BRAND SERIES: Casual Dining's Fight for Survival | Who's Winning, Who's Failing - Restaurant Masterminds Podcast

Episode Transcript
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Speaker 1 (00:00):
We are back here on the Restaurant Mastermind podcast, and
of course it's going to be a good one today
because we're diving into casual dining. You guys will not
want to miss this one. I'm here, of course with
my co host mister Paul Mullinari.

Speaker 2 (00:12):
How are you I'm doing excellent. Baron, how are you doing, buddy.

Speaker 1 (00:15):
I'm excellent. This is a good topic because I think
a lot of people right now are feeling the pinch,
and I'm talking about consumers, which is having a huge
impact on the restaurant industry. I'm talking to CEOs every
week that are saying foot traffic is down. The real
question is will the casual dining sector survive what we're

(00:39):
going to potentially see coming up. So we're going to
talk about that today. Yeah, there's a lot to talk about.

Speaker 2 (00:46):
It's a really precarious time right now for casual dining.
It's in some ways, you know, when they've never really
fully recovered since COVID and a lot of brands are well.
There's a lot to get into, isn't it.

Speaker 1 (01:01):
Yeah, we'll get into it all right, you guys stick
around right here, We'll be right back. My name is

(01:28):
Paul Baron as the early pioneer in fast casual I've
seen the industry evolve from just a few operators to
the most sought after segment by consumers around the world.
Now we're planning to shape its future. Tap into decades
of my expertise identifying the emerging brands and tech winners

(01:48):
in the space. Saber Capital will be fueling the next
generation of fast casual innovation. All right, we're back here,
and I'm here with Paul Molinari. We're chicken out all
the casual dining concepts that you can imagine, the ones
that we're going to be hitting on. First, of course,
I want to hit on TGI Fridays. Okay, And with

(02:11):
TGI Fridays, we had this story that, of course everybody
has kind of been watching this obviously, after bankruptcy filing,
they're now starting to push into a lot more alcohol
and they're also doing handbreaded chicken fingers. I mean, basically,
what they're trying to do is up the game a
little bit. So if you think about the scenario of

(02:34):
you file bankruptcy and then you go out and you
start building in all this value, First of all, why
didn't you do that before.

Speaker 2 (02:44):
Yeah, it's interesting what I guess, you know, what took
so long to rethink some of these things that almost
feel in some ways common sensical, like changing the menu
up a little bit, you know, getting a little more streamlined,
trying to attract gens, you know, getting a little bit

(03:04):
younger with foods that are a little more attractive to
the gen Z audience.

Speaker 1 (03:12):
I'm not sure they had thirty seven million in debt
week sales. They had some store closures.

Speaker 2 (03:19):
That came in.

Speaker 1 (03:21):
It was at one time it was a popular bar scene,
and I would say, yeah, there was a period of
time in which it was the scene in terms of
a great bar. Why do you think that that because
it's probably the gen X and the boomers that started
to navigate away from that. Why do you think that
that happened? Well, I think for well, I think a

(03:45):
number of reasons. And it's not just you know, a
value bar.

Speaker 2 (03:50):
You're always going to attract value customers. But I think
the number of options have just increased substantially. I think
there has been a greater amphiths by restaurants to improve
their bar, to improve the drink menus with different you know,
different mixes and different concoctions, and I think to a

(04:12):
certain degree, you know, Friday's, Uh, it just doesn't look cool.
It's just not cool, man. I mean, you know, is
that a place you really want to be seen? Uh?
You know, I think it's it's a it's a tough
place to get your friends, you know, out to want
to go to.

Speaker 1 (04:34):
I think, I think, Paul, they have to go through
a full rebrand, and I know that's going to cost
a lot of money most likely to try to do
this with the number of stores they have. I know
that recently they talked about getting down into smaller footprints,
which is probably going to be reasonable. But when you

(04:54):
look at at Fridays, I'm going to bring up another
brand here in a second that I'll show you guys
when you think about rebranding right now, and the key
thing here is you've got because you could do this
also just from a digital side, if you just did
it on Instagram and on your website, I think the
opportunity is quite different, you know, for maybe getting discovered

(05:17):
by millennials that have never really considered the brand before.
What are your thoughts on a rebrand? Is it doable
from this at this level? I think it's doable.

