Jun 1, 2024 11 min read

I Need More Cowbell!

I Need More Cowbell!
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Friends of Branded!

Happy Saturday and I hope you had a great week!

I realize that I’m more than a little obsessed with the digital transformation that is taking place in the hospitality industry, and I appreciate you all putting-up with this passion of mine.

For whatever it’s worth, I’m also obsessed with tonight’s Rangers vs Panthers game 6 at 8pm in Florida and I’m looking for our boys to channel their own 2024 version of Mark Messier's 1994 magic (it’s your turn and time gentlemen)!

It’s not lost on me (and I hope not lost on any of you) the unique opportunity that we all have to be part of an industry (that is incredibly large, fragmented and still very much antiquated & analogue) that is undergoing a most meaningful transformation.

I know we all wish the topic of the global pandemic was completely behind us (and leave it to me to keep this topic in fresh in our e-mail boxes on a Saturday morning), but that’s unfortunately not the case. Away from the health issues (which of course are the most important issue), from a hospitality business perspective, the pandemic contributed to a seismic shift not only in consumer behavior, but also exposed issues, challenges and opportunities for foodservice operators, suppliers, and manufacturers.

The pandemic changed consumers' food purchasing patterns and that very much includes specifically food delivery (and everything associated with off premises dining), digital services and the myriads of food options and venues that our guests can purchase prepared meals from. More than anything else, this industry witnessed both guests and operators not only become open to technology being more prevalent in our dining experiences but pushed both parties to lean into and embrace it.

Change is of course hard, but the restaurant industry alone (b/c readers of the H^2 know that I consider the hospitality industry to be far more expansive than just restaurants and includes all venues that sell and serve F&B) has rallied back with the industry forecasted to reach $1 trillion in sales in 2024.

It's like this image was made for the restaurant industry's 2024 forecast!

A few other factoids that get my attention and continue to feed my passion (obsession?) for this industry include the restaurant industry’s demand for human capital and let me tell you something (Lucy) we are hiring! Our workforce is projected to grow by 200,000 jobs for total industry employment of 15.7 million by the end of 2024. Almost 50% of operators claim to have a need for more employees to meet customer demand.

For all those that have expressed to me that Branded's work with emerging tech & innovation will takeaway jobs (and have tried to shame me for my focus on this digital transformation), that previous factoid about job creation and the demand for human capital is my mic drop in response to that. 😊

It goes without saying that all is not rosy in our industry or without challenges. The challenges for operators quite high:

  • 45% of operators expect competition to be more intense than last year.
  • 98% of operators say higher labor costs are an issue for their business.
  • 97% cite higher food costs as an issue for their business.

Please note, when 97% and 98% of any industry’s operators are of the same opinion and taking a unified position, I think you can essentially say its 100% and the 2% or 3% on the other side didn’t read the survey question correctly (just saying). 😊

Another challenge are the consumers (our guests) being pushed by higher prices with nearly 50% of consumers being value-minded when it comes to dining at restaurants.

But of all the statistics I’ve been following (and yes, there are quite a few), here’s the one I love the most (yes, the MOST) – 90% of consumers say they enjoy going to restaurants. The enjoyment of a meal, the social setting, and the experience that is hard to replicate at home, is still something the consumer craves and deeply desires. Seriously, take a moment to think about getting 90% of Americans to agree on anything right now.

So why is today’s theme about needing “More Cowbell?”

Of course, I love this legendary Saturday Night Live skit and any opportunity to bring Will Ferrell and Christopher Walken into the H^2 is something I’ve always aspired to do (and if you’re not familiar with this skit, I just happen to have an official version of it here for you to enjoy: More Cowbell - SNL).

But in all seriousness, the cowbell is a supporting (as opposed to a leading) instrument in any band and is my Top of the Fold theme as a metaphor for the importance of technology and innovation in the hospitality industry.

Technology & innovation are supporting actors to the people, food & beverage that drives the hospitality industry.

You can call me music producer Bruce Dickinson and Branded’s portfolio companies and the many emerging companies we’re working with Gene Frenkle, b/c the industry needs more technology! (Please note, Bruce Dickenson and Gene Frenkle are the leading characters in this SNL skit. Did I overplay this reference? I think I might have). 😊

The National Restaurant Associations’ Technology Landscape report overwhelming tells us that the restaurant industry is poised to add more technology in order to gain efficiencies and improve the customer experience.

Pulled from The Hospitality Technology Network's article:

  • 63% of all restaurant operators surveyed plan to devote resources to digital marketing/location-based marketing.
  • 47% of operators plan to use technology and automation to help with the current labor shortage, and it will become more common within their segment (44% full-service, 49% limited service).

The report also shared that “gig workers” are WANTED and in demand as 25% of restaurant operators surveyed said that using JIT (just-in-time) workers to fill staffing will become common in their segment in 2024. The move towards more gig workers comes as the industry continues to face labor shortages.

I know I’ve mentioned this before (and often), but California’s minimum wage increased to $20 per hour for fast food workers (that went into effect on April 1 and that was no joke) is part of this seismic shift. The regulators threw a dart when it passed the Fast Act that requires fast food chains with 60 or more locations nationwide to meet the wage increase. I’ll give the regulators the benefit of the doubt that they meant well, but the Fast Act will accelerate the embracement of kiosks and digital ordering (thank you CA regulators!).

As the NRA’s report makes clear (and Branded agrees and embraces), technology can help address labor challenges by automating recruitment and scheduling systems, improving productivity in the kitchen, and providing opportunities for temporary workers.

But before you question or challenge my above mentioned “mic drop” (thank you Bryan Cranston for allowing me to use your image) hospitality operators believe that technology will augment rather than replace human labor in the restaurant industry.

Operators, this is for YOU, the following is important and must be seriously considered when you’re exploring how and what technology to embrace.

You know that our industry is not a “one size fits all.” There are generational differences that will determine how your guests embrace or desire engagement with technology. If your brand’s ideal customer profile (“ICP" for those in the bizz) is a Gen Z, Millennials or Gen Xers, they’re ready, willing and able to embrace tech (and I dare say, if you asked Schatzy’s 3 young adult sons, they prefer to dine at tech-enabled restaurants). If your brand caters to Baby Boomers, less than half want to be forced to use digital services and the majority would prefer not to do so).

Not Schatzy's Family

With attribution and pulled directly from the Restaurant Technology Landscape Report 2024: report:

  • More than 3 in 4 operators say technology gives them a competitive edge.
  • 55% of operators are planning investments to improve their service areas, while 60% are looking for technology that will enhance the customer experience.
  • 16% of operators plan to invest in AI integration (including voice recognition) in 2024.
  • 82% of Gen Z adults are comfortable placing an order at a limited-service restaurant with a smart phone app.
  • 65% of all adult consumers would be comfortable paying their check at a full-service restaurant with a computer tablet at the table.
  • 57% of operators plan to invest in loyalty/rewards.
  • 5% of operators plan to invest in robotics.
  • 3% of operators plan to invest in drones/autonomous delivery.

Yes, we (the hospitality industry) need more cowbell (technology) and “guess what! I’ve got a fever, and the only prescription is more cowbell (technology)!”

It takes a village.

Today’s shoutout section goes to Branded’s portfolio company, Humanly.io, the market’s leading conversation AI platform for recruiting teams.

Readers of the H^2 know Branded’s belief in the consolidation that needs to take place and is taking place in our industry and this week, Humanly announced its acquisition of Teamable, a key player in the talent acquisition industry.

This strategic move solidifies Humanly's position as an end-to-end solution that empowers talent acquisition teams to excel at every stage of the recruitment process.

Pulled from the press release, the acquisition of Teamable enables Humanly to offer customers a complete suite of AI-powered tools to source, attract, screen, schedule, and convert candidates, at scale. According to industry experts, AI is rapidly transforming the recruiting landscape, enabling companies to identify, attract, and engage top talent more efficiently than ever before. By joining forces, Humanly and Teamable are poised to lead this transformation, offering customers a comprehensive suite of tools to streamline their recruitment processes and drive better outcomes for candidates and recruiting teams.

Branded is thrilled to be partners with our friend and Humanly’s CEO, Prem Kumar and his vision of making streamlining the recruiting process.

According to Mr. Kumar, “[Humanly's] acquisition of Teamable marks a significant milestone in our journey to empower talent acquisition teams. Together, we are redefining talent acquisition by providing customers with the tools they need not only to find the best candidates but also to engage and convert them effectively. We are making the dream of posting a job and having qualified candidates appear on your calendar – without the manual effort in-between – a reality. This is a huge step towards delivering exceptional value to our customers.”

In the rapidly evolving landscape of HR tech, Humanly's acquisition of Teamable marks a pivotal moment. Humanly will integrate Teamable's capabilities into their AI-driven platform. The Humanly team views the acquisition as more than “simply” an acquisition, it’s advancing a vision. Being the first AI-powered end-to-end recruiting solution means more than just innovation; it's about leveling the playing field and providing cutting-edge solutions historically not available to mid-market organizations.

Humanly is committed to providing operational insights that are holistic, recognizing that point solutions lead to fragmented data and poor experiences for recruiting teams. Humanly was founded around the belief that customers deserve a single tool to engage with candidates seamlessly across their journey.

This vision is about more than tracking across recruiting efforts, it’s about enabling human connection and timely hiring interactions. By designing its tool with candidate experience at its core, Humanly ensures that hiring teams no longer need to juggle different solutions for each interaction, ultimately leading to a cohesive experience and integrated data.

When Branded thinks about operator-centric technology companies, Humanly stands out as one of our best examples!

Congrats to both Humanly, Teamable, and all of its current customers and the futures customers that will be embracing this platform!

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.

In today’s episode of Hospitality Hangout, Michael Schatzberg, “The Restaurant Guy,” and Jimmy Frischling, “The Finance Guy,” are joined by Zack Stein, co-founder and CEO of Supply Caddy.

Zack shares his journey into hospitality, followed by years in venture capital focusing on early-stage startups. He discovered his flavor in CPG (Consumer Packaged Goods), garnishing his experience with a passion for creative packaging. With Supply Caddy, he’s now cooking up innovative packaging solutions that are as appealing as the dishes they encase, ensuring every takeout and delivery experience is a feast for the senses.

You can tune in on SpotifyAppleAmazoniHeart, or your favorite listening platform!

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That’s it for today!

See you next week, (about the) same bat-time, same bat-channel.

It takes a village!

Jimmy Frischling
Branded Hospitality Ventures
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

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