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THE DIGITAL RESTAURANT: September 25, 2023

What triggers loyal guests? Why stored value matters? And a Panda is getting sold in Asia 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 for more bonus content.

Get your quick news summary on the world of #restaurants , #technology and #delivery food in our round up of last week’s hot stories from Delivering The Digital Restaurant's Digital Restaurant podcast.

1. Which day is the most popular for loyalty triggers? @paytronix has the data! Have you joined more loyalty programs this year?


Carl: When do your most loyal guests visit? Pandas are leaving Asia, and calorie counting AI. That's all ahead on this week's 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, that in some way tie back to our book series, Delivering the Digital Restaurant. Are you ready? Let's go. Good morning, Meredith. How are you doing?

Meredith: I am good. How are you today, Carl?

Carl: I am great. It's nice to be able to say I'm not traveling much right now, so I'm enjoying.

Meredith: Paytronix came out with a new report and we always love their reports. This particular question is how do loyal guests get triggered to visit your restaurant?

Carl: We are very fortunate. We have an exclusive, Meredith, an exclusive because we got access to this report before anyone else which is very nice of the folks over at Paytronix to give us the information. It's actually going to be accessible in the link below tomorrow on Tuesday if you're interested in looking at the detail. of this So the answer to your question is it depends on what type of restaurants. For full service restaurants, it's Thursdays.

For quick serve, it's Mondays. And you know, they put a bit of commentary around this -certainly when it comes to the full service side, they're saying using a reward on your first or last day in the office is perhaps tempting people to say, have a reward of some kind. And therefore it's more seen as a treat outside of regular visits.

Some other key headlines from the report is that there's been a 19 percent rise in loyalty members versus last year. QSRs are seeing a big chunk of that, 24 percent up, whereas FSRs are 16 percent.

They also touch on different mechanics, so birthday rewards see a redemption rate of about 12%. There's a story in this, in the sense that there are a large proportion of restaurants that either have a redemption rate between the 1 percent and 8 percent range or the 30 to 40 percent range. So what's driving that delta? Well, they say typically those restaurants that get that one to eight percent result are offering things like free sides or desserts. But those that are offering points or free coffees or pizzas tend to be in the 30 to 40 percent Other things in this are really interesting that QSRs are addressing more visits by 26 to 35 year olds with nearly 50 percent of loyalty members ordering online at least 90 percent of the time, while less than one in eight orders actually have someone ordering from both the in person channels and online. So we've always said people tend to choose a lane. It's certainly coming through in the Paytronix reports here. When we're looking at the spend per visit at full service restaurants, it's going up in December.

So they make recommendations around loyalty offers only being triggered around orders of a certain size in value. So fascinating report. I'd like to see more about Text messages, in app loyalty messages versus just email, which they focus on. I think it would have also been great to have seen more information on guest signup.

You know, how do you get people to sign up for loyalty? How do they help? Because I know they do in lapsed customer capture and also things around the different promotional mechanics that drive more value to those value conscious guests. But all in uh, a brilliant report. I think it gives a lot of good tips out there for those folks looking to up their loyalty game.

Meredith: I think the most interesting thing you just said to me is how much of an increase there is in loyalty membership year over year. And I'm wondering if they go into detail on is that because more restaurants are adding loyalty programs? Or is that because they think consumers are just getting more price sensitive and they view loyalty as a way to offset some of the price increases we've seen in the industry?

Carl: Okay, let's go to our second question.

Panera -often leading the way when it comes to technology are reducing a little bit of friction with their one swipe technology. I gather you maybe have a few thoughts regarding a visit yourself to Panera this week.

Meredith: It is true. We always speak very highly of Panera and what they're doing technologically.

I think they were one of the early leaders in this space. They certainly were an early adopter of kiosks in their restaurants. Their app is quite good, and now adding this one swipe is wonderful for people who want to do a quick reorder. I love the picture that they show in the article of the person in the car just, you know, swiping while they're driving. It's great.

Now, my visit this week. I went to a Panera, and I think all of the technology that they've added on the front end for the consumer is, kind of coming to a head inside the restaurant and getting a little bit complex. The restaurant that I went to, they had the kiosks, they had a pickup shelves for mobile order ahead and, signage about where to go.

