Friends of Branded!
Happy Saturday and I hope everyone had a great week!
As we brought 2023 to a close, I said in the last edition of the year, that the H^2 team would work to keep raising our game, respect this community we love and try new things.
So, in the spirit of my favorite movie about a therapist and a gangster (that's going through a few things), this week the H^2 is keeping it fresh and trying something new.
I present to you, for the first time, “what am I reading in the world of foodservice and hospitality.”
The inspiration of this week’s theme came from the many people who share articles with me that they come across their desk and that they thought I would enjoy and be interested in. Several of these folks send me articles with the disclaimer that it might be too basic or assume I’ve already seen it. No such passivity, preludes or otherwise is ever needed.
To the folks that share articles with me, all I have to say is “thank you,” that I appreciate you taking the time, and your thoughtfulness in sharing information that you feel might interest me. Having you think of me when you come across foodservice and hospitality articles is a gift and I appreciate you for it.
Without further ado, here goes nothing and my using this week’s Top of the Fold to share some of the articles and specifically journalists that I enjoy reading, lean-on and value. I may be responsible for this weekend ‘read,’ but I’m an investment guy that loves the hospitality industry and the digital transformation that’s underway. The folks that I’m pulling from and highlighting today are journalists and deserve a great deal of attention for their excellent work covering the hospitality industry.
First up, the crew from Axios’ “What’s Next,” Alex Fitzpatrick; Jennifer A. Kingson; and Joann Muller and their bringing Axios Richmond's Karri Peifer, Axios New Orleans' Chelsea Brasted and Axios D.C.'s Anna Spiegel into the fold, who collectively present the state of the restaurant industry and the opportunities, challenges and changes underway.
I enjoyed this article so much, that I’m not only opening the Top of the Fold with it, but I may well use it to respond to every inquiry I get about why Branded is exclusively focused on this industry and specifically the emerging technology and innovation that hospitality operators are embracing. When I read the article, I saw a story (maybe even a screenplay) that opened with the current state of the industry. The opening act was presented as a “restaurant boom” that’s taking place and specifically the growth in restaurant openings at higher rates than pre-pandemic levels. Excitement ensues and builds!
The authors and Branded agree that despite the economic challenges, that operators “continue to delight diners, staying responsive to shifts in consumer preferences, like the increasing demand for earlier reservation times and higher-end experiences.”
Readers of the H^2 know that Branded feels that the hospitality industry is comprised of some of the most agile and resilient people anywhere. Throw this community a challenge, such as a pandemic, a disruption in the supply chain, a spike in inflation, a labor shortage, what the heck, cover or swarm the land with frogs (#2 on the 10 Plagues of Egypt hotlist), this industry always finds a way to keep moving forward.
But all is far from rosy in this story, as a large swath of the industry, reports to being less profitable than pre-pandemic levels. Trouble ahead?
Quick sidebar (very quick), I don’t know any investment platform that loves the word “BOOM” more than Branded. Don’t believe me, click the word! 😊
Here’s a link to the article: Axios - What's Next and The Restaurant Industry
For hospitality operators, you will recognize and relate to so much in this article, and the author’s story continues by explaining how some restaurants “won COVID.”
Operators: ask yourselves, did you “win the pandemic?” Did you dive in, take risks, and make changes or were you among the many that elected to move more cautiously? Please note, this is a judgment free zone, but among the current headwinds the industry is facing and that you’re battling head-on, I bet each one of these challenges included in the article are ones you’re experiencing.
This section of the H^2 is brought to you by Crunch Fitness! 😊
For investors, especially later-stage (than Branded) and crossover ones, this article is even more important for you as it addresses the criticality of tech & innovation and specifically the most pressing challenges in the industry. Spoiler alert, like many things, math matters and in the hospitality industry, the math is only getting harder.
In keeping with my screenplay analogy, this is the end of the second act. We were riding high on the resiliency and growth, but we’re now brought down by financial pressures and how the smaller restaurant groups and specifically the independents are feeling the financial pressures the most (damn you, math!).
Rising food and labor costs, combined with increasing competition from a myriad of food options, is making this a most difficult industry to navigate. The comment in the article I loved the most is about how the math is only getting harder and the “reality check” offered is that “most restaurants are still trying to force old business models to work in a new economic and social environment.”
This quandary represents both the challenge and opportunity for investors. Old business models are just that, old and not in a nostalgic, vintage or throwback type of way. Analogue and antiquated tools aren’t cool for business b/c if they were, we’d all still be using our Macintosh 128K.
For restaurants, old album and sports illustrated covers are cool, but antiquated tech stacks are not. As highlighted in the article, most restaurants still haven’t addressed their antiquated or perfunctory tech stacks and that’s one of the key reasons why Branded believes we’re still in the early innings of this digital transformation.
The article includes a section on restaurant robots and how the ongoing labor shortage, and high turnover are pushing hospitality operators to embrace automation.
Let’s remember, 22 states have raised their minimum wage this year and three additional states will do so later this year. Seven states now have a minimum wage of at least $15 and additional six states have approved gradual increases to $15 an hour.
You will never hear me be against the need to value and compensate the awesome workforce that comprises the restaurant industry, but to the contrary, the increases in labor costs is one of the most important tailwinds for investing in tech & innovation in this industry.
Team Branded is a BIG believer in automation in order to address so many pain points, but long-time readers of the H^2 know that we subscribe to the KISS (Keep It Simple Schatz) theory and that the hospitality industry remains, first & foremost, an F&B and people business. Yes, there’s a great deal of enthusiasm for AI and automation, but for our investment thesis, we’re far more enthused by this being a tech-enabled industry and the specific need to leverage automation to address the more tedious and mundane tasks.
The article ends of course, but the story of course does not (the screenplay isn't complete). The article captured where we are, how some operators won, the challenges we face and some of the tools to help us continue to move forward.
I found the article inspiring and even uplifting. What!?! Why!?! Great questions.
B/c it sets the stage for the year ahead, the opportunities we have to continue to delight guests and the expanding set of tools designed to help us try to effectuate that and succeed with. How lucky are we to be in such a dynamic, changing, and important industry? Rhetorical question. We're very lucky!
Next up, the talented Kristen Hawley and her article on the importance of hospitality operators creating experiencing to meet the demands of their guests and specifically a reservation platform, Tock, and its newest feature. This is cool stuff! Enjoy!
Here’s a link to the article: Experience an Experience
I loved this article by Ms. Hawley as she describes how guests are CRAVEWORTHying (see what I did there GM?) experiences and Tock is trying to address this demand by offering something special in the form of an experience.
Kristen brings the NRA (the grilling one) into the mix and how the association recognized “experiences” as its top trend in 2023, referencing a survey that found 67% of consumers would rather spend money on an experience, like a dining at a restaurant, compared to purchasing something at a store.
Ms. Hawley has always been one of my favorite journalists covering this industry b/c she calls them like she sees them and that includes her newsletter this week where she feels “the new [Tock] feature, which feels more like a technical tweak with huge marketing potential, is a nod to how diners think about meals at full-service restaurants.”
The reservation space has been a most popular topic recently particularly as several emerging technology companies have been acting in bad faith and attempting to capitalize on restaurants’ inventory of tables without permission or without creating any value for operators.
Bad, very bad! Stop it!
To be crystal clear, that’s NOT what Tock is doing here and to the contrary, they’ve created a feature that is attractive to guests and accretive to operators (this is the textbook definition of ‘operator-centric’). According to the article, Tock’s bookable experiences have thus far generated over $2.25bn in revenues for restaurants.
In the category of my talking Branded’s book (my house (newsletter), my rules), as I’ve written about previously, Branded’s portfolio company, Tablz, is also an ally to operators when it comes to reservations with its “select a table” features and functionality.
The select a table upsell option for guests and the additional revenue stream it creates for operators is magical. Tock and Tablz are doing it right when it comes to being an ally to operators, adding value and specifically creating revenues at a time when restaurants so desperately need it.
Well done Tock and Tablz, we appreciate you.
To the reservation platforms doing otherwise, two words for you folks, two words.
I’m a loyal reader of Ms. Hawley’s newsletter and I value and always want to support such strong content providers. The Branded Team was also lucky to have Kristen on our Hospitality Hangout podcast.
There are so many other writers and journalists that the Branded Team values and enjoys keeping up with. If the feedback on this week’s Top of the Fold is well received, I’ll be sure to continue highlighting the content providers we feel are important and share their work with the H^2 community.
As always, it takes a village.
This week’s shoutout belongs to two of Branded’s two portfolio companies and the momentum and value they continue to bring to the industry.
Driscoll Foods Launches New Online Ordering App with Cut+Dry to Revolutionize E-Commerce Operations
This week our friends and partners at Cut+Dry announced their partnership with Driscoll Foods and the launching of a new online ordering app.
As highlighted above in the Top of the Fold, and please validate this for yourselves by asking hospitality operators, the biggest challenges are (i) Labor and Procurement; or (ii) Procurement and Labor. For the hospitality industry, this is akin to the three rules of real estate. 😊
The coming together between Cut+Dry and Driscoll is something you’re going to see happening more and more. I clearly like to boast about Branded’s portfolio companies, but it’s even more fun when leaders in the industry do it for me. Driscoll Foods said they chose Cut+Dry as its trusted tech partner AFTER thoroughly evaluating EVERY e-commerce provider in the industry.