Speaker 2 (05:26):
And I think a lot of the brands that we'll
talk about today are you know, some of them are
very seriously considering big rebrands. The problem with rebrands, of course,
is that they're extraordinarily expensive and you have to ask,
you know, do they even have the money to support
something like that. So, you know, a rebrand in a
lot of ways, that's the last that's the that's the

(05:46):
end of the line. That's where you've tried everything and
it's just time to hit the reset button. So, uh,
you know, is it salvage I mean from a reputation standpoint,
they have some work to do. Yeah, uh, they do,
but it's I don't I think it's absolutely salvageable. I'm
not sure I would consider a rebrand, Okay, I.

Speaker 1 (06:07):
Think it was something nostalgic, you know.

Speaker 2 (06:09):
I mean, listen, if Chilies can pull it off, why
can't Fridays.

Speaker 1 (06:15):
So you you look at their competition now, because this
is what they're essentially up against. This is a small
chain out of Dallas, Texas called Village Burger Bar. You know,
Fridays of course kind of born and raised in Texas.
But this is a good example of almost the same thing,
wings on it, burgers, a lot of those starter style

(06:36):
you know, dips and stuff that they have. But look
at this menu. Uh, and they're offering wine and beer.
Obviously you can also get into you know, full on cocktails.
So this right here is a completely different look feel
this being you know, a completely unique concept and it

(06:58):
and the interesting thing about this one is it's fast
casual and it has this upscale component that is leveraging
in what's happening in casual dining, which is where I
think a lot of the competition is really coming from
right now, is from these upscale casual dining concepts or
fast casual dining concepts.

Speaker 2 (07:16):
Yeah. Absolutely, I think that you know, when you look
at casual dining and you compare it to fast casual,
there does seem to be you know, a better value
on the fast casual side than the casual dining. Now
that being said, there are certain brands that are bringing
in more value items and are and are making a

(07:36):
compelling case to sit down and be served. You know, Paul,
where do you think, like along the way, A lot
of people think the impetus for the downfall was corona virus.

Speaker 1 (07:52):
I don't think so I think it was. Yeah, I
think it was the demographic shift. You know, they weren't
most of the casual dining changes. Chains did not shift
to the millennials. They tried to ride as long as
they could on their existing customer base, which was mostly
boomers and Gen X you know us. And I think

(08:12):
they missed the mark on not getting enough one new
menu items, really leveraging social and digital and building out
an infrastructure to kind of attract this next generation because
now they're competing. You know, I just showed Rome. I'll
bring it back up on screen for you guys watching,

(08:34):
but Rome Artisan Originally this was a burger bar only. Okay,
this is another fast cutter concept that has been elevating up.
I mean, look at these photos on screen.

Speaker 2 (08:43):
Yeah, this is.

Speaker 1 (08:45):
This would this is where TGI Friday should be right here,
you should be looking. You could put a TGI Friday's
badge on this fifteen years ago and people would have
bought that. You know, that's absolute. Yeah, they they have
missed the boat. I think when it comes to leveraging
in the millennials and right now, if you don't have

(09:07):
a lock on the millennials, your brand is just not
going to grow.

Speaker 2 (09:11):
It's just that simple. Listen as a gen xer, when
you think of Fridays, it immediately comes to my mind.
That movie and I forgot the name of the movie.
But Jennifer Aniston is wearing you know, her pieces of Flair?
Oh yeah, remember her? Was that one? I forgot it? Yeah,
that was a good one. Remember exactly was that office space?

(09:31):
I don't even know, but it was something like that
in the nineties.

Speaker 1 (09:34):
Something with something to do with family, A family. No, no,
that's where she was a stripper. Fucking love it, Jennifer
Friday's worker. Okay, either one, I'll talk already, I'll take
them both.

Speaker 2 (09:50):
But the what a beautiful product placement at the time,
and it was so cool, but they never evolved past that, Like,
where's the answer to that? Where's the up on that,
where's the where's that cultural moment where Fridays is part
of the culture again? And you know, in a real
in a cool way. You know, that's tricky, and but

(10:13):
they got to do it. They got to figure that out.

Speaker 1 (10:16):
Oh here it is right here. I think it was
office space. It was office space, office space, and.

Speaker 2 (10:24):
We got to let me I'll mute that.

Speaker 1 (10:26):
But just so everybody can see what we're talking about
that it actually existed out there and this was this
was a theme where they were going after the flair
and I mean this was definitely the only thing that
they changed it away from the brand itself.

Speaker 2 (10:42):
But you can kind of see. And that's what I think.

Speaker 1 (10:45):
The question here is did the millennials just not connect
to that?

Speaker 2 (10:51):
Yeah, and you know what, I'm looking at it now
and I'm not even sure if that was Fridays, But
the reality is is that I think everybody, I think.

Speaker 1 (10:58):
Everybody thought it was exactly but yeah, it was the
Well it's even searchable on YouTube. It's it's the generator
for Aniston Friday's scene.

Speaker 2 (11:05):
Okay, so there. Yeah, so cultural moment kids, And there
are a lot of brands nowadays that are sort of
injecting themselves into cultures, right, Like we had a conversation
about you know, Lift Moss with with with Taco Bell
and how they are you know, putting themselves into there.
And there are other brands that are using tremendous amount
of user generated content to no doubt, right, So Fridays

(11:30):
needs to find that that that thing.

Speaker 1 (11:32):
Again, I blame it on their marketing. They had the
wrong marketing people in there a decade ago. That was
really where it started to spend sideways. And they never
attracted never I didn't catch the you know, the wind
and their sales to go to the millennial crowd.

Speaker 2 (11:50):
They never evolved. You know, you can't stop at you know,
Jack Daniel's ribs.

Speaker 1 (11:57):
Bingo, bingo, Yeah, exactly. You can't live on those things. Hey,
well some people are not. They're moving in. They're actually
walking the walk a little bit. Now. I don't know
if it's going to work. And that of course is
Red Lobster, thirty six year old CEO. This is a
Goldman guy and or was started as a Goldman Sachs intern,

(12:17):
and he's going after some very key things in terms
of you know, kind of a function of changing the
model of where this is going. When you look at
Red Lobster right now and you think of this also,
could Red Lobster end up being in the same book
as possibly Chili's where they have kind of corrected course

(12:41):
a little bit. They've revamped the menu, they've done some remodeling.
You know, this is kind of where they're going. And
the big one that he also the CEO from Red
Lobster is going after his higher service standards.

Speaker 2 (12:55):
So yeah, that's all.

Speaker 1 (12:57):
Those three things are really kind of, in my opinion,
are stakes for the restaurant industry.

Speaker 2 (13:02):
As a whole. But today it feels like it's a
it's a differentiator. It's well, that's what I was just
about to say. I mean, the beautiful thing about the
Red Lobster brand and what the CEO has in his
bag now is it is a key differentiator. I mean,
they're seafood. I mean, how many casual dining chains can
you say focus on seafood? Not too many. So the

(13:27):
question with that, of course, is you know, how do
they how do they incorporate the value? You know, do
they if they can do a twenty dollars lobster role
and do it well, maybe that's you know, maybe that's
the hook.

Speaker 1 (13:45):
They got the three core shrimp sensation for twenty bucks.
You can see a little bit of the menu. They're
still trying to hang in there with the happy hour
somewhat family oriented to me, Okay, I'm looking at the website,
was looking at this earlier when we were prepping for
the show, and I was like, they feel like they're
a little bit everywhere. You know, they haven't really locked

(14:09):
in on something that is unique enough to say, all right,
I want to try this for the first time with
the family or you know, with my friends. But maybe
this is this is one of those reflection points where
Red Lobster might actually get a shot at trying to
do what Chili's has done.

Speaker 2 (14:30):
You know, I think, I mean, they've had some pretty
underperforming sales for for a while, and I think they
you know, they what did they lose thirty forty fifty restaurants, Yeah,
a lot of closings, a lot of clothing, you know.
So I think, like a lot of these brands they
are going to have, they're going to they're going to

(14:53):
eliminate the you know, the underperformers. They're gonna they're going
to pair down, get lean and find a better strategy.
You know, there's no question in my mind that this
young CEO probably you know, has he's going to have
to focus. I think he's going to have to focus
and you.

Speaker 1 (15:11):
Look at focus. This is of course Chili's will show
a story in a second. But this is the thing
that I thought really struck home with me, is they've
really dialed in their website here recently a lot of modifications.
They have gone right to the favorites. So they're going
with their strong suit. They're getting directly into the rewards.