They had an order point, they had delivery. I mean, they had it all.

Carl: They're doing all the right things. What's the problem?

Meredith: Well, as you know, I'm not necessarily a fan of an omnichannel space, just because your consumer is omnichannel doesn't mean you need to be. And there were a whole bunch of very confused people in that store trying to figure out where to go and where to get their order.

And they clearly were having a labor shortage issue relative to the number of orders that were coming in. And this showed itself in two ways. Number one one of the employees came out and told everyone standing in line waiting to order to go use the kiosk because they did not have anyone to staff the POS and they weren't using it that day.

The second thing was the actual orders coming into the kitchen -from where I was standing I could see both the KDS, which was just flooded with orders. And there was no way of knowing which that poor gentleman should be putting together first or second or where he was in this process. And then the barista station had a thermal printer and it was just throwing off tons and tons and tons of orders.

And she was probably 20 chits deep and people were standing there going, where is my coffee? And she's like, I couldn't tell you. I have 20 little pieces of paper here. I don't know which one you are. So it really brought home, in Chapter four of the second book, we talk about creating operational capacity and how the wonderful thing about all of these new channels and ways to order is that you make it easier for your guests to order.

Potentially you're getting even more orders in. Receiving all of these orders, executing on all of these orders, and then fulfilling them to the consumer, the driver, whoever it might be in a way that is seamless and easy. And it definitely felt at least in that store, like Panera had done a bunch of innovation on the front end consumer facing but had a little bit of opportunity around helping the operations catch up on the back end with all that innovation they have done on the front end.

Carl: When we think about that chapter in many ways, it didn't have a huge amount of technology in it on purpose. I think when we talk about digitization, and I was speaking to a bunch of CIOs recently at FSTEC, I think part of the challenge is oftentimes we think this technology just sits within that CTO, CIO bucket.

But the reality is what we talk about covers the entirety of the C suite. And therefore, the entirety of different functions and the way they have to respond at the same pace as what the technology is. So perhaps on the operational processes side at Panera, there are some opportunities, at least for that one location.

Meredith: Yeah, or maybe even in their back of house technology. Maybe they haven't invested as much there as they have in front of house. It's hard to say from the outside, but clearly in that one store there was some opportunity to help the team execute better on all of the orders coming in.

Carl: Well, look, before we move on to our next question, I want to ask everyone, if you haven't already subscribed to us, please, that really helps us make sure that we have people listening to us around the world.

And also, if you haven't yet done so, please give us five star. It makes us feel good about ourselves and that hopefully helps us get more seen by those people that perhaps are looking for the content that we're putting out there. And if you haven't heard about it yet, Meredith and I are going to Palm Springs and the Margaritaville Resort on October 1st through 3rd for Create.

I'm looking forward to it. We're going to be doing some podcast specials there as well, speaking to a variety of different folks. So if you're in Palm Springs, do come over and say hello to us. We'd love to have a chat.

Meredith: Okay. Next question. So Thanx, the loyalty company, has introduced a concept called stored value. So tell us about that one.

Carl: Yeah, Thanx announced this new feature that enables the equivalent of the Starbucks or Chick Fil-A wallet, you know, where you load up your account in advance and have cash available to pay for your current and future visits.

They've been working with a company called ANSA A N S A to enable this and it, it works through Apple or Google pay like you're used to perhaps through other verticals and ANSA is a digital 'wallet as a service' tech company. And so it removes the need for any additional hardware on the restaurant side, which I think is brilliant because anytime we talk about new innovations, it's like, well, how do we have to integrate it with this and that?

I think the fact that there's no additional technology beyond this function, I think it's super important. Now, the article states that Starbucks, who, of course, has been doing this for quite a while, has a $2 billion balance in cash from customers that have loaded up on their app. And when, you know, cash is king, this sounds like a very handy surplus.

What I like about this is that it focuses in on the third aspect of what we call the digital trinity of ordering, loyalty, and payment, and the payment piece, obviously, in that piece. And by having funds already committed, you're inherently creating loyalty. You can, of course, denote the specific chunks of cash that customers can add to their wallet.

