WEBVTT - Craftable’s Zats on Using AI to Cut Eatery Costs 0:00:21.720 --> 0:00:22.800 Welcome to Chopping It Up. 0:00:23.200 --> 0:00:25.440 I'm your host, Mike Hanlon, the senior Restaurant and Food 0:00:25.440 --> 0:00:29.240 Service analyst at Bloomberg Intelligence. Our research and that of 0:00:29.280 --> 0:00:32.320 bi's five hundred analysts around the globe can be found 0:00:32.360 --> 0:00:36.200 exclusively on the Bloomberg terminal. Today, we're joined by Sam Zatz, 0:00:36.240 --> 0:00:38.520 co founder and CEO at CRAFTABWL. 0:00:38.840 --> 0:00:39.800 How you doing Sam? 0:00:40.200 --> 0:00:42.240 Hey, Mike Aydan, how's your day weekend? 0:00:42.960 --> 0:00:44.760 It was nice, man, got to spend some time with 0:00:45.120 --> 0:00:46.080 family and friends. 0:00:46.120 --> 0:00:47.880 What about you? It was great? 0:00:47.960 --> 0:00:50.519 It was great. See here in Texas, we had one 0:00:50.600 --> 0:00:53.519 hundred degrees, then Labor Day hits and we're down now 0:00:53.600 --> 0:00:56.080 to eighty five ninety degrees, so we can actually get 0:00:56.080 --> 0:00:58.600 outside and finally have our summer in the South. 0:01:00.120 --> 0:01:02.720 Did very nice. Yeah, we're lucky. 0:01:03.440 --> 0:01:05.279 You know, we had a little bit of rain this weekend, 0:01:05.319 --> 0:01:09.440 but this week has been absolutely glorious. Highs of eighties, 0:01:09.480 --> 0:01:12.560 lows of fifty five. It's been absolutely perfect. 0:01:12.720 --> 0:01:17.080 So that's right. You've got to enjoy it and hopefully 0:01:17.680 --> 0:01:19.119 had some good family time as well. 0:01:19.800 --> 0:01:22.080 Yeah, and so you're a California guy, right, so you 0:01:22.120 --> 0:01:25.039 missed that California weather or what that's true? 0:01:25.200 --> 0:01:28.399 That's true. So for most of my life was based 0:01:28.440 --> 0:01:32.920 out of pale Alto and went to actually both of 0:01:32.920 --> 0:01:36.200 the rival schools back on the West coast. So a 0:01:36.280 --> 0:01:40.920 little bit of divided during the big game. But enjoy California. 0:01:41.040 --> 0:01:44.720 But for the past five years, Texas and southern hospitality 0:01:44.720 --> 0:01:47.240 has definitely been home for us here. 0:01:47.640 --> 0:01:47.920 All right. 0:01:47.960 --> 0:01:51.040 And so yeah, I saw you graduated from Berkeley with 0:01:51.120 --> 0:01:54.160 an engineering degree, So we'll get to that in a second. 0:01:54.160 --> 0:01:56.800 But have you ever read The Way of the Peaceful 0:01:56.840 --> 0:01:59.880 Warrior by Dan Millman? I have not, but tell me 0:02:01.160 --> 0:02:03.520 all right, So I just finished it. 0:02:03.520 --> 0:02:04.520 It's a phenomenal book. 0:02:04.520 --> 0:02:07.640 It's an oid to biograph, it's an auto biographical novel, 0:02:08.480 --> 0:02:11.920 and it primarily takes place at Berkeley, in fact, the 0:02:12.200 --> 0:02:16.600 gas station near Berkeley. It's about the author's spiritual journey. 0:02:16.840 --> 0:02:18.680 So I highly recommend it. 0:02:19.400 --> 0:02:22.280 And just about everybody at Berkeley has their own spiritual journey. 0:02:22.800 --> 0:02:26.800 You can pick whether it's through football, through engineering, or 0:02:26.919 --> 0:02:30.080 just by walking the streets to Telegraph Avenue. So you 0:02:30.160 --> 0:02:32.639 get to pick your own ending there in your own journey. 0:02:32.639 --> 0:02:34.079 So it's quite a special place. 0:02:35.080 --> 0:02:37.959 Very cool man, all right. So as an engineer, how'd 0:02:37.960 --> 0:02:39.480 you get into the restaurant business. 0:02:39.960 --> 0:02:42.800 So I actually grew up in a family of restaurant tours. 0:02:43.360 --> 0:02:48.680 Family were engineers from former Soviet Russia, and when my 0:02:48.760 --> 0:02:52.400 grandparents came here, they of course needed to find a 0:02:52.400 --> 0:02:55.840 family business, and of course my parents got us all 0:02:55.880 --> 0:02:59.840 into the hospitality business. So we actually had a couple 0:02:59.880 --> 0:03:05.240 of restaurants back in Palelto in the Peninsula, and it 0:03:05.280 --> 0:03:09.040 was actually my first job helping out serving tables seeding 0:03:09.120 --> 0:03:12.760 guests in our family's restaurants. 0:03:13.720 --> 0:03:14.239 Very cool. 0:03:15.520 --> 0:03:17.679 So once you talk a little bit about craftable and 0:03:18.040 --> 0:03:19.320 how you came up with that idea. 0:03:20.240 --> 0:03:23.320 Yeah, So it was actually having grown up in restaurants 0:03:23.440 --> 0:03:26.960 and then having spent some time in engineering school, I 0:03:27.000 --> 0:03:31.560 really wanted to learn about businesses and really leveraging how 0:03:31.600 --> 0:03:36.800 can technology help businesses become more profitable and operate smarter. 0:03:37.720 --> 0:03:41.480 So I actually jumped into management consulting after my Berkeley 0:03:41.560 --> 0:03:45.640 days where I did a lot of business transformation, and so, 0:03:45.760 --> 0:03:48.560 of course, after my wrapped up consulting, started to get 0:03:48.640 --> 0:03:53.200 more eager and excited to be more entrepreneurial. Ended up 0:03:53.400 --> 0:03:59.120 in business school and I had explored a series of 0:03:59.320 --> 0:04:01.920 various industry and then one day actually a good friend 0:04:01.920 --> 0:04:05.160 of mine had called me and he had shared that 0:04:05.280 --> 0:04:08.280 he had some great news, he had some very challenging news. 0:04:09.040 --> 0:04:11.480 And that was actually the day he became the beverage 0:04:11.520 --> 0:04:16.120 director of a well known restaurant in San Francisco. And 0:04:16.160 --> 0:04:19.000 that day was great because you know, he had spent 0:04:19.080 --> 0:04:22.160 ten years being a bar back, our tender, bar manager. 0:04:22.240 --> 0:04:25.640 Ultimately becoming a beverage director. That day was also scary. 0:04:26.040 --> 0:04:30.280 It was scary because he finally realized what beverage directors do, 0:04:30.360 --> 0:04:34.320 and that's basically living about fourteen different Excel spreadsheets, one 0:04:34.320 --> 0:04:38.159 for ordering, one for inventory, one for recipes, another for waste, 0:04:39.160 --> 0:04:43.440 another for menu pricing and costing, and basically, you know, 0:04:43.920 --> 0:04:50.720 the data's manual, it's difficult, it's disparate. And he was 0:04:50.760 --> 0:04:53.320 basically asking me, you know, hey, Sam, you're the you're 0:04:53.360 --> 0:04:56.440 the former consultant, you're the engineer. Hey, can you help 0:04:56.480 --> 0:04:59.359 me understand you know, what is this whole bar P 0:04:59.520 --> 0:05:03.400 and L and how do I download Excel? And that 0:05:03.520 --> 0:05:08.320 was when I realized there's a huge opportunity to really 0:05:08.360 --> 0:05:11.920 help our incredible industry really understand how to make better 0:05:12.040 --> 0:05:16.520 operational decisions inside of the four walls of the restaurant. 0:05:17.120 --> 0:05:18.800 Okay, and what was your typical customer? 0:05:19.640 --> 0:05:21.960 Well, I guess before we get in there, why do 0:05:22.120 --> 0:05:25.120 you talk a little bit more about the suite of 0:05:25.160 --> 0:05:28.920 the products and what you offer and what it helps 0:05:29.040 --> 0:05:30.400 do at the restaurant level. 0:05:31.000 --> 0:05:31.240 Yeah. 0:05:31.279 --> 0:05:36.400 Absolutely, So we take a operator first approach, which is 0:05:36.400 --> 0:05:39.360 a little bit different than most other restaurant tech solutions. 0:05:39.760 --> 0:05:41.960 And so what we mean by that is that we 0:05:42.000 --> 0:05:45.400 look at what different functions and departments of the restaurant 0:05:45.839 --> 0:05:49.159 or hospitality that we're serving. So we have a solution 0:05:49.279 --> 0:05:53.760 called Beveger that's for your bar management, as restaurant profits 0:05:53.760 --> 0:05:55.719 are won and lost at the bar program, as you 0:05:55.760 --> 0:05:59.080 know all too well. And then a number of years 0:05:59.160 --> 0:06:03.440 later we created product called food Ajert similarly it's for 0:06:03.520 --> 0:06:06.760 culinary directors and for chefs that are trying to manage 0:06:06.800 --> 0:06:11.039 their food cost management. And then after that we actually 0:06:11.320 --> 0:06:14.960 realized and not as much realized, but received the feedback 0:06:15.000 --> 0:06:19.320 that our food and beverage products were actually happened to 0:06:19.320 --> 0:06:22.320 be in hotels, and believe it or not, hotels also 0:06:22.360 --> 0:06:25.160 like to procure and manage and track inventory of non 0:06:25.360 --> 0:06:28.760 F and B products as well, whether it's retail or 0:06:28.800 --> 0:06:31.320 linens and things like that. So we actually have a 0:06:31.360 --> 0:06:35.080 house product which is our non F and B for 0:06:35.279 --> 0:06:38.320 all the operational decisions, again very similar to food and 0:06:38.680 --> 0:06:43.080 beverage for the house departments. And then during COVID in 0:06:43.080 --> 0:06:48.040 twenty twenty, we created our first real time analytics solution, 0:06:48.360 --> 0:06:53.440 so think about delivering sales versus labor and understanding their 0:06:53.440 --> 0:06:57.520 prime costs every fifteen minutes. So we're pretty excited about that. 0:06:57.520 --> 0:07:01.839 That was really eye opening as folks were shifting from 0:07:02.040 --> 0:07:06.440 in person and in room dining to delivery and third 0:07:06.480 --> 0:07:09.600 party and takeout. It really shifted the model of how 0:07:09.600 --> 0:07:12.840 to manage sales, cogs and labor. And that's really where 0:07:12.840 --> 0:07:15.080 we really dove in with our customers and created our 0:07:15.120 --> 0:07:19.960 analytics solution. And so that's really the suite of Prafitable products, 0:07:20.000 --> 0:07:28.840 and we serve all different segments of hospitality, whether it's restaurants, bars, QSRs, FSRS, hotels, resorts, 0:07:29.840 --> 0:07:33.520 we even have a large collection of golf courses, country clubs, 0:07:33.680 --> 0:07:38.400 entertainment venues, really anywhere where the operators are really trying 0:07:38.440 --> 0:07:41.680 to make better day to day decisions, where you know 0:07:41.720 --> 0:07:44.040 they're really trying to tackle the middle of that P 0:07:44.160 --> 0:07:48.000 and L for prime cost and cogs and labor reporting 0:07:48.040 --> 0:07:48.640 and management. 0:07:50.000 --> 0:07:52.800 Yeah, which is so important right now with all the 0:07:53.360 --> 0:07:56.119 labor and commodity and inflation we've seen over the last 0:07:56.120 --> 0:07:57.360 handful of years. 0:07:57.440 --> 0:08:00.120 And really, why I have you here today? 0:08:01.760 --> 0:08:03.800 And it sounds like you're also helping the gms and 0:08:03.800 --> 0:08:06.400 the beverage directors and a lot of the employees do 0:08:06.440 --> 0:08:07.679 their jobs as well. 0:08:07.760 --> 0:08:09.840 Does your product help with employee retention? 0:08:10.600 --> 0:08:14.280 Yeah, Mike, So, employee retention is actually a huge element, 0:08:14.360 --> 0:08:17.480 and it's one that we see the Craftable Solution helping 0:08:17.520 --> 0:08:21.520 a lot of our restaurant partners. Just think about it. 0:08:21.560 --> 0:08:24.440 Your bar manager, you're closing the month, it's two o'clock 0:08:24.480 --> 0:08:26.720 in the morning, and now you've got six hours of 0:08:26.840 --> 0:08:29.640 counting inventory. Or you're a chef and you're trying to 0:08:29.640 --> 0:08:32.680 figure out how much do I order for the week, 0:08:32.960 --> 0:08:36.280 but it's a holiday week, maybe it's just before labor 0:08:36.320 --> 0:08:39.000 day a week ago, and you're trying to understand how 0:08:39.000 --> 0:08:41.760 do I properly order so I don't have waste and 0:08:41.800 --> 0:08:45.800 then have really overbearing food costs. And so those are 0:08:45.840 --> 0:08:48.520 all decisions that we're helping our operators, whether it's the 0:08:48.600 --> 0:08:52.480 bar manager, the general manager, or the culinary director and 0:08:52.520 --> 0:08:55.200 even the director of ops really understand how do I 0:08:55.320 --> 0:08:58.040 run those day to day, real time decisions that they're 0:08:58.080 --> 0:09:01.760 making day and day out, and that they've relied really 0:09:01.800 --> 0:09:08.559 on instinct and intuition and their handy dandy spreadsheet and clipboard. 0:09:08.800 --> 0:09:11.480 And so that's really where the essence of craftable. 0:09:11.080 --> 0:09:13.640 Comes very cool. 0:09:13.679 --> 0:09:17.199 And you mentioned, you know, you you serve restaurant customers, 0:09:17.280 --> 0:09:19.600 you know, across the spectrum and all the different sub 0:09:19.640 --> 0:09:23.240 segments of the industry. What what's the typical size of 0:09:23.280 --> 0:09:23.960 your customer? 0:09:25.000 --> 0:09:28.560 So typical size of a graphical customers anywhere from five 0:09:28.720 --> 0:09:34.440 to five hundred restaurant locations, and it could be a restaurant, 0:09:34.520 --> 0:09:38.000 could be quick serve, it could be full serve, it 0:09:38.040 --> 0:09:42.720 could even be full hotel hospitality. Really we're looking for 0:09:42.800 --> 0:09:49.080 operators that are are are having either complex operations where 0:09:49.120 --> 0:09:52.560 they're making a lot of various recipes with a lot 0:09:52.600 --> 0:09:57.080 of menu changes, vendor changes, uh seasonality with staffing, or 0:09:57.200 --> 0:10:00.840 we see another type of customer where they're looking to 0:10:00.880 --> 0:10:05.760 have a very high velocity or speed in terms of 0:10:05.800 --> 0:10:09.120 their feedback and their operations to the customer. So the 0:10:09.600 --> 0:10:14.240 high velocity really are more chain franchise QSR type of 0:10:14.280 --> 0:10:17.400 models where we really blend nicely, and then a lot 0:10:17.400 --> 0:10:21.239 of the farm to table, complex big wine program, craft cocktails, 0:10:21.360 --> 0:10:23.960 or even a whole hotel solution is really where that 0:10:24.240 --> 0:10:27.800 more complex, sophisticated use case comes in. But we serve both. 0:10:28.520 --> 0:10:29.400 Okay, very cool. 0:10:31.240 --> 0:10:34.000 It sounds like you know you're doing a good bit 0:10:34.080 --> 0:10:41.040 of sales forecasting right to help predict inventory needs and labor. 0:10:42.080 --> 0:10:44.680 Are you using AI to help with that process? 0:10:45.360 --> 0:10:48.000 Yeah? Absolutely, so. We've spent the last three years developing 0:10:48.000 --> 0:10:52.160 our own AI models, and really what we're doing is 0:10:52.280 --> 0:10:55.640 we're providing a baseline based off of how your prior 0:10:55.679 --> 0:10:57.880 sales are as well as we have over dozens of 0:10:58.480 --> 0:11:01.719 data points and factors that feed into it. But what 0:11:01.720 --> 0:11:04.559 we've really realized is that the win win is not 0:11:04.679 --> 0:11:07.880 just to replace the general manager. One of my clients 0:11:08.400 --> 0:11:12.840 very successful, he calls it lebotomizing when you actually start 0:11:12.880 --> 0:11:16.720 to feed the answer to the GM versus having that 0:11:16.760 --> 0:11:20.559 GM really understand customer and then being given them a baseline. 0:11:20.960 --> 0:11:24.160 So we take a mixed approach, a hybrid approach, if 0:11:24.200 --> 0:11:27.040 you will, where we generate an initial forecast from a 0:11:27.120 --> 0:11:31.200 quantitative perspective, and then we welcome our clients to actually 0:11:31.240 --> 0:11:33.560 add in any additional things that they may know are 0:11:33.640 --> 0:11:36.480 coming that the model may have missed based off of 0:11:36.520 --> 0:11:40.280 prior history and performance. But Mike, you're totally right. Everything 0:11:40.360 --> 0:11:44.320 starts with the forecast. Once you've got a really strong forecast, 0:11:44.720 --> 0:11:47.680 that's really where that beautiful real time feedback loop starts 0:11:47.720 --> 0:11:52.040 to activate and spin and really drive an increased profitability, 0:11:52.360 --> 0:11:55.640 whether it's what you're ordering, how you're staffing, what you're prepping, 0:11:56.040 --> 0:11:59.120 and even how to maximize and optimize your menu so 0:11:59.160 --> 0:12:02.800 you can optimiz Is it for engineering profitability? Ah? 0:12:02.880 --> 0:12:04.320 Yeah, that was one of the questions I was going 0:12:04.400 --> 0:12:04.720 to ask. 0:12:05.200 --> 0:12:06.319 Sorry I beat you to it. 0:12:06.840 --> 0:12:09.520 Yeah, you did so, so you do help with menu 0:12:09.559 --> 0:12:11.000 pricing absolutely. 0:12:11.120 --> 0:12:16.280 So we're not in the dynamic pricing arena yet, we're 0:12:16.280 --> 0:12:20.160 looking really more towards the operational menu pricing, which is, 0:12:20.160 --> 0:12:22.600 how do we bring together the price that you actually 0:12:22.640 --> 0:12:26.520 are paying today, what your labor and your staffing is today, 0:12:26.760 --> 0:12:30.440 and then what your menu profitability is today. So those 0:12:30.440 --> 0:12:34.120 are things that you know, your grandfather's accounting system really 0:12:34.120 --> 0:12:36.800 can't do, especially in such a high paced world that 0:12:36.840 --> 0:12:37.800 we're currently live in. 0:12:37.720 --> 0:12:42.280 In the restaurant space, yeah, yeah, for sure. 0:12:42.440 --> 0:12:45.760 And I'd imagine it's down to the to the SKU, right, 0:12:45.880 --> 0:12:49.199 so you can you know, you might have more pricing 0:12:49.440 --> 0:12:53.680 power on a chicken cutlet sandwich because you sell thousands 0:12:53.679 --> 0:12:57.880 and thousands of them a week versus maybe a chicken 0:12:57.960 --> 0:12:59.280 salad or something like that. 0:12:59.360 --> 0:12:59.560 Right. 0:12:59.720 --> 0:13:03.160 Yeah, absolutely, we look at the profitability, we look at 0:13:03.200 --> 0:13:05.760 the volume of the sale. We also are looking at 0:13:05.800 --> 0:13:08.280 the supply chain. We're starting to look at, you know, 0:13:08.280 --> 0:13:11.000 what are the prices that we're getting from the vendors 0:13:11.160 --> 0:13:13.360 on Sunday, So you can start to think about, well, 0:13:13.360 --> 0:13:15.240 how do I price my menu or what are the 0:13:15.280 --> 0:13:19.000 items to actually lto and push forward and so again, 0:13:19.040 --> 0:13:20.960 it all starts with the forecast, and the forecast is 0:13:20.960 --> 0:13:22.520 what's going to help you with the purchasing, and then 0:13:22.600 --> 0:13:25.120 that's how you can start to optimize the menu. A 0:13:25.160 --> 0:13:29.920 lot of restaurants have a lot of stability and kind 0:13:29.920 --> 0:13:34.319 of consistency, but everything around that restaurant is very dynamic, 0:13:34.720 --> 0:13:37.120 and that's really what we're trying to help bridge between 0:13:37.280 --> 0:13:39.120 the outside world and trying to make it a little 0:13:39.120 --> 0:13:42.439 bit easier for operators to manage all those different forces inside. 0:13:43.120 --> 0:13:45.760 Cool And are you doing that down to the individual restaurant. 0:13:46.440 --> 0:13:48.480 We're doing it down to the individual restaurant. We're doing 0:13:48.520 --> 0:13:51.000 it down to the individual skew. We're doing it down 0:13:51.520 --> 0:13:54.920 to the individual vendor skew that may roll up to 0:13:55.080 --> 0:13:59.200 an inventory skew as well. So it's all about really 0:13:59.320 --> 0:14:02.719 understanding and putting all the pieces togethers as we call it. 0:14:02.800 --> 0:14:04.760 We like to connect all those dots together. 0:14:05.320 --> 0:14:07.800 Yeah, I mean, strategic pricing has been huge that the 0:14:07.960 --> 0:14:11.120 chains that we cover that had a really good handle 0:14:11.160 --> 0:14:13.120 on it over the last few years have been able 0:14:13.160 --> 0:14:16.320 to raise prices so much more. They've had such better 0:14:16.360 --> 0:14:20.360 traffic than the chains that were behind the curve on 0:14:20.360 --> 0:14:20.920 that one man. 0:14:22.000 --> 0:14:24.960 Yeah, and stepping back, you can only continue to raise 0:14:25.000 --> 0:14:27.680 prices so much as we're seeing and as the summer 0:14:27.720 --> 0:14:31.640 has really proven, and so you know, raising prices will 0:14:31.640 --> 0:14:34.440 only get you so far. And then it's really understanding, well, 0:14:34.440 --> 0:14:37.200 how do I actually leverage all these new data sources 0:14:37.600 --> 0:14:40.880 make better real time decisions to cut my excess costs 0:14:40.880 --> 0:14:44.320 and waste so that way I can minimize the impact 0:14:44.400 --> 0:14:47.200 on the customer and that's what will keep those guests 0:14:47.240 --> 0:14:48.440 counts as high as possible. 0:14:49.720 --> 0:14:52.520 Yeah, for sure, And you mentioned you're moving to real 0:14:52.560 --> 0:14:54.240 time operations and flash reporting. 0:14:54.600 --> 0:14:56.360 Can you talk about that. Yeah. 0:14:56.400 --> 0:14:59.800 Absolutely, So what we've realized is again as the world 0:14:59.840 --> 0:15:02.280 canntinues to get more and more complex and more and 0:15:02.320 --> 0:15:05.880 more data points, is really about what we're calling the 0:15:06.280 --> 0:15:10.200 continuous close or the continuous feedback loop, which is all 0:15:10.240 --> 0:15:13.920 about how do we create that AI generated forecast which 0:15:13.960 --> 0:15:16.680 is going to help you understand all the different parts 0:15:16.720 --> 0:15:20.160 of the business, whether it's what you're purchasing, what you're staffing, 0:15:20.320 --> 0:15:23.160 or what you're prepping. And then as you're starting to 0:15:23.160 --> 0:15:26.240 get that feedback loop back, so how sales is coming in, 0:15:26.360 --> 0:15:28.960 how labor is coming in, we start to bring that 0:15:29.080 --> 0:15:34.480 forecast to actual and really it's a rolling real time 0:15:34.520 --> 0:15:38.120 feedback loop, so your forecast gets replaced with your actual 0:15:39.000 --> 0:15:40.560 and then you're re forecasting. 0:15:41.320 --> 0:15:44.320 It's interesting, you know, and we talked last time too. 0:15:44.360 --> 0:15:48.320 You talked about how important it is for finance and 0:15:48.400 --> 0:15:51.920 ops to kind of work together when addressing the middle 0:15:52.000 --> 0:15:52.320 of the. 0:15:52.240 --> 0:15:52.720 P and L. 0:15:53.280 --> 0:15:56.520 Can you talk a little bit about about that and 0:15:56.560 --> 0:15:59.840 how you know, just maybe reducing your costs on an 0:16:00.040 --> 0:16:02.600 item doesn't solve the problem for the long term. 0:16:02.960 --> 0:16:05.760 Yeah. Absolutely, we see this set craft all all the time, 0:16:06.760 --> 0:16:10.320 there will be a directive from finance that says you 0:16:10.400 --> 0:16:14.040 need to go cut costs, and then operations really just 0:16:14.120 --> 0:16:20.200 goes on a vendor or a skew item cost cutting exercise. 0:16:20.840 --> 0:16:22.560 And back when I was in consulting, we actually did 0:16:22.560 --> 0:16:24.880 these things called procurement studies where you really were just 0:16:24.920 --> 0:16:28.520 trying to squeeze all of your costs and your expenditures. 0:16:29.240 --> 0:16:32.160 That works maybe once, maybe twice, but it doesn't really 0:16:32.160 --> 0:16:34.400 work for the long term, and it doesn't actually help 0:16:34.480 --> 0:16:39.520 the overall long term profitability because you may squeeze or 0:16:39.520 --> 0:16:43.320 you may cought or eliminate something because of the cost factors, 0:16:43.320 --> 0:16:45.600 but now you're missing about well maybe it's going to 0:16:45.600 --> 0:16:49.040 produce higher labor or it'll or you'll lose out on revenue. 0:16:49.520 --> 0:16:52.680 And so stepping back to understand what the total implication 0:16:52.880 --> 0:16:55.640 is and looking at it not as a cost driving 0:16:55.680 --> 0:16:59.760 exercise but a profit driving exercise is really what we 0:17:00.000 --> 0:17:02.080 partner with all of our clients around focusing on. 0:17:02.600 --> 0:17:06.000 Yeah, great, it's so important to have finance, operations marketing 0:17:06.080 --> 0:17:08.440 all on the same team. 0:17:09.160 --> 0:17:12.280 And oftentimes folks in finance may not have operator experience, 0:17:12.359 --> 0:17:16.080 and so bridging the gap between the two is really important, 0:17:16.119 --> 0:17:19.440 and finance is looking to generate financial statements, but operations 0:17:19.600 --> 0:17:22.399 is really trying to manage the day to day and 0:17:22.480 --> 0:17:25.600 so if finance can help with the reporting back to operations, 0:17:25.600 --> 0:17:28.200 and operations can collaborate with finance to have them reach 0:17:28.240 --> 0:17:30.560 their goals, that's really where we see a lot of 0:17:30.600 --> 0:17:33.240 great growth and probably something that a lot of the 0:17:33.600 --> 0:17:37.000 successful change that you're reporting on are having a lot 0:17:37.000 --> 0:17:37.560 of success with. 0:17:38.520 --> 0:17:40.520 Let's talk about commodity prices a bit. 0:17:40.880 --> 0:17:44.800 Oil prices have been sliding lower, you know, probably a 0:17:44.840 --> 0:17:47.119 lot of it. It's due to weaker economic data of 0:17:47.200 --> 0:17:51.680 China also the US, but the soft commodities still remains stubborn. 0:17:51.840 --> 0:17:51.959 Right. 0:17:52.000 --> 0:17:56.560 We still have food costs remaining kind of high. So 0:17:56.760 --> 0:17:59.280 what's your outlook on food inflation for the rest of 0:17:59.320 --> 0:18:01.080 this year, maybe into twenty twenty five. 0:18:02.280 --> 0:18:05.680 Yeah, so we see food inflation going down a little bit, 0:18:05.880 --> 0:18:10.760 so it'll continue to the annual inflation will continue to 0:18:10.840 --> 0:18:14.200 be in the in the one to three percent range 0:18:14.560 --> 0:18:16.440 as we continue to see it, So we don't expect 0:18:16.480 --> 0:18:21.240 to see more bumps, but you're still going to continue 0:18:21.240 --> 0:18:23.600 to have high interest rates. They may be cut slightly 0:18:23.640 --> 0:18:25.879 here and there, so the pressures that you're talking about 0:18:25.920 --> 0:18:28.439 aren't going anywhere. I mean, let's face it, we're almost 0:18:28.440 --> 0:18:31.960 twenty one percent higher than we were since the pandemic, 0:18:32.800 --> 0:18:34.520 and that's not going to have any sort of relief. 0:18:34.680 --> 0:18:38.080 So those high food costs are here to stay. Which 0:18:38.119 --> 0:18:40.280 again and don't want to sound like a broken record, 0:18:40.320 --> 0:18:43.720 but it's again where you know, we will start working 0:18:43.720 --> 0:18:46.440 with one of our partners and we'll see that they're 0:18:46.440 --> 0:18:50.960 buying chicken from five different vendors and that's really where 0:18:51.040 --> 0:18:54.679 that real time decision loop and understanding, forecast and budget is. 0:18:55.119 --> 0:18:57.800 You know, are we buying the right chicken? When are 0:18:57.800 --> 0:19:01.399 we buying the chicken? And we'll see various swings on 0:19:01.560 --> 0:19:05.080 the different skews of the chicken, and so really grasping 0:19:05.080 --> 0:19:07.680 a good hand on the supply chain and again kind 0:19:07.680 --> 0:19:10.280 of connecting to before, it's not about a cost cutting, 0:19:10.320 --> 0:19:12.320 it's about let's talk with our vendors, let's talk with 0:19:12.359 --> 0:19:14.800 our supply chain. How do we create a win win 0:19:14.920 --> 0:19:18.560 relationship and be able to maybe cut down the five 0:19:18.640 --> 0:19:22.399 SKUs to three SKUs and find a better alignment of 0:19:22.440 --> 0:19:25.919 your supply chain with your distributors and your suppliers. We 0:19:25.960 --> 0:19:28.560 see that as an immense opportunity and it's something that 0:19:28.720 --> 0:19:31.040 we do day in and day out as we support our. 0:19:31.000 --> 0:19:33.200 Customers digital sales. 0:19:34.200 --> 0:19:36.639 What are you seeing from your customers in terms of 0:19:37.119 --> 0:19:42.159 digital sales. We've seen kind of a reduction in digital sales. 0:19:42.200 --> 0:19:44.639 I think maybe there could be some pushback here on 0:19:44.840 --> 0:19:48.880 just the price that you know, some people are paying. 0:19:48.760 --> 0:19:51.040 For third party delivery providers. 0:19:51.480 --> 0:19:53.960 What do you see in Yeah, so what we're seeing 0:19:54.040 --> 0:19:57.359 is the demand has definitely gone down than we had 0:19:57.520 --> 0:20:00.399 coming out of the pandemic. I think folks are to 0:20:00.400 --> 0:20:04.480 get back into the restaurants, get back into hospitality really 0:20:04.520 --> 0:20:07.159 the reason why you and I love this industry. But 0:20:07.200 --> 0:20:11.000 the digital sales, I think that the restaurant tours are 0:20:11.040 --> 0:20:13.480 starting to catch up with the technology companies and they're 0:20:13.520 --> 0:20:16.760 starting to price in a lot of those commissions and 0:20:16.880 --> 0:20:20.719 extra fees, especially when you look at returns and chargebacks 0:20:20.760 --> 0:20:23.720 and things like that, which we see accumulate quite quickly 0:20:24.200 --> 0:20:27.040 for the restaurant tour. And so what that's driving is 0:20:27.040 --> 0:20:29.560 that the restaurants are starting to put higher prices on 0:20:29.640 --> 0:20:32.200 those menus, and so you're seeing more and more menu 0:20:32.359 --> 0:20:37.560 variation versus based on the different channels of where that 0:20:37.640 --> 0:20:38.879 restaurant is available. 0:20:39.359 --> 0:20:43.439 Okay, and you know AI obviously all the rage. 0:20:43.920 --> 0:20:48.280 I have to ask the question, outside of craftable, what 0:20:48.800 --> 0:20:54.040 AI functionalities and technologies do you think are best for restaurants. 0:20:55.760 --> 0:21:01.679 Gosh, there's so much opportunity in a to take a 0:21:01.720 --> 0:21:04.120 lot of the manual and the repetitive tasks. I think 0:21:05.160 --> 0:21:06.760 a lot of the buzz and a lot of the 0:21:07.200 --> 0:21:12.520 Silicon Valley type story telling about how AI is going to, 0:21:12.720 --> 0:21:16.080 you know, take over lives and is going to replace 0:21:16.119 --> 0:21:17.800 you and me. I think that's a little bit of 0:21:18.200 --> 0:21:21.880 hyper belief you if you really ask me candidly speaking, 0:21:22.800 --> 0:21:25.480 but where where does AI really do a great job. 0:21:25.880 --> 0:21:31.000 It's anything that's super repetitive, super manual, super consistent, where 0:21:31.040 --> 0:21:33.000 there's a lot of data that can be processed in 0:21:33.600 --> 0:21:37.080 a short amount of time. And that's really anything that's 0:21:37.200 --> 0:21:40.440 revolving around the communication with the customer, around the menu, 0:21:40.560 --> 0:21:46.639 for example, providing customer service, being able to analyze data 0:21:46.680 --> 0:21:51.600 like prior sales, being able to look at competitor or 0:21:51.680 --> 0:21:53.760 benchmark data. I'm sure you guys are using a ton 0:21:53.760 --> 0:21:57.399 of AI just to just to synthesize and analyze everything 0:21:57.400 --> 0:22:00.200 that you're doing at Bloomberg as well. That's really where 0:22:00.240 --> 0:22:03.800 I think the essence of it. I think the storylines 0:22:03.840 --> 0:22:07.240 around AI, I think that those are just those are 0:22:07.280 --> 0:22:09.000 just buzzwords at the moment. 0:22:09.640 --> 0:22:12.960 Yeah, got to get those tech valuations up there. 0:22:12.760 --> 0:22:16.160 You go. They've had some softening valuations, so we got 0:22:16.160 --> 0:22:18.359 to keep coming back. I mean, I remember we were 0:22:18.400 --> 0:22:22.440 talking about AI back at back in Berkeley and we 0:22:22.440 --> 0:22:25.280 were twenty thirty years into the beginning of AI. So 0:22:25.800 --> 0:22:29.320 AI is not new, you know, it's really if you remember, 0:22:29.400 --> 0:22:33.720 the prior buzz was big data, so it's just another 0:22:34.160 --> 0:22:38.000 generation and evaluation bump. As you're suggesting. 0:22:39.119 --> 0:22:43.480 Yeah, it's funny. We use Cognoviy Labs. We'll give a 0:22:43.520 --> 0:22:48.119