Cyberattacks, a $14M investment into MoonBowls and which restaurants top the off-prem satisfaction report?
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.
Articles mentioned in the video:
Carl: 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, and in some way tie back to our book series, Delivering the Digital Restaurant. Are you ready? Let's go.
Carl: Good morning, Meredith. How are you?
Meredith: I'm very good. How are you, Carl?
Carl: I'm doing well, thank you. Can't complain. I'm actually over in Riyadh, would you believe, in Saudi Arabia again. Hopefully the signal's okay.
Meredith: So far, so good. Hey, before we get started with questions, I want to show you something.
Carl: Oh, yeah, what's that?
Meredith: This crazy car for those that are listening and can't see it, it is a 1980s Domino's delivery vehicle that looks like a spaceship and it's so fantastic. I will put the link in the notes and in the newsletter. It is available for purchase right now. And honestly, I kind of want to get one because, you know, we're the delivery people, Carl, you and I, and I feel like we should drive around in a spaceship like this.
Carl: I would agree, but there's something about the capacity of that vehicle for the amount of books that we'd need to deliver. I'm not sure it carries that many books.
How many pizzas do you think that thing holds?
Meredith: It looks like at best, maybe one, but it looks, it looks fast.
Carl: It certainly does.
Meredith: Okay. So to our first question, Carl, for you, delivery innovation is heating up. There's been some dissatisfaction in off premise, so innovation is an appropriate response.
Carl: The overarching story here is that off premise is being taken seriously by restaurants. You know, the off premise, uh, both in the terminology of the report, but also in the way we speak about it is delivery, drive thru, carry out or take out. And so it's all of those combined.
But what's happened uh, they've partnered up with technomic to look at the way in which customers are reporting their satisfaction about the off premise channel. So over the last year they've asked 700 guests for each of the brands that they assessed what their experience was like.
And they've looked at the combination of those factors between off premise and other channels. And so let me bring the first one up here just so we can talk about the the overall winners. So there you go. You can see, the off premise overall winners are represented by different restaurant categories.
First of all, on quick service you see Dutch Brothers there, Fast Casual, Jersey Mike's, and Chuy's for full service. So names that I don't think we necessarily always talk about. I mean, we know them. We love them. We think they're great brands, but they're not necessarily the ones we put in our top five or [00:03:00] seven, if you will, when it comes to off premise.
So congrats, I think to those brands, because clearly they've been working and certainly in the eyes of their customers on improving the off premise experience. But also look at this Meredith, there are other scores here around the Dine In score, the Dine In satisfaction, and it reports the gap between the Off prem score and the Dine In score And I think what's interesting here is we often are talking about the importance of channel consistency, recognizing that the guest is channel agnostic and will often engage across multiple channels with the brand. But look at the gap differences between the different restaurant categories. Fast casual, I think it's fair to say, there's actually quite a tight gap.
Whereas when you look at quick serve and a couple of the locations on full service, it's quite wide So why do you think that is?
Meredith: I don't know. I, I got wrapped around the axle when I saw this, because historically, we've always said that delivery satisfaction scores are so much lower than Dine In. I think probably what's going on there is off premise, a broader definition than just delivery.
So, when I first looked at it, I was confused by that, and then I thought, well, of all people who know how to do off prem really well, it should be quick service and they really prioritize that channel over the dine in. So that one makes sense to me, but the other ones not quite so much. I mean, fast casual, whether you're off prem or on prem, you kind of go through the same ordering experience.
Carl: I agree. It looked fascinating information. I think what it is saying is, is that there are still opportunities to improve the Dine In scores for these brands as well. And perhaps looking at an amalgamation of what are the best scores across off prem and on prem together is clearly the way we need to go.
But as I said before, I'm not sure talking about just off prem is really the best way of understanding. It's more that kind of combination score. So I'd be interested to see who actually has the smallest gap of all the different restaurant categories and restaurants, who has the smallest gap? You see Olive Garden down at the bottom there at 1.