(15:31):
I mean you can see the flow of how they're
trying to attract the customer. And I think they've been
able to be very very pinpointed on being able to
get into that millennial mindset. Now maybe this will work
because now obviously after you know, their Q four earnings

(15:53):
last year a fairly significant you know performance, what was
a comparable let me pull that up. Terrible sales thirty
one percent.

Speaker 2 (16:03):
Thirty one percent increase in stam store sales. That's uh.
And they're calling that being attributed to streamline kitchen operations
and menu simplification. Uh. But here's the thing. I'm not
buying that. I think what they're doing, I mean just
look at that the the the Q the quarter pounder, right,

(16:25):
the quarter pounder alternative. I mean that is so like
in your face. They went right to McDonald's to it.
They took one of the most beloved UH sandwiches in
the history of hospitality and the quarter pounder, and they're like,
you know, we're going to reboot this thing. Yeah, unapologetically,
and I think they absolutely crushed it.

Speaker 1 (16:46):
And there we think about this as you're graduating a
millennial audience, which which probably were born and raised on
the quarter pounder. Okay, they recognize it, then they're like, well,
what's the next one up? You know, and the opportunity
for Chili's to kind of seize on that. That's the
difference between where TGI missed it and Chili's hit it.

(17:08):
They were able to connect into that millennial audience. They
increased their throughput their social I was a bit surprised
at how well their social media was done, but that
in itself is exactly what I'm talking about. You know,
when you look at just what they've been able to
do in a short period of time, and this is
the thing that a lot of people miss, and that is,

(17:29):
you know, everybody talks social media. Yeah, yeah, social is important,
but we're kind of dedicated to it, but not necessarily
really dedicated to it. I'll show you something right here.
This is their TikTok page. Not necessarily a huge audience,
only one hundred and sixty two thousand for a major

(17:50):
brand that should probably be somewhere upwards of about half
a million to a million. But the point is is
they've just gotten started, so they've really tied in and
you'll notice that they've really themed it very interestingly. So
they're splitting audiences here. I want you to see something. Yeah,
so millennial right here, so remember the financing fast food

(18:10):
theme that they did right right, Okay, millennial audience here,
and then they're tying into boomers and Gen X, so
they're trying to split the lane right here on their
their audience that help them grow. Notice how they're filtering
back to millennials. Yeah, okay, this to me is the

(18:30):
way marketing has to be done. You cannot get to
one lane centered, and I think Chili's has been able
to kind of spread the gap here, which is showing
up in their sales.

Speaker 2 (18:42):
Yeah, clearly they understand their their audience and who their
target market is. And yeah they're they're doing a bang
up job. And I love the Office play in too,
because yeah, exactly, it's you know, as a as a
parent of a couple of gen Z kids in their
later teens in the early twenties, I mean they watched

(19:05):
The Office. There was like a massive like all of
their friends like watched The Office everybody first time. Yeah,
for the first time, for the first and they all
streamed it of course on their on their MacBooks. But
so there's this amazing crossover where Chili's just absolutely nailed
it with that tart, with that office lover demographic. Yep.

Speaker 1 (19:27):
Well, and I think the point when you look at
marketing and this is something that I really need to
get across to a lot of operators today. Right now
you're focused on millennial gen Z, which is great. Remember
that if you're cycling a brand, you know, obviously the
alpha generation is too young. It's you know, this is

(19:48):
the first year for Alpha generations. So really gen Z
is the next holy grail of marketing, and I think
anybody that can transition on that gen Z the millennial split,
much like the difference between gen Z Millennial versus millennial
and gen X. Gen X was a very small market

(20:08):
versus Millennial being very large, gen Z and Millennial are
almost equal in size massive. So together this could actually
generate an opportunity for casual dining to maybe get a
rebirth here if they do it right.

Speaker 2 (20:25):
Well, I think, yeah, you're right, Paul, And the best
part about it is, you know, for those brands that
are willing to swallow their pride a little bit and
adopt a playbook and a roadmap from a competitor. I
think in a lot of ways, Chile is giving you
the recipe ye or a really smart strategic approach. Let's see,

(20:48):
if you know, let's see if the others can can
follow suit and evolve using their own brand elements. The
big QP, the big quarter pound earth they just course,
you know, it's a big quarter pounder, come on, right
in your face, man. Yeah, it's like, holy crap, I
love it and even kind of looks like the McDonald's
set up. It is a freaking McDonald's. Corse, it's the

(21:11):
same ingredients. And but here's the thing. I think it's
got like eighty percent more burger in it.

