WEBVTT - Restaurant-Tech Troubles Could Continue in 2024 0:00:14.120 --> 0:00:15.239 Welcome to Chopping It Up. 0:00:15.760 --> 0:00:17.959 I'm your host, Mike Hallon, the senior restaurant and food 0:00:17.960 --> 0:00:18.920 service analyst. 0:00:18.680 --> 0:00:19.920 At Bloomberg Intelligence. 0:00:20.480 --> 0:00:23.320 Today we're joined by Juwan George, co founder of eight 0:00:23.440 --> 0:00:26.720 five eight Partners, an investment firm and consultancy focused on 0:00:26.800 --> 0:00:27.640 restaurant tech. 0:00:28.280 --> 0:00:29.600 Thanks for doing this, Juwan. 0:00:30.120 --> 0:00:33.599 Yeah, thanks, Mike. Excited to chop it up with restaurant 0:00:33.640 --> 0:00:34.440 tech with you today. 0:00:35.440 --> 0:00:37.040 For sure, Man, I've been looking forward to this. 0:00:37.120 --> 0:00:39.519 We've been talking about doing this for a while, so 0:00:40.760 --> 0:00:42.680 let's just jump right in. There won't be an eight 0:00:42.800 --> 0:00:45.560 five eight Partners if OLO didn't exist, So why don't 0:00:45.600 --> 0:00:47.640 we start with your career experience at OLO? 0:00:48.360 --> 0:00:52.000 Yeah, for sure. So you know, my story is I 0:00:52.120 --> 0:00:56.640 joined OLO during the senior year of college back in 0:00:56.760 --> 0:00:59.520 March of two thousand and seven, and you know, had 0:00:59.600 --> 0:01:02.360 just turned twenty one years old. Didn't know what I 0:01:02.400 --> 0:01:05.479 was going to do post college, but saw a visionary 0:01:05.560 --> 0:01:08.640 leader in Noah and a company that was chasing an 0:01:08.680 --> 0:01:11.360 idea that I totally believed in. And it was the 0:01:11.400 --> 0:01:14.440 idea that one day customers were going to treat their 0:01:14.480 --> 0:01:17.839 phones as the remote controls for their lives and order 0:01:17.959 --> 0:01:20.520 and pay for their food in advance. So for me, 0:01:20.680 --> 0:01:23.199 it was a fifteen and a half year journey there 0:01:23.480 --> 0:01:26.600 that I would break up into three chapters. This first 0:01:26.640 --> 0:01:29.400 chapter is what I would label your kind of product 0:01:29.440 --> 0:01:31.800 market fit, trying to find that, and it was a 0:01:31.840 --> 0:01:34.760 seven year chapter in which it took to get to 0:01:34.840 --> 0:01:38.959 one million dollars in arr and. So we were based 0:01:38.959 --> 0:01:41.200 in New York City at that time, you know, one 0:01:41.200 --> 0:01:44.600 of the earliest restaurant tech but just tech companies in 0:01:44.640 --> 0:01:48.919 that ecosystem. And really during that seven year period, Olo 0:01:49.160 --> 0:01:52.840 was predominantly this twelve person company of people in their 0:01:52.840 --> 0:01:56.440 twenties who have now become friends of mine, and we 0:01:56.440 --> 0:01:59.000 were just simply ahead of its time, right, you know, 0:01:59.080 --> 0:02:02.200 they say you're twenty for learning. And we lost one 0:02:02.280 --> 0:02:05.000 hundred more times than we won in that era, but 0:02:05.200 --> 0:02:08.560 we held on to this Winston Churchill quote which was 0:02:08.720 --> 0:02:12.400 never ever ever give up, and ultimately we found this 0:02:12.520 --> 0:02:15.760 fast moving water in a customer out of Texas that 0:02:16.240 --> 0:02:18.600 at that point in time helped us take this B 0:02:18.680 --> 0:02:21.480 two C business into a B to B two C 0:02:21.680 --> 0:02:25.200 business and we got our first major win with five 0:02:25.240 --> 0:02:29.080 Guys burgers and fries that helped us get that elusive 0:02:29.200 --> 0:02:32.960 product market fit that every startup, every technology company hopes for, 0:02:33.680 --> 0:02:37.280 and that unlocked the second chapter, the rocket Ship years 0:02:37.639 --> 0:02:41.320 a million to forty five million an arr and it 0:02:41.360 --> 0:02:43.800 was a six year period in which we were doubling 0:02:43.840 --> 0:02:47.200 the company every year. We had just hired our first 0:02:47.280 --> 0:02:51.680 leadership team, including my mentor and current business partner, Marty Hantfeld, 0:02:51.760 --> 0:02:55.080 this head of sales, and during that period of time 0:02:55.200 --> 0:02:59.919 really Olo became the gold standard in enterprise e commerce 0:03:00.120 --> 0:03:04.880 ordering and really introduced new modules that were groundbreaking for 0:03:04.919 --> 0:03:08.639 the industry around third party delivery, a product called Dispatch, 0:03:08.680 --> 0:03:11.960 a product called Rails, and that really helped propel our 0:03:12.040 --> 0:03:15.480 lead forward past dozens of omline or green competitors in 0:03:15.520 --> 0:03:18.720 that era, and we largely focused on what I call 0:03:18.840 --> 0:03:21.680 the mighty middle of the market, right, so not the 0:03:22.000 --> 0:03:25.959 SMB's mom and pops and not the big guys like McDonald's, 0:03:26.160 --> 0:03:30.240 but rather fifty locations to three thousand locations, and we 0:03:30.280 --> 0:03:34.760 worked exclusively with restaurant brand HQs. So I spent most 0:03:34.760 --> 0:03:38.240 of those years on an airplane accruing all the status 0:03:38.280 --> 0:03:43.120 points and going to hundreds of restaurant brand HQUS and 0:03:43.160 --> 0:03:47.040 it unlocked the final chapter, Chapter three, an era of 0:03:47.120 --> 0:03:49.440 which we took the company from a private offering to 0:03:49.480 --> 0:03:53.280 a public offering. And this was you know, January twenty twenty, 0:03:53.320 --> 0:03:56.880 I got the Jersey call to lead the enterprise sales team, 0:03:57.320 --> 0:03:59.680 and so I was leading that team but also selling 0:04:00.040 --> 0:04:02.320 and we all know what happened in March of that year. 0:04:02.640 --> 0:04:06.800 Olo went from must have tech to mission critical tech. 0:04:07.160 --> 0:04:10.080 And you know, still remembering this earnings call from Wyman 0:04:10.200 --> 0:04:15.160 Roberts over at Brinker talking about seventy percent of transactions 0:04:15.200 --> 0:04:18.159 coming through the OLO platform. That is what we were 0:04:18.200 --> 0:04:21.680 seeing across the board for our customers. And so it 0:04:21.720 --> 0:04:24.240 was a difficult time, you know, a busy time, and 0:04:24.279 --> 0:04:27.359 I felt like I took a breadth in December of 0:04:27.400 --> 0:04:30.760 twenty twenty, looked up at the scoreboard. There were fourteen 0:04:30.839 --> 0:04:33.920 thousand new locations we added, and we doubled the company 0:04:33.920 --> 0:04:36.839 from forty five to ninety eight million in arr and 0:04:36.880 --> 0:04:39.560 it was really that which allowed us to take the 0:04:39.560 --> 0:04:43.880 company public that March of twenty twenty one. So, you know, 0:04:43.920 --> 0:04:47.200 a fifteen and a half year adventure, right the American 0:04:47.279 --> 0:04:51.120 startup dream. You know, over the last really decade, there's 0:04:51.160 --> 0:04:54.239 only been a few restaurant tech companies that have gone public. 0:04:54.560 --> 0:04:58.279 Think about your toast, your DoorDash, your square, your uber 0:04:58.400 --> 0:05:00.840 and Olo and Olo was the only one that did 0:05:00.920 --> 0:05:04.040 it as an enterprise focus B to B two C company. 0:05:04.240 --> 0:05:07.440 So I operated in that role for fifteen months. We 0:05:07.520 --> 0:05:10.640 acquired two companies, we beefed up the team, and you know, 0:05:10.680 --> 0:05:13.560 when it's time, it's time. I exited the company in 0:05:13.640 --> 0:05:16.640 August of twenty two as we were approaching about two 0:05:16.720 --> 0:05:19.680 hundred million ERA R and lots of stats that we 0:05:19.680 --> 0:05:22.640 could be proud about there, but seventy one percent of 0:05:22.640 --> 0:05:25.800 the enterprise market became customers. But the stat I'm proud 0:05:25.800 --> 0:05:28.600 of us about was this ninety nine percent retention rate 0:05:28.960 --> 0:05:32.240 of our customers. And it was really that retention rate 0:05:32.360 --> 0:05:34.960 that allowed us to build the relationship capital to do 0:05:35.000 --> 0:05:37.440 what we're doing today with eight five day partners. 0:05:39.000 --> 0:05:41.040 Very cool, man, It sounds like it sounds like it 0:05:41.080 --> 0:05:43.760 was fun, you know, and the time to take your 0:05:43.760 --> 0:05:46.159 shot is in your twenties, man, so it sounded like 0:05:46.320 --> 0:05:48.839 it lined up pretty well for you and your friends 0:05:48.839 --> 0:05:49.080 at all. 0:05:50.040 --> 0:05:52.159 It was a good ride and wouldn't have done it 0:05:52.200 --> 0:05:55.039 any other way than doing the one company thing. 0:05:54.920 --> 0:05:55.280 For sure. 0:05:57.320 --> 0:05:57.880 Very cool. 0:05:57.960 --> 0:06:01.680 So what problems was eight five eight created to solve 0:06:02.600 --> 0:06:04.880 and what opportunities can the firm and its clients take 0:06:04.880 --> 0:06:05.800 advantage of right now. 0:06:07.400 --> 0:06:11.840 So I mean after leaving Olo last year, Marty, who 0:06:11.880 --> 0:06:15.359 also lives in San Diego, I referenced earlier, had left 0:06:15.440 --> 0:06:19.760 OLO forty five days prior, and we started just conversing 0:06:19.760 --> 0:06:23.400 over cocktails and coffee in San Diego, and we started 0:06:23.400 --> 0:06:27.800 calling the restaurant brand operators, the restaurant tech companies, and 0:06:27.880 --> 0:06:31.080 the restaurant tech investors, and we kept hearing a lot 0:06:31.120 --> 0:06:34.320 of pitches for what we consider to be nice to 0:06:34.400 --> 0:06:38.240 have non essential tech, and we weren't hearing a lot 0:06:38.279 --> 0:06:41.880 of themes and pitches for must have or mission critical 0:06:41.920 --> 0:06:45.680 solutions to really solve the problems that our friends the 0:06:45.760 --> 0:06:49.280 brands were anxious to address. So really to help our 0:06:49.320 --> 0:06:53.320 own restaurant brand friends and technology companies, we formed eight 0:06:53.320 --> 0:06:57.400 five A partners this year January to really invest in 0:06:57.920 --> 0:07:01.719 one to three must have technology solutions, but also to 0:07:01.839 --> 0:07:06.039 advise the next generation of restaurant technology winners that were 0:07:06.040 --> 0:07:08.520 focused on that mid market and enterprise that we had 0:07:08.560 --> 0:07:12.480 focused on. But you know, like most startups, not everything 0:07:12.480 --> 0:07:16.120 has gone according to plan on the investment side. You know, 0:07:16.200 --> 0:07:18.920 this side of the business has been challenging, no doubt. 0:07:19.120 --> 0:07:21.840 It's not due to a lack of interest, but rather 0:07:21.960 --> 0:07:24.800 due to the current state of the markets and valuations. Right, 0:07:25.120 --> 0:07:28.880 it's a tough moment for a new investment platform to 0:07:28.920 --> 0:07:31.480 put on the training wheels and try to figure out 0:07:31.520 --> 0:07:33.840 what the right entry point and valuation is. 0:07:34.440 --> 0:07:35.440 So, you know, we. 0:07:35.440 --> 0:07:38.760 Also had a big offset in the form of demand 0:07:38.840 --> 0:07:42.240 in the advisory practice, so that's where the focus has 0:07:42.400 --> 0:07:45.480 been and really will go for the foreseeable feature, so 0:07:46.000 --> 0:07:49.120 you know, to really fill that demand, we brought on 0:07:49.520 --> 0:07:53.160 in mid year Sep Hall, who was the former head 0:07:53.160 --> 0:07:56.280 of sales at OLO on the East Coast, and Jackie Berg, 0:07:56.680 --> 0:07:58.880 who was the former head of marketing at OLO, to 0:07:59.000 --> 0:08:03.080 lead this goat to market and marketing and brand practice 0:08:03.120 --> 0:08:06.120 here at A five eight, And between the four of us, 0:08:06.200 --> 0:08:10.480 we're responsible for closing more enterprise software deals than anyone 0:08:10.520 --> 0:08:12.680 in this industry over the past decade, right, So that's 0:08:12.720 --> 0:08:15.120 what we bring and so in a nutshell, A five 0:08:15.120 --> 0:08:19.360 eight helps launch and scale mid market and enterprise sales, 0:08:19.880 --> 0:08:23.920 marketing and customer success programs for restaurant tech companies. And 0:08:24.000 --> 0:08:27.080 so we're sitting here now at the end of December, 0:08:27.600 --> 0:08:31.400 we've helped