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MONDAY MINUTE: February 27, 2023

Photographic AI, Doordash results and Toast continues the acquisition spree.

All these headlines and more represent our thoughts and views on the world of restaurants, technology and off premise food in our round up of the last week’s hot news stories - subscribe today to the Monday Minute and register at www.deliveringthedigitalrestaurant.com for more bonus content.



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TRANSCRIPT:


Carl: Photographic AI, DoorDash results and Toast continues the acquisition spree. That's all ahead on this week's Monday Minute.

Monday Minute works like this. We're going to ask each other five questions about headlines that have caught our attention around the worlds of technology, restaurants, and off-premise that in some way tie back to our book Delivering the Digital Restaurant. Are you ready? Let's go.

Meredith, where in the world are you right now? It looks something different in the background.


Meredith: I know, right? You can tell by the ladder behind me that I'm obviously in Mexico. Known for its ladders.


Carl: Wow. Look at this. We're always traveling. You and I how you doing this Monday morning?


Meredith: very good. And you?


Carl: Very good. Can't complain. We've got lots to talk about again, so let's get straight into it. We talked about Uber last time and some of their results. DoorDash came out with their end of year results. What caught your attention?


Meredith: Very interesting as always. The thing that continues to puzzle me about these guys' releases is that you really can't tell what's going on with food delivery.

But lots of interesting news, nevertheless. And overall, the market reacted really well that this was positive news, even though the company lost more than a billion dollars for the full year of 2022. Now, I'll tell you what, if I lost a billion dollars, probably. I would hear about it, but instead the market is reacting as though this good is good news.


So what's going on here? I think a couple of things. The first is that DoorDash had fallen off its pandemic high under the concern that perhaps this ordering delivery behavior was just a pandemic thing and wouldn't carry on. They saw a lot of positive signals on the revenue side, and I think that really bouyed the market's opinion of them.


So things like fourth quarter revenue rose. 40% year over year. The company had a record of 467 million orders. Gross order value rose to 14.4 billion. And that's in comparison to an expected 459 and a half million orders, and 14.1 billion in gross order value. So while we don't know exactly how that breaks out, between things like Dash Mart and their new partnerships in the grocery convenience space versus restaurant food.


Overall, you see a consumer that is continuing to order delivery. They reported that they ended the year with 32 million monthly active users, which is an increase of 7 million from year end 2021. They also gained 5 million dash patch members year over year, bringing the total membership to 15 million which is incredible.


Lots of positive signs there. Also, I just want to take a minute to say, out of the 32 million monthly active users, 15 million of them are DashPass - that's a very interesting stat to me, and I think suggests that a lot of their revenue is really accounted for by these folks who are paying to use the service on a more frequent basis, which is very similar to the Amazon model, right? Amazon Prime. Those members are the ones who really drive most of Amazon's revenue. And another piece of news that DoorDash came out with as part of this is that Christopher Payne is retiring now. He was the President who was driving much of DoorDash's strategy over the last few years and and its development into the company it's become. And his background, of course, Is Amazon. So I am guessing that much of what we see in terms of DoorDash's incredible execution is very similar to how Amazon rose over time. Now, still, you might be wondering yes. Top line is growing , but they lost a billion dollars.


Let's get back to that. And what DoorDash says about that is, yes, we lost a billion dollars on the net income basis, but if you look at adjusted EBITDA, we are actually making some traction. And in fact beat expectations on the adjusted EBITDA line. And as well now are coming in 11 consecutive quarters positive on adjusted EBITDA.


Now, questions about what the adjustments are? Maybe we have a few, but that is a positive sign overall for DoorDash and for delivery.


All right, Carl. Kiwibot got more financing. We're always excited to hear about financing news in these challenging times. So tell us what drew the attention of the sources of capital in this case?


Carl: I think you're right. It's certainly pertinent given the fact that actually robotics generally in 2022 was a really tough environment for any robotics company to get investments.


So to be able to see $10 million coming into the delivery startup, Kiwi bot, which has come from a Swiss-based asset financing group called Kineo Finance is actually really good news. I've met their CEO Felipe Chavez and I'm excited to see what's gonna really happen for Kiwi Bot here, because this is going to enable them to move beyond the 1400 robots that they have today to have the fleet of over 2000.


And, it's gonna be interesting to see are they going to start expanding into new areas or moving beyond the college campuses that they're currently working in, they're currently in 41 different cities. They've done over 250,000 deliveries around the world. In fact, they're actually testing also in Saudi Arabia and Dubai in the compounds for where expats are living.


One of the things which I like about Kiwi bot is that they're being very focused about what is their sweet spot and their sweet spot is deliveries that are just a mile in length, right? So therefore you need to be able to be in these high density environments, which is why they're operating across 27 different college campuses right now, for example. And they've had a lot of excitement and progress there. The other thing which interests me about Kiwi Bot is the way in which they go to market.


I don't know what the cost of these robots is, Meredith, but I suspect it's not cheap. But the way in which restaurants get access to this is through a leasing me and I think that's probably a much easier path to market to be able to get these things being worked in the right locations for the right restaurants that need them.