Speaker 1 (21:16):
Yeah, more beef y you know, the who knows what
quality level is, but nicer bun obviously they're putting into this.

Speaker 2 (21:26):
But I don't know. Ninety nine you get the burger
that the endless chips in the dream, Yeah, endless chips
switches forever. That's the way to go. That's bigger that.
That's actually a better deal than if you were to
go to McDonald's, right now and order a quarter pounder meal.
It's crazy.

Speaker 1 (21:43):
I think that's the thing with with we're dealing with
on these new kind of these new innovations around casual dining,
they're still staying with their their cornerstone of what they are.
They're just refreshing it, understanding how to target, integrating a
little social and then building out. What the Red Lobster
guy's trying to do is build out some service. Yeah,

(22:05):
maybe figure that's the thing's Red Lobster. I think they're
a little bit wide right now. If he can lock
in on something whatever that might be, if it's a
lobster roll, if it's a shrimp thing, if it's a
whatever their menu as they injured, Sure.

Speaker 2 (22:17):
As hell hope it's a lobster roll. I mean, for
krying out loud, that would be the way to go.
I mean, we're going into summer. I mean, I'll tell
you what. In New England, it's all about the lobster
roll right now. We are like we're in lobster roll.
This is our pumpkin spice up here. So I mean,
if Red Lobster can pull off a good lobster roll

(22:38):
and convince us hardy jackass, New Englanders that it's actually good.
I mean, they may have something.

Speaker 1 (22:44):
Then you've got to hit all right, let's talk about
let's talk about Hooters. They just filed for bankruptcy and
you look at the you know, the restaurants. I just
don't know if this is kosher anymore.

Speaker 2 (23:01):
I just I love talking about Hooters. Okay, Well, it's
just one of these brands that is like it's the
It's one of those brands where you can just you know,
you can philosophize, like Paul, like you and I could

(23:24):
just like you know, sit on a park bench and
stare at the sunset and talk about the Hooters restaurant
because and what they should do, what they could do,
what could what could happen? And like, the way I've
always thought about this is like, this is what Hooters
should do. There's they can take two very distinct paths.
They can either spend a tremendous amount of money, go

(23:47):
through a ridiculous rebrand and figure out how they can
appeal to a mass audience. Uh, you know, or they
can just go down the other path, yeah exactly, and
just embrace who they are and never ever ever apologize
for it. Yeah.

Speaker 1 (24:07):
Well that's what they're talking about is a rebrand. So
here's what it says. Let me bring it back up
so everybody can kind of see what we're talking about here.
It says this the complex, the complex bankruptcy deal keeps
the restaurants up and running. Remember, you had four hundred restaurants,
had forty almost ten percent of them were underperforming. They're

(24:28):
here to stay. They're probably you know the Buffy Spicila
the or the Buffalo's Chicken Wings, the you know, tacky
yet unrefined slogan.

Speaker 2 (24:36):
You know the whole idea. Yep.

Speaker 1 (24:39):
And still you know, people are understanding of the restaurant.
But the whole idea is is that this situation on
a rebrand, how would you even do it?

Speaker 2 (24:52):
I wouldn't. I don't know. I guess I I might.
You know, I'm not.

Speaker 1 (24:57):
Gonna they're talking about trying. Let me get this right.
This is the statement to me that blew me away
right here. This is the one of the CEO there
told Bloomberg Hooter's rebrand rebrand would make the restaurant more
family friendly.

Speaker 2 (25:15):
Okay, right, all right.

Speaker 1 (25:17):
Now, I mean, come on, I'm a father of young children.
You wouldn't catch my kids in there at all. Of course,
not even with their If there was a rebrand, it
would take so much money, it'd be a different restaurant,
it would it would never work.

Speaker 2 (25:32):
It's the silliest thing ever, I how why don't you
just admit what you are? Yeah, and just going to
that audience. I mean, you could argue that right now
has it's the best time at least over the past
ten to twelve years to actually not fall into this

(25:54):
you know, wokish category and just you can actually have
I don't know. I don't want to get poltical about it,
but I think they'd find an audience.

Speaker 1 (26:03):
I think they have one hundred percent they know where
the audience could be.

Speaker 2 (26:07):
Yea.

