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THE DIGITAL RESTAURANT: August 28, 2023

Generative AI cookies, Catering & Pizza Vending on the rise, and Deliveroo merges fulfilment channels.

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 last week’s hot news stories - subscribe today to The Digital Restaurant and register at www.deliveringthedigitalrestaurant.com for more bonus content.



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TRANSCRIPT:

Carl: Pizza robots, generative AI cookies, and Catering's big comeback. That's all ahead on this week's Digital Restaurant.

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


Meredith: The first question is for you this week we've got pizza robots coming at us. Tell us about that.


Carl: Well, in a way, Meredith, this is not anything hugely new.

We've talked about pizza robots in the past, but certainly on the subject around automation. But this article caught my attention largely because of a company called Pizza Forno, which has these ambitions of having 20,000 of them in place by 2026. They've got about 50 out there right now, and it's much what we've seen in the past where you've got a 32 inch ordering screen, robotic arms, convection oven, something being cooked in about three minutes or so.


When you look at automated pizzas, it's something that's clearly starting to gain some real momentum. Now what drew my attention was that 35% of their business is done between the hours of midnight and 3:00 AM and I don't know whether you've been on DoorDash or Uber Eats at those hours, Meredith, but you don't get a huge amount of choice in those particular periods of time. And it's no surprise perhaps to see that they're trying to focus in on certainly campus locations where those students are coming back in from their nights out but also rural locations. They're looking at places like rural Texas, for example, to have these.

The other thing that really drew my attention, is the operational component of this. So Sysco deliver the supplies into these, so there's no real human component for Pizza Forno themselves.


And there's eight different options that the robot's going to be able to make. And it holds about 70 different pizza bases. So clearly it's not a huge volume, but it's a sufficient, very efficient model that is targeted towards specific hours and specific locations. So we'll see whether they do hit that number.


We've seen plenty of ambitious plans in the past as to whether those things play out, but the fact that they've already got a number out there, like 50 of them across the country right now shows that they're building momentum. The article also made reference to to a company called Pizza Jukebox, which is I think supported by BRIX Holdings, which does something also a little different.


They allow you to play your song of choice while your pizza is being cooked, and they have somewhat less lofty ambitions. They hope to have about 200 of their units live across the US in three years time. But pizza automation is definitely on the rise. Do you think it's something you're going to go and visit and take maybe Lincoln to go and see?


Meredith: Oh, for sure. I was in an airport yesterday and it just feels like the vending machines are taking over the airports. It makes all sense in the world as labor costs continue to rise. So it'll be very interesting to see who figures this out and does it well.

The article said that this is already common in Europe. You're European sort of. Have you seen this? Have you used it before?


Carl: I've not seen a pizza robot vending machine in Europe. Doesn't mean they don't exist. Obviously I spend most of my time on this side of the Atlantic these days, but the reality is that there's less space in Europe and so therefore small format food solutions make more sense probably in those areas, especially where you've got density of populace as well.


Meredith: . And labor costs are probably higher.


Carl: We've also talked in the past about marketplaces having virtual brands. And so why are we talking about DoorDash launching a salad brand?


Meredith: In some ways that's not new news. Uber was one of the originators of the virtual brand category. We talk in the first book about the creation of virtual brands at Uber, and that was something that they were doing, gosh, back in 2018, 2019, really early on. So it's not a huge surprise that DoorDash would be creating a salad brand. But here's what's interesting about it to me. We just went through a phase where both Uber and DoorDash culled a bunch of virtual brands off their sites and said, no, you have to meet certain criteria in order to count as a virtual brand.


Which, as you know, I have questions about. Why not just let the algorithm serve up the ones that are popular and relevant to the consumers and not show them everything. But in a time where they've just said, we're going to get rid of a bunch of virtual brands, they are now launching a virtual brand. So that's very interesting to me.

I think more indicative of the fact that virtual brands are something that can work when done well, and DoorDash knows it. The second thing about it that was interesting is that in key locations, in their DoorDash kitchens, they appear to be operating this brand themselves, so entirely vertically integrated.


Which as you know, at Empower Delivery, we are a big fan of vertical integration and believe that it leads to a better delivery outcome when there is one person controlling the real estate, the brands, marketing, the ordering, the delivery, cooking, all of it .You can much better coordinate what's going on.


