Friends of Branded!
Happy Saturday!
It’s still completely dark outside b/c it’s super early as I’m at my desk thinking about how to kick off this week’s edition of The Branded Weekend Update.
I’m reading... I’m on my second cup of coffee (there will be a 3rd)... and I’ve got Pandora open so I can listen to some music. In the category of way more information than anyone wants (or that I should be sharing), Kenny Rogers’ song, Lady, was just played. (No! I don’t listen to the Kenny Rogers’ station - b/c that would be way cooler than what I’m about to admit). I’ve got Barry Manilow Radio on (that's right, I'm a Fanilow). Saturday mornings at 5am are reserved for one of two Pandora stations – Barry Manilow or Adele. Please feel free to draw your own conclusions, but ask yourself, what artist would you listen to from 4:30am to 7am, every Saturday morning, for over 2 years, when writing a newsletter? Whatever it is, you do you.
So back to Kenny and the song Lady.
Maybe it’s the hug my wife just gave me, maybe it's my thinking about how fun this past week was with so many people coming in & out and working from B Works (Branded’s HQ and co-working space), or perhaps it was the dinner I had on Thursday with two friends (who are also both CEOs of Branded Partner Companies) along with a new friend that joined to make it a group of four, the high school basketball I was at last night with so many Brant Lakers on the court and in the stands or the D^2 holiday party I attended after, but I find myself listening to the song as opposed to just hearing it.
I couldn’t possibly guestimate how many times I’ve heard this song (that was written by Lionel Richie, first recorded by Kenny Rogers, released in September 1980 and is listed at #60 on Billboard’s All Time Top 100) but I’ve never heard it so clearly before, and the word “together”, from the third verse exploded in my head like the legendary fireworks scene in The Great Gatsby (okay…in the 2013 remake).
Together! I like being together with people, with my family and friends. With partners and co-workers. With the folks who drive Branded’s Portfolio Companies and their teams. With strangers who are really just friends I haven’t met yet.
Yes, I’m all for optionality and giving people the flexibility to live and work the way they want and that is best for them. For me, I prefer in-person. I prefer being at the table (or the bar) with friends. They say hockey is the best sport to watch in-person at the arena (and I 100% agree with that). For me, life is a sport best played in-person.
As we roll into the holiday season, take a moment to raise a glass with a family member, friend, co-worker or otherwise. Be present, put your phone away and enjoy the moment that is really quite special b/c that very moment is actually truly unique and won’t ever be repeated the exact same way again.
Okay, there’s a lot to cover, so as always, Let’s Go!!!
MARKET COMMENTARY
Articles that caught my eye combined with some Branded commentary and insights.
I want to be CRYSTAL clear, and this is a specific message to one person, I have NEVER uttered a word about this to anyone!
However, when Barron’s writes an article predicting that the next generation of grocery delivery is likely to be defined by traditional brick & mortar giants building out their own delivery systems and even providing their services to their rivals, let’s just accept the fact that this is no longer a secret! Branded has taken the position that, similar to virtual restaurants/ghost kitchens, we already know who the eventual winners are going to be in the grocery delivery space – the existing and largest brick & mortar players.
Ever since Kozmo.com, UrbanFetch and WebVan, the challenge for these intermediaries and even the grocers they support, is to win & retain market share WITHOUT sacrificing profits. The article references data from McKinsey that says a grocer typically makes a $4 profit from a $100 basket when a shopper picks up their own goods. That turns into a $13 loss when the grocer has to manually pick items from the store and deliver them to the customer.
Branded believes and it looks like there are others who do as well, that the winning model will come from old-school retailer – Walmart - which is cutting out the middleman. Earlier this year, Walmart acquired Delivery Drivers Inc. (Walmart Acquires DDI), the company that runs its Spark delivery network. Yes, Walmart now owns its own delivery service and offers white-label delivery to other retailers.
Kroger is also becoming a player in this space using robot-operated warehouses. Let us not forget Kroger’s acquisition of Albertsons (KR buys ACI for $24.6bn) a move that has given the grocery giant a 13% market share of US food-retail sales and a BIG canvas for its approach to delivery.
I can’t end this segment without mentioning the 800-pound gorilla in the room – Amazon which has a small stake in Grubhub (with the right to take it up to 15% under the terms of the agreement) (AMZN buys stake in Just Eat Takeaway.com). It’s not hard to imagine a potential acquisition here of GrubHub, and honestly, would anyone be shocked if Amazon announced the acquisition of Instacart? The pullback/correction has slashed the value of Instacart from $39bn to $13bn (you could buy a little more than 3 Instacarts for the price paid for Twitter…sorry…I couldn't resist).
My point, grocery delivery is NOT going away, it’s just that this most challenging business is going to be consolidated and we expect dominated by the likes of Walmart, Kroger and Amazon (and there aren’t many of these behemoths out there). Deep pockets matter and are needed, and the establishment will be the answer as opposed to the start-ups that relied on VC funding and frothy valuations.
Is the restaurant industry ready for dynamic pricing? ABSOLUTELY!!! That’s not to say it will be easy (b/c it won’t), but with the right tools and if done with integrity, communication, and transparency, we believe the importance of dynamic pricing is fully understood and the dawn of the embracement (from BOTH the operator and the guest) is upon us.
Because I co-head an emerging venture platform focused exclusively on tech & innovation in the food service and hospitality industry, and I author a weekend newsletter, I encourage you to read the article by Danny Klein, editorial director at QSR and FSR magazines (and on the shortlist of the very best in the business). Danny asked more than 100 operators for their definition of Dynamic Pricing as he tries to bring clarity and understanding to this most important vertical that will only continue to gain steam as we roll into 2023.
The Dynamic Pricing genie has been let out of the bottle! Smart people (like Danny) can cover topics such as this in less than 2 minutes (my stuff is usually about a 9-minute read).
TECHNOLOGY
If you listen to our podcast, The Hospitality Hangout, you know that Schatz and I love a good "breaking news" moment. I'm excited to share some breaking news today about Branded portfolio company, MarginEdge. MarginEdge has landed $45M to give restaurants real-time spend data! The company is truly changing the data and automation game for back-office operations. With this additional capital, CEO Bo Davis intends to improve and expand the platform, including being able to provide more real-time reporting capabilities, enhancing the mobile app and expanding its payment network.
TechCrunch
MarginEdge takes time spent on invoices, inventory, recipes, paying bills and more, down from hours a week to minutes a day. Their automated invoice processing software uses a powerful combination of machine learning and real humans (no bots here!) to digitize invoice data in as little as 24-48 hours once onboarded.
Along with invoices, their platform tackles:
- Nightly reporting of POS performance data
- Daily sales and purchasing data that’s automatically pushed to your accounting system (your bookkeeper will thank you!)
- Unlimited free Bill Pay
- Recipe management
- Inventory management
- Order management and guides
- Price alerts and movers (to keep you ahead of pesky product price changes
And don’t just take our word for it – they’ve processed more than $5 billion worth of invoices across more than 4,000 clients in the US and Canada including Honey Baked Ham, Clyde’s Restaurant Group, Sunday in Brooklyn, Maple Street Biscuit Company, and more. Just in case that wasn’t enough, MarginEdge also has a 4.9-star rating on Capterra and a 4.5 rating by Forbes Advisor.
So what makes MarginEdge different from every other restaurant management platform out there? We think it’s the human aspect. This is restaurant software made by restaurant people (seriously, their entire sales team is made up of former chefs, GMs, and operators), with a deep empathy for how hard it is to run a restaurant.
With all the variable costs operators face, MarginEdge is the same monthly subscription cost with no contracts and no hidden fees. Everything’s included so there are no surprises at the end of the month! Learn more about the platform and see how it all works here.
The Access Hospitality Network is off and running!
If you're interested (and only if you're an accredited investor), please consider signing up for Branded’s Access Hospitality Network. This is our very own investment club & community that will be afforded unique and differentiated investment opportunities. Commentary shared with the Network will focus on the M&A and Capital Markets associated with this industry and this emerging alternative asset class. There are no dues or membership fees. Members of the Network will benefit from specialized publications, thought leadership, proprietary deal access, exclusive events and more!
If you’re interested in joining The Network, please click the link: Access Hospitality - powered by Branded Hospitality Ventures.
FINANCE & DEALS
“The secret of getting ahead is getting started. The secret to getting started is breaking your complex overwhelming tasks into small manageable tasks and then starting on the first one.” ― Mark Twain.
Often times the hardest thing about getting started, is getting started. This quote by Mark Twain depicts a consistent obstacle that busy yet brilliant minds experience all too often. The want to get everything done but are getting nothing accomplished - I bet you know the feeling. Whether it be in relation to starting your next venture or making an investment, picking an objective and tackling a singular task at hand is a skill that everyone should aim to master. So, my avid readers, remember that the second step is always easier, and let your next step be your first.
(Note: Data as of 12/09/2022 at 4:00PM)
BUSINESS
Technology is changing the way restaurants operate and adapt to new challenges. Tech is no longer a nice to have, it's a need to have. For a restaurant to be successful in today’s world it must be agile and adapt quickly to changes in procedures and protocols.
I'm excited to share some insights from some of the largest consulting firms in the world.
PODCAST
Tuesday, December 6th- Hospitality Hangout: In the latest episode of Hospitality Hangout, Michael "Schatzy" Schatzberg “The Restaurant Guy” and Jimmy Frischling “ The Finance Guy” chat with R.J. Melman, President of Lettuce Entertain You, a fifty-one year old restaurant group that is privately held with over one hundred and twenty restaurants across the country in thirteen different states. It is based out of Chicago, Illinois.
Melman’s dad, Rich Melman started the company back in 1971 when he opened a restaurant with his best friend Jerry Orzoff. Melman’s siblings Jarrod and Molly are both part of the Lettuce Entertain You Restaurants team.
The guys share breaking news and say that Lettuce has just opened their first restaurant in Florida. It is Aba, a Mediterranean restaurant that brings cooking influences from the Mediterranean, including Israel, Lebanon, Turkey and Greece. Also the group is opening RPM Italian in West Palm Beach and Summer House in Orlando.
Listen to the full episode on Spotify, Google Podcast, Apple Podcasts, or Amazon Music
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!
- Tablz: App lets you reserve specific tables at restaurants
- Spirits Network: This Streaming Channel Monetizes With Shoppable Liquor Ads
- Meez: What Does Effective Kitchen Management Look Like? Advice from Chef Sarah Hassler
- Picnic: Robot cooks are taking over restaurants and coming into homes
- Galley: A Single Source of Truth for Culinary Operations: Harvest Table’s Journey to sustainability, efficiency, & profitability
- Bite: This Fast-Casual Brand Introduced More Customization—And Boosted Check Averages by 38 Percent
- Incentivio: How to Keep Up With The Holiday Rush at Your Restaurant
- Ecotrak: Ecotrak Releases Techtrak Mobile Application to Connect Service Technicians with Business Customers
- Ottonomy: Ottonomy Opts for Multiple Use Cases for Indoor/Outdoor Robots, Including First Mile Deliveries
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!!
- Barrons: Forget DoorDash and Uber. Walmart and Kroger Are Now the Innovators in Food Delivery
- Restaurant Business: Applebee's Owner to Acquire Fuzzy's Taco Shop for $80M
- Restaurant Business: Automation doesn't have to be an all-or-nothing choice
- Restaurant Business: Here's why the nation's largest restaurant franchise is branching into hotels
MARKETING
CALL FOR SPEAKERS AND SPONSORS!
The Restaurant Marketing Summit is coming back in January 2023 (registration announcement coming soon).
Stats from 2022:
- 1,300 registrations
- 117 VIP registrations
- 3,300 registration page views
- 519 asset clicks
- 7,427 minutes viewed
Would you like to present, speak or sponsor the event? Reach out to Rev Ciancio, our head of Revenue Marketing Services ASAP: rev@brandedstrategic.net
Its an incredible way to get exposure for your brand or executives to buyers and partners.
That’s it for today! I wish you a wonderful weekend!
See you next week, (about the) same bat-time, same bat-channel.
It takes a village!
Jimmy Frisch
Co-Founder & Managing Partner
Branded Hospitality Ventures
jimmy@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_Dec 2022