Speaker 1 (26:07):
The problem is that I think that they haven't figured
out how to diversify that audience into something that is
going to grow for them. Here is my tip to
Hooters and this goes out to Neil Kai for the CEO. So,
first of all, there is a major shift in sports betting, huge, okay,

(26:30):
big shift in sports betting. I would partner up with
Barstool Sports and I would get into a sports betting
program that is very similar to what Calshi is doing,
which is you know, a market betting theme kind of
polymarket which is international, but Calshi is legal here in
the United States. You're going to see sports betting and

(26:53):
these sports books get more and more proliferated. We have
yet to see a restaurant make that leap, and I
think that's the leap. Sports betting is the way to
go for these guys. Yeah, leverage down into it, get
into leagues, get into all of this, you know obviously,
you know, I think.

Speaker 2 (27:12):
You might even be able to take it a step further,
Paul and go and go web three on that, and
for sure, sure get a Hooter coin.

Speaker 1 (27:21):
Get a Hooter token available, use it in the in
the model of the sportsman. I mean, it's going to
be a free for all with the regulation you know
here very soon if they get this.

Speaker 2 (27:30):
Marketrilliant idea that that's perfect and it fits the demographic,
it fits who they are as.

Speaker 1 (27:35):
Yeah, and here's the beauty. There's a hidden trojan horse
in this. I'm not going to Hooters to check the
girls out. I'm going down there to put a bet
on a game.

Speaker 2 (27:47):
I'm going to make some money. I'm going to make
some money. There's a whole new angle. This is going
to be discussed. I can see, you know, I could
see all of the college kids, all the college fellas.

Speaker 1 (28:03):
I mean, what do they go to lose? What do
they have to lose? They're in bankruptcy, Come on, what
do they have to lose? Dave Portnoy, if you're listening,
he may buy them out of bankruptcy and do it
on him on his own.

Speaker 2 (28:14):
You know, it could be uh, Hooters powered by barstool,
for Christ's sakes, I mean, this is Portanoy. Get on this,
get on it.

Speaker 1 (28:22):
Get after it. This would change the game. These guys
would just be printing money. Yeah, they'd be printing money.

Speaker 2 (28:29):
And in the amount.

Speaker 1 (28:30):
I mean, if you look at what ESPN Bett is doing,
you look at all DraftKings has been exploding.

Speaker 2 (28:38):
Hooters, what are you thinking? Yeah, come on now, they
can set it up right there. If they go down
the road off traveled with the rebrand and trying to
appeal to family Middle America. You do never going to work,
So we're never going to work.

Speaker 1 (28:57):
And you know, I think the key here is is
that many of these brands we've talked about today, Chili's
has kind of gone at least in a direction where
they were able to identify into multi demographics. Fridays is
still out to lunch yet, maybe Red Lobster if they
get a focus, you know, within and try to hit

(29:19):
a home run on something. But Hooters, in my opinion,
has the biggest opportunity because of where they are in
the market right now. They're actually even though they're they're
kind of on the canvas right now, I think their
position is in a good spot for what's happening in society.

Speaker 2 (29:39):
Yeah, I'm with you, PAULI, I'm with you. There you go.
I think you know you can take the powered by
barstool approach. I don't know if that works the same
way for some of these other brands, but suitainly, certainly
for Hooters, it's just a no brainer. Yeah, it's a
it's a explore it. You have to explore it. You

(29:59):
got to get there.

Speaker 1 (30:00):
So we've got a couple of things to hit on
before we get out of here. McDonald's is now saying
that they are seeing slides in traffic. This is a
big deal because McDonald's has been somewhat resilient through much
of what we've seen in some of these downturns, but
now low and middle income consumers are pulling back on spending.

(30:20):
This is coming out of Q one data, so that's
a big deal a deal. But at the same time,
Taco Bell says they're surging in sales. So when you
look at the two right there, as we go into
restaurant dive, Taco Bell sales are surging, KFC is expanding
their saucy concept. This is getting into again rebranding, staying

(30:44):
with the millennial consumption. You know, these are the brands
that have been able to connect the dots to this
next generation. And I think that is what we're trying
to get at here, is if casual dining is going
to make it, that's what they're going to have to
do without a doubt.

Speaker 2 (31:00):
That is yeah, agreed. And you know it's interesting though
with McDonald's and the slide that they've experienced with traffic,
even considering that their five dollars meal is still you know,
it's still rolling. Yep. That's kind of concerning, isn't it.