close to a dozen restaurant technology companies on 0:08:31.520 --> 0:08:36.319 their playbooks for enterprise and mid market, and we're excited 0:08:36.320 --> 0:08:38.600 to double down on this industry that we love and 0:08:38.679 --> 0:08:42.920 help this next generation. So we'll bring on new resources, 0:08:43.040 --> 0:08:46.679 new customers going into twenty twenty four, and yeah, we've 0:08:46.679 --> 0:08:47.720 never been more fired up. 0:08:49.400 --> 0:08:50.000 That's cool, man. 0:08:50.040 --> 0:08:53.160 It seems like there's a huge opportunity for you there 0:08:53.200 --> 0:08:57.360 because the companies that have had successful exits seem to 0:08:57.760 --> 0:09:00.200 have great sales teams, and I feel like they're there's 0:09:00.559 --> 0:09:04.839 some really good products out there that took a long 0:09:04.920 --> 0:09:07.920 time to gain traction, and they really couldn't make traction 0:09:08.080 --> 0:09:10.839 until they brought on some experienced salespeople. 0:09:13.320 --> 0:09:14.400 To be clear, you. 0:09:14.320 --> 0:09:16.839 Know, it took a long time for Holo to get 0:09:16.880 --> 0:09:19.040 to where it got to, and it doesn't need to 0:09:19.080 --> 0:09:21.480 take fifteen and a half years for the next company 0:09:21.920 --> 0:09:24.880 to reach a milestone. You know, at Olo, we went 0:09:24.920 --> 0:09:28.240 through two sales leaders in that first chapter until we 0:09:28.320 --> 0:09:31.959 got it right with Marty, and I think about those learnings, frankly, 0:09:32.040 --> 0:09:36.120 the mistakes that we made way more mistakes than wins 0:09:36.600 --> 0:09:40.439 to guide those companies and not making the same mistakes. 0:09:39.920 --> 0:09:42.160 That we did. Yeah. 0:09:42.240 --> 0:09:46.320 Cool, So who is the ideal customer for your advisory business? 0:09:47.400 --> 0:09:51.280 Yeah, so we think about the ideal customer profile as 0:09:51.480 --> 0:09:57.360 you know, a must have restaurant tech platform, right, companies 0:09:57.480 --> 0:10:01.719 that ultimately we're hearing themes for. And so backing up, 0:10:01.880 --> 0:10:06.080 you know, we've created an advisory board of roughly thirty 0:10:06.120 --> 0:10:10.280 operators that represent forty thousand locations, right, So we have 0:10:10.440 --> 0:10:14.240 that benefit to hear firsthand from those operators what they're 0:10:14.280 --> 0:10:17.880 working on, what problems they're having, who they're having the 0:10:17.920 --> 0:10:21.480 problems with, what solutions they're looking for, and we act 0:10:21.520 --> 0:10:24.280 as a trusted back channel to those brand and resource 0:10:24.720 --> 0:10:28.319 So we take those themes ultimately and try to map 0:10:28.400 --> 0:10:31.360 those two solutions in our advisory practice. So to answer 0:10:31.400 --> 0:10:33.800 your question, I think we're hearing a lot of themes 0:10:33.840 --> 0:10:37.280 this go around largely to do with the back of 0:10:37.320 --> 0:10:39.840 the house than the front of the house. And so 0:10:40.080 --> 0:10:45.280 we've mapped ourselves to close again a dozen technology platforms 0:10:45.280 --> 0:10:47.439 that are addressing those problems. 0:10:46.920 --> 0:10:51.199 That we're here. Okay, cool, you answer my next question. 0:10:51.280 --> 0:10:52.840 Yeah, I was wondering if it was going to be 0:10:52.840 --> 0:10:55.240 consumer facing tech back of the house front of the house. 0:10:55.280 --> 0:10:59.280 So Yeah, we've come across some interesting solutions on the 0:10:59.280 --> 0:11:01.760 back of the house through our research, you know. So 0:11:02.440 --> 0:11:06.520 it's interesting how that that's evolving. Anything that you find interesting, 0:11:06.520 --> 0:11:09.400 maybe things that you're not invested in right now or 0:11:09.920 --> 0:11:13.199 but in that back of the house area. 0:11:12.640 --> 0:11:16.880 Yeah, I think, you know, kind of thinking about an example, 0:11:17.800 --> 0:11:22.199 third party delivery reconciliation. Right, So this was a problem 0:11:22.360 --> 0:11:25.880 that we heard over and over while at OLO, which 0:11:26.080 --> 0:11:31.520 was we now are omni channel businesses that accept orders 0:11:31.559 --> 0:11:36.480 from first party transactions, but now third party transactions for 0:11:36.600 --> 0:11:41.199 both catering for now takeout for delivery, and all of 0:11:41.200 --> 0:11:46.040 these different parties pay us on different increments, and our 0:11:46.080 --> 0:11:49.160 settlements aren't adding up to what our accounting teams say 0:11:49.400 --> 0:11:52.320 should or shouldn't be in there, right and so interesting 0:11:52.440 --> 0:11:55.120 that's such a pain point, and again we saw it, 0:11:55.400 --> 0:11:58.800 didn't address it during those years. But now we've seen 0:11:59.120 --> 0:12:02.120 half a dozen let's call it best of breed solutions 0:12:02.160 --> 0:12:04.560 pop up in that market, and so we've backed one 0:12:05.000 --> 0:12:08.120 called loop AI in our practice, which we believe has 0:12:08.160 --> 0:12:11.000 the best product but is attacking that head on as 0:12:11.280 --> 0:12:15.520 let's call it a delivery intelligence tool of sorts to 0:12:15.679 --> 0:12:20.640 capture offline customers. Right, so stores being offline when they shouldn't, 0:12:20.960 --> 0:12:26.280 stores to recapture chargeback data, marketplace facilitator taxes. And so 0:12:26.440 --> 0:12:29.840 that's just an example overwhelmingly that we're hearing from that 0:12:29.920 --> 0:12:30.680 advisory board. 0:12:31.679 --> 0:12:32.360 Okay, cool. 0:12:33.000 --> 0:12:37.000 Another one I found interesting recently was a company using 0:12:37.640 --> 0:12:41.080 cameras and AI to get order accuracy. 0:12:41.160 --> 0:12:46.640 Right, Yeah, no doubt, We've looked at that space extensively. 0:12:46.880 --> 0:12:50.839 AI is no doubt a buzzword here. Can't tell what's 0:12:50.960 --> 0:12:55.080 actually AI and what's actually not. So for example, you know, 0:12:55.120 --> 0:13:02.240 we got a pitch for a restaurant technology AI video 0:13:02.240 --> 0:13:06.640 surveillance company that was ultimately looking to fight that same 0:13:06.679 --> 0:13:10.160 issue that I referenced earlier with chargebacks, And when we 0:13:10.280 --> 0:13:13.520 drilled into it, the AI was actually people in the 0:13:13.559 --> 0:13:17.760 Philippines that were watching the camera and would flag when 0:13:17.760 --> 0:13:21.480 an issue happened. Right, So I didn't realize AI meant 0:13:21.480 --> 0:13:24.160 to glorified security guards, but that's what it meant. And 0:13:24.160 --> 0:13:25.480 that specific. 0:13:25.600 --> 0:13:31.439 Example, Yeah, yeah, some of that news hit the wires. Man, 0:13:31.480 --> 0:13:35.440 it is pretty wild, right, so yeah, it makes you 0:13:35.440 --> 0:13:38.240 you know, it's it's funny, man. But when you see 0:13:38.840 --> 0:13:40.800 you know what we will call it a bubble and 0:13:40.880 --> 0:13:43.480 at least the use of the term AI. Right, Like 0:13:44.160 --> 0:13:46.400 when you see bubbles, you know, you have people that 0:13:46.440 --> 0:13:48.600 are trying to take advantage. 0:13:48.040 --> 0:13:50.200 Of some of the things they're seeing. 0:13:50.240 --> 0:13:52.840 But if somebody can make that technology work, man, it 0:13:52.880 --> 0:13:55.600 sounds like it sounds it sounds pretty interesting for sure. 0:13:57.559 --> 0:13:57.760 You know. 0:13:57.880 --> 0:14:01.199 Obviously, helping food waste and making your customers a lot 0:14:01.240 --> 0:14:04.160 happier is key for these restaurant chains that are doing 0:14:04.520 --> 0:14:05.800 heavy delivery business. 0:14:05.920 --> 0:14:10.839 You know, to be clear, we're bullish on that use case. 0:14:10.920 --> 0:14:13.440 We just don't think it's the first generation of companies 0:14:13.480 --> 0:14:14.080 that will win. 0:14:15.000 --> 0:14:16.760 Yeah. Yeah, interesting. 0:14:19.160 --> 0:14:21.840 You know, as we you know, all know, restaurant chains 0:14:21.840 --> 0:14:25.480 have been aggressively updating their tech stax post pandemic. I guess, 0:14:25.560 --> 0:14:28.200 big picture, where are we right now? Where's the restaurant 0:14:28.240 --> 0:14:30.200 industry with restaurant tech at the moment. 0:14:31.120 --> 0:14:34.560 Yeah, so I think about, you know, the years leading 0:14:34.640 --> 0:14:37.680 up to twenty twenty three, and they were really the 0:14:37.800 --> 0:14:42.080 years that I'd labeled the California gold Rush of restaurant tech. Right, 0:14:42.360 --> 0:14:46.000 So there was a wave of companies, some new, some old, 0:14:46.360 --> 0:14:50.040 that hit the market primed with solutions to sell to 0:14:50.160 --> 0:14:55.440 this massive total addressable market of SMB mid market and 0:14:55.600 --> 0:14:59.200 enterprise restaurant brands. And it's also i'd call it that 0:14:59.440 --> 0:15:03.760 zurp right, the zero interest era. So restaurant technology companies 0:15:04.000 --> 0:15:08.640 could raise capital at rich valuations from the venture capital community, 0:15:09.000 --> 0:15:11.760 they could hire staff by the dozens, and they could 0:15:11.800 --> 0:15:14.160 just burn through the cash in the bank, knowing that 0:15:14.200 --> 0:15:16.480 there was more at the end of that. And so 0:15:16.640 --> 0:15:18.760 again I remember seeing some of these pitch decks. Right, 0:15:18.920 --> 0:15:21.800 we worked with Burger King, we worked with KFC, We're 0:15:21.800 --> 0:15:25.040 in deep discussions with Chick fil A, when in reality 0:15:25.160 --> 0:15:28.920 it was random franchisees of those chains and they had 0:15:28.960 --> 0:15:32.440 one conversation with the innovation department at Chick fil A. So, 0:15:32.760 --> 0:15:35.000 you know, fast forward to today, you know, it's an 0:15:35.040 --> 0:15:39.120 incredibly difficult time to raise capital. Your companies have been 0:15:39.160 --> 0:15:42.480 forced to do more with less. This past year has 0:15:42.520 --> 0:15:46.000 been plagued with reductions and forces in the headlines from 0:15:46.080 --> 0:15:51.120 the large enterprise companies. Valuations have come back to earth. 0:15:51.200 --> 0:15:54.080 In many cases, it's half or less of what the 0:15:54.160 --> 0:15:57.880 last valuation that was previously assigned to them, and growth 0:15:57.920 --> 0:16:02.240 has frankly stalled right from the past year, and in 0:16:02.240 --> 0:16:04.800 some cases, by the way, it's negative because of churn 0:16:05.200 --> 0:16:09.080 with their customer base. So ultimately, at the end of 0:16:09.120 --> 0:16:12.800 the day, restaurant tech companies are dealing with a buying 0:16:12.880 --> 0:16:16.880 freeze from the operators on all nice to have tech 0:16:17.240 --> 0:16:20.360 that the operators instituted in twenty twenty three. And so 0:16:20.520 --> 0:16:23.320 these restaurant tech companies that are nice to have are 0:16:23.400 --> 0:16:25.600 running out of cash and they're running out of time, 0:16:26.000 --> 0:16:29.320 and so this go around, there's not endless capital that's 0:16:29.360 --> 0:16:31.280 going to be supplied to them when they run out 0:16:31.280 --> 0:16:35.440 of cash. So it reminds me of the two thousand 0:16:35.440 --> 0:16:40.040 and nine to twenty twelve timeframe. Going back in restaurant tech, 0:16:40.520 --> 0:16:44.000 there were companies like Exit forty one that's going to 0:16:44.000 --> 0:16:46.000 be a throwback to some of your audience, but it 0:16:46.040 --> 0:16:49.080 was an online ordering company, a competitor of Oolo's at 0:16:49.120 --> 0:16:52.360 the time. They raised over fifty million dollars in that 0:16:52.560 --> 0:16:57.040 era and it just evaporated overnight. And so, you know, 0:16:57.080 --> 0:17:01.160 I think about the Brita Rosenheim Wheel right this like 0:17:01.200 --> 0:17:04.720 twenty twenty three restaurant Tech Ecosystem wheel that she put out, 0:17:05.040 --> 0:17:09.000 and there's over two hundred and fifty restaurant tech companies. 0:17:08.560 --> 0:17:09.320 On that wheel. 0:17:09.520 --> 0:17:12.440 So there's a lot of solutions to a lot of problems, 0:17:12.640 --> 0:17:16.320 and most of that wheel, we believe just doesn't need 0:17:16.359 --> 0:17:20.080 to exist and represents nice to have solutions in the market. 