Friends of Branded!
Happy Saturday and I hope you had a great week.
When Schatzy and I attend industry events, we like to play a game where we select the word (or words) that we expect to hear most often. There’s no judgement here and this game isn’t about our support or otherwise for these words, but rather our predicting what themes and trends we expect will be uttered the most by the speakers, panelists, and subject matter experts (“SME”) attending the event.
It’s like “corporate bingo, the hospitality technology edition.”
For 2025, we're suspending this game or at least reconfiguring the objective to now predict the second most popular words b/c the top answer on the Family Feud board is all locked-up and it will come as no surprise that “Artificial Intelligence” is the hot topic of the year.
Artificial Intelligence (“AI”) is so popular right now, that Schatzy is thinking about changing the name of one of his three sons to “Alfred Irving Schatzberg” in order to at least have one of his children use the initials “AI” Schatzberg. He believes this is a recipe for wealth generation, not just for the son whose name will be changed, but for generations of Schatzbergs to come! 😊
In all seriousness, public companies are being penalized for not focusing and investing on this technology aggressively enough as AI is being touted as one of the most important and transformative technologies of our time. The potential (or promise) to enhance productivity, improve decision-making, and enable innovations across multiple industries is game-changing.
The experts I follow (and respect) tout AI not just as a technological advancement, but as a paradigm shift that is reshaping industries, economies, and daily life.
This is clearly big, important, and is going to rock the world of hospitality & restaurants, right?
Not so fast young grasshopper, not so fast.
Despite the above statements and my conviction that these bold predictions are in fact true, let’s bring these macro and visions of grandeur into the world of hospitality and specifically restaurants and tell you the realist of the real deals - our industry will lag the AI boom.
Sorry, not sorry, but the restaurant industry is not a tech-forward one. We never have been a tech-forward industry, and I don’t expect we ever will be one.
For whatever it's worth, I'm not a fashion-forward person. I never have been a fashion-forward person, and I don't expect I ever will be one (but that's a topic for another day or not).
None of this is meant to be negative or my throwing shade at restaurant industry, but we need to be realistic (especially when it comes to paradigm shifts that are expected to reshape industries, economies, and daily life, which of course, includes hospitality and the restaurant industry).
I’m NOT suggesting that AI isn’t important and to the contrary, Branded believes it’s critically important, but the vast majority of our industry will be slow to adopt and embrace this technology.
Please skip to the Access Hospitality (although I’d prefer that you finish reading the Top of the Fold first and work your way down to the Access Hospitality section 😊) to see how Branded has positioned itself for this paradigm shift that is AI and for those interested, an opportunity to join us, yes, there's a CTA (aka: Call to Action) below.
Just b/c the restaurant industry isn’t a tech-forward one doesn’t mean there won’t be first-movers, AI enthusiasts and fortunes made.
For many restaurant companies and even more so for the ecosystem that sells into restaurants and wants (needs) to see the industry not just survive but thrive, this is your moment to differentiate yourselves and be ahead of the curve. However, and for the majority of industry folks that want to do things the way we’ve always done them, continue with a ‘wait & see’ approach and get there, when they get there, respect!
There are so many reasons why our industry is not a tech-forward one and we’re more accustomed to playing the role of the caboose on this technology and innovation train. We’re the last of the trillion-dollar industries to join the digital revolution and a benchmark I typically use is that we’re a decade behind retail. That’s right, while I of course know that our close cousin (the retail industry) isn’t a bastion of technology front-runners, like the two joggers in the woods running from a bear, the retail industry only needs to beat us to be viewed as technologically superior (and again, they’ve got us beat by about a decade).
One of the key factoids creating this 10-year gap benefitting retail is the strong tech leaders they’ve got on their team that keeps them ahead of restaurants in the technology and AI race.
Retailers such as Amazon, Walmart, Alibaba, and Nike are just a few examples of retail companies that have invested heavily into AI, robotics, and digital commerce. Retailers have been using AI-powered recommendations to analyze customer behavior for a couple of decades. Other utilizations include AI-driven recommendation engines, dynamic pricing, chatbots, demand forecasting, automated restocking, and supply chain optimization.