So exciting times. Obviously they're partnered up with Sodexo that I think that was part of one of their earlier rounds, which brought them in about 14 million and they raised some pre-series A funding of around $7.5M last year. So this keeps the legs on the robot bus for Kiwi at least for a little while longer. And hopefully it works out well for them.


Okay. The third question, Meredith, is around Toast. We have been also talking quite a bit about the way in which consolidation is going to be a theme of 2023. Looks like they are continuing their acquisition spree this time with Delphi. Tell us more.


Meredith: I thought this one was really interesting because generally most recently Toast has been buying things that I would say complete the suite of products and drive them toward being a total restaurant operating system.


Delphi is more hardware oriented. Now, it is software enabled hardware but it is more hardware oriented and more importantly, it is drive-through hardware, and of course Toast historically has been much more aligned with independents. Independents tend to be less likely to have drive-throughs, and so I think this acquisition signals a strong intent for Toast to further their inroads into large chains --larger chains than what they've done in the past. And by really getting into the drive-through game. So I thought this was a very interesting acquisition on a number of fronts, not just the consolidation play.


Okay. Now, Carl I'll be honest, before we talked I said, how do you pronounce this? And I still don't know. So it's either swipe B or swipe by. I'm not sure. And I apologize to the company for not knowing. But however you call yourselves, you've added photographic AI to your suite of products. And Carl, tell us about that.


Carl: Yep. I'm gonna go with Swipeby as well, cause that's how it's written and if it's Swipe B great but SwipeBy seems to make sense as well. It's a pioneering tool. It's not just them. Actually we should call out Lunchbox because they've been in the news recently for doing this as well but the functionality builds on Open AI and something called stability, ai Text to photo, which allows restaurants to address what I think remains one of the most clear and obvious optimization challenges for restaurants out there. And that is if you want to exist online, you've gotta make sure your menu items have photography.


Swipeby says that 80% of its clients do not have photos for the majority of their online menu items. And they said just by having this functionality, they're able to then increase the ordering rates by up to 35% which just tells you the power of photography. We never had that type of number given to us before Meredith, but I was really excited to, to read this. Carl Turner, the SwipeBy CEO and founder said "Our approach is unique in that we integrate AI into our system. Snapshot uses the menu that is already uploaded or syncs through their POS, allowing our clients to generate images with just a press of a button.

Making it easy for restaurants as well, I think is super exciting. And, let's see how this thing works, because we've done a few plays ourselves, right? We talked about articles that we try to write using Chat GPT there, there's an article that we'll put in the link in our newsletter about what Chat GPT thinks of how to run a ghost kitchen.

Right? Which is fun to read. I know.


Meredith: I love that one. I felt like chat GPT was quoting us. That's fantastic.


Carl: You did? Yeah. Who knows, maybe it is, we're out there a bit. , but I think the point is that when you can use functionality like this, that can easily be used and quickly, you're gonna address the major issue attributed to restaurants today, which is if you can't have photos on there, you've given a lot of opportunity to your competition to be able to sell those items instead.


All right. Meredith, last question for you this week is around Panera. They're in the news again. We've talked about this before, and the fact that they got into their I think it was the coffee program in initially, wasn't it, with regard to their subscription model. Now they're offering annual subscription memberships.

Tell us about this.


Meredith: Yeah, I love this. For the superfan, this is a great way of just deepening the relationship with a brand, getting a lot of value out of the brand. And for the brand. Of course, they get certainty of revenue pre-booked, and it turns out in this particular case, they also get additional sales.


So I thought really interesting was a accompanying article in Nation's Restaurant News, where they interviewed Edwardo Luz, who's the chief brand and concept officer of Panera, and says, this is quite surprising. According to Luz, 25% of Panera purchases now come from unlimited sip members who are much more likely to add food attached to their beverage orders.


So they're seeing it as a way of not only deepening the relationship with that consumer, but then causing them to come in more frequently and attach other items to that, right? So if you're making a decision as a consumer, oh, should I go here or should I go there? I get free beverage at a Panera, I'll just go there and add on your sandwich and the off you go, right?


That is an absolutely incredible statistic. Now, will it work for everyone? No, I think that it is part of that, you know what we call the triumvirate of first party ordering. You've really gotta have the loyalty piece in place, the payments piece in place, the frictionless ordering in place, and if you have all of those things firing on all cylinders, then yes, a subscription program is possibly something that can work for your restaurant as well.


Carl: Great stuff. Meredith, thank you as always for joining us when you are on your little trip away in Carbo.


Thank you to our audience for listening to us this week. We have some news. We've talked to you about this before a little bit in the sense that the Monday minute is going away, but. Do not fear it is coming back in a new form.

It's going to be called the digital restaurant.


And so you don't have to change your channel, you don't have to adjust your television. We'll be back in a couple of weeks but with a new name called The Digital Restaurant,

But until then, if you have any questions, comments, thoughts around what we've talked about today, what you think we should cover next time, please put your thoughts in the comments below.


But thanks again for listening.


The Monday minute is available for you to follow and subscribe wherever you listen to your podcast. Watch us on YouTube and follow us on all our social media learn channels. Thanks for listening.

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