your mix on off premises?
things, of that nature.
Do you need a loyalty program?
I, and I think this is probablythe best.
Maybe one of the biggestchallenges that small restaurant
(27:22):
groups and independents have,right now is it's they know that
there's a need for technology tobecome more efficient, but
they're looking at a milliondifferent solutions and where to
start.
And it comes down to what is thepriority, what is the biggest
pain point and may, and not, andnot throwing spaghetti against a
(27:45):
wall, but just understandingwhat your biggest pain point is,
whether it's a call, you need acost savings, something along
those lines, and then I justbeing patient with the process,
Jeremy Julian (27:55):
it reminds me of a conversation I had with Chris
Demery from, from Blaze Pizzarecently.
He was on the show, a couple ofmonths ago, and he talked about
the fact when he first got tothe brand, they were treating
both the in person Yes, and thedigital guests exactly the same.
And I know Chapulte had some ofthose problems early on where
you can't serve both guests thesame way.
You've got to figure outdifferent levels of kitchen
(28:16):
automation and kitchenefficiency.
And he ended up doing two makelines and ultimately he solves
the digital guest differentlythan he solved the in person
guests.
And so you can focus on both thein person guests and His story
for those that didn't listen hewent back and listened to guest
surveys he looked at what thosefeedback mechanisms were and
said, okay How do I solve thisand then you go do site visits
(28:38):
and you go figure those thingsout?
I know that the Brinker guytalked about the some similar
things He was watching how hardit was to make the food and said
Where are those sticking points,whether it's the pickles or
their, chicken tenders,selfishly.
I loved Brinker's old, tempurachicken tenders.
They stopped because they weretoo hard to make and they
couldn't make them consistently.
And so because of that, whenthey were good, they were
(29:00):
fantastic.
And when they weren't good, I'mone of those people that ordered
them when they weren't good,they were awful.
And so they took them off themenu because they couldn't
produce them consistently.
But I love your idea that says,go look, go.
Spend the time to invest andthen pick one or two things and
keep your eye on the ball forthose one or two things To solve
them rather than trying to solveall of them at the same
Alicia Kelso (29:20):
and to your point, that's where the data comes back
into the picture.
And I think that's the mostcritical piece that we've got to
figure out.
We restaurant operators don'thave time.
They're too busy operatingrestaurants that are seven days
a week.
In most cases, breakfast toclose, who knows.
And so they don't time to minethis data, but that the answers
(29:42):
are typically in that data.
And if they're not in that dataabout your customers and what
the pain points are with them,then in the restaurants, in the
kitchen, talking to youremployees, Extensively, you will
find out the pain points reallyquickly.
And those are going to be thetwo best areas on what should
become your priorities in termsof tech investment.
Jeremy Julian (30:04):
Love that and I would also say that they should
read the magazine because youguys talk about lots of cool
Alicia Kelso (30:09):
try to,
Jeremy Julian (30:10):
And i'm saying it.
I know it's a shameless plug,but at the end of the day, I
oftentimes get ideas for whatbig brands are doing because you
guys write about it day in andday out And so there's people
that are out there that aremaking these investments And
many times they're paying off.
Obviously, there's sometimes itdoesn't pay off But when it does
you guys write about it and youguys talk about those successes.
So I love
Alicia Kelso (30:30):
I appreciate that.
Jeremy Julian (30:31):
yeah last question alicia, where is it
going?
Is it going back to and Irealize that's a really hard
question to answer I've beendoing this close to 30 years and
I, if somebody would have toldme where things were going to be
in 19 and then again in 20, Iwould have been like, yeah.
There's no way restaurants areall going to shut down.
and you're not gonna be able togo into them, but across the
board, where do you think thingsare going?
Do again, I, I see a convergenceof, price point within, I see
(30:55):
these brands that are succeedingbecause they're creating a good
value proposition.
But where do you see, continuedinvestment?
Where do you see people, doingthose things in 2025 and beyond?
Yes.
Alicia Kelso (31:06):
ball, I'd be on a beach right now with a drink in
my hand.
but I've had several of theseconversations, within the past
several weeks and I alwaysappreciate, picking everybody's
brains, because I thinkcollectively we're all either on
the same page or near the samepage.
And I think what I can tell youin terms of where it's going in
the near term, I think 2025 willmore stable than 24.
(31:31):
Thank God.
less bumpy, if you will.