I'd love to see this type of tech build out though, further with maybe subscription programs and of course, maybe tie back to incentives around the loyalty program itself, where perhaps additional points are given if someone loads up to a certain amount. The challenge I suspect is a financial one. You know, just like a bank doesn't keep hold of all of our deposits in our bank accounts in that they would be in trouble if we withdrew all our cash today. What does someone like Starbucks do with their mountain of $2 billion worth of cash? What will smaller chains do if they are the ones that are holding onto it?

Or perhaps do Thanx get to hold on to the cash and keep the interest? There are big questions around this, but I do think ultimately it's helping the customers be able to have a more frictionless experience and drive loyalty at the same time.

Okay, our next question: Food Panda are divesting out of Asia. What did you learn from this one?

Meredith: Delivery Hero, which owns part of the Asian business under the Food Panda Brands is, they say, exploring a deal to sell those Food Panda brands off to Grab, which is a Singapore based company. The deal hasn't closed yet. But I think what was most interesting to me about it was as they explained the rationale for exploring said deal, the number one thing was Delivery Hero said it was concentrating on profitability, growth and maintaining investor confidence, which I think that's a sign of the times. But even more interesting is that while Delivery Hero saw their segment revenues and their GMV grow, it grew across all markets except Asia and GMV in Asia declined by 7%.

GMV is down in Asia. They have been ahead of the U. S. in terms of adoption, in terms of growth. And so to see them come down, one wonders if they're also ahead of the U. S. In terms of a slowdown in delivery. So we'll see when that all of the Q3 and then Q4 reports start to come out for the U. S. companies. But that looked a little bit like a canary in the coal mine for us on the fact that Delivery Hero is acting on this very interesting as well.

All right. Final question about. AI image recognition for calorie counters. Tell us about that. How does it work? Does it work? It's amazing.

Carl: Well, I haven't used it myself, but this is an Indian health and wellness startup that follows along the same path as apps like MyFitnessPal. Track what you consume and how you exercise to match a calorie deficit and therefore hopefully lose weight over time.

Now, this particular company, HealthifyMe, supports 35 million users across India. They've raised 30 million dollars in their last Series D funding round, so, you know, they've been around for a while.

What's different about this software, and I'll bring up an image here so that we can share it with everyone. Here we go, let's see it. Is that have this now feature called Snap. which requires a picture of the food to determine the calories that it contains. Now it's only doing it for Indian foods, which are notoriously difficult to track, but it's able, at least what it says, able to recognize 150, 000 different types of Indian food items.

Now, I don't believe it's going to be perfect. There must be an element of this, which certainly doesn't work to the full degree yet. But you are basically taking a picture of the food and then perhaps later it will come back and tell you about the calories that it's figured out. So I don't think it's an instantaneous thing, but they also have this auto scan where it will scan all the photos in your library to be able to then come back later as well.

Now, I think what's interesting here in the co founder and CEO Tushar Vashisht said that they've been doing this for about 11 years now, but it's only through this recent feature that they're bringing the artificial intelligence into it. But really, what triggers my attention, Meredith is You know, I see there's potential ways for how this could perhaps pivot and be applied in in different contexts over time.

So, for example, when we think of chargebacks and disputed orders from customers on third parties, imagine if a photo food scanning app can confirm not the calories, but whether the items were indeed included in the order or not. That would certainly drive some value. What about for the consumer where a photo of the dish could validate whether they received the correct portion size to what they had ordered or not?

Don't know about you, but do you ever feel you're getting a little shorted sometimes on delivery orders versus the portion size that you might get in the restaurant? So, I don't know. I think there's some interesting things about this. We've often talked about cutting edge technology that might seem a little bit crazy at the outset, but certainly ways in which it pivots over time to different utilizations.

Meredith: I like this use case and the auto scan of what's in your photos. That's super cool for those of us who love to take photos of our food and post them on Instagram. Like why not also get calories at the same time? I love

Carl: it. Well, that's it for this week's Digital Restaurant.

We'd love to hear what you think of what we've covered this week. There was certainly lots of articles that we had to not include, but there'll be in our newsletter. But if you've got any thoughts as to what you'd like to talk about or for us to talk about next week, please let us know. But for this week, 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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