Tim Driscoll, President of Driscoll Foods, expressed enthusiasm about the partnership, stating, "Choosing Cut+Dry was a strategic decision. Their advanced technology, extensive product database, and deep industry knowledge will not only optimize our operations but also enhance the overall experience for our valued customers. This is a significant step forward in our mission to provide the best possible service." I appreciate you Mr. Driscoll!
Cut+Dry increases sales, improves your bottom line and is the industry’s leading E-commerce platform. This platform was created by the team that built Sysco’s entire digital experience and uniquely positioned themselves at the intersection of (i) manufacturers; (ii) distributors; (iii) and restaurants.
The Cut+Dry platform connects these Three Musketeers by leveraging technology and data. Cut+Dry is a textbook example of my ethos that “it takes a village.” The criticality of recognizing the interconnectedness and high correlation among this triumvirate comprised of manufacturers, distributors and restaurants working effectively & efficiently together, will help change the foodservice industry. This company is the industry’s technology platform to make this happen with its easy-to-use system creates a more profitable and less wasteful experience.
What?!? Less wasteful?!? Cut+Dry and Driscoll, let’s get Branded’s friends and partners at Copia involved in this partnership! Always be closing! 😊
Branded Hospitality Ventures wants to congratulate Driscoll Foods as well as Mani Kulasooriya and the entire Cut+Dry team.
NRA 2022, Mani, NRA 2022!
A final shoutout goes out to our friends and partners at Incentivio and specifically a webinar they participated in which you can find below:
How Leveraging AI Can Help Restaurants In Data Processing, Guest Engagement, and Customer Retention
I've certainly been having some fun with the obsessive focus and ways in which the hospitality industry is leaning into artificial intelligence. I'm no longer even seeing investment pitch decks that don't include a page or more with respect to their role in the move towards AI.
This webinar, however, is on-brand for Branded as it provides great insights on how restaurants can actually and tactically use AI to derive real value right now.
In this webinar, the discussion is about the role of AI in restaurants today, and how savvy restaurant owners can use it to boost their guest engagement (and you know how important Branded believes guest engagement is for operators and brands).
This webinar features Mat Todtenkopf from Incentivio, Cristy Risenhoover from Earthbar, and was hosted by our friends from Food on Demand.
Our partners at Incentivio know a thing or two about how to turn customers into loyal guests without, wait for it, guessing! 😊
Incentivio is among Branded's most operator-centric portfolio companies. It affords operators the opportunity to own their data and act on it. The platform offers a tailored digital experience for operators to target customers with the right offers at the right time, increase retention and maximize revenue with a single platform.
To our Hospitality Network, you asked for a bundled and integrated solution? We present to you - Incentivio!
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 Perry Miele, President and CEO of Nestlé Professional.
You can tune in on Spotify, Apple, Amazon, iHeart, or your favorite listening platform!
20 Years Of Hope
Join national non-profit CORE: Children of Restaurant Employees in celebrating 20 years of supporting food & beverage families.
This week's winner of the WITW is Branded contest goes to our good friend and one of the BIGGEST names in the chicken business, Mr. Josh Halpern, CEO of Big Chicken (see what I did there?). 😊
Josh is on a safari in South Africa, and we appreciate his showing off a beloved piece of Branded swag. Given that we know that Mr. Halpern has a number of our Branded baseball hats, I also appreciate how he selected the one that goes so well with his clothing and mode of transportation.
We appreciate you Josh and everything you do for the industry.
Make your drinks go viral!
Craft personalized drinks for an unforgettable guest experience!
Digital Restaurant Association
We champion restaurants to thrive in a digital world
BUSINESS
A Sip of Strategic Wisdom: Brewing Success, Starbucks Style
By: Seth Temko, Solutions Services Partner at Branded Hospitality Ventures
Where do you turn when everyone turns to you for answers? If you crave a splash of insight to accompany your morning brew, join me in exploring the go-to-market tactics of a true hospitality heavyweight.
Welcome to the new IFMA
The future of food-away-from-home is evolving—and so is our membership structure.
MARKETING
600+ Restaurant Industry Leaders are Doing This ... And You Should Too
By: Rev Ciancio, Head of Revenue Marketing at Branded Hospitality Ventures
The 2024 DRA Restaurant Marketing Summit, Powered by Branded featuring more than 30 incredible speakers who answer every question you have about social media, guest feedback, loyalty, hiring, mastering third party and more.
About ACG New York
Founded in 1954, ACG is the premier M&A deal-making community with a mission of driving middle-market growth. ACG’s global network operates within 61 local markets worldwide and comprises more than 100,000 middle market professionals who invest in, own and advise growing companies. ACG provides events, conferences, bespoke meetings, deal-sourcing forums, unique experiences, educational seminars, and numerous benefits to non-members and members alike.
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 January 2024