8, at least on, on the list of restaurants here. But let's, let me move on from just talking about that because the article talks about just the innovation that's happening in delivery In quite a lot of detail, but one of the things that I thought was particularly interesting, and if I bring up the, , the delivery part of this, um, report here is if you look at a quick service there, look at the top Meredith, two brands known for ice cream. Carvel's chief brand officer said on the article that they recognized that they needed to improve the experience for the customer when it came to delivery. So they consciously reduced the freezer temps by 10 degrees to minus 20 degrees Fahrenheit, thereby improving the quality of ice cream, you know, just, just right upon delivery.
You also see MOD pizza there represented on third place on the fast casual list. And I was talking with Stephen Crowley this week from our friends over at Service Physics who have been working with MOD Pizza on a lot of operational speed improvements, things that we touch on in the Optimizing Throughput aspect of our second book.
And they've seen a dramatic improvement in both speed and accuracy as a result of focusing on those areas. You've also got First Watch coming in second on casual dining and Chris Tomasso there and his team have been addressing so many things in their new stores, including a dedicated entrance for drivers and making sure there are specific make lines for off premise.
So the article didn't really focus too much on the winners here and what they're doing, but it did talk about the fact that restaurants are investing in restaurant redesigns, thinking about the format to make sure you've got as optimized a footprint as possible to make sure that delivery is taken seriously.
Smoothie King, are one of the ones that were represented there. And they're really invested in drive thru lanes to make sure that you've got people that can collect online and delivery orders, as we've seen with a number of QSRs. They talk about , the technology that's helping sequencing the orders correctly at KFC and Pizza Hut.
And, uh, Domino's got a shout out for their pinpoint delivery function. They talk about vehicle evolution and the way in which more brands that are doing self delivery are looking at electric vehicles. And of course, drone delivery, which we've talked about before with the likes of Flytrex and Flyby and, Zipline.
And Scott Landers from Figure 8 is quoted in the article saying, look, it's time for people to take self delivery seriously because "it allows brands to maintain better reputational control and facilitate a more palatable fee structure." And then the last piece was around promotional adjustments, which again, I don't think it's a huge amount of focus here, but Checkers and Rally's do 50 percent of their late night business as delivery.
And so therefore they consciously promote that channel at nighttime. And so the more restaurants start to think about using delivery and promoting on specific day parts, I think it's going to be interesting. Of course, that's one of the other elements here, which is represented on virtual brands with Badass Burritos, which is part of the DogHaus family where they see a huge level of traffic between 1am and 6am.
So again, that's when they promote. So really interesting report. I'd love to get more behind the success of those that they're reporting on. But maybe the folks over at Technomic will let us have a little dig in and we'll get back to it on a future occasion.
Meredith: Yeah, I can't wait to see. I mean, even that second one you showed, that one showed delivery scores higher than other. I'm not sure what's in other, but again, so confusing compared to what we've seen previously from the likes of Medallia in their Sense360 reports.
Carl: Okay, so one thing we don't talk about much, but we have talked about in the past.
I'm sure you're gonna remind everyone is the threat of cyber attacks for restaurants. Tell us more about this one.
Meredith: Yeah. So Joe Guszcowski wrote an article just highlighting that as tech adoption increases in the restaurant industry, the threat of cyber attacks goes up. And I think what we've talked about before is really what he calls these potential points of entry for a hacker.
That in a multi unit environment that has many employees and many different pieces of software, it becomes multiplicative where potential hacker could get in. Right? If you've got 30 employees in 1000 different units, then all of a sudden you have 300, 000 employees. And if you're using 20 different pieces of software and each one of those employees has access to it, all of a sudden you have 6 million potential points of entry.
You know, you think you're only using 20 pieces of software, but 6 million points of entry is a lot, right? And that creates a lot of risk for the restaurant industry. the article, went on to quote Hiscox insurance, which said that restaurants or just food and beverage generally are more likely to pay ransomware attacks, which makes them a prime candidate to be attacked, we have had several major attacks this year, with Yum! Brands in the UK, um, and notably with NCR. This is something that I think as an industry will have to take seriously, whether it's around, you know, changing how we access all of these many different softwares, or potentially just again, another reason why having a more holistic software that has fewer points of entry might be a really good thing.
So it'll be interesting to see how the industry responds to this and evolves over time. I think again, because we're at that front end of innovation and we've got a lot going on, probably creates more risk for us than we need.