But they are also rolling this brand out to host kitchens. Now they say that they're doing it only at the highly rated restaurants that are capable of doing it. Hopefully they won't have the same problems as say a Mr. Beast because of that. It'll be high quality no matter who's preparing the food.


I think it can be a little bit frightening for restaurants to think about. Oh man, and this is what we've been talking about from the beginning. They have all the consumer data. They know what consumers are looking for. They know how much they're willing to pay. They can see who they're ordering from. They can see which menu items, which modifiers. They have tons and tons of data. So could they not make the best concepts with all of that data? Maybe. I think those of us who love restaurants would say there's also a bit of soul in it, and sometimes you have to come up with something brand new that isn't in the data.

Carl: Yes. And there's this question: is DoorDash a restaurant company or is it a technology company? And should it do what it does best and let the restaurants do what they do best? I haven't heard anything necessarily negative suggesting that food coming out of DoorDash Kitchens is necessarily any different from other restaurants. But still, it's all about focus these days.


Alright, well before you ask me the third question, this week, Meredith, I want to ask our listeners if they can to, as ever, like us, if you're listening to us on YouTube, if you're listening to us on LinkedIn, we always like a like there as well. But also can you subscribe to the Digital Restaurant on whichever podcast platform you prefer. Obviously subscribers, make sure that we're being relevant and being listened to, and we love to get your ratings through as well. So if you get a chance, please like us, please subscribe. We always like to hear from you.


Meredith: Okay, Deliveroo is combining grocery and pre-prepared meal deliveries from a regular restaurant, and I know that's happening already here in the US. So what's interesting about this overseas?


Carl: It's interesting for me because Deliveroo have noticed that when you look at the orders that are happening for either dinner or lunch delivery, within a few minutes, customers are then making a separate transaction to then order their groceries or their convenience food offering. And so they're deciding to actually pair these two things together clearly to make some level of efficiency with regards to the routing and the fulfillment of the order. Now they're trialing this in London initially. I don't know whether we're going to see a huge amount of difference in terms of extra levels of orders as a result of this, but I think when you look at what's happening with DoorDash and everything they're doing with regards to trying to embrace other verticals like C stores and pharmacy and pet food, clearly this is about not only giving customers more choice, but it is about utilizing the logistics network as effectively as possible.


Now, I always thought that part of the benefit of that was utilizing your driver fleet at times when people weren't thinking about food, and so therefore utilizing the driver fleet in times when it's less busy. But clearly this isn't necessarily what we're seeing with Deliveroo and the numbers that they've examined so far.


What was also interesting about this article was on an earlier version of it, the articles said that this would enable them to cut costs, which kind of makes sense, right? If you're being able to utilize your fleet more effectively, this would be a cost cutting exercise in some way.


But they then have actually had a company spokesperson come out and say that this wouldn't cut costs. So I'm not too sure what is driving this here, other than hopefully driving more customers to utilize the delivery platform. The other thing that stood out to me, they said Hawaiian food is the number one food of choice right now on the delivery platform in London.


So the Londoners are clearly thinking about Hawaii.


Meredith: It makes all the sense in the world. We have long said, Carl, that when we as consumers make decisions about are we going to the grocery store, are we getting delivered food... if we need something like milk, it kind of steers you in this direction of going to the grocery store.


And once you're there, eh, as long as I'm here anyway, I might as well buy ingredients for dinner or get one of those roasted chickens and figure it out. They're much less likely to get delivery, so I think it certainly can drive up delivery.


I think it will struggle to reduce costs, just as they said, because now they have that driver making two stops, as you pointed out during peak hour. That seems pretty tricky. I like the Kroger Kitchen United approach much better because they're putting those restaurants in the same place as all of those grocery goods. And so it's much more efficient, one pickup point, one drop off point. And that seems like that would reduce costs.


Carl: I don't know whether you've ever used that service with DoorDash, where you order your food and then add on a couple of items from a nearby 7-Eleven. That obviously adds time to the fulfillment process. And so if you've got the food being made and the grocery items being picked up in different locations, are you really enhancing the customer experience?


I guess they'll test it and the trial will tell us whether it's something that customers enjoy. Okay. The fourth question this week is an article you picked up on about the rise of catering. Catering went through some tough times during the pandemic, but now it's on the up again.