More recently, AI-powered styling assistants and virtual fitting rooms have become popular (how good is Warby Parker’s visual try-on offering, seriously, it’s awesome!).
Voice commerce? Amazon Alexa and Google Assistant integrated AI into shopping which allows customers to make purchases via voice commands.
Given the pace retailers are on with tech, innovation, and AI, it’s not hard to imagine fully automated retail stores where AI leads innovation in checkout-free shopping, robotics, and smart warehouses.
Don’t get me wrong, with the restaurant industry embracing the digital transformation, the adoption of AI will gain speed, but we have years (about a decade) of catching up to do.
The $64,000 question is why restaurants have lagged retail when it comes to technology and now AI adoption (and another reasonable question would be to ask why I just referenced a game show that aired on CBS until its run ended in 1958 (aka: a decade before I was born). 😊
There are a number of answers here (to the question of why restaurants are lagging retail), but in short (and I know I’m never short when it comes to these newsletters), it all comes back to why our industry is different from all others, which includes the (i) fragmentation; (ii) the personal connection with our guests; (iii) a higher dependency on human capital; (iv) limited capital; and (v) the technologic expertise of operators and restaurant expertise of technologists.
I want to expand specifically on these last two.
Restaurants are among the most JIT (Just-in-Time) operators of any industry and that’s been a key headwind and reason the restaurant industry has been slower to embrace technology. As stated above, AI isn’t just a new technology, but a paradigm shifts and that’s tech-speak for BIG MONEY, BIG MONEY (no whammies), the burning of capital and a series of starts & stops. This isn’t the game restaurants are built to play and win. The majority of operators will let the industry’s biggest tech enthusiasts take the risks associated with being first movers and be more than happy to catch-up when the risk / return is more appropriate.
Again, this is not a criticism, it’s the reality and it’s the truth.
I’ll go further and add that this isn’t a cowardly decision by our industry, it’s a pragmatic one and I even say it echoes Sun Tzu and The Art of War (“If a battle can’t be won, don’t fight it”). Wars cost money and being a leader in the technology, innovation and AI are all professional wars that the restaurant industry has neither the DNA nor the capital to fight (and win).
But beyond the capital, it’s the expertise answer that I feel is the most important reason why the restaurant industry will lag when it comes to AI (and this is no different than what led to our industry lagging in technology). The friction between industry SMEs and the technologists is one of the key factoids the led to the launching of Branded Hospitality. This gap is closing, but it’s still incredibly wide. How wide? Far too wide for the restaurant industry to be anything other than a laggard when it comes to AI. Gaps in this specific area are expensive and that only adds to the risk of early adoption, embracement, and engagement.
To be a leader in technology, innovation, and AI, comes down to the relationships between SMEs and technologists. Again, this gap is being addressed, but at a pace that will not change the restaurant industry’s place at the back of the line of adoption.
Again, this week’s Top of the Fold is not intended to be negative whatsoever, but in the world of early-stage investing, being early and wrong are the same thing (or at least deliver the same poor financial results). Are there ways for restaurants and our ecosystem to embrace AI now? Of course! Does Branded recommend engagement? Yes, but at a pace that is appropriate and in partnership with experts that will reduce the risks.
It takes a village.
#1 Hospitality Podcast
Your go-to podcast for engaging conversations with hospitality's top leaders. Subscribe and never miss an episode!
The FIRST shoutout this week goes to the good Dr. Shaquille O’Neal, NBA Hall Famer, FIBA Hall of Famer and recognized as one of the league's greatest players of all time when he was named to the NBA 75th Anniversary Team, on the announcement this week that his contract with TNT has been extended.
According to various news sources, Shaq agreed to a long-term deal with TNT Sports valued at $15mm per year.
Why is Shaq getting a shoutout from a hospitality-focused newsletter for this most meaningful extension of his TV contract?