Carl: Okay. Well, look, before we move on, uh, I must draw people's attention to the fact that we have been doing some very special podcasts recently as part of our
presence at, Live at CREATE, hopefully those of you that are regular subscribers to our podcast tuned into hear Landon from Homestate talk about optimizing presence on the marketplaces. But we've got a seven, I think seven other podcasts coming over the weeks ahead and we'd love you to listen into them.
So the best way to do that, of course, is to subscribe to our YouTube channel, subscribe to our newsletter on LinkedIn. Uh, if you're on LinkedIn and haven't connected to Meredith and I please do so. We really appreciate anyone that can spare some time to give us a five star review as well.
Meredith: Hey, Uber Eats has come out with a new report on what folks are ordering. So Carl, what are folks ordering?
Carl: Well, Meredith, you know, I'm a fan of games, right? And so I figured it's time to do a bit of Quiz Night time with you. So, uh, Let me ask you this. What do you think, according to Uber Eats and the analysis they have done on their latest cravings report, which I think is the fifth time that they've done this.
What do you think is the number one most popular delivery request?
Meredith: Uh, extra hot.
Carl: Oh, close. Spicy was fifth on the list, but no onions. No onions was the most popular delivery request in the US.
Now, most ordered items, now I'm pretty sure you'll know that the number one item on the list is french fries.
But what do you think is number two on the most ordered item list for Uber Eats?
Meredith: Ranch dressing.
Carl: Garlic naan.
Meredith: Garlic naan? Wow, America look at you!
Carl: Garlic naan.
Meredith: First we embrace the fries of the French and then the naan of the Indians. I'm impressed with your diversity, America.
Carl: Other things go into this where they talk about the most popular delivery combo being burrito, bowls and cheese, french fries and salt. But there are some interesting ones as well here. Most unexpected food combos was steak and jelly, cottage cheese and mustard, condensed milk and avocado.
But the most frequently paired food with alcohol purchases It was ribeye and vodka was the number one, but the thing that came in fourth on the list. Lobster tail and apple whiskey. So there you go America. Now you clearly have a view as to what you need to put on your menus If they're not there already lobster tails and apple whiskey is of course.
Meredith: I have so many questions about that
Carl: Plenty more on the link, on that one there, but certainly worthwhile to take a look at look we have a bit of fun with this, but what I think is interesting is data that you can get from the likes of Uber Eats and DoorDash about what the rest of the country is eating, or perhaps more specifically your location, because I'm sure they'll be able to provide more specific information about the markets where your restaurants are.
This kind of information can really inform the way in which you're innovating your menus and keeping ahead of the trends and seeing what your customers are interested in. So take a look at that. Okay, fourth on our list this week was about another legal case. two in a two in a row for the Digital Restaurant where we're talking about some interesting legal news.
This time Chick fil'a um, were paying out some customers and it's drawn some attention for us specifically around what this might mean for pricing.
Meredith: First we should say that, Chick fil A did not admit any wrongdoing. They just kind of settled and are giving $4.4 million away, primarily in the form of gift cards, which of course is just going to bring people back into the restaurant. So, hard to say that something totally nefarious has occurred here, but it is clear that there are class action lawyers out there going after this pricing gap issue. And specifically what happened in the Chick fil A case is that they were advertising free or reduced price delivery, but then they were marking up menu prices on their first party app.
And so a consumer could potentially feel misled because they're getting quote unquote free delivery. That they are paying for that delivery in the form of marked up prices on the menu. that was the claim in the case, and we should also say that there was a similar case against Panera a few years ago. So I would not be surprised to see more of these, particularly as, folks try to push consumers from 3rd party to 1st party.
restaurants will use promotions in order to encourage consumers to move over. But the reality is you still have to pay for the delivery, right, even if you're getting that consumer first party on the ordering side, somehow you've got to fulfill the food to them and that has a cost to it.
And to the extent that restaurants are trying to pass that cost through on a menu markup might not be wise if they're claiming free delivery.
All right, our very last question. Salted Brands raised $14 million, planning to double their store count. Congratulations, Salted!