Meredith: Huge increase in catering, which most restaurants, I think would say I love catering. I tend to prep it off- peak, it goes out in really big ticket orders where you have a lot of things all at once. Very efficient. So most restaurants really love the catering occasion from both those standpoints.

And you're right, it got absolutely crushed during the pandemic because no one was going into offices. But now as people are starting to come back, and I think even more importantly as offices are trying to bribe people to come back, that catering occasion is really increasing. And this article in particular is pointing out how many different restaurants were talking about the rise of catering in their public earnings calls. They are citing that as a huge growth engine inside of their businesses. Now the numbers are staggering, right? You're saying like, oh, we have a hundred million dollars of sales growth is up 35%. Much higher than what you see in the overall restaurant industry.


But they're starting off very small basis because catering got so cratered during the pandemic. So they might be going from 1% mix to 3% mix. And while that is huge growth, it isn't necessarily taking over the business. So I'm excited to see catering come back to life. I think it's very healthy for the restaurant industry.


I think there is a question about, what do offices really want in this day and age in terms of catering? The Sweet Green Outpost model as an example, has really taken off and there, each consumer gets to choose exactly what they want. They can even pay separately. The same is true at places like Cluster Truck, where it's a group order and everyone buys exactly what they want, but it all comes together.


I think those types of catering are very interesting and might ultimately replace what you see in terms of a big buffet style old school catering, which is what comes to mind when we think of the word.


Carl: It's also a great opportunity for new people to discover your restaurant, right? So you might not be the one actually ordering the catering itself, but you are at the table eating it.


And that's why a lot of the best in class in this regard actually will put little leaflets and encourage people to come and visit the restaurant's own website perhaps for some future occasion on a personal level. So, I think there's a great way of discovering new restaurants through catering.


Meredith: And finally, I think this topic is custom made for you. We're talking about crazy futuristic technology combined with a snack. I mean, wow, cookies and AI. Tell us about what Tiff's Treats is up to.


Carl: I'm glad you started with the AI technology piece. I thought you were going to say cookies were definitely my subject, which I, you know, I do like the odd cookie.

Look, when we were discussing this particular article before we started recording, you rightly said, The problem is these days is AI is utilized in pretty much every headline, whenever it can be put in. And look, this definitely does have an element of AI, generative AI in particular. And I particularly like this about Tiff's Treats, which is the cookie company the article refers to. It's an Austin based company - they've got 90 locations across places like Colorado, Florida, Georgia, and they serve straight out the oven cookies to customers that come and visit them at their locations. But they're also now starting to create delivery-only kitchens as well, so ones where you can only have their cookies delivered.


I think to the point around the AI subject, what they're suggesting there is, is that guests can actually put a message, a gift message if they're perhaps gifting some cookies to someone. Isn't it nice to be able to add a message in the same way as perhaps you would if you were gifting flowers to someone. But if you are failing to have the inspiration on what to write on your message, then there is a component that they've talked about here, which allows you to have some generative AI actually shape the message on your behalf.


Which is cool. It's neat. Is it something which helps get headlines, but doesn't actually drive sales? Who knows? What really makes me think though is how generative AI in, in creating a more personalized perspective on the guests that you're serving could actually create a level of digital hospitality.


So for example, Meredith, imagine if you are trying out a new cookie that you haven't had before, or this is the fifth time in a row that you've had a particular cookies and cream type flavor or something. To be able to use the intelligence of what the restaurant knows about you, and your ordering habits and generate a message that makes it more custom, more personalized.


That could be really powerful and there's a lot, therefore, which I'd suggest many restaurants could learn from utilizing that type of technology to, to create that more hospitable feel in a delivery transaction.


Meredith: Perhaps as something about where we are in the news cycle that the AI bit made the headline and the delivery only kitchens was buried in like the fourth paragraph.


Carl: Yeah, absolutely. Well look that is it for this week's Digital Restaurant. We'd love to get your views on what we've discussed, what you agree with, what you disagree with, and perhaps what you'd like us to cover on a future edition. But until next time, thanks for listening.


The Digital Restaurant Podcast is available for you to follow and subscribe wherever you listen to your podcasts. Watch us, rate us and subscribe to the digital restaurant on YouTube and follow along on all our social media digital restaurant channels. Thanks for listening.


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