Friends of Branded!
Happy Saturday and I hope you had a great week.
For Team Branded, the 2023 conference season has come to a most successful close and as it does each year, we end on a high note with the industry gathering in Las Vegas for the Restaurant Finance & Development Conference (aka: “RFDC”).
Branded has the privilege of attending many shows throughout the year and in a world where work-from-home, increased optionality and an explosion of video calls have replaced in-person meetings, these conferences and industry events have become critically important for relationship building, networking and business development. For me personally, each event I attend is intentional, important and plays a specific role in the work I’m responsible at Branded.
My team knows how much I love and appreciate RFDC or as I affectionally call it, “the money show.” RFDC is the restaurant industry’s premier financial event and as a recovering Wall Streeter, these are my people!
This conference, more than any other, represents an opportunity for industry folks to engage in discussions in and around the capital markets and get a sense of expectations for the year ahead.
As is often the case, Branded attends these events as one of the few truly early-stage investors and that affords us the opportunity to speak with later-stage players about some of our maturing portfolio companies and learn what these later-stage investors are looking for.
Big Time (Rush) credit to the conference organizers, Restaurant Finance Monitor and its leadership, John Hamburger and Mary Jo Larson. I don’t think there’s another event that so thoughtfully creates as much meeting and gathering space for its attendees as RFDC. As hospitality people, we appreciate the attention to this important detail and their keen understanding of what their “guests” both want and need. Cheers to the entire team at Restaurant Finance Monitor for being such fantastic hosts.
My overarching takeaway from the event, “cautious optimism” and once again, particular enthusiasm for QSR and Fast Casual concepts.
In the spirit of this event being held in Las Vegas, my crew’s Frank Sinatra, Geoff Alexander, President & CEO at Wow Bao is a generous, thoughtful and enthusiast host. At a dinner Mr. Alexander arranged at Delilah, a restaurant owned by The Hollywood Group, this is a JOINT and love letter to the roaring 20s!
Delilah is a modern-day super club with vintage aesthetics, lavish chandeliers, plush interiors, and nostalgic touches. At Delilah, dinner turns to dancing and female entertainers and a multi-piece band literally take center stage!
At my end of the table, the irony wasn’t lost on us that QSR and Fast Casual was a MAJOR focus at RFDC, but here we are dining at (and loving) this Full-Service & High-End joint.
The restaurant industry is fragmented, more so than any other industry I’ve ever seen and that includes a delineation between experiential restaurants and quick-serve restaurants. One is not better or worse than the other and each has an important place in the industry.
Restaurant people can NEVER turn it off, so a discussion about what The Hollywood Group must have paid for this build-out ensued and there were of course guesstimates of what this specific venue was putting up in revenues per annum was a topic of conversation. This even led to a rarely used quote from the 1984 movie, Sixteen Candles, being used, “That grill costs $5,000 [Jake], do you have $5,000 cause I don’t.” Farmer Ted (aka Anthony Michael Hall).
Please note, a dear friend of over 50 years once showed Sixteen Candles to his then two teenage daughters. They couldn’t watch it and were completely offended by this film. This movie falls into a growing category of “films that could NOT be made today.” So much so that I felt the need to take a few liberties and crop the photo b/c this quote and scene goes bad quickly and didn’t age well. But I digress…as usual.
My own observation of the vast amount of space between a “Delilah” concept or for my fellow New Yorkers, a joint like The Lobster Club and the many Quick Serve Restaurants & Fast Casual joints made me think about the vast amount of space between emerging Technology and Innovation companies (where I define Technology as Software as a Service and Innovation as Hardware + IoT).
The former (SaaS companies) requires a significantly lower capital expenditure commitment while the latter (Innovation + IoT) requires a far greater one. Is that why investors flocked to technology and drove multiples to exorbitantly high levels? Is that why we’ve seen an explosion and arguably a saturation of SaaS offerings in the ResTech space and a far more limited amount of innovation?
Regardless of the reason, readers of the H^2 know my views on where money is made and lost in the restaurant industry and that’s in the kitchen (aka: the back of house or the “putting green” for the H^2 loyalists). 😊
The industry is fully aware that software is critically important to improve margins and address the many pain points and headwinds facing operators, but this digital transformation is only gaining momentum and requires the embracement of the connected kitchen and hardware.
My prediction for 2024, there will be a great deal more attention and capital spending on hardware. That’s neither easy nor inexpensive, but it is necessary, it's the reality, and it was one of the most consistent points of discussion at my meetings out at RFDC with operators. These operators told me their focus and attention are now moving to the kitchen and other parts of the back of house.
For investors, patience is a virtue and that's NOT just an Aesop Fable. The journey with hardware will require a deeper investment and the return on investment will take longer.
Like almost anything you can imagine, you can’t paint the entire innovation side of the ResTech industry with the same brush b/c there’s innovation with both more or less friction. For readers who want to learn about some of the portfolio companies that Branded feels will be the biggest winners in the automation space, please check out the Shout Outs section a little further below. Sharing is caring, right? Read what you like and skip what you don't, but the portfolio companies included below are pretty awesome. Just saying.
As always, it takes a village!
Readers of the Hospitality Headline, that are interested in learning more about Branded’s portfolio companies, investment strategies and future opportunities, are invited to explore becoming part of our Access Hospitality Network.
From her early days at P.F. Chang's to bartending in Nantucket (with a surprise encounter with Jimmy Buffet), Lauren shares the invaluable lessons she learned as she emerged as a trailblazing restaurateur.
In this episode, Lauren spills the beans on how she navigates the intricate landscape of restaurant management. Learn her secrets to success, including fostering team engagement, embracing ambiguity without all the answers, and decoding communication preferences in the era of chat bots.
You can tune in on Spotify, Apple, Amazon, iHeart, or your favorite listening platform!
Innovation, Innovation, Innovation!
One of Branded’s favorite innovation companies continues to be PourMyBeer. It seems every week this company announces a new record-breaking installation.
This week the high watermark was once again raised with 102 self-pour taps. Congratulations to our new friends at On Par Entertainment in Dayton Ohio. We see you, we appreciate you, and we know your guests are going to love your self-pour solution.
The PourMyBeer system checks so many boxes for restaurant operators, and a rapid ROI for operators is certainly one of them (with 80% reaching breakeven in year 1).
You know the issues facing operators, (i) waste & fraud; (ii) consumers frustrated with wait times; (iii) labor costs; and (iv) poor service.
That’s what we love about PourMyBeer, self-pour creates benefits for both operators and consumers. You want a win-win, this is a win-win!
The rapidly growing self-pour beer and beverage market presents a frothy (intentional pun) $25 billion + opportunity as consumer demand for variety, convenience and experiences reshapes the hospitality industry.
Another one of our favorite innovation companies, Minnow Pod and its food delivery management solution. Food delivery is BOOMING with food delivery sales growing at 525% since 2018. $63bn was spent on food delivery in 2022 and yet the process of food deliveries creates a host of problems for property managers.
The Issues!
- Giving delivery workers access to the building creates security issues.
- Staff time spent managing deliveries takes away from other responsibilities.
- Poor tenant delivery experience reflects negatively on the property.
- Unmonitored deliveries create a food safety risk.
The Solution - Minnow Pod!
- Enhances building security by restricting unvetted delivery workers to lobbies.
- Manages every food delivery so property managers can focus on higher priorities.
- Improves the tenant experience by making food delivery more convenient.
- Reduces liability for foodborne illness by monitoring every delivery.
I’ve written about this company before, but since they keep going like the Energizer Bunny, I’m going to keep highlighting them - Bite.
I have a young daughter that has never seen a tollbooth collector. I don’t believe she will remember a human cashier at a QSR b/c that job will be going away as kiosk solutions take over the space.
Kiosks have proven not just to be as good human cashiers, they’re superior. This is not a criticism of human cashiers, but the data makes it clear that humans as guest ambassadors and the kiosk is a better combination than a human alone.
Bite is our portfolio company in the kiosk space and while we’re biased, we believe it’s among the very best digital ordering software companies in the market. Bite has created Bite Lift which elevates your restaurant's service with machine learning. Bit Lift is a proprietary algorithm that lets you maximize order size and throughput – especially during peak times. Bite’s intelligent recommendations increase check averages by 20% or more.