Speaker 1 (31:19):
Well, this is these are recession indicators to meet when
you get that level of restaurant being hit by the
core consumer that they have. Let me see if I
can pull up the data here we go. First quarter
twenty twenty five, traffic from low income declined by almost
double digits. Okay, middle income consumer traffic fell by nearly

(31:42):
as much as came from Kamzinski, who is their CEO.
Traffic growth from high income consumers remains okay, but the
frequency of high end consumer is down, so I mean
they're getting hit on all areas. And same store sales
down in the US by almost four percent.

Speaker 2 (32:05):
Yeah, I don't know. Do you think that this is
it's just time for a new menu innovation or I
mean things are just the menus tired. No, I don't
think it's any of that.

Speaker 1 (32:16):
I think this is all self inflicted economic woes in
the United States, obviously due to terrorists what we're dealing
with right now with just inflationary measures. We've got an
FOMC meeting next week where the FED will come out
most likely will not change rates and until we see
But the one advantage I think, if you do have

(32:37):
anything that's a benefit, and I don't know that it's
a benefit, is that you know, oil prices are down.
I mean we've got a fifty eight dollars barrel of
oil right now, which is according to my oil barren.
Friend he's he says that we're flying very close to
the flame on oil prices.

Speaker 2 (32:58):
Man, it's like fifty bucks. Yeah, why don't we just
all pack it in and just it's done. Listen, we
got to fight through, guys. This is not you. I mean,
I gotta fight through you.

Speaker 1 (33:09):
Got to fight through these downturns and figure out how
to differentiate. I had a good call with a friend
of mine, Larry Einstein, yesterday. We were talking about this
very issue, and the point we finally got to by
the end of the call was that now what differentiates
a restaurant is actually hospitality, which is absurd to say.

Speaker 2 (33:31):
Right, that isn't that funny? Like when you when you
listen to and read about all of these CEO's grand
plans about how they're going to, you know, turn things around. Yeah, inevitably,
one of the one of the key focus areas is
just better service.

Speaker 1 (33:46):
Yeah, it's the only way people's the service numbers are
are not looking. I mean, I'm gonna show you the chart, guys.
This is McDonald's the King of the hill when it
comes to performance. Okay, that's their same store chart.

Speaker 2 (34:01):
Okay.

Speaker 1 (34:01):
From Q one of twenty twenty three to where we
are right now. If Q one of twenty twenty five,
this is not going in a direction you want to go, No,
we can't have that. So the only way I think
we bring this back is you've got to over deliver
on hospitality, which is what this business is built on.

(34:22):
And you have to figure out because most of the time,
most of the time, these these companies have good products. Yeah,
most of the time, but this hospitality side is just
on the.

Speaker 2 (34:35):
Technology side, which of course you know is my focus.
You know, one of the things that you know, we
all say the same thing, whether it be you're in
the technology, the ops, or the financial it's all it
comes down to the same the same concepts, and ultimately
it's hospitality. But in the tech space, what's really fascinating
is that so much of the technology is supposed to

(34:58):
compensate for the lack of hospit hospitality, to allow the
technology to create these hospitable experiences, and so increasingly I
feel like we're removing the human out of the hospitality
and replacing it with digital or human like experiences through

(35:19):
the digital channels. And I don't know if that ultimately
is you know, is that going to Is that just
too much? Is that just too much where we are
becoming so digitized? I don't think so. I think I
think you have.

Speaker 1 (35:36):
This is how we're showing Applebee's, who is switching to
toast for its point of sale. Yeah, this is going across.
But my point on this is I don't think that's
a big reach. In fact, I think a lot of
these casual dining chains have very tired POS systems. You know,
you should have a system that allows you to do
pay at the table without ever calling your server back,

(35:57):
just automatically, not without recording. I'm just talking about a
QR code, pay at the table, Boom, You're done. And
in casual dining, that would be a huge lift to
the next level. It's going to increase customer service, you know,
throughput on your on your tables, all the things that
you want. Applebee's is going to go and implement that,
you know, And here it is. It's twenty twenty five,

(36:19):
all right. Every independent restaurant I go to has that
service already, has had it for years. So to me,
that's the you know, it's just hey, just get up
with the modern times. That's really all you have to
do today. Right now in terms of tech.

