Speaker 1: Welcome to Chopping It Up. I'm your host, Mike Hanlon,
Speaker 1: the senior restaurant and food service analysts at Bloomberg Intelligence.
Speaker 1: Our research and that of bi's five hundred analysts around
Speaker 1: the globe can be found exclusively on the Bloomberg terminal.
Speaker 1: A quick PSA if you like the pod, we'd love
Speaker 1: it if you could leave us a review on Apple
Speaker 1: or Spotify. Today we're joined by Noah Glass, CEO and
Speaker 1: founder of OLO.
Speaker 2: Welcome back to the pod, Noah, Mike, thank you for
Speaker 2: having me, and thank you for having me back.
Speaker 3: This is super exciting.
Speaker 1: Yeah, of course. Man, listen, I appreciate you coming on.
Speaker 1: You were I looked it up. You were episode ten
Speaker 1: and it kind of brought us to another level. You
Speaker 1: were the best performing episode for for quite a while,
Speaker 1: so I appreciate you having the faith in me coming
Speaker 1: on so early, before you know, we really had a name.
Speaker 1: So I appreciate you, and you're welcome back anytime. A man, Well,
Speaker 1: thank you.
Speaker 2: I have heard a rumor that now the best performing
Speaker 2: podcast episode of all time on Chopping It Up was
Speaker 2: my good friend Juwan George had five eight partners. I
Speaker 2: think he started the rumor knowing what I know about him,
Speaker 2: but I have a bit of a competitive streak, as
Speaker 2: does he, and so I'm glad that ten episode ten
Speaker 2: was like number one of the charts for a while.
Speaker 2: I'm bummed it's no longer number one, so I hope
Speaker 2: whatever episode this is can reconquer the number one spot.
Speaker 1: All right, cool man? Yeah, this is sixty six. And
Speaker 1: Matt Tucker, he kind of he benefited from a little
Speaker 1: luck on the terminal, so he's not like top ten
Speaker 1: downloads online, but on the Bloomberg terminal, they they it
Speaker 1: blew up. So Matt Tucker had a great, great episode two.
Speaker 1: So you know, all these guys that previously worked with
Speaker 1: you tend to do pretty well on the pod.
Speaker 3: Yeah.
Speaker 2: We're a lively bunch, and one of our core values
Speaker 2: is that we laugh hard together, and I think that
Speaker 2: comes out in our podcast appearances.
Speaker 1: So are you an NBA guy too, like the two
Speaker 1: of them?
Speaker 2: Not really, mainly because I'm really bad at basketball.
Speaker 3: I don't know.
Speaker 2: My son, who's now eight, was just considering a basketball
Speaker 2: camp this summer, and I was remembering back, you know,
Speaker 2: the scarred experience of athletics in my youth, playing basketball,
Speaker 2: Not really having played basketball before and as I don't
Speaker 2: know if basketball was really like four people of our
Speaker 2: size and athletic abilities. As we were talking before, I
Speaker 2: played lacrosse. That was my game. I played soccer a
Speaker 2: lot grown up, but basketball just never really. I really
Speaker 2: like NCAA Final four basketball. I love I mean, having
Speaker 2: played at the college level and just knowing how hard
Speaker 2: these guys are working, these gals are working. That's super fun.
Speaker 2: I love that NC DOUBLEA grit. I feel less passionate
Speaker 2: about the NBA, although I admire, like incredibly skilled players
Speaker 2: of Edie Craft.
Speaker 4: Yeah yeah, big big week for the NC DOUBLEA. But yeah,
Speaker 4: both Matt and Joan are are big NBA guys and something.
Speaker 4: You know, we like to bust each other about being,
Speaker 4: you know, especially Matt being a Wizards fan. Well, let's
Speaker 4: just you know, why don't you give a quick rundown
Speaker 4: of OOLO just for any listeners that might be new
Speaker 4: to the industry.
Speaker 2: Okay, So we talk about our mission at OLO as
Speaker 2: hospitality at scale and what that means is, you know,
Speaker 2: the way that we show up for enterprise restaurants across
Speaker 2: emerging enterprise enterprise Top twenty five restaurant brands to help
Speaker 2: them really meet the needs of their guests, and we
Speaker 2: do that through an open software platform that has now
Speaker 2: sixteen different modules that restaurant brands use. They're comprised of
Speaker 2: really three suites, order, pay, and Engage, and we're really
Speaker 2: well known in the industry for the order platform, and
Speaker 2: that's what we built over the past twenty years. We're
Speaker 2: coming up on our twenty year anniversary. Initially to enable
Speaker 2: guests to order and pay and get their food faster
Speaker 2: at the restaurant for takeout. That we added delivery to that,
Speaker 2: first party delivery and third party delivery, and really from
Speaker 2: the time of our founding in two thousand and five
Speaker 2: up until our IPO, which is actually this day, March
Speaker 2: seventeenth of twenty twenty one, so this is the four
Speaker 2: year anniversary of the IPO, we were just that order platform.
Speaker 2: We have since added two additional suites to what Olo does, Pay,
Speaker 2: which has integrated payments into the order platform, enabling things
Speaker 2: like Apple Pay and Google Pay, a better payment experience
Speaker 2: for the guest and also a better experience for operators.
Speaker 2: And I'll get into that a bunch, I'm sure now. Also,
Speaker 2: olopay is not just for digital transactions, but also for
Speaker 2: all in store transactions as well. And then engage and
Speaker 2: Engage is from an acquisition that we did, our very
Speaker 2: first acquisition in November of twenty twenty one, and that
Speaker 2: was a company that was known as Wisely had been
Speaker 2: a partner of ours for five years. And it's really
Speaker 2: about taking all of the digital guest data, all the
Speaker 2: different interactions that we have with a guest, bringing it
Speaker 2: together into a unified guest profile, into a guest data
Speaker 2: platform as we call it, or what's typically known as
Speaker 2: a customer data platform, and then using all of that
Speaker 2: data to do bespoke personalized marketing out to the guest
Speaker 2: and to personalize the guest experience. So we think about
Speaker 2: those things, Order, Pay and Engage as working really well
Speaker 2: together together. We call them the OLO guest Data flywheel,
Speaker 2: and really that's because Order and Pay throw off a
Speaker 2: ton of data, transaction data tie back to the guest,
Speaker 2: and then Engage is how you take that data and
Speaker 2: use it to drive even more engagement from guests, more transactions,
Speaker 2: more orders, more payments, and so the flywheel continues to
Speaker 2: spin and spin. For a sense of scