Friends of Branded!
Happy Saturday and I hope you had a good week.
It’s been one week since the Hamas terrorists attacked Israel and the violence and atrocities are unimaginable, sickening and yet, here we are.
Before I jump into the H^2, I want to simply say that in my opinion, this is NOT an Israel issue or even a Jewish issue. You do not need to be either Israeli or Jewish to be outraged by this violence and more than that, by this pure evil. This is a human issue, and you therefore only need to be human to care. I see and continue to watch and read about people taking sides. That makes absolutely no sense to me b/c there’s only one side and that’s anti-Hamas.
As a father, a husband, a friend, and a human, it’s heartbreaking to see these horrific acts of terror and I stand in solidarity with the people of Israel and all those wishing for peace.
So how does one transition from the realities, challenges, and horrific events this past week and move into the Top of the Fold section of the H^2, like the slogan Nike made famous, you just do it!
This week the Branded team along with several of our portfolio companies had the privilege and pleasure of attending Citi’s 8th annual Emerging Restaurant Forum ("ERF"). There will be more on that below in the Shoutout section below, but several of the key topics discussed and covered at the ERF are the drivers of this week’s Top of the Fold section.
The agenda was LOADED with success stories (Danny Meyer + Union Square Hospitality Group and Brett Schulman + CAVA) along with a bevy of emerging restaurant brands that I expect will prove to be ones to watch (and for Branded, maybe ones to invest in as well). 😊
There was also a wealth of emerging technology companies in both in the audience and on the stage and again, Branded was proud to have some of our portfolio companies attend this event with us.
In addition to GoTab and MarginEdge who joined me on-stage (along with Big Chicken) we had Andrew Nash, CEO at Targetable, Tom Lawton, Chief Revenue Officer and Brett Spiegel, Head of CX at Chowly , Rajat Bhakhri, CEO at Incentivio and Daniel Meth, CEO at Ingest as welcomed and valued attendees at the Citi ERF event!
I was afforded the opportunity to moderate a panel discussion along with my friends and partners Josh Halpern, CEO at Big Chicken, Tim McLaughlin, CEO at GoTab and Bo Davis, CEO at MarginEdge.
The feedback on this panel was overwhelmingly positive and a specific comment I received from several of the attendees was that our panel discussion was one that seemed akin to a group of friends that were just hanging out having a discussion on our topic – “Using Operator Lessons to Build Better Tech.” Please note, it was not lost on me (and it was highly appreciated) that the line “It takes a Village” proceeded the title in the program. Well played Citi, well played. 😊
I made several comments during this panel and certainly took a few shots at humor. Some jokes landed, while others missed their mark. One of the comments I made that I was completely serious about, garnered some laughter. While that’s cool with me, as my comment may have been framed humorously, it was also completely true. In the sport of golf, there’s a saying that “you drive for show, and you putt for dough.”
In the restaurant business, Front of House ("FOH") is the “show,” and Back of House ("BOH") is the “dough.” Laughter aside, as a restaurateur, you have NO CHANCE to succeed in this industry unless you’re succeeding in the Back of House.
The Back of House encompasses all the behind-the-scenes areas that our guests don’t see. Think of the BOH as the central command center and where food preparation takes place, inventory and storage are maintained, where food is prepped, cooked, and plated. The manager’s office and break areas of some kind are also part of the BOH. While no two restaurants are exactly the same, they all share these BOH characteristics.
To be completely transparent, I’ve had MANY jobs in the Front of House including bus boy, barback, waiter and bartender, but I’ve NEVER worked in the Back of House. Despite my lack of actual BOH experience, trust me when I say this is where the winning and losing takes place. As a former FOH-player only, I can share this self-effacing image with a great deal of confidence.
Readers of the H^2 are fully aware of my view that the hospitality industry is among the most misunderstood industry as any I’ve ever experienced or invested into. This is b/c everyone thinks they understand it. There’s a false sense of familiarity that has understandably been embraced as a result of the relationship between most guests and hospitality venues and b/c people genuinely feel they can feed themselves.
There are, however, very few businesses where the manufacturing (BOH) facility is in such close proximity to the retail (FOH) side of the operation. That alone is a truly unique and distinguishing aspect to the hospitality industry.