I think that investors will comeoff the sideline.
a little bit more than, 24 waspretty much silent, for the most
part, but I think that theinvestments will open up a
little bit more because of thatstabilization.
I think value is going tocontinue to play out, and
(31:52):
consumers are going to continueto be, a little bit, Discerning.
I think that is absolutely goingto continue because there's
still a lot of uncertainties.
right now.
One thing that intrigues meabout this industry from a macro
perspective, is we'reretrenching.
We've seen a lot ofbankruptcies.
We've seen mass closures amongbrands that didn't file for
(32:12):
bankruptcy.
And I don't want that to beperceived as just negative
because I don't that can be thatmeans we're getting Our system
is getting healthier.
Our industry is gettinghealthier.
it's much bigger.
There are far more brands thanthere were 10 years ago, and
that's always going to be ebband flow.
And I think that, to thatearlier conversation we had is
(32:33):
just becoming smarter on the Pand L and just focusing on four,
for a while.
Profitability versus aggressivegrowth just for growth's sake.
I think that will become abigger conversation.
One thing that does intrigue methat I think is really happening
is the blurring of the lines.
So we're seeing c stores gainshare of, market share away from
QSRs in many instances.
(32:54):
To your point earlier or evenprior to this call, The price
point between casual and fastcasual and QSR isn't as stark as
it used to be.
we sit, we're seeing Pizza Hutat a drive thru.
We're seeing Chipotle push thegas on their drive thrus.
There's just a blurring of thelines now, and I think that is
(33:15):
going to continue where we justhave a big blurred industry and
I think it's going to be marketto market on what is successful
and what is not And I think thatyou could have the best
Performing restaurant of alltime that's going to work here,
but not here because our youknow Our demographics our
markets are becoming morebifurcated than they've ever
been And so I think you knowWhere does it go from here?
(33:38):
I think it's all over the map.
Jeremy Julian (33:40):
Yeah.
and the thing I would say that,that I've heard you say is this,
Consumers are going to be morediscerning with where they spend
their dollars.
And if they don't find thevalue, they're not going to come
back.
If they don't have a goodexperience, they're not going to
come back.
I think the days of being ableto screw up a meal because
you're the only casual diningplace in town, but it doesn't
matter because that's the onlyplace you can go on a Friday
night for a date night.
(34:01):
Those days are gone.
People will end up, makingchoices with their wallets and
ultimately if you don't fix youroperations, which some of that's
technology, some of that'straining, some of that's
staffing, all of the things thatwe talked about, I think
consumers are so much morediscerning.
They're going to choose withtheir wallet and it's going to
show in your P& L if you don'tdeal with
Alicia Kelso (34:20):
A hundred percent, and it's, and they're not just
more discerning, they're moresophisticated.
So they know when something's alittle off.
They have way more choices thanthey used to, and they don't
need you.
So block, to your point,blocking and tackling, is, has
to be priority number one.
Jeremy Julian (34:37):
Love it.
How do people stay in touchAlicia?
How do they, get to themagazine?
How do they get to thepublications you guys have
because I want everybody outthere to read what you guys are
writing
Alicia Kelso (34:45):
yes, we're at NRN.
com and if want to reach out tome directly, it's Alicia, A L I
C I A dot Kelso, K E L S O atInforma, dot com.
Of course, we're on all socialsas well.
I'm personally on LinkedIn,invite anybody to connect and,
always happy to have,conversations.
The more conversations we have,the better the ideas.
(35:06):
the better ideas manifest and,moving this industry forward is
our priority at NationsRestaurant News.
We're a trade publication.
We love it here.
we want everybody to succeed.
Jeremy Julian (35:15):
and again, that's I know we talked about it prior
to hitting the record buttonThat's really why the restaurant
technology guys podcast existsis I've you know made a career
and I've gotten it Do somereally cool things in the
restaurant industry.
So selfishly, I want to seerestaurants succeed.
I want to see them make goodchoices.
I want to see guests experienceget increased through the use of
technology.
I want to see all of the thingsthat you talked about.
So thank you for taking time.
(35:35):
Thank you for reaching out.
I've been a fan of, of what itis that you guys have been doing
for a long time.
So thank you for being on to ourlisteners, guys.
thank you guys for, forlistening and make it a great
day.
Thanks for listening to theRestaurant Technology Guys
podcast.
Visit www.
RestaurantTechnologyGuys.
com for tips, industry insights,and more to help you run your
(35:55):
restaurant better.
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