Speaker 1: Welcome to Chopping It Up.
Speaker 2: I'm your host, Mike Hallon, the senior Restaurant and Food
Speaker 2: Service analyst at Bloomberg Intelligence. Our research and that of
Speaker 2: bi's five hundred analysts around the globe can be found
Speaker 2: exclusively on the Bloomberg terminal. If you enjoy the pod,
Speaker 2: I'd love it if you could leave us a review
Speaker 2: on Apple or Spotify. Today we're joined by Zach Oates,
Speaker 2: founder and CEO of Ovation and hosts of the Given
Speaker 2: Ovation podcast.
Speaker 1: Zach, what's up?
Speaker 2: My man?
Speaker 3: Just living the dream here?
Speaker 2: Mike, Dude, I uh saw doing a little background on you.
Speaker 2: I dug up some interesting stuff. This is gonna be fun.
Speaker 2: I've been looking forward to this, But after what I
Speaker 2: dug up, this could go in different directions.
Speaker 3: Man.
Speaker 1: First of all, dude, First of all, you grew up
Speaker 1: in Jersey.
Speaker 3: Yeah, Man, I'm a Jersey boy.
Speaker 1: Where did you grow up in Jersey?
Speaker 3: Morristown, Motown. Just to be clear for those who aren't
Speaker 3: familiar with Jersey, I did say Morristown, which is different
Speaker 3: than Moorestown, which is different than Norristown. So all three
Speaker 3: of those places are like very different. And I grew
Speaker 3: up in Morristown, which is. When I say the city,
Speaker 3: I mean New York, I don't mean Philly.
Speaker 2: Yeah, for sure, Morristown's got a man it's got a
Speaker 2: good food scene too, man.
Speaker 3: Yeah, good food scene. I mean it was awesome, Like
Speaker 3: the town I grew up in. I grew up right
Speaker 3: outside of Morristown, and they had duck crossing signs, and
Speaker 3: I mean it's just in the middle of the forest,
Speaker 3: and yet I could drive five minutes away and be
Speaker 3: by a movie theater and be by you know, amazing
Speaker 3: restaurants and so anyway, it's an awesome place to grow up.
Speaker 1: Yeah, Morris County's phenomenal.
Speaker 3: What uh, That's actually where I got my That's where
Speaker 3: I got my like first foray into food. I was.
Speaker 3: I worked at Friendlies there in Morristown.
Speaker 1: How was that experience, dude?
Speaker 3: It was great and like full circle moment when they
Speaker 3: started working with us, and then super full circle moment
Speaker 3: when they we got awarded Vendor of the Year with them,
Speaker 3: and so it was just like super cool to have
Speaker 3: that experience of going from you know, that's where I
Speaker 3: got my start to like vendor of the Year of Friendlies,
Speaker 3: and I was. I was just so popped. I had
Speaker 3: no idea, So it was. It was quite the honor
Speaker 3: and loved working there and basically like where I cut
Speaker 3: my teeth in hospitality.
Speaker 1: That's very cool man.
Speaker 2: The chocolate almond chip ice cream is still one of
Speaker 2: my all time favorites.
Speaker 3: Oh Man, that that peanut butter sauce. Oh yeah, and
Speaker 3: so good.
Speaker 1: Yeah. That Reese's Pieces Sunday phenomenal. So where'd you go
Speaker 1: to high school?
Speaker 3: Newark Academy, right down the street from Friendlies in Morristown.
Speaker 2: Yeah, yeah, all right, very cool man. Yeah, I grew
Speaker 2: up in Ceedar Grove.
Speaker 3: Yeah, it was.
Speaker 1: After my time, but when my brother was.
Speaker 2: In high school, we were actually playing against NORC Academy
Speaker 2: and some sports.
Speaker 1: I think we might have played them in basketball when
Speaker 1: I was.
Speaker 3: Well, I was I'm I'm I'm older than you, Mike.
Speaker 3: So yeah, we probably didn't crossover in high school.
Speaker 1: I don't think so.
Speaker 2: Also, your dad is very well known in New York
Speaker 2: and New Jersey.
Speaker 1: Man.
Speaker 3: Yeah, he's very well known in very small circles.
Speaker 1: Yeah, he's.
Speaker 2: Well one, very big circle Giants fans. I mean he
Speaker 2: won a lot of games, including three Super Bowls, two
Speaker 2: with the Giants, two USFL championships.
Speaker 1: He won whatever he went, man, so you must have
Speaker 1: learned a lot from him.
Speaker 3: I did. It was like one of those things I
Speaker 3: tell people that my father was a professional athlete, my
Speaker 3: mother was a model, and unfortunately I got my dad's
Speaker 3: looks in mother's athletic ability, and so I was on
Speaker 3: the you know, I had to work hard for what
Speaker 3: I got. But no, it was it was really interesting
Speaker 3: growing up with your dad. Not only you know, three
Speaker 3: Super Bowls is great, but he also is a five
Speaker 3: time pro bowler, you know, and so being the best
Speaker 3: in the world at something and growing up with your
Speaker 3: dad who is the best in the world, and you know,
Speaker 3: we always talk about that in terms of like, oh,
Speaker 3: you got to be the best in the world at
Speaker 3: something and like, but growing up with a dad who
Speaker 3: was is just really inspiring because it's it makes it
Speaker 3: so much more real. And it's not like this you know,
Speaker 3: trite phrase that people use, but it's like, no, that's
Speaker 3: like the guy at the dinner table, you know, the
Speaker 3: one driving me to church on Sunday. Like I mean,
Speaker 3: like he's the best in the world at throwing a
Speaker 3: football upside down backwards between his legs, but hey, best
Speaker 3: in the world as something.
Speaker 1: Ah, that's very cool. Man. Yeah, I'm a Raider fan,
Speaker 1: but my whole family of Giants fans. And you know, I.
Speaker 2: Actually got to go to a few regular season games
Speaker 2: in nineteen eighty six, the first Super Bowl win. Yeah,
Speaker 2: I missed the old Giant Stadium. There wasn't a bad
Speaker 2: seat in the house, man.
Speaker 3: I mean yeah, I mean I also went to a
Speaker 3: few a few Giants games growing up. Actually, do you
Speaker 3: know my favorite part about the Giants games was on
Speaker 3: the way home there was a Red Robin that we
Speaker 3: would stop at, and I that's where I love Red
Speaker 3: Robin and that was that was the place that I
Speaker 3: would that was like my jam coming back from the games.
Speaker 3: And when I got older, they would bribe me to
Speaker 3: stay for the second half because I would always be like,
Speaker 3: all right, halftime, let's go, like I'm done. And then
Speaker 3: as I got older, they would bribe me and they say, Okay,
Speaker 3: if you stay the second half, then in the third
Speaker 3: quarter we can go and get nachos, and then after
Speaker 3: the game we'll go to Red Robin. So that's how
Speaker 3: they eventually uh bought me into staying at football games.
Speaker 3: But you'd be hard, Mike you'd be hard pressed to
Speaker 3: find me watching a football game nowadays. I'm not a
Speaker 3: huge fan.
Speaker 2: I love football, but uh yeah, takes up takes up
Speaker 2: a lot of time. All right, good stuff, man, And
Speaker 2: I love that red robin on your tower.
Speaker 1: It's fantastic too good. Yeah, all right.
Speaker 2: So, how many companies have you started and were any
Speaker 2: of them in or related to the restaurant industry before ovation?
Speaker 3: No. I started three companies and this is my third
Speaker 3: company i've started. But I also did international nonprofit. I
Speaker 3: lived in Ukraine for two years and I started and
Speaker 3: ran an organization for eight years and we worked with
Speaker 3: shelters in Ukraine for women and children, helping them with
Speaker 3: job training and computer literacy and it was and group therapy, amazing.
Speaker 3: The organization had a lot of incredible experiences there, but
Speaker 3: with the war and everything, we had to kind of
Speaker 3: put that on pause. So looking forward to picking that
Speaker 3: back up off the shelf. But Ukraine's a near and
Speaker 3: dear place to my heart. Love love that part of
Speaker 3: the world. And then my other companies. One was in AI,
Speaker 3: so before AI was really a thing. And what we
Speaker 3: actually did was I developed an algorithm to translate social
Speaker 3: media data into gift recommendations, and so we were featured
Speaker 3: in you know, all sorts of publications and I won't
Speaker 3: mention because someone might be competing, but uh, we were
Speaker 3: you know, all over the place. Had a great run there,
Speaker 3: sold the algorithms. The other one was a child safety wristband.
Speaker 3: So it was hardware tech for kids, which is if
Speaker 3: you want to do, like the hardest type of company
Speaker 3: to start in the world besides a restaurant, uh, get
Speaker 3: into hardware tech for kids, because that is just, I mean,
Speaker 3: unbelievably challenging. But it was great. And then we ended
Speaker 3: up selling the patents for that one. So the company
Speaker 3: didn't like do phenomenal, but the patents sold and uh,
Speaker 3: and so that was that was a great experience. And
Speaker 3: then and then started ovation. And you know, this is
Speaker 3: something where because I knew a lot about AI and
Speaker 3: what AI can do, and I knew a lot about uh,
Speaker 3: you know, growing up in the restaurant industry. It was
Speaker 3: just a passion of mine. I mean, my dad when
Speaker 3: he retired, he actually got a little bit into restaurants himself.
Speaker 3: He was an investor in a restaurant right by us.
Speaker 3: And we had some restaurant to our friends. Actually, the
Speaker 3: guy that owned the Red Robin, he to this day,
Speaker 3: every time I go home, he comes over and visits,
Speaker 3: like we're such good friends to this day, and he
Speaker 3: comes over to the house all the time for all
Speaker 3: the holidays and everything, and so we've got some you know,
Speaker 3: growing up with restaurants, it just was always a passion
Speaker 3: of mine and seeing what algorithms can do. And then
Speaker 3: I did some customer experience consulting for Fortune fifty companies
Speaker 3: and realizing that there's an opportunity to there's a huge
Speaker 3: dearth of information about the guests in restaurants and especially
Speaker 3: around the guest experience, and it just seemed like bananas
Speaker 3: to me that we're still doing fifty question surveys to
Speaker 3: try to understand how our restaurants are doing. Like this
Speaker 3: isn't this isn't the nineties. Like that's not how the
Speaker 3: world works. That's not how consumers work. If you're gonna
Speaker 3: if you're going to ask them to do you a
Speaker 3: favor and tell you how things are, they don't want
Speaker 3: to take twenty minutes to get a dollar off their taco,
Speaker 3: Like that's just that's that's not how it works. And
Speaker 3: if we're making business decisions based on what that demographic
Speaker 3: of people want. Like if you have twenty minutes to
Speaker 3: get a dollar off your next taco, I don't want
Speaker 3: your opinion because I want people's opinions that that they
Speaker 3: value their time a little bit more, you know what
Speaker 3: I mean. And so that's that's really what got me
Speaker 3: into starting Ovation. But having those other experiences starting those
Speaker 3: other companies was amazing. I learned so many things and
Speaker 3: it was great and from you know, the ups and
Speaker 3: the downs of all of that and realizing that, you know,
Speaker 3: I remember having one kid dm me on back in
Speaker 3: the day Twitter, and he was from India and he said, Hey,
Speaker 3: I just wanted to say thing, thank you for starting
Speaker 3: your company because I didn't know what gift to get
Speaker 3: from my girlfriend. I got onto your app, I used
Speaker 3: it and I got the perfect gift and she loved it,
Speaker 3: and I just wanted to say thank you. That was
Speaker 3: like one of the most wild moments for me to realize,
Speaker 3: Like here I was in this hotel at this conference
Speaker 3: and this guy in India's messaging me to say thank
Speaker 3: you for finding this gift, and I'm like, wow, like
Speaker 3: we can we can do something, Like we could make
Speaker 3: the world, even even like a little corner of the
Speaker 3: world a better place. And man, that's powerful. And I
Speaker 3: don't need to be like Steve Jobs or you know,
Speaker 3: I guess elon Musk prior to this year and and
Speaker 3: make all of these just like world shifting changes. I
Speaker 3: could change my corner of the world, and that's that's great.
Speaker 3: And if I could help the world move forward a
Speaker 3: little bit and help people find a little bit of joy,
Speaker 3: then I'm all about it. Let's build some value, baby.
Speaker 2: Yeah, that's that's fair, fantastic man that it's a great outlook.
Speaker 2: And that kind of leads part of that leads into
Speaker 2: my next question. You know, you talked about these long surveys,
Speaker 2: you know on LinkedIn. You're the self proclaimed anti survey
Speaker 2: survey or, so please talk a little bit more about that.
Speaker 3: Yeah. So, one of the things I always tell people
Speaker 3: is everything that we do in hospitality, from the ingredients
Speaker 3: to the training, to the ambiance, to the music, to
Speaker 3: the furniture to the plates, everything is about what creating
Speaker 3: a great guest experience hard stop right now. Obviously you
Speaker 3: got a P and L in there, because you got
Speaker 3: to make margins to create a great guest experience. I
Speaker 3: think that's like self evident, because if you don't, if
Speaker 3: you're not making money, then you can't create the experience anyway.
Speaker 3: But it's all about the guest experience, and so it's
Speaker 3: about how can I create the best guest experience with
Speaker 3: my P and L. And when I think about that,
Speaker 3: it's like then I said to myself, Okay, well, how
Speaker 3: are we measuring that experience? And again it's up to
Speaker 3: long surveys, which very few people do, or online reviews,
Speaker 3: which very skewed people do. Right, the experience has to
Speaker 3: be very skewed to leave an online review. And so
Speaker 3: what we found is that if you make a survey simple,
Speaker 3: and by simple I mean the ovation survey starts with
Speaker 3: two questions, no matter how much people have paid us
Speaker 3: to add questions to that survey, our answer is always
Speaker 3: and will always be no. That survey is sacred. And
Speaker 3: why we have done the studies. We have done the research.