Speaker 2 (36:34):
It's true, you know, another thing, and not to get
on my nutritional allergen pedestal as I like to do
on this show. But you know, I just got back
from Scotland, a really great trip to Edinburgh and ooh nice,
it's just beautiful. And it just reconfirmed again because we

(36:54):
do go to Europe, you know, quite a bit. We're travelers. Yep,
it just reconfirmed again that I think Europe just has
so much, so much more of it together from a
hospitality standpoint, a service standpoint, like they take gluten free,
dairy free, treat you know, nut free, allergens and nutritions

(37:15):
so damn one hundred thousand times more seriously than we
do than we do in the United States. You know,
immediately you sit down like they they're asking you do
you you know, allergies, And then if you do have one,
they have menus that are you know, don't look like
they crawled out from underneath the rock. That it's just
the same attention to detail with their menu and everything

(37:38):
is and you know, as a family that's affected by
various food allergies, you know, myself not included. I'm actually fine,
but everybody else seems to have a problem in my house.
But that affects everything.

Speaker 1 (37:54):
Yeah, and affects all your decision making processes as well
as just the experience general.

Speaker 2 (38:00):
The experience, And it really is an amazing filter for
when you look at hospitality. You know, if you go
through the lens of allergens, I think it really kind
of puts a magnifying glass on how how hospitable a
brand is to its to its patrons, to its for sure.

Speaker 1 (38:23):
I think, well, I mean, you know, Europe I think
has a cheat code because a lot of the products
that we consume here in the United States aren't even
legal to sell in Europe. So that's another you know RFKJ.
I mean, if he gets to the point where he
can get our food systems cleaned up, hopefully, personally, I

(38:44):
think that's going to take a decade to get done.
But what you're finding now, back to your point, is
you've got a whole new era of consumers who are
using JATGPT to learn about this stuff, and they're starting
to understand what foods are. They're starting to and I'm
not talking I'm talking about whole foods in terms of
building menus in and really how to create great food.

(39:09):
And I think when you have that exposure to an
audience that is very ripe for consumption of data, AI
is going to generate enough menu elements, you know, whether
you've got you know, a gluten free issue or you've
got you know, something against dairy. A lot of people
are there's out there that have protein allergies, which is crazy.

Speaker 2 (39:34):
Yeah, so they're out there.

Speaker 1 (39:36):
Yeah. So so those kind of things I think are
going to be aided a lot by where AI is going,
which is going to put a lot of pressure on restaurants,
you know, because now the consumer is going to be
so much more aware.

Speaker 2 (39:50):
I agree one hundred percent. As a matter of fact,
I was just recently named to be a board member
at the Celiac College Guide, which is like, well, what's that. Well,
so you can imagine there are hundreds of thousands of
high school kids every year that are going off to
college and a percentage of them are gluten free and

(40:10):
Celiac and believe it or not, you know, uh, that
is a major choice. That is a major consideration to
figure out where they're going to go to school. School. Yeah,
and uh, you know, so you have now you're having
you know, foundations and nonprofits that are trying to help
people make sense of where they can eat for current

(40:31):
out loud. Uh So, yeah, I agree, we're going to
see more more of that AI infusion into into menu
and and well show.

Speaker 1 (40:43):
Yeah, we're definitely going to do a show for you
guys on on AI menus and the influx of what
those might look like in the future, because that that
could be something very unique in the sense that we're
going to already see robotics starting to get implemented very soon.
So I think the landscape is is on the verge
of starting to see some trickle effects of change, maybe

(41:06):
for the first time, because we've been talking about this
for a while robotic you know, from Flippy to you know,
the pizza ovens. But I think we're very close now.
It may be the next eighteen months. I think the
restaurant industry is going to see a huge downturn this
year and twenty twenty six and twenty seven, you're going
to see a lot of new developments in technology and

(41:28):
AI usage for the restaurant space. We'll cover that right
here on Masterminds. Of course, Paul and I will be back.
I don't know what when what episode we're on. I
know next week we're going to be getting Lime Fresh
coming on. Patrick Ford is going to be joining us,
so we'll have a fast casual guy talking about the
rebirth of a fast casual fresh Mechs chain and make

(41:51):
sure and check that one out out there. Thanks for
coming in today, Paul. Was good seeing you.

Speaker 2 (41:56):
Great seeing you man.

Speaker 1 (41:57):
We'll see you guys next week right here on the
rest of Masterminds Podcast, Y

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