0:17:20.320 --> 0:17:23.560 So there's data recently that has come out of Karta, 0:17:23.880 --> 0:17:27.080 which is a table management software, and it showed in 0:17:27.200 --> 0:17:30.080 Q three of twenty twenty three that there were over 0:17:30.119 --> 0:17:33.600 two hundred startups that shut down and that's been steadily 0:17:33.640 --> 0:17:37.560 increasing quarter over quarter over the last four quarters. And 0:17:37.600 --> 0:17:40.840 so we expect in twenty twenty four for there to 0:17:40.840 --> 0:17:44.320 be a record number of restaurant technology companies that'll shut 0:17:44.359 --> 0:17:49.159 their doors for good. And I think in parallel, the 0:17:49.200 --> 0:17:53.600 next twelve months should actually prove super interesting from an 0:17:53.760 --> 0:17:56.960 M and A and consolidation perspective. You know, starting with 0:17:57.040 --> 0:18:01.119 the publicly traded restaurant tech companies, these companies spent the 0:18:01.200 --> 0:18:05.280 last year getting fit and now they're seeing their valuations 0:18:05.400 --> 0:18:09.800 rise just a little bit. Those companies DoorDash, for example, 0:18:09.880 --> 0:18:13.520 they've got four plus billion dollars sitting in the bank 0:18:13.720 --> 0:18:16.399 toast a billion dollars sitting on the bank. And we 0:18:16.480 --> 0:18:19.719 know companies like par have been known to be acquisitive 0:18:19.760 --> 0:18:23.640 over the last three to four years. So from my perspective, 0:18:24.560 --> 0:18:27.400 it's a great time for these operating platforms to put 0:18:27.440 --> 0:18:29.880 some of that cash and some of that equity to work. 0:18:30.200 --> 0:18:32.439 There's going to be companies that are available at a 0:18:32.480 --> 0:18:35.199 fraction of their value and really could help them do 0:18:35.359 --> 0:18:39.480 more with their existing customer base and push their lead further. 0:18:39.800 --> 0:18:41.920 And I think in the same vein there's going to 0:18:41.960 --> 0:18:44.760 be many private companies that realize that M and A 0:18:45.119 --> 0:18:46.920 is going to be the only option for them. Right. 0:18:47.359 --> 0:18:50.320 That should also make for some interesting deals. But think 0:18:50.359 --> 0:18:54.320 about as anario, Right, there's two competitors in the same space. 0:18:54.400 --> 0:18:58.480 They're both not getting meaningful traction. They could join forces 0:18:58.520 --> 0:19:01.800 and attack an operating platform together and they probably be 0:19:01.880 --> 0:19:04.639 better off than worse. Right, So it's an area that 0:19:04.720 --> 0:19:07.840 we're watching closely and looking to contribute in for twenty 0:19:07.880 --> 0:19:08.360 twenty four. 0:19:09.320 --> 0:19:09.600 Cool. 0:19:09.720 --> 0:19:12.119 Yeah, it it sounds like it. It'll provide you with 0:19:12.160 --> 0:19:15.600 some opportunities. But there's a lot of parallels with you know, 0:19:16.119 --> 0:19:18.440 my world with the restaurant space, you know, in terms 0:19:18.480 --> 0:19:23.960 of s sloads significantly, but you know, as those private 0:19:24.040 --> 0:19:27.879 valuations have come down and lending costs of risen, But 0:19:28.640 --> 0:19:33.760 the strategics with those those strong balance sheets especially seem 0:19:33.840 --> 0:19:39.720 to be poised to do most of the deals next year, right, All. 0:19:39.680 --> 0:19:40.320 Right, good stuff. 0:19:40.359 --> 0:19:43.040 So what issues are restaurant tech companies having with their 0:19:43.040 --> 0:19:44.600 go to market strategy at the moment? 0:19:46.000 --> 0:19:50.840 Yeah, well, you know, restaurant operators are dealing with serious 0:19:50.920 --> 0:19:54.200 tech fatigue at both the brand and the store level. 0:19:54.680 --> 0:19:59.440 There's multiple dashboard fatigue. There's one hundred and ninety nine 0:19:59.480 --> 0:20:04.480 dollars per month per service fatigue. There's finger pointing fatigue 0:20:04.520 --> 0:20:08.159 amongst all these different providers, and in many cases, with 0:20:08.280 --> 0:20:11.800 the solutions they're purchasing, the operators they're only using a 0:20:11.880 --> 0:20:15.720 sliver of the services, they're over paying for them, and 0:20:15.880 --> 0:20:18.800 there's a steep learning curve to both getting them up 0:20:18.840 --> 0:20:23.000 and running from a deployment perspective and maintaining them. So, 0:20:23.400 --> 0:20:25.880 you know, at the same time, I think about from 0:20:25.880 --> 0:20:30.239 an operator perspective. Operators these days could barely open up 0:20:30.280 --> 0:20:34.600 their emails without literally getting dozens of new emails from 0:20:34.680 --> 0:20:38.480 vendors every single day trying to sell them something. You know, 0:20:38.560 --> 0:20:42.879 they try and find solace and go to LinkedIn and 0:20:43.160 --> 0:20:46.920 connect with their peers, and they're greeted by a bunch 0:20:46.920 --> 0:20:50.480 of people in an ever escalating social media contest. Who 0:20:50.520 --> 0:20:53.880 could yell louder and they go to a restaurant conference 0:20:53.880 --> 0:20:56.520 and get accosted by half a dozen sales guys that 0:20:56.560 --> 0:20:59.919 are selling them some AI solution. So I think restaur 0:21:00.200 --> 0:21:02.560 operators are fed up, you know. So here's the big 0:21:02.600 --> 0:21:06.480 problem for restaurant tech companies. You know, Ultimately, they're banging 0:21:06.520 --> 0:21:10.120 their heads against the wall because they're not selling anything, right, 0:21:10.359 --> 0:21:13.640 and they believe the solution is to send more emails. 0:21:14.119 --> 0:21:18.719 And these same companies show up to that restaurant conference 0:21:19.160 --> 0:21:21.760 praying for a different outcome, but they show up with 0:21:21.880 --> 0:21:26.040 little to no preparation. They're staring at operator badges, and 0:21:26.080 --> 0:21:28.440 they're just hanging out in the lobby bar with all 0:21:28.480 --> 0:21:31.480 the other restaurant tech people that are not selling anything. 0:21:31.600 --> 0:21:34.240 So it's just not working. And so this is part 0:21:34.320 --> 0:21:36.439 of the work that we're doing in this go to 0:21:36.520 --> 0:21:39.879 market advisory and marketing and brand practice here at eight 0:21:39.960 --> 0:21:42.879 five eight, you know, we've entered a new market and 0:21:42.920 --> 0:21:46.280 a new era of go to market. It's all about 0:21:46.560 --> 0:21:49.360 if at least you're serious about mid market and enterprise. 0:21:49.440 --> 0:21:55.440 That's my qualifier. Focus segmentation and creative messaging, your quality 0:21:55.680 --> 0:21:59.000 over quantity, that's what's going to win and restaurantech tech 0:21:59.000 --> 0:22:01.840 companies that want to win in this market need to 0:22:01.840 --> 0:22:05.879 align themselves, in our view, with influencers and advisors that 0:22:05.960 --> 0:22:09.320 can help them understand the accounts and really create these 0:22:09.440 --> 0:22:13.520 multi threaded game plans on their ideal customer profile accounts. 0:22:13.600 --> 0:22:15.600 So that's what we're doing here at eight five eight, 0:22:15.720 --> 0:22:19.399 and we feel like we're we're seeing that trend overwhelmingly 0:22:20.720 --> 0:22:21.440 very interesting. 0:22:23.280 --> 0:22:26.840 So the restaurant chains on the advisory board, should they 0:22:26.880 --> 0:22:29.960 be looking for an all in one tech solution or 0:22:30.119 --> 0:22:32.719 would they be better off cobbling together a bunch of 0:22:32.800 --> 0:22:35.280 best of breed options or is it? 0:22:35.320 --> 0:22:37.359 Is it you know, case specific? 0:22:38.160 --> 0:22:42.240 Yeah, So I think overwhelmingly going back to that advisory board, 0:22:42.480 --> 0:22:45.720 you know, we hold calls with that group once a 0:22:45.800 --> 0:22:48.960 quarter and so it's just individual calls and we hear 0:22:49.000 --> 0:22:51.840 from them what they're working on, what's must have, what's 0:22:51.920 --> 0:22:54.440 nice to have. And I think the themes that we're 0:22:54.440 --> 0:22:57.400