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Fast Seconds (in an AI World)
Friends of Branded!
Happy Saturday and I hope you had a great week.
There’s a narrative ripping through Silicon Valley right now that AI is coming for SaaS. And to be clear, this is a narrative that’s having real-world consequences including the wiping out of billions in market cap, founders pivoting overnight, and investors asking one question: “If AI can do it, why pay for software?”
But if you take a pause, zoom out, and squint through the noise, you get a very different takeaway. AI isn’t killing SaaS, it’s compressing it, repricing it, and rewiring it.
And here’s where it gets most interesting for the restaurant industry, which has historically been late to embrace tech and innovation, we might actually be best positioned to win this cycle. This win would not be despite our being second movers, but b/c of it.
First, let’s dispel the myth that restaurants are behind on tech. Let’s call it what it is, this narrative is lazy. Restaurants didn’t lag tech b/c we’re unsophisticated. We lagged b/c margins are tight, labor is volatile, and operations are unforgiving. Most importantly, we lagged b/c we know that bad tech doesn’t just fail, it breaks our business.
Survival is widely considered the most fundamental human instinct. For restaurant operators, we built a muscle most industries don’t have. We wait, we watch, and we adopt what works.
We’re in the throes of an environment where tech is eating itself. Right now, the software world is in its own version of a kitchen fire with too many tools, too much overlap, and too little ROI clarity.
Please note, this was happening before AI started dominating the headlines. Add AI to this kitchen fire, and this is akin to the pouring of gasoline on that fire. Think about it, what used to require 5 dashboards, 3 subscriptions and 2 analysts can now be handled by one AI layer sitting on top of everything.
So no, SaaS isn’t dead, but a lot of “nice-to-have SaaS” absolutely is.
We’re in a moment where second movers have the edge and this is where the restaurant industry flips the script from being regarded as a laggard to being a sniper.
For the most part, the restaurant industry is skipping the “AI Theater” phase. Most industries are jumping in and are running pilots, buying tools they don’t need, and rebuilding tech stacks prematurely.
Meanwhile, the restaurant industry? I’ll have another beer please.
Where watching who actually drives margin and skipping the failed vendors, the overhyped demos, and the tools that don’t survive contact with a Friday night rush.
For avoidance of any doubt, AI and the restaurant industry are going to have a most meaningful relationship b/c AI loves messy businesses (and what defines a messy business better than restaurants?).
AI doesn’t shine in perfect systems, it shines where things are fragmented, inconsistent, and operationally chaotic. Does this sound familiar to anyone? (Anyone? Bueller? Bueller?)
Restaurants are well recognized as scheduling puzzles, inventory nightmares, pricing guesswork, and guest data black holes.
But here’s the key takeaway, that’s no longer a weakness (or at least not when it comes to the embracement of AI). That’s AI discipline and fuel!
Billy, we don't stink right now. We're the best team in baseball, right now, right this minute, because of you".
Branded has been hammering about the need for consolidation in our tech stacks and while there are certainly naysayers to this view and those that believe best-in-class will win over best-in-suite (respect), AI may well be the death of the “Point Solution Party.”
Restaurants today are buried in tech solutions including loyalty platforms, ordering layers, marketing tools, labor systems, and inventory systems.
Don’t hate the player, hate the game, b/c AI is changing it. AI will accelerate the consolidation of point solutions faster than any Saturday morning newsletter can do and the results will be fewer tools, smarter platforms, and intelligence layered across everything.
This is not a story about AI vs SaaS, it’s the story of AI collapsing the SaaS stack.
I like real talk (thanks MR), so here’s the dirty secret of AI. It’s getting easier to build, but it remains brutally hard to deploy. Restaurants don’t buy features, interfaces, and buzzwords. We buy proof, ROI, and references.
And in an AI-focused world, this discipline becomes even more valuable (I’d say it’s our super-power).
Of course, there’s a risk of waiting too long to engage and embrace AI and we shouldn’t romanticize it. Of course, there’s a downside to being a second mover b/c if you miss the window, and you lose labor efficiency gains, margin recovery opportunities, and data ownership. This is a real risk b/c once AI systems are embedded, these tools don’t just optimize your business, they define it.
It sounds like I’m now acting like a two-armed account (“but on the other hand”), and I know that’s not helpful. So, let’s be clear and make a bet on where this all nets out. Restaurants don’t need to win the AI-race, we need to win the AI-timing game.
The winners in this cycle won’t be the first to adopt AI or the last to resist it (it’s not that simple, even if I wish it was). The winners will be the ones who adopt it right after it works, and right before everyone else does.
Please understand, we’re watching a fundamental shift in how value is created in the restaurant tech stack and in the spirit and my embracing School House Rock where 3 is a magic number, here we go (i) AI becomes the brain; (ii) SaaS becomes the body; and (iii) data becomes the oxygen.
And the opportunity? It’s not about building more tools, it’s about owning where those tools get deployed and why, b/c in a world where everyone has AI, the edge isn’t access, it’s application.
Friends, restaurants have always been about “fast seconds” (and that was also absolutely true at mealtime in the Frischling home growing up…if you snooze, you lose, and no seconds for you). 😊
In this AI era, fast seconds is not a disadvantage, it’s the playbook b/c while everyone else is chasing what AI can do, restaurants will invest in what AI actually does for EBITDA.
And that’s how winning is done in the AI-race!
It takes a village.
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“AI is Going to Fundamentally Change…Everything”
That’s what NVIDIA CEO Jensen Huang just said about the AI boom, even calling it “the largest infrastructure buildout in human history.”
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Former Taco Bell CEO Greg Creed joins the conversation to break down how he helped turn the company into one of the most recognizable and culturally resonant restaurant brands in the world. From the now-legendary response to the “Taco Bell beef lawsuit” to the creation of breakout hits, Greg unpacks the marketing instincts and bold product thinking that fueled the brand’s momentum.
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There’s a difference between “integrations,” and actual alignment.
This week’s Shoutout goes to two Branded portfolio companies, Chowly and Ovation, for doing something deceptively simple but incredibly powerful: getting in the same room (well, podcast studio) and talking shop.
On the latest episode of Ovation’s Give an Ovation podcast featuring Sterling Douglass, the conversation zeroes in on a truth operators are living every day: restaurants don’t just serve guests anymore, they engage them digitally, often without ever seeing them face-to-face.
And that’s where this pairing hits.
Chowly sits at the demand layer, owning the digital storefront, integrating ordering channels, and helping operators drive revenue and control their customer funnel.
Ovation owns the feedback loop, capturing real-time guest sentiment, and turning it into operational action.
Different lanes. Same highway.
While I’m sure both Ovation (Zack Oates) and Chowly (Sterling Douglass) are pleased that I’m highlighting the podcast they did together, this shoutout isn’t just a podcast. It’s a glimpse into where the restaurant tech stack is heading.
Less fragmentation. More orchestration. From “systems that talk” to “systems that think.” B/c in today’s game, the winner isn’t the platform with the most features, it’s the one that connects the dots between demand, experience, and retention.
Or put differently, if Chowly helps you win the order, and Ovation helps you win the guest, then the real win is when those two outcomes stop operating in silos.
That’s not integration. That’s infrastructure. And that’s why I wanted to shoutout this podcast!
Click here to share this week’s Shout Out with your network!
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DEAL ROOM: Small Deal. Big Signal.
In a world where headlines are dominated by billion-dollar buyouts and platform roll-ups, sometimes the smartest money, and the clearest signal, comes from the smallest check written (and the boldest bet placed).
This week, that bet belongs to friend of Branded, Alonso Castañeda and his new concept, Taco Culture.
Fresh off his time at Savory Fund, Alonso isn’t just launching another taco spot, he’s underwriting a thesis and one that Branded’s believes, that culture scales faster than capital.
No massive war chest. No over-engineered tech stack. Just product, positioning, and pace (and heart, lots of heart!).
Let’s call it what it is, this is a seed-stage restaurant deal, and one that deserves a seat at the table (see what I did here David, Luke & Huck? 😊) just as much as the nine-figure transactions I typically cover.
B/c here’s the inside baseball:
Every mega-brand starts as a micro-bet.
Every institutional darling was once an operator’s gut call.
Every “platform” was once a single unit trying to make payroll.
The industry loves to celebrate scale, but scale is just proof of concept that survived.
What Mr. Castañeda is building with Taco Culture is earlier than early, but that’s exactly the point.
This is where:
Brand DNA is set.
Unit economics are stress-tested.
Culture (the real moat) is either built or broken.
And here’s the kicker for investors and operators alike, if you’re only paying attention once it’s “institutional,” you’ve already missed the best part of the return curve.
We talk a lot about “finding the next Sweetgreen or Chipotle.” The truth is that those stories don’t start in boardrooms. They start in places like American Fork, UT, with an operator, a point of view, and a willingness to go from zero to one.
Of course, big deals get headlines, but small deals build empires.
We see you Alonso and Team Taco Culture! And we want to recognize and celebrate you!
You can click here to share The Deal Room with your network!
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I overheard a couple chatting while walking down the street. Was I stalking them? No. But when I realized they were discussing where to eat, was I eves dropping? Yes.
They stopped in front of a sushi restaurant (one that I LOVE and is definitely on all the “top sushi in NYC” lists). Looked like they were going in. (Good call) But no. One person spotted the “B” rating sticker on the window… and that was that. They kept walking.
This brought back a lot of memories (and some PTSD) from when NYC rolled out the rating system and the infamous window sticker. I think you’d be hard-pressed to find a restaurant operator who would say, “Yippee, this is the best thing that ever happened to our city and restaurants.”
Not because they don’t believe in health codes. Not because they don’t keep a clean and up to code establishment. But because there is a LOT that matters and an untold story behind the checklist that will determine whether your restaurant is an A, B, C or worse… and your customers just see the rating, without context, and you may in fact lose potential business.
And yes, there is real impact. I did some Googling, and a study using NYC data (because New York or nowhere) showed that once restaurant grades are made public, A-rated restaurants see revenue increase by about 5.7%, while C-rated restaurants see revenue decline… so yes, that little letter in the window matters.
Now, I am not a political person. And before you come at me. I am not here to argue, lobby or politicize the rating system. I’m not going to sit here and tell you all about how much money being “reviewed” COSTS a restaurant, and the corresponding bills to the city, health department and legal teams for someone you didn’t ask to come to your restaurant and walk in unannounced. I’m not going to share my thoughts on the health department showing up to do their walk-through during lunch or dinner rush.
For anyone reading this that isn’t in the restaurant industry, let me give you a visual of this moment. Compare this to the scene in The Devil Wears Prada when the staff is alerted that Miranda Priestly is on her way up. The scramble is real. Put on your high heels! Throw out that croissant! Put on lipstick! Clean your desk! Don’t let her see that note! Well it’s the same thing. Also – the timing of this article and this reference happening to be the same weekend of the release of The Devil Wears Prada 2?!? Coincidence? I think not!
I digress. From the moment the inspector arrives, every employee (front and back of the house and “above” the house in corporate) stops, drops and rolls to get everything in order, as best as possible. (Oh wait, I said I wasn’t going to explain… oops.)
Let me get back on track. I’m not here to debate the point system. I’m not here to tell you how many times I’ve called my friends unsavory names (to their faces) for not wanting to eat somewhere because they aren’t A rated. But I am here to offer a fun take on this, and before you get excited… you may not like it.
I’ve wanted to write this article for YEARS! (14 exactly…). But sometimes we need a spark. Mine came from a recent headline: “Ritzy NYC restaurant Carbone hit with more health violations – while hiding its B rating.” And that was all I needed to start typing. I am not going to spend timing diving into that article, but you can read it here.
So what really annoys me about the public and consumer perception of the rating system is the irony: while someone may not eat at a restaurant because of a letter sticker on a window… their home kitchen would most likely be a big fat F. So let’s have some fun.
I went back to the old trusty DOH Violation handbook guide that I still have saved. (Why? Remember I’ve been wanting to write this for years) and revisited what restaurants get docked for in NYC… and spoiler alert… you’re not going to like this.
If you need a refresher on the point system, inspectors assign points for every violation, and they add up fast! 0–13 gets you an A, 14–27 is a B, and 28+ is a C.
You can also click here to share The B List with your network!
Don’t just scroll—click! Congratulate everyone on making the B List and send some LinkedIn love their way.
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That’s it for today!
See you next week, same bat-time, same bat-channel.
It takes a village!
Jimmy Frischling
Branded Hospitality
235 Park Ave South, 4th Fl | New York, NY 10003
Branded Hospitality is a foodservice growth platform with three integrated business lines—Ventures, Solutions, and Media. We invest in innovative tech and emerging brands, provide expert advisory and capital strategies, and amplify visibility through podcasts, newsletters, social, and events—creating a powerful flywheel that drives growth, brand strength, and lasting success.
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