Speaker 3: If you want to get the data, you start with
Speaker 3: that and you let us, with all the AI that
Speaker 3: we've been doing with the millions of points of data,
Speaker 3: let us tell you what that unstructured data means. And
Speaker 3: it's not just pulling in from the ovation feedback, but
Speaker 3: we pull in from Google, Yelp, Facebook, Door, dash up Hub.
Speaker 3: Why Because all of that unstructured data is also guest feedback.
Speaker 3: You can't treat it differently than your guests that are
Speaker 3: giving you private feedback. So we we have adapted our
Speaker 3: feedback to be in a similar context to what that
Speaker 3: other unstructured review data is. And by bringing that all together,
Speaker 3: you now have statistically significant data to make operational changes
Speaker 3: at location basis, at menu basis, at ease of ordering basis,
Speaker 3: Like you could know exactly what to fix where in
Speaker 3: your operations without harassing your guests with fifty questions. Now, Mike,
Speaker 3: I do want to have one like giant asterix here
Speaker 3: while I am the anti survey survey guy, and I
Speaker 3: think that that's like a very appropriate, very appropriate like title.
Speaker 3: I do believe that long surveys have a place I
Speaker 3: think of. I wrote a book about dating, and the
Speaker 3: way that I think about long surveys, long surveys are
Speaker 3: are like the first kiss, you know, like when you
Speaker 3: go to pick up a blind date. You don't open
Speaker 3: up the door and just kiss them on the doorstep
Speaker 3: right when you go to pick them up. No, maybe
Speaker 3: it was a really good first date. Maybe at the end,
Speaker 3: you know, and I think that like, but the concept
Speaker 3: is maybe later on, more more likely than not. But
Speaker 3: the concept is it has a place, but its place
Speaker 3: is not initially because when a guest wants to reach out,
Speaker 3: they want to reach out for a reason, Mike. They
Speaker 3: want to reach out because you forgot their sauce, you
Speaker 3: forgot their fries, that the server, the server was rude.
Speaker 3: There's something that is on their mind that is a
Speaker 3: very emotional thing, and that's what they want to tell you.
Speaker 3: And so I think that that's one of the very
Speaker 3: key things that's critical to remember is that a survey
Speaker 3: is not bad. It's just a survey upfront is And
Speaker 3: what we say is let the guest get the feeling
Speaker 3: off their chest, and then an hour later or the
Speaker 3: next day, you can get the data that you want
Speaker 3: that might not be structured in that in a in
Speaker 3: a might not be included in unstructured feedback. For example,
Speaker 3: we have customers right now that are asking about their ltos.
Speaker 3: All right, Mike, you come into zach Shack and we're
Speaker 3: doing a peanut butter and jelly hamburger, and I'll ask
Speaker 3: you Mike, did you enjoy the peanut butter and did
Speaker 3: you try the peanut butter and jelly hamburger. If you
Speaker 3: say yes, I say great, tell me more about it.
Speaker 3: If you say no, I say great, here's a here's
Speaker 3: a five dollars off coupon to come and get that
Speaker 3: lto So now we're driving you know, recency, and we're
Speaker 3: driving spend and we're doing it all while collecting data.
Speaker 3: And that's just like one example. Another example is if
Speaker 3: you're you have a restaurant in Vega, and you want
Speaker 3: to do text marketing, but you don't know who's local
Speaker 3: and who's not. Great, ask a follow up question, do
Speaker 3: you live in Vegas? And then you're not sending your
Speaker 3: text messages to people who live in sheboygan that we're
Speaker 3: there for a bachelorette party and so you know, or
Speaker 3: if you want to ask about you know, how did
Speaker 3: you hear about us? So you can measure the effectiveness
Speaker 3: of different forms of marketing. Great, and so all of
Speaker 3: these things are possible with long form surveys, and all
Speaker 3: of these things are unlikely to come up in unstructured data.
Speaker 3: But what we found is that if you ask the
Speaker 3: two question survey first, and you followed up with a
Speaker 3: long form survey, you actually will get more long surveys
Speaker 3: completed than if you start with a long form survey.
Speaker 3: And so that's the Ovation way is we make sure
Speaker 3: that the guest gets the emotion off. We make sure
Speaker 3: that the restaurant can have a really easy path to
Speaker 3: handle that guests and either through you know, if they
Speaker 3: loved it, let's get them to drive more revenue. If
Speaker 3: they didn't love it, let's have AI help us recover them.