Carl: Yeah, of course, we featured Jeff [Applebaum, Salted's CEO] and sorted in our first book , and obviously worked with Jeff before at Kitchen United when he was one of our members over there. So we're really thrilled to hear about this news, especially as it's been, I think a rough year when it comes to those folks that are in the virtual brand territory.
And when you hear stories like this about a concept that was founded in 2014, operate with eight different brands. And here's, here's the really interesting thing their average footprint for their locations, 220 square feet. 90 percent of their sales are from delivery, and their customers report 86 percent positive experiences.
Their average AUV for their locations is $1 million. And all of their locations are profitable. So when have we been talking about this type of thing with this type of concept? Not very often. And I think why we featured Salted in our first book was because they really had an appreciation of how you have to approach the business model differently to succeed.
in this environment where you don't have face to face time with your customers at any point. And they've, they clearly focused on, uh, the food because it's in the "better for you" category. It's very vegetable heavy. It's free of preservatives, sugars, and gluten. Their main crown jewel brand is called Moon Bowls.
I'm a big fan of it. It's a Korean bowl concept, but they've got Hawaiian concepts, Lulu bowls, a Chinese ginger bowls concept, 5 salad company, Cauliflower pizza, a keto friendly concept called Thrive Kitchen. Again, all operating out of that 220 square foot kitchen. I believe that they're launching a Mediterranean concept too, but yeah, they've raised this $14 - they're going to be trying to get to 50 locations by the end of next year and may even delve into brick and mortar locations. And they're approaching technology with a really intriguing way in the sense they they really think about how do they improve the guest experience. And Jeff was quoted in the article saying it really comes down to this "notion of owning and operating your brands and creating healthy revenue, meaning revenue from repeat loyal customers.
And the only way you can do that is if you're delivering a really high quality, consistent and customer experience." And so things that they're doing is that they are actually taking photos of every item prepared so to assess the quality and identify mistakes and address where more training is required. So that way, as they expand out, they can manage that level of consistency.
The moment a guest receives their order, they're sending them a text asking them to say, is everything okay? And of course, by doing that, they're also starting to develop a relationship digitally with them for further remarketing purposes. So those types of things are the things that I think a digitally native brand such as Salted and what they're doing with their concepts really enables them to be able to get the success that they have. Their their lead investor, Alexia Lingart, who's the investment manager at CreaDev said "Salted has proven a much more efficient, sustainable
and responsible model for scaling a national restaurant platform. We believe that deep focus on quality data and technology will enable them to capitalize on the shifting consumer behavior in the industry." And what I think is particularly amusing about this is that Jeff went on to Shark Tank a few years ago and they all laughed him off.
They said they weren't interested from what I saw. And I think this is great news for someone like Jeff, who obviously, uh, didn't, didn't take that to heart, carried on persisting and getting this kind of result. So with that 14 million, hopefully they're going to go on to even greater successes in the year ahead.
So well done to their team.
Meredith: Yeah. I think Jeff got the last laugh there. I mean, Salted Brands, we just think the world of them. And I think, you know, you might be asking, is it a virtual brand or is it a ghost kitchen? Oh, oh, it's both, right? It's a vertically integrated digitally native brand. That has created these digital only brands out there in the ether, but it has also created a 220 square foot ghost kitchen environment that it's serving these digital brands out of. So love that approach, love that they're bringing the digitally native restaurant to life.
And my personal favorite quote from Jeff Applebaum was he said. Most restaurant brands that are popular today were created 70 years ago, and I just thought, wow, how different were we 70 years ago? And certainly many of these brands have continued to innovate. And that's why they remain relevant. Maybe a little long in tooth and what Jeff is doing and Salted is doing with these incredibly vegetable forward, more healthy oriented food. Um, lots and lots of bowls when of course out saying is bowls are the new sandwich that like this is all very forward food that makes sense with the modern consumer.
Carl: Absolutely. And, uh, Jeff, if you don't use the 14 million in its entirety. Meredith wants a new vehicle. Just a thought.
Alright, anyway, that's it for this week's Digital Restaurant. Uh, thank you as always for listening. Please leave your views below. Let us know what you think about the articles we've discussed this week. And if you have any thoughts around what you'd like us to talk about in a future edition, please get in touch.
But until next time, thanks for listening.
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