In an earlier panel to the one I moderated, titled “How Robotics are Transforming the Restaurant Experience,” from the audience (and sitting in the farthest seat in the back of the room, like I did in High School), I asked the panelists the question of whether it’s the headwinds or tailwinds that are winning out in the battle of the embracement of automation. This strong panel moderated by Shenwei Zhu from Citi, included Jason Valentine, CSO at Botrista; Felix Zhang, Founder & CEO at Pudu Robotics and Andy Siegel, Partner & CMO at RoboBurger.
Some of these headwinds include, but aren’t limited to, higher interest rates and the cost & friction of embracing automation (versus the lower CapEx associated with software). Some of the tailwinds include continued increases in the cost of labor and the overall shortage of labor. There was also a good discussion about mental health, wellness and how automation can relieve employees of tasks that are monotonous, disliked and often lead to job dissatisfaction.
Overall, the panelists expressed that these tools and automations were not to be viewed as job-killers, but rather represent an opportunity to free-up the staff from less interesting tasks and a higher opportunity for job satisfaction. Even if these robots, tools and automations were in fact job-killers, I’m sorry (not sorry), but I would only be prepared to debate this issue around the hospitality industry’s need to embrace automation with those that don’t use EasyPass and continue to wait online to pay a toll-booth worker or those that do not pump their own gas and instead pay an incremental fee for someone else to do it for them.
The hospitality industry can’t be prevented or looked down upon b/c of its embracement of technology & innovation or held to a higher standard than every other industry that has gone through their own respective technology transformation (or revolution). The hospitality industry has been among the slowest to embrace technology & innovation and now that the transformation is underway, we can’t stop the meaningful progress being made and momentum that’s building.
I personally believe that the hospitality industry is now embarking on a transformation that so many other industries have already gone through. Restaurants (in-person, off-premise, ghost, dark, or otherwise), like so many of these other industries, are tech-enabled businesses, but NOT technology businesses. Technology is playing a CRUCIAL role in the optimization of efficiencies and the improvements in margins that come as a result, but this industry is first and foremost, about hospitality, the food & beverage and the guest experience.
It’s understandable that most guests are unaware of the sheer magnitude of technology that resides in restaurants and surveys we’ve run suggest there are anywhere from 12 to well over 20 Independent Software Vendors (“ISVs”) in any given venue. This doesn’t even include the equipment and the now connected kitchen which is comprised of IoT (Internet of Things) solutions. I know I’m starting to go down a path that most guests don’t get to see, but you’re going to be hearing much more about the connected kitchen and the range of benefits it creates for operators.
As an operator-first investment platform, we need to listen to our Hospitality Network which is comprised of operators from all parts of the industry. They’re telling us that their focus is shifting to the BOH and this includes both software, hardware (aka: kitchen equipment) and the blending of the two, the connected kitchen. With our Network helping to direct our investment activities, I want to share some of the themes that play a big role in the BOH of restaurants and in Branded’s investment verticals.
I understand that when you highlight a few, you take the risk of disappointing many, but no one ever said this newsletter was about my wanting to win a popularity contest.
- If you’re going to talk about the BOH, you’ve got to start with the kitchen equipment itself. Middleby is the dominant player in the world of kitchen equipment, and as the industry moves into the connected kitchen, we expect Middleby to maintain this dominant position and to lead us forward.
- Kitchen Display Systems (“KDS”) is the digital screen that manages customer orders for restaurants. Paper order tickets were replaced by KDS and that allows restaurants to organize, prioritize and track orders. QSR Automations is the gold-standard here and their back of house solution improves kitchen workflow and communication. How important is the KDS to an operator? The right provider literally reduces the overall stress on the kitchen staff by lowering ticket times and allowing for faster table turns. Branded is super proud that Curbit, an advanced, real-time integration with AI-powered dynamic order throttling is succeeding b/c it allows operators to unlock even greater value from their KDS.
- Back office and specifically P&L details and accounting are mission critical for operators, and we put forward MarginEdge and Restaurant365 as the leaders in the space respectively. Both of these companies are LOVED by their customers b/c of the value they bring and the stress they relieve.
- Food costing & recipe management are not just important to the chef and kitchen team but are one of the most important line items on an expense report and specifically one of the key metrics when it comes to looking at a restaurant groups performance relative to its peers and the industry. meez is the company we lean on heavily for this area of expertise as this beloved BOH software provider ensures that your kitchen runs smoother with accurate food costing, quicker team training and better recipe organization.
- Purchasing & supply chain management remain an area where tremendous opportunities exist because of the continued antiquated nature of how manufacturers, distributors and operators engage with one another. This is an area Branded believes is ripe for disruption and is of the utmost importance for SMBs and Independents. Enterprise level restaurant groups get great breakpoints, SMBs and Independents do not. Branded has partnered with Cut+Dry and Simple to digitize, modernize and democratize the procurement workflow.
- Inventory tracking & controls weigh heavily on operators and Galley Solutions, a purpose-built solution for foodservice operators is working to prevent food waste, drive operational efficiency and empower the kitchen staff.
- Digital food temperature & automated task management solutions ensure hospitality operators are complaint and deliver superior customer experiences in every location. Blanket continues to help operators confidently scale and grow store counts by leveraging its digital operations software and ensuring consistent brand representation in every location.
I know the above had some density to it and I was unable or unwilling to insert some pictures to break it up. The BOH is getting greater attention, becoming an even bigger focus of our Hospitality Network and is a sector of the industry we’ve not only leaned into as investors (as highlighted above in many of the companies included), but will continue to be a major area of our focus and an important vertical for our new funds.
In the spirit of the H^2, let me end this week’s Top of the Fold with one of the worst misunderstandings that I continue to see among guests. Since I wrote about BOH, I think it’s incredibly appropriate here.
The misunderstanding at issue: speaking firmly or yelling at or scolding a server with the intent of “sending a message back to the kitchen.” No one has ever been successful with this strategy and in fact has only put on full display their own ignorance of how a restaurant operates.
This one misunderstanding checks two key boxes. First, don’t do that. It’s not appropriate and it's wrong. That should be enough, but I’ll continue. Second, your message isn’t going anywhere and is only going to make your own experience at the joint less enjoyable (and will probably make your server’s experience with you less enjoyable as well). The server is NOT going to the kitchen to express your displeasure and disappointment. If there are issues, they will be dealt with, but the idea that your “tough message” is going to land in the kitchen is silly and again, it only shows ignorance about the workflow and relationship between the FOH and BOH. Also, yelling at a server just signals that you sux.
You want a free tip on how to improve your experiences at restaurants? Be nice. Be understanding. Treat the staff as people that you’re about to have a dining experience with and hopefully enjoy their restaurant. That alone will go a long way.
And in a world where there is so much ugliness right now, let’s all be human and treat others with care, kindness and decency. Let’s try to be a little nicer to one another, be a source of good and be someone’s light.
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.
This week's winner of the Where in the World is Branded, goes to our own partner and Branded's Chief Operating Officer, Mr. Matt Lerner. He's showing off our new winter hat (which comes in both black and white)
I'm not sure if the launch of this photo contest is the cause of the following, but friends of Branded found this post on a website called Mercari.
Before anyone purchases a piece of Branded swag in order to participate in this contest, just shoot a note to our team and we'll get you something.
As for the seller on this website, Mr. Justice Jm Mann, I'm not mad at you at all. In fact, I'd like to discuss a job offer and if you'd be interested in working in our to be launched "retail department."
To participate in this weekly contest: please e-mail our marketing team at 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!
This week's shoutout is a simple one and it goes out to our friends at Citi who not only organized and hosted such an amazing event, but were incredibly generous to Branded and allowed us to play a role and bring some of our portfolio companies and friends along with us.
True story, I attended Citi's Emerging Restaurant Forum ("ERF") four years ago and was a guest of a guest. I asked a few questions during the sessions and was approached by a member of the Citi team who wanted to know who I was and who brought me.
That led to my meeting Brian Anton, Citi's Global Head of Retail and Matthew Daniel, Director, Global Retail.
Over the last few years, conferences have been attended where Citi and Branded have traveled and attended. Conference calls, lunches and dinners have ensued as the two teams continued to explore potential areas of collaboration.
What could Citi, an over century old global banking powerhouse and Branded, an emerging investment firm exclusively focused on early-stage companies in the foodservice and hospitality industry do together?
Do Major League Baseball teams have farm systems? IYKYK
The entire Branded team would like to thank our friends Brian, Matthew, Susannah, Taylor, Helen and the rest of this amazing ERF team for including Branded, once again, in your event. It's a special event and we appreciate you.
In the photo above of my panel, you may have noticed my blue crocks.
Here's a better view of my footwear I took to the stage at the 2023 ERF event. These glorious shoes were a gift at last's event and my wife told me I'd NEVER wear them outside our apartment. She was 100% correct, until Thursday this week! 😊
ACG MIDDLE MARKET WEEK
ACG NY's Middle Market Week will bring together leading global middle market dealmaking professionals to develop and enhance their dealmaking activities, strengthen their long-term relationships, and provide numerous opportunities for networking. Make sure you are in New York for this can’t miss week of non-stop deal opportunities November 6th through November 10th.’
TODAY'S TRIVIA
Answer also revealed at the end of the newsletter
BUSINESS
Unlocking the Power of 'Maybe' in B2B Software Sales: A Guide
By: Seth Temko, Solutions Services Partner at Branded Hospitality Ventures
Salespeople work hard to get prospects to answer ‘Yes’ or ‘No’. But in B2B sales, especially software sales, there are more response options than this simple binary. More organizations (and individual salespeople) need to be equipped to handle ‘Maybe’ and ‘Not Now.’ Read More
Digital Restaurant Association
We champion restaurants to thrive in a digital world
FINANCE
Eater, Resy Founder Receives Major Investment in Attempt to Democratize Restaurant Loyalty
By: Noah Stern, Associate, Branded Hospitality Ventures
A great staff member can remember certain details personalizing a customer's experience. One founder is attempting to take this one step further by not only automating the collection of these preferences, but then rewarding the guest for their loyalty. Read More
Restaurant Industry Movers in the Market
—Data as of 10/13/23
Serve Up Hope with CORE
Children of Restaurant Employees is a national non-profit and direct provider that is dedicated to serving food and beverage operations employees with children. CORE provides financial relief when the restaurant employee, their spouse, or child faces a life-altering medical crisis, injury, death, or natural disaster. To learn more about how CORE helps, and how you and your company can get involved, click the button below
TECHNOLOGY
Mastering the Illusion: 4 Secrets to Winning Customers Loyalty
By: Julia Suchocki, Partner at Branded Hospitality Ventures
Attention, Attention, Attention. When you really start to analyze it, we come to the realization that virtually every action we undertake is besieged by elements vying for our focus. Even if it means just a second of our time. Think about it: You wake up to the blaring alert of your phone, only to find the latest news interspersed with relentless advertisements, all clamoring to sell you something. As you walk to the subway, you are surrounded by countless billboards, each one dedicated to enticing you with the promise of the next must-have product. Attention has consistently been, and will remain, the driver of profit. Read More
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
6 Top Takeaways from Fast Casual Executive Summit 2023
By: Rev Ciancio, Head of Revenue Marketing at Branded Hospitality Ventures
Fast Casual Executive Summit just concluded in Louisville, KY. This is a show for proactive brands and proactive thinkers and I'm giving you the pivotal takeaways that are set to redefine the fast-casual landscape. Read More
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!
- Yumpingo: Retaining Your Best Customers: Key Strategies for Restaurant Success
- Incentivio: Predicting Customer Churn in the Restaurant Industry
- Ovation: Learn how to strengthen restuarant weaknesses and fortify strengths with the author of ForkFight.
- Brizo Foodmetrics: How to Scrape Restaurant Data
- Curbit: Microsoft Veteran Joins Curbit as CEO
- Spendgo: 4 Key Strategies to Successfully Launch a Loyalty Program
- Specialty Food Association: Mighty Quinn’s Barbeque Wins sofi™ Gold Product Award in Barbeque Sauce
- GoTab: Ohanafy/GoTab-How Technology is Transforming the Customer Experience in Breweries
- Hone: A Guide to Restaurant Profit Margins
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!!
- QSR Magazine: Schmackary’s Signs Franchise Agreement in New Jersey
- Fast Casual: Why restaurants don't really need fully automated kitchens
- Business Insider: CMO Insider's new advisory council includes marketing leaders from Mastercard, Sesame Workshop, Indeed and more
- Fast Company: Meet the zombie brands: Why Blue Apron, Allbirds, and others are still alive, only different
- Nation's Restaurant News: The restaurant industry has finally returned to pre-pandemic employment levels
- Market Watch: PepsiCo’s stock buoyed by better-than-expected earnings after company again raises prices
- Forbes: Inside Paypal’s Billion Dollar Battle For Payment Processing Dominance
- Market Watch: Apollo to buy struggling owner of Wagamama chain for nearly $900 million
ANSWER: 70%
70% of all U.S. restaurants are single-unit operations (1) While the big chains employ a large percentage of restaurant workers, there are far more single-unit restaurants than chain restaurants in the U.S. The National Restaurant Association found that 70% of all eateries only have one location.
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 October 2023