Speaker 3: But then you need to separate what is a one
Speaker 3: off issue and what's a consistent problem. And so ovation
Speaker 3: helps to bifurcate that with our AI to say, hey,
Speaker 3: Mike had a problem with the service, and turns out
Speaker 3: that nobody else complained about service this month, and so
Speaker 3: let's apologize to Mike, but let's not beat up our
Speaker 3: staff over service because one person complained about it. But
Speaker 3: let's say that there's a specific location that has a
Speaker 3: five percent higher incident rate, which is, if you take
Speaker 3: the total number total pieces of feedback and you look
Speaker 3: at what percentage of those had an incident about service,
Speaker 3: if they are five percent higher than the average restaurant
Speaker 3: in your group. Then yeah, you need to go talk
Speaker 3: to that location about service and retrain them on the
Speaker 3: Zach Shack way of being friendly and treating customers. And
Speaker 3: then the final step to this piece here, Mike, is
Speaker 3: that all of that data is great and I love
Speaker 3: being able to share data with restaurants, but you gotta
Speaker 3: do something with it. And so what we do is
Speaker 3: we have this whole entire goals module that uses AI
Speaker 3: to tell that GM, here's exactly what you need to
Speaker 3: do to improve, here's what you should be focused on.
Speaker 3: And then with the guest feedback, we track how well
Speaker 3: that GM is doing, and we give the brands a
Speaker 3: dashboard to easily view every location in one spot and
Speaker 3: which ones are on track, off track, how are they doing,
Speaker 3: what are they working on, and if you want them
Speaker 3: to work on something different besides what the AI thinks
Speaker 3: is going to be best, great, click a button and
Speaker 3: override that. And so that's that's the power of collecting it,
Speaker 3: taking action in the moment, finding the trends and fixing
Speaker 3: those trends, and measuring that by collecting the feedback. Very cool,
Speaker 3: And what was the question.
Speaker 1: I forget? But a quick aside Zach's Dating book has
Speaker 1: phenomenal reviews on Amazon.
Speaker 2: Uh huh, talk to me a little bit about the
Speaker 2: quantity of responses versus severity.
Speaker 3: Yeah, so this is something where a lot of times
Speaker 3: people will get feedback, and especially when they're looking at
Speaker 3: their unstructured feedback. And guess what the majority of feedback
Speaker 3: is going to be about. Mike, we're in restaurants. What
Speaker 3: do you think the majority of feedback is about food? Food?
Speaker 3: And so people are sitting there in these offices just
Speaker 3: pouring over this feedback about food, trying to understand. Okay,
Speaker 3: Mike said it was too salty, but then somebody else
Speaker 3: said it wasn't salty enough. You know, someone said it
Speaker 3: was too spicy, someone said it wasn't spicy enough. Okay,
Speaker 3: how do we tw tweak? Tweak, tweak. There absolutely is
Speaker 3: a time and a place for that, and you've amazing.
Speaker 3: Food is now table stakes. The problem that we find
Speaker 3: is that food is not usually the reason that people
Speaker 3: get most angry, and that anger is gonna yield to
Speaker 3: negative reviews. That anger is gonna yield to I'm never
Speaker 3: trying them again. That anger is gonna yield to Hey,
Speaker 3: I'm telling fifteen of my friends not to go to
Speaker 3: zach Shack. It's not the food, because food is very
Speaker 3: it's very preferential based. The same exact food is gonna
Speaker 3: be you know, it's gonna be great to someone and
Speaker 3: terrible to somebody else. Right now, there are mistakes that
Speaker 3: are made. Something is burnt, something is you know, the
Speaker 3: rice is dry, like there may be some things like
Speaker 3: that that, yeah, you can improve operationally. But then you
Speaker 3: get to this middle ground of service, which is a
Speaker 3: little more on the black and white of hey, were
Speaker 3: you nice to me or not. Now, if I'm having
Speaker 3: a bad day and I go into a restaurant and
Speaker 3: somebody doesn't kind of go above and beyond, I may
Speaker 3: think they're being rude. If I go into a restaurant
Speaker 3: with four kids and I'm waiting for five minutes for
Speaker 3: my food, that may feel like twenty minutes, right if
Speaker 3: I'm by myself, or if I'm just like, if I'm
Speaker 3: on a date and they bring me my food in
Speaker 3: five minutes, I'm like, now, like, give me some more time, Like,
Speaker 3: you know, we're still breaking the ice here, you know,
Speaker 3: Or my wife and I were sitting down, we want
Speaker 3: more time to talk because we're finally you know, the kids,
Speaker 3: got a babysitter, so like, I'm not in a rush.
Speaker 3: A little more subjective, but that's going to get you
Speaker 3: angry reviews. If someone is believes that they were not
Speaker 3: treated well, if someone was told that they are, if
Speaker 3: someone like waited too long for their food, that's kind
Speaker 3: of in that middle ground. But then on the far
Speaker 3: right you have accuracy. And what we find is that
Speaker 3: is completely black or white. I ordered fries, I didn't
Speaker 3: get fries. I ordered a burger with mustard. I didn't
Speaker 3: get mustard. Now the black and white may be they
Speaker 3: ordered it wrong, but at the end of the day,
Speaker 3: it's still black and white. What they either they placed
Speaker 3: an order incorrectly, or they placed it or correctly and
Speaker 3: they got an incorrect order. Either way, that accuracy is
Speaker 3: going to represent a very small percentage. When you look
Speaker 3: at food service accuracy, that accuracy represents a very small
Speaker 3: percentage of feedback, and it represents the majority of negative reviews.
Speaker 3: Of the worst reviews you get are about accuracy. So
Speaker 3: someone can look at our ovation dashboard and say, ah, man, like,
Speaker 3: you know, I'm getting fifteen percent complaints about food and
Speaker 3: I only have six percent complaints about accuracy. I'm going
Speaker 3: to focus on food. You're focusing on the wrong ship here,
Speaker 3: because those are people where everything was great, but accuracy.
Speaker 3: That's a fast way to lose customers and gain five
Speaker 3: to gain one star reviews. And service is going to
Speaker 3: be the next, uh, you know, the next ladder up
Speaker 3: of You got to fix your service. You got to
Speaker 3: make sure that people are are being treated the way
Speaker 3: that they're expected to be treated, knowing that there is
Speaker 3: some subjectivity there. And then with the food, yes, fix
Speaker 3: the consistent problems, but again, don't be so concerned about
Speaker 3: the ones that are completely opposite feedback just because the
Speaker 3: fact is you're a restaurant, you're going to get most
Speaker 3: of your complaints about food. So figure out, and this
Speaker 3: is something that we help you to do. What about
Speaker 3: that food needs to be changed? And what about that
Speaker 3: food has been totally is totally preferenced And Mike just
Speaker 3: might not like zach Shachsberger's and that's okay. And so anyway,
Speaker 3: that's that's the advice I give people, is like, if
Speaker 3: you're going to start with one thing, start with order accuracy,
Speaker 3: because that makes I mean, last night, Mike, I ordered
Speaker 3: from a restaurant I'm not gonna say who I ordered
Speaker 3: from a restaurant. I got home and they didn't give
Speaker 3: me two sides. Now I've got I just got back
Speaker 3: from a crazy long conference, traveling all day. My wife
Speaker 3: is with you know, the four kids by herself for
Speaker 3: like four days. She's tired. I'm like, hey, I'll pick
Speaker 3: up food on the way home. Don't worry about cooking tonight.
Speaker 3: I get it. I get home, I open it up,
Speaker 3: and what my wife wanted wasn't there. You better believe.
Speaker 3: It was like so frustrating. And then when I call them,
Speaker 3: they're like, okay, well, well we'll make that for you.
Speaker 3: Just come by and pick it up. And I'm like,
Speaker 3: that's not gonna happen. I'm not taking an additional thirty
Speaker 3: minutes to go because you messed up my order. And
Speaker 3: so I was very, very frustrated by that. And that
Speaker 3: is what is going to really cause a a huge
Speaker 3: concern for brands and going to cause those negative reviews.
Speaker 3: So watch out for that. Don't be so consumed by
Speaker 3: the loud or the many that you lose sight of
Speaker 3: the few, but the important.
Speaker 2: Yeah, that's really interesting, And to your point, there's nothing
Speaker 2: worse when you get a delivery order, you know, an
Speaker 2: incorrect delivery order, so frustrating. Are there any trends right
Speaker 2: now that are cropping up across your customer base.
Speaker 3: Yeah, I will say a lot of people talk about value,
Speaker 3: and a lot of people are saying right now, like, hey,
Speaker 3: you got to take price, take price, take price, but
Speaker 3: it can't take price because you know, I you know cost,
Speaker 3: you know, price sensitivity with customers. What we're finding is
Speaker 3: that people are okay to spend more money. They just
Speaker 3: want to get what they're paying for. They're everything has
Speaker 3: gone up in price. People are not shot by prices
Speaker 3: anymore other than I mean, there's a couple of burger
Speaker 3: places that I've gone too lately and I got like
Speaker 3: a burger, a small burger, a small fry, and a
Speaker 3: small soda, and I spent twenty five bucks and I'm like,
Speaker 3: I'm like, I'm not ordering door Dash, like I'm right here.
Speaker 3: But anyway, so that was a little bit surprising. But
Speaker 3: the fact is that, like, people are used to spending
Speaker 3: more money, and so they're okay with it, but you
Speaker 3: gotta make sure you nail it. You cannot afford to
Speaker 3: have a missing item, to have a missing ingredient. Especially
Speaker 3: Oh my gosh, Mike, if you want to see people
Speaker 3: who are really mad, you should read reviews of people
Speaker 3: who paid seventy five cents for extra sauce and the
Speaker 3: sauce didn't come that. Those reviews are fascinating to read
Speaker 3: because it's just like the vending machine principle of if
Speaker 3: I put a dollar in the vending machine and my
Speaker 3: candy bar comes out, I'm like, well, yeah, I got
Speaker 3: what I paid for. If I put a dollar in
Speaker 3: and two candy bars come out, it's like, oh wow,
Speaker 3: really cool. Like that, that's great. I'm like pleasantly surprised, right,
Speaker 3: But I'm not like shouting it from the rooftops. Right.
Speaker 3: But if I put in a dollar, mic and so
Speaker 3: help that vending machine if that candy bar gets stuck
Speaker 3: in there. Right, But I mean like we're going hulk
Speaker 3: on that. We're grabbing that, we're shaking the vending machine,
Speaker 3: we're smashing into it, because it's not about the dollar.
Speaker 3: It's about not getting what you're paid for. And so
Speaker 3: that's the thing we're seeing in our trends is that
Speaker 3: the value discussions are tied to unmet expectations, not tied
Speaker 3: to everything's getting more expensive. But what we are finding
Speaker 3: too is that people are noticing shrinkflation and they're they're
Speaker 3: hyper focused on that. So if you change your packaging,
Speaker 3: we had a customer same you know, they weigh their food,
Speaker 3: same exact food when they get it in store versus
Speaker 3: when they get it delivered or get it to go.
Speaker 3: But the to go complaints are all about how portion
Speaker 3: sizes have gotten smaller, and people are hyper sensitive to that,
Speaker 3: just because the packaging makes it look like it's smaller,
Speaker 3: but it's the same weight. But the difference between eating
Speaker 3: something on a plate and eating something in a you know,
Speaker 3: to go container, it looks different, it's not as spread out.
Speaker 3: And so think about that because perception is reality. And
Speaker 3: if someone thinks they're getting less, guess what. I don't
Speaker 3: care how much and how perfectly you weigh that to
Speaker 3: the hundredth of the of a decimal for the ounce.
Speaker 3: But if they think they got less, then they got less.
Speaker 3: And so just keep that in mind as you're thinking
Speaker 3: about your to go orders, especially because people are noticing
Speaker 3: they are on the lookout for getting ripped off in
Speaker 3: their words, and they want to get what they paid for.
Speaker 3: So That's why, again, the accuracy comes into play so much,
Speaker 3: because if I order from you and you mess up
Speaker 3: my order, guess what. There's a lot of fried chicken
Speaker 3: places out there, and I'm gonna give someone else a
Speaker 3: shot to keep to get my business to put in
Speaker 3: the rotation.
Speaker 1: Yeah, that's really interesting.
Speaker 2: And about the sauces, man, I'd imagine part of that
Speaker 2: is to the fact that some competitors may give you
Speaker 2: the sauce for free, right, And so if I'm paying
Speaker 2: extra for something I feel like should be free and
Speaker 2: then I don't get it, it just adds a little
Speaker 2: more salt in the wound.
Speaker 3: Yeah, exactly, that's exactly right.
Speaker 2: Last time we spoke, we discussed the service recovery paradox.
Speaker 1: I think that is absolutely fascinating. Please please speak a
Speaker 1: little bit about that.
Speaker 3: So a lot of people say that a bad review
Speaker 3: is a gift, and it is, but if it's online,
Speaker 3: the problem is you're unlikely to get it changed, and
Speaker 3: you're unlikely to really be in contact with that guest.
Speaker 3: And when you're giving stuff away in a response to
Speaker 3: a negative review, that's basically just like teaching people, hey,
Speaker 3: leave a review, we'll give you free stuff. So The
Speaker 3: trick of this is getting a private feedback tool that
Speaker 3: you're able to connect with that guest in real time
Speaker 3: before they leave that negative review. But that negative guest,
Speaker 3: when compared to the average guest, is actually worth more.
Speaker 3: And they've done PhD studies about the service recovery paradox,
Speaker 3: and basically the thesis is, and that's been proven out
Speaker 3: time and time again, is a guest that has a
Speaker 3: service failure and proper service recovery is more likely to
Speaker 3: become loyal than a guest who never had a service
Speaker 3: failure in the first place. So I went to our
Speaker 3: data and I said, okay, we've got the data here.
Speaker 3: I've never seen dollars like how much more valuable. What
Speaker 3: we found is that the average guest, let's just talk
Speaker 3: about retention rate. Average guest retention rate is thirty percent.
Speaker 3: This is, by the way, we followed one hundred and
Speaker 3: fifty thousand consumers over eighteen months to track this data.
Speaker 3: Thirty percent retention rates average. If they have an amazing
Speaker 3: experience and they're willing to go on and even take
Speaker 3: an ovation survey and say I had a five out
Speaker 3: of five experience, they have a sixty percent retention rate,
Speaker 3: and if they had a negative experience with no service recovery,
Speaker 3: they have a thirteen percent retention rate. Okay, so here
Speaker 3: we are thirty average, sixty happy, thirteen upset. Now what
Speaker 3: happens if they have an upset? If they're equally as upset,
Speaker 3: but the only difference is that they get responded to.
Speaker 3: And I'm going to put a caveat here, if they
Speaker 3: get responded to using our AI, And I'll tell you
Speaker 3: why in a second. What happens is that guest compared
Speaker 3: to the average guest, they don't have a thirty percent
Speaker 3: or even a sixty percent retention rate. They go from
Speaker 3: thirteen percent to sixty eight percent retention rate. Not only that,
Speaker 3: but they come in four times more frequently than the
Speaker 3: average guest. Not only that they spend five dollars more
Speaker 3: per visit than the average guest, and not only that
Speaker 3: they are twelve times more likely to leave you a
Speaker 3: five star review. So the recovered guest is actually worth
Speaker 3: twenty four times the value of the average guest. And
Speaker 3: the reason I say AI is because what we found
Speaker 3: is that our AI is actually ten percent better at
Speaker 3: winning back. The recovery rate is ten percent higher than
Speaker 3: if you don't use AI, and there's a few reasons
Speaker 3: for that, but one of the main reasons is because
Speaker 3: they're actually you're taking some of the emotion out of it,
Speaker 3: and so it's not a combative conversation, but it's a
Speaker 3: understanding conversation. But also because you're using their name, and
Speaker 3: a lot of times when we respond to guests, we
Speaker 3: forget to use their name. If we're using like a
Speaker 3: chat a chat tool, AI will always remember to say Mike,
Speaker 3: and they'll say Zach, Mike. Hey, Mike's so sorry about
Speaker 3: your experience with us and that our our rice was dry.
Speaker 3: We always drive for excellent food. Seems like we missed
Speaker 3: the mark this time. Let me give you five dollars
Speaker 3: off and would love to welcome you back again. I'm Zach.
Speaker 3: Let me know if I could do anything to help out,
Speaker 3: you know, like and then we send them that you
Speaker 3: could send them that offer. What is interesting though, is
Speaker 3: that sending an offer it increases the retention rate a
Speaker 3: little bit, but using a name increases the retention rate more,
Speaker 3: and so it's less about giving people something, it's more
Speaker 3: about giving them a feeling. It's helping them feel heard.
Speaker 3: Whereas will Gadera puts it feel seen right, because my
Speaker 3: definition of hospitality, after you know, seeing millions millions of
Speaker 3: customers go through the ovation platform and see what they
Speaker 3: care about the most, is hospitality is proving to the
Speaker 3: guests that you care. And you can care by doing
Speaker 3: a little bit extra and helping them feel Specially, you
Speaker 3: can care by meeting their expectations consistently. You can care
Speaker 3: by apologizing and making it right, and you could care
Speaker 3: by fixing your operations and actually following up with people
Speaker 3: to say, hey, you told us that the rice was dry.
Speaker 3: We actually realized that we are cooking too much rice
Speaker 3: in the afternoons. Thank you so much for helping us
Speaker 3: out with that. We've made that change and hope that
Speaker 3: you'll notice a difference. Those those customers who go like
Speaker 3: above and beyond, they become not just lifelong fans, but
Speaker 3: they become insane fans. And that's like you're catering my
Speaker 3: wedding type fan. And that's what we need to have
Speaker 3: staying power in this economy and this much competition, and
Speaker 3: with the cost of getting a new guest being so
Speaker 3: irrationally high nowadays that you almost can't afford to spend
Speaker 3: the money required to get into someone's regular rotation, and
Speaker 3: so you just you have to rely on being very
Speaker 3: vigilant listening to your fans and making sure that that
Speaker 3: you create experiences even when things go wrong, that make
Speaker 3: them want to bring other people in. I love it.
Speaker 1: That's a perfect place to wrap it up. Thanks again, Zach.
Speaker 2: Where can listeners go to learn more about ovation and
Speaker 2: find your podcast?
Speaker 1: Which is fantastic by the way.
Speaker 3: Well that's because you've been on it, Mike. You could
Speaker 3: check us out at ovation up dot com or go
Speaker 3: check out given ovation at anywhere your favorite podcast is found.
Speaker 2: All right, good stuff. I want to also thank the
Speaker 2: audience for tuning in. If you liked our discussion, please
Speaker 2: share with your friends and colleagues.
Speaker 1: Check back soon for
Speaker 2: An interview with Joe Keith Valver, managing partner at A
Speaker 2: Line Public Strategics.