"Bite has been instrumental in helping us grow top line when we’ve needed it most. The recommendations they show via Bite Lift are actually what our guests want, leading to significantly higher check average and flow thru to our bottom line. Our guest experience is stronger and our employees are happier, using the extra time they have from removing cashier responsibilities, to focus on Hospitality and Throughput. These are real restaurant people, supporting restaurant people. Truly one of the most valuable partnerships we have." Spencer Rubin, Founder & CEO at Melt Shop.
My final shout-out today goes to our friends and partners at Agot.ai, an AI and computer vision platform for Quick Serve (“QSRs”) and Fast Casual restaurants that addresses accuracy, food waste and speed of service.
Restaurants are facing a host of challenges that threaten their growth and profitability. The list of challenges isn’t short, but the ones Agot aims to address include the following: (i) Rising food costs; (ii) Labor shortages and wage inflation; (iii) Costly legacy systems; (iv) Difficulty knowing their customers; (v) New operational costs (e.g. 3P delivery services); and (vi) Food safety and sanitation risks.
Please don’t get nervous, but AI and Computer Vision are poised to revolutionize how restaurants operate.
Agot’s RetinaTM Platform sees EVERYTHING that is happening in the restaurant and provides real-time guidance to staff. A single Computer Vision AI Platform covers critical use cases in QSR and Full-Service restaurants: in the Back of House (BOH), Front of House (FOH), and Drive-Thru (DT), while offering cost replacement potential for legacy systems. Due to the operational impact, Branded believes computer vision systems like Agot will become the most impactful tech purchase restaurant operators will make for the next decade.
For information on any of the companies included in this week’s Shout Out section, please contact me directly.
The above are examples of the types of operator-centric innovation companies Branded believes are critical for the industry and for hospitality venues to succeed.
Each addresses pain points, challenges or represents an opportunity to create and capture value.
Branded’s investment thesis is to identify, vet and validate emerging tech & innovation companies that are good for operators. We want the operators to take care of their guests and our portfolio companies to take care of them. That’s the goal and that’s what we love to do!
We're proud to award Friend of Branded, Jill Raff from the Jill Graff Group this week's honors!
We love the hospitality industry, and we love people who also love this industry!
Ms. Raff is a writer and has her own show on YouTube. I want to share an article Jill wrote with our H^2 readers and also share a link to her show.
Ask Jill! The difference between customer service and hospitality (nrn.com)
Celebrity Customer Experience™
To participate in the contest: Email marketing@brandedstrategic.com or contact your friend at Branded to submit a photo of yourself wearing a piece of Branded "swag" and let us know where in the world you are!
TODAY'S TRIVIA
Answer also revealed at the end of the newsletter
TECHNOLOGY
The Art of Lease Negotiations: A Personal Guide for Restaurant Owners and Operators
By: Taj Adhav, Founder of Leasecake
Elevate your restaurant game with our exclusive guide to mastering lease negotiations! From decoding lease intricacies to negotiating like a pro, discover the steps that lead to profitability.
Digital Restaurant Association
We champion restaurants to thrive in a digital world
BUSINESS
Operators Want to Hear About Other Operators. But You... Not So Much
By: Seth Temko, Solutions Services Partner at Branded Hospitality Ventures
Product sellers take note: no matter how much you believe and say that you are your restaurant clients’ ‘partner’, that you are ‘on their team’ or ‘sit on their side of the table’, they see through your facade, especially if your marketing messages mainly talk about you, you, you and how great you and your products are. Discover the changes you must make in your marketing if you want to stand out and gain interest from new prospects.
Donate to CORE this Giving Tuesday
CORE: Children of Restaurant Employees needs your help this Giving Tuesday! Giving Tuesday is an internationally recognized day of giving, and we're asking you to participate by making a donation to CORE - a nonprofit that provides financial relief to food & beverage service employees with children when they face a life-altering medical crisis or natural disaster. Will you show your support for qualifying restaurant families this Giving Tuesday? Learn more and donate by clicking the button below!
FINANCE
On a Night Out, Americans Want Tequila. Will the World Feel the Same Way?
By: Noah Stern, Associate, Branded Hospitality Venture
When Debra Crew was named CEO of Diageo, she was nothing short of ambitious. She wanted to make tequila the dominant liquor brand around the world. For the majority of people in North America, this may come as a bit of surprise, but the U.S. and Mexico currently make up 85% of global tequila sales. But, for the first time in history, tequila is on pace to become the most purchased spirit in the United States, taking over from vodka and American whiskey. According to beverage tracker IWSR, total tequila sales will hit a whopping $13.3 billion this year.
Restaurant Industry Movers in the Market
—Data as of 11/17/23
MAXIMIZE VALUE, IMPROVE PERFORMANCE
Learn how the Hospitality Industry advisors from CohnReznick can put you at the forefront of advanced financial, operational, and risk management strategies.
MARKETING
Stop Measuring The Wrong Restaurant Marketing Metrics
By: Rev Ciancio, Head of Revenue Marketing at Branded Hospitality Ventures
Embarking on a culinary journey is an art, and so is marketing your restaurant effectively. In this sneak peek, discover the essential channels and golden metrics that will redefine your restaurant's marketing strategy.
IN THE NEWS
Hospitality Tech and F&B Innovation IN THE NEWS:
We love to highlight Food Service & Hospitality news, especially when it’s Partners & Friends making it!
GoTab: Pour Perfection- How GoTab Optimizes Taproom ExperiencesMarginEdge: FULL COMP: The Voice of the Restaurant Industry RevolutionOvation: Crafting the Perfect Recipe for a Restaurant’s SuccessOvation: Behind the Scenes of a Successful Restaurant Experience with Donna JosephsonLeasecake: The Complete Guide to Automated Leasing for Multi-Unit OperatorsLeasecake: How Mad Greens Improves Franchisee-Franchisor RelationshipsYumpingo: 5 ways for restaurants to maximize revenue over the festive periodCut + Dry: Silicon Valley’s “Fake It Till You Make It” Startup CultureIncentivio: The Future of Restaurant Payment SystemsIncentivio: Restaurant Data Analytics: Using Data to Drive Business DecisionsMighty Quinns: Micha Magid of Mighty Quinn's BBQ Says Restaurants Need to Break the Mold When It Comes to Franchising. Here's Why
And in other News…please see some of the stories that caught our attention and that we’re paying attention to. This week was loaded with headlines and news!!
Bloomberg: Raising Cane’s Founder Turns Chicken Fingers Into $7.6 Billion FortuneBusiness Insider: Travis Kalanick's $15 billion ghost kitchen company lays off staff Grocery Dive: Order up! How grocers are replicating the restaurant experience in retailNation's Restaurant News: Restaurant Business Online: POS provider Qu lands investment from Danny Meyer’s Enlightened HospitalityNation's Restaurant News: Uncle Julio’s names Scott Lawton CEO, RJ Thomas as president/COOWall Street Journal: Can Tequila Really Go Global? This Booze Boss Is Giving It a ShotWall Street Journal: How Chipotle’s Founder Is Moving Beyond BurritosFortune: Investor Marc Lore’s Wonder Group closes its deal for meal kit service Blue Apron for $103 millionMarketWatch: Shares in Wagamama owner drop as PizzaExpress owner decides not to rival Apollo bidMarketWatch: Blue Apron still has ‘substantial doubt’ it can continue as going concern if Wonder merger fails to closeRestaurant Dive: Noodles & Company CEO departsFSR: Union Square Hospitality Group Names John Ragan President of USHG Restaurants
ANSWER: Burger King
Burger King had a promotional tie-in with Men In Black II in the summer. In the movie, aliens stop at Burger King after returning to Earth.
ASK THE HEADLINE
🔍 Got Questions? We've Got Answers! 🌟
Satisfy your thirst for knowledge? Look no further! It's time to dive into our brand-new segment: "Ask The Headline"! 🎉
📅 We'll be answering YOUR questions every week. And here's the best part: you can choose to stay anonymous or receive a fabulous shout-out when we feature your question!
That’s it for today!
See you next week, (about the) same bat-time, same bat-channel.
It takes a village!
Jimmy Frisch & Julia Suchocki
Branded Hospitality Ventures
jimmy@brandedstrategic.com & js@brandedstrategic.com
235 Park Ave South, 4th Fl | New York, NY 10003
Branded Hospitality Ventures ("Branded") is an investment and advisory platform at the intersection of food service, technology, innovation and capital. As experienced hospitality owners and operators, Branded brings value to its portfolio companies through investment, strategic counsel, and its deep industry expertise and connections.
Learn more about Branded here: Branded At-A-Glance November 2023