Great question (of course). Stay with me friends.
First, let’s understand that despite all of Shaq’s basketball awards, honors and recognition, my young daughter knows Shaquille best for his being the boss of Josh Halpern, the CEO at Big Chicken. She also knows that Big Chicken is NOT an endorsement deal for Shaq (she’s paying attention and is one smart cookie) but rather is the “O’Neal-Family business,” which includes his mother, Lucille (and her recipes), his daughter, Taahirah, and several of his uncles including Uncle Mike & Uncle Jerome.
Finally, like so many Americans, my daughter believes most things are better when you add mac ‘n cheese, so “The Ultimate” is a menu item that is both approved and a “Frischling-Family favorite”).
Branded’s relationship with Big Chicken started with Josh Halpern, Sam Stanovich, Big Chicken’s Head of Franchise Partnerships, and specifically the company’s desire to build a best-in-class tech stack. As I was able to meet other members of the team, including the good people from JRS Hospitality, Authentic Brands Group, Shaq, Lucille, Taahirah and Uncle Mike (I appreciate you Uncle Mike), Branded became excited about the idea of our not only supporting Big Chicken’s building and leveraging of technology, but to our making this company one of our first investments into an emerging restaurant space.
One of the questions I enjoy answering the most in connection with this investment is about Shaq’s popularity and relevance given he retired from the NBA in 2011.
This question is always a slam dunk (pun obviously intended) as Shaq is arguably more popular today than he was at the height of his playing career and that includes with an audience that has never seen him play the sport. Shaq’s brand has grown beyond that of basketball and is an icon for new generations.
Shaq’s enduring relevance comes from his larger-than-life personality that is magnified by his diverse media presence and business ventures. His relationship and relevance with the NBA and how much longer that would last was a question that I believe has now been asked and answered this week in a most meaningful way.
What does this long-term contract mean for Big Chicken? As far as I’m concerned, it does little b/c this brand is already being recognized as an outstanding operator (Announcing the 2025 Outstanding Operator Winners), and working incredibly hard to always be improving and delivering value for its franchisees and its guests.
It does, however, make me feel good about one thing – both TNT and Branded are betting on Shaq for the long-term and believe this business mogul’s best days are still very much ahead of him.
Have a BIG day!
In the spirit of emerging chicken brands, the SECOND shoutout this week goes to the good people at Dave’s Hot Chicken, which is reportedly exploring a sale that would value it at around $1 billion, according to Reuters.
The Branded team wants to give a BIG congratulations to or friends Bill Phelps, the CEO, Jim Bitticks, the companies President & COO, and the rest of this great team.
Dave’s already has more than 250 restaurants worldwide and has been recognized as one of the fastest-growing fast casuals over the past few years.
I think most readers of the H^2 know that Dave’s Hot Chicken began as a pop-up in an East Hollywood parking lot in 2017. The business operated out of the parking lot for about 7 months before taking an investment from one of the founders’ brothers so that it could move into a brick-and-mortar location. In 2019, the founders tapped Bill Phelps, Co-Founder of Wetzel’s Pretzels and an investor of Blaze Pizza, to become CEO and help grow the company.
According to Mr. Bitticks, “we try to maintain a fairly high standard of food quality and guest service to make sure that it’s this loop that feeds itself. You can keep growing because the profitability’s there, the franchisees have interest, but the business continues to excel from a sales perspective because the food quality is there, and the service is there. And it’s just this self-sustaining model.”
Despite the challenges and headwinds hitting the restaurant industry, private equity continues to look at the emerging restaurant industry favorably. In just the past year alone, private equity has made big bets and been active investors. In 2024, Roark Capital completed its acquisition of Subway, and Blackstone acquired Tropical Smoothie, and Jersey Mike’s.
Is this shoutout a little premature as “exploring” a sale most certainly doesn’t mean that there will be a sale? Did I just prepare the locker room for a championship celebration and put something up on the jumbotron before the final out (JB: I didn’t say the year or the team, so we’re cool with this reference, right?)
No, it’s not and here’s why.
Regardless of whether Dave’s Hot Chicken is acquired isn’t why we’re giving this great company a shoutout. It’s b/c Dave’s represents yet another example of the American dream and the democratization of our industry. Dave’s humble beginnings, the journey and yes, the success 3 childhood friends in their 20s are having when they scrapped together $900 to open in a parking lot in 2017 is worthy of this recognition.
In a short period of time, this company is now exploring an exit of over $1 billion.
Only in America kids, only in America.
One final note about these two shoutouts and how they’re both about emerging chicken concepts.
It would be hard for me to count the number of people that have asked me about the saturation in the chicken-segment of the industry and question the need for new chicken-focused fast-casual and limited-service restaurants. To be clear, it’s a good question, and I want to share an article about this most important and I dare say, still emerging asset class.
Wings rising up while chicken category expands
Burgers remain the top selling fast food category in the US followed by snacks, chicken, and pizza. McDonald’s leads the burger count with over 40,000 locations while KFC is the US market leader with less than 4,000 locations.
The fast-food industry was largely popularized by burgers and that segment expanded aggressively across the globe before chicken-focused chains gained similar traction. Chicken QSR and limited-service restaurants have been growing rapidly and while I’m not predicting that chicken will overtake the burger, as we all know, there’s Room for Seconds. 😊
Respect the bird!
Branded invites readers of the H^2 that are interested in learning more about our portfolio companies, and investment strategies to become part of our Access Hospitality Network.
This week I want to feature Branded's partnership with the good people over at ARI Venture Studio (“ARI-VS”), the first venture studio to focus exclusively on technology solutions for restaurants and a curated thesis on Artificial Intelligence.
The Top of the Fold reflects Branded’s assessment on the restaurant industry’s position when it comes to the embracement and engagement of AI.
If left on our own, history will repeat itself and by that, I mean we will be a laggard in the adoption of this paradigm shift that is AI-solutions. For the reasons included above, and specifically the meaningful capital needed and expertise gap, the path for the restaurant industry to economically and successfully win in the AI race is a most challenging one.
The driving force behind Branded partnering with ARI-VS is the need to close the gap on both capital and expertise, and b/c of the importance of AI and the associated the efficiencies for our industry is paramount. The goal of our partnership with ARI-VS is to be partners with the company that will be creating the next generation of AI-enabled solutions for restaurants.
The venture studio model is not a venture fund, and this is a most important distinction. ARI-VS is structured as a operating company and a new asset class that aims to systematically build new startup ventures by combining the financial resources of a venture capital firm, the expertise of accelerators and incubators, and the creativity and drive of startup founders.
Positioned as “factories that build businesses,” venture studios are companies that apply venture building methodologies to systematically identify market opportunities, develop ideas for businesses that can pursue those opportunities, assemble founding teams to operate those businesses independently, and support the businesses’ growth from inception to spin-off.
ARI-VS is uniquely an operating company that is harnessing the power of AI to reshape the future of the restaurant industry. With decades of start-up experience, deep industry relationships, and a relentless passion for innovation, ARI-VS is not just creating and launching software startups, the platform is setting a new standard for what’s possible in ResTech. ARI-VS’ proprietary development platform accelerates the journey from concept to reality, turning bold ideas into operational beta start-ups in weeks, not months.
To build companies quickly, ARI-VS leverages its proprietary Software Development Platform, SPRINT, to accelerate time-to-market. SPRINT brings light and order to the infinite possibilities of large language models and supporting AI offer to next generation technologies. ARI-VS, its start-up building processes and SPRINT platform are AI-first in application.
As an early-stage investor exclusively focused on the hospitality industry (and where about 80% of our portfolio is ResTech), Branded values this opportunity to partner with ARI-VS.
This call to action is an invitation for corporates and other parties interested in exploring areas of collaboration with ARI -VS to contact me directly.
Corporates and parties that have experience working with (or have explored working) with incubators & accelerators, I believe, will find the ARV-VS model of particular interest and a most welcomed and aligned way to participate in this emerging asset class and the paradigm shift that is AI-solutions for the restaurant industry.
You can also take a look at some of the thought leadership created by the ARI-VS team with the links below:
- Unlocking the Value: The Venture Studio Business Model
- Why Venture Studios Are a Smarter Bet Than Single Startup Investments for Corporate Venture Funds
- Why ARI Venture Studio's Pragmatic Approach Beats the Unicorn Hunt
- Embracing Technology: A Recipe for Success in the Modern Restaurant Industry
In the truest sense of the words, it takes a village.
NYC Co-working Space
Seeking a premier co-working space in the heart of Gramercy, NYC? B Works fosters a community centered on strategic relationships, synergies, and innovative solutions. Elevate your growth—become a member today!
Featured Episode: Ketchup, Crinkle-Cut Fries & 1500 Shake Shacks: Rob Lynch Spills It All
In this episode of Hospitality Hangout, we’re taking a deep dive into what makes Shake Shack one of the most exciting brands in the industry. Rob Lynch joins us to share how the company is navigating rapid expansion while staying true to its core values of great food, hospitality, and community.
At one point, the idea of reaching 450 locations seemed like a stretch—now Shake Shack is setting its sights on 1,500. We discuss a major shift happening in the restaurant and hospitality industry, where CMOs are increasingly stepping into CEO roles, bringing a guest-first mindset to the highest level of leadership.
Rob opens up about the challenge of scaling while maintaining brand identity, balancing non-negotiables with efficiency, and integrating digital innovation without losing the human connection at the heart of Shake Shack’s success.
And of course, no episode would be complete without some fun. Rob takes on our signature segments, including Hot or Not, where he weighs in on AI-powered ordering and drone delivery, and Fast Money, where he competes for the ultimate bragging rights.
Listen now and stay ahead of the game! 🎧
Tune into the episode and subscribe to our channel here: Hospitality Hangout With Rob Lynch
You can tune in on:
Spotify: Click Here
Apple Podcasts: Click Here
Watch on YouTube: Click Here
Are you loving the Hospitality Hangout? Let us know! Please leave us a review here!
Elevated service, every step of the way
Call a National Accounts Representative! CALL 866.949.4504
MARKETING
THE Restaurant Marketing Playbook - 2025
By: Rev Ciancio, Head of Revenue Marketing at Branded Hospitality Ventures
There are so many moving parts to marketing these days, so many channels where we have no control of the algorithms, and it’s hard to find a guide for best practices, right? Restaurant marketing is so much easier when you have the manual.
Technology
Marketing Lives in the Future: Why Your Marketing Team Can't Help You This Moment
By: Seth Temko, Solutions Services Partner at Branded Hospitality Ventures
Marketing lives in the future by necessity, focusing months ahead on creating and optimizing lead generation programs while sales handles immediate deal closures, which is why marketing teams can't help with end-of-month sales targets but are often better at predicting long-term revenue numbers.
Food For Thought
The Psychology of Menu Fonts
By: Dr. Melissa Hughes, keynote speaker & author
Fonts are silent storytellers. They set the tone, evoke emotions, and communicate the restaurant’s personality before you even read a word.
JOIN THE HEADLINE
Ready to showcase your ideas and insights?
Share your article with us for a chance to be featured in The Hospitality Headline!
We’re excited to spotlight diverse voices and spark meaningful discussions within our community. Submit your piece and let’s make your voice a headline!
That’s it for today!
See you next week, same bat-time, same bat-channel.
It takes a village!
Jimmy Frischling
Branded Hospitality Ventures
jimmy@brandedstrategic.com
235 Park Ave South, 4th Fl | New York, NY 10003
Branded Hospitality Ventures ("Branded") is an investment and solutions platform at the intersection of foodservice, technology, innovation and capital. As experienced hospitality owners and operators, Branded brings value to its partners through investment, strategic counsel, and its deep industry expertise and connections.
Learn more about Branded here: Branded At-A-Glance