Friends of Branded!
Hello December! Thanksgiving is officially behind us, and we’re now in the final month of 2022 and the sprint to year-end. It’s been an amazing year thus far, a challenging year, and an interesting year. The word “interesting” is, well, interesting and as with most things, it’s in the eye of the beholder.
My fellow investor friends talk about this being an “interesting” year and the words “correction”, “pullback”, “healthy”, “cleansing” and “necessary” usually follow in some way, shape or form.
For avoidance of any doubt, I agree with all of that, but again, similar to beauty, it’s all in the eye of the beholder. As an early-stage investor and accelerator platform focused on emerging technology and innovation companies, we have the privilege of working with entrepreneurs that believe they’ve identified an opportunity, challenge, or problem that their idea (software, hardware, other) can capture, address or solve.
Let’s be honest, entrepreneurs are at least a little bit crazy. Steve Jobs famously gave a shoutout to the crazy ones “because the ones who are crazy enough to think that they can change the world, are the ones that do.” I love that quote, but overall, that doesn’t represent my experience with entrepreneurs. These are rational, competent, and highly experienced professionals that see something and have taken the bold and brave step to go after it.
Please don’t accuse me of contradicting myself here. Even these founders must be at least a little bit crazy to see things differently, leave a good-paying job and take the leap into uncertainty and a world where there’s an off-switch.
I commend and I love the entrepreneur. They have courage, determination and take risks. They’re often creative even if they’re behavior sometimes comes across as frantic or impulsive. Starting a business is hard, really freaking hard and there’s nowhere to hide.
That’s what brings me back to the word “interesting” and the other words I used above to describe this “market.” This “market” is the blood, sweat, tears and capital of many folks and this correction is hitting many of these courageous and brave people hard. Don’t get me wrong, I subscribe to the “Godfather Rules” (and let’s be honest, the Godfather films are really the greatest business movies of all time and should be required viewing at every MBA program). “This is the business we’ve chosen” are the words made famous by Hyman Roth (and remember, Hyman “always made money for his partners”).
So while I shed no tears in connection with this correction, that doesn’t mean I’m not sensitive to the impact that this correction is having on many and specifically the 180-degree change in investor sentiment that went from growth at all costs to an obsession with distance from the pin (where the pin is breakeven).
This is where my obsession with the village comes in, the community, and the team. My unsolicited advice to all my entrepreneur friends out there, both professionally and personally, surround yourself with the best people you can. Embrace healthy tension and even conflict, but do so professionally, respectfully and in the best interest of what you’re trying to accomplish together with your village, community, and team. Be courageous, determined, and passionate, but also be kind, humble and embrace feedback (especially when it’s not complimentary). Most importantly, keep moving forward!
Okay, it was a busy week, and we have a lot to cover, so as always, let’s go!
Articles that caught my eye combined with some Branded commentary and insights.
If you ask any restaurant operator what the biggest challenges they’re currently facing are, I’m certain you’ll hear (i) labor; and (ii) supply-chain. Our industry has seen an exodus of about one million workers. 34.6% cite wages as the reason for leaving. Still, the longer and more truthful answer is that the pandemic was an awakening that these workers weren’t getting enough satisfaction from these jobs or what they felt they deserve (and let’s face it, there are other ways to make money outside of working in a hot kitchen or dealing with guests with unrealistic expectations).
This article by Connie Gentry highlights what regional operators are doing as they shift from “decisions of desperation” to a “whole new silver lining playbook.”
As the saying goes, “necessity is the mother of invention.” The labor shortage has impacted the hospitality industry to an even greater detriment that the supply chain disruptions and inflationary food prices. This requires the industry to be as creative and innovative as possible to hire, retain and also eliminate human capital. That’s right, eliminate labor that is more associated with chores and can be accomplished through technology and innovation. By freeing up your employees from these outsourceable chores, they can focus more on your guests and their experience. Technology is NOT a job killer; it’s going to allow you to use your labor more intelligently and help your employees work smarter and be more efficient.
Look at what Shake Shack is doing with kiosks (shake-shack-add-kiosks-every-location). This fast-growing brand anticipates opening 65-70 new stores in 2023 and one of the biggest questions CEO Randy Garutti has is “how the heck do we staff these Shacks?” According to Kate Fogertey, Shake Shack’s CFO, kiosks represent a “really great lever” for Shake Shack to lean on to help streamline labor and address the front-of-house opportunity. Fogertey added that a good portion of Shake Shack’s guests prefer kiosks over traditional cashiers when given a choice. In many locations, Shake Shack has five or six kiosks alongside one or two cash registers. “And you see a number of people … instantly go toward the kiosk,” Fogertey said. “If you haven’t used one before, I highly encourage you do.”
Branded Partner Company boast- Bite: This operator-centric platform allows restaurants to use its proprietary algorithm (Bite Lift) to maximize order size and throughput. Bite’s intelligent recommendations will increase check averages by 20% or more.
As owners of full-service restaurants in NYC, our friends at Technomics, a research and analytics company are making a prediction for 2023 that we love – a rise in in-person dining! Technomics expects on-premise dining to continue to bounce back as consumers “yearn for in-person experiences DESPITE financial difficulties.”
Technomics Guru-in-Chief (okay, his official title is managing principal), Joe Pawlak predicts that "the industry is expected to face some stumbling blocks going into 2023, led by weakened consumer sentiment and ongoing pricing difficulties, but as the year progresses, the situation is expected to moderate, and the industry will benefit with stronger sales and traffic."
Pawlak and his team recognize that while inflation and the increases in interest rates have created the threat of a possible recession, Technomic’s first trend predicts the impact on the foodservice industry to be relatively mild. Taking a negative and turning it into something positive for the industry? Technomics estimates that rising grocery prices will actually contribute to the closing of the value gap between dining at home or at a restaurant, incentivizing consumers to eat out. Technomics goes even further and believes that while visit frequency may decrease, consumers will be more likely to maximize each visit and spend more on each meal.
One more point from the article and Technomics second prediction, the return to in-office work! I have strong feelings about remote work and while I respect the importance of optionality and flexibility, the brain-drain that will continue as a result of work-from-home and the near impossibility of building company culture with a remote workforce will have companies bringing their employees back into the office (okay, maybe NOT 5 days a week, but people will be coming back to the office). That’s good news for so many businesses that support and depend on office workers including restaurants.
Branded Partner Company boasts – Brizo Foodmetrics and Ingest: I love the crew at Technomics, but I can’t give them a shoutout without mentioning Branded’s own commitment and interest in the data and analytics space. Brizo is more than just generic data. Brizo is BIG data analytics for foodservice suppliers that will help you know your customers better and drive growth. As for Ingest, every restauranteur I know talks about their experience, gut and instincts when it comes to decision-making. I agree with the criticality of those things, but I also guarantee that their experience, gut and instincts will be smarter and better when they leverage data from Ingest.
At Branded we LOVE when our partners, partner! I'm excited to announce that two of our portfolio companies- Ovation and Incentivio - have teamed up!
Ovation, a 2-question, SMS-based feedback solution used by restaurant brands to help them connect with guests and drive revenue, most recently partnered with Incentivio, a fully automated guest engagement platform.
Restaurants using Ovation and Incentivio will now be able to extend guest loyalty and ordering beyond brick-and-mortar walls, and smoothly gather actionable feedback from customers wherever they are.
When guests at participating restaurants order through Incentivio, they will automatically be sent a text approximately when they’ve finished their meal asking them about their experience--just like a table touch. Through Ovation’s quick two-question survey, guests are connected directly to managers, leading to resolved concerns and improved operations. From there, satisfied customers are encouraged to create more direct orders, redeem promotions sent through email and text message marketing, and build stronger relationships with restaurants through Incentivio’s loyalty solutions.
Voted the #1 guest feedback platform in a nationwide RestaurantOwner.com survey, Ovation uses a 2-question SMS-based survey as a Digital Table Touch™ that has redefined guest feedback. Through frictionless integrations with online ordering platforms and other tools, Ovation allows restaurants to easily resolve guest concerns in real-time, get more 5-star reviews, discover insights to improve, and drive revenue.
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
One driving factor that lead us to open Bworks, Branded's co-working space exclusively for the foodservice industry, was the many chance encounters the space would bring to our team and tenants. This week I want to highlight our good friend Chris Keating, EVP Conferences at Winsight, who continues to be a megaphone for the industry. Chris took a trip to Bworks recently and happened to dive into a casual conversation with our marketing team. He shared, "What I love about hospitality is that it's the only industry that can boast that the top 6 restaurant companies in the world are US companies. You won't find that in any other industry." With that in mind we're sharing today some of the top-performing US restaurant companies.
(Note: Data as of 12/02/2022 at 4:00PM)
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.
Tuesday, November 29th- Hospitality Hangout: In the latest episode of Hospitality Hangout, Michael "Schatzy" Schatzberg “The Restaurant Guy” and Jimmy Frischling “ The Finance Guy” chat with Aaron Noveshen, Founder and CEO of Starbird and Founder and Chairman of The Culinary Edge.
The Culinary Edge is a food and beverage innovation firm that was started by Noveshen over twenty years ago and Starbird is a fast-casual chicken chain that their team created after identifying chicken was about to grow significantly.
The guys talk to Noveshen about the success of marketing Starbird’s limited-time offers, better known as LTOs including the Cali Bacon Dutch Crunch. The Dutch crunch bread is baked in-house and the chicken sandwich has made it to the menu. Novenshen says that their secret sauce is their Star Sauce.
Thursday, December 1st - Tech This Out: Tech Out this excellent industry published by Business Insider highlighting the 29 FoodTech Power Players of 2022 revolutionizing how restaurants operate and deliver amid a looming recession.
Insider's 2022 list spotlights FoodTech leaders who are helping restaurants take their digital business to the next level as they face a looming recession. We're thrilled to share that Branded's CMO and Partner Julie Zucker has been featured as well as 5 of Branded's portfolio company CEO's! Congratulations to Tim McLaughlin of GoTab, Bo Davis of MarginEdge, Frazer Nagy of Tablz, Clayton Wood of Picnic and Steven Simoni of DoorDash (founder of Bbot)!
At Branded we believe it truly takes a village and this is a true testament to the amazing things our partners are doing for the industry. These CEOs are working hard and innovating at a rapid pace to help restaurants bring their operations to the next level.
Click here to read the full article or check out the highlights below!
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!
- GoTab: GoTab Powers Innovative Food Hall Experience For Award-Winning The Golden Mill
- Ecotrak: Introduction to Techtrak
- PourMyBeer: PourMyBeer & GoTab Integration: How It Works
- meez: Recipe Contest
- MarginEdge: Using MarginEdge for Restaurant AP
- Minnow: Avoiding Food Delivery Chaos And Hangry Tenants: Why Buildings Need A Food Delivery Management Solution
- Galley: The One Thing That Runs The Food World
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!!
- Restaurant Business: Here's Why the Nation's Largest REstaurant Franchise is Branching into Hotels
- QSR: Dickey's Barbecue Rolls Out Gift Card Bonus Offer
- NRN: Why Washington D.C.-based Little Sesame wants to become a CPG powerhouse
- Restaurant Technology News: Tattle Joins Forces with Como to Empower Restaurant Operators to Capture and Leverage Guest Experience Feedback
Here's a restaurant marketing tip from our restaurant evangelist, Rev Ciancio:
Want to know how to get a 29% increase in sales on your most popular item in just 30 days?
We figured out how to do this at my restaurant, Handcraft Burgers & Brews with ONE SIMPLE MOVE.
To find out how we did it, check out this post on LinkendIn
If you ever have any questions about restaurant marketing best practices or hurdles you've hit, reach out and ask me: email@example.com
PS Congrats to Rev and everyone at Handcraft Burgers & Brew for hitting their one-year anniversary this week! If you haven't been there yet, it's right across from the Bryant Park Holiday Market in NYC!
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!
Co-Founder & Managing Partner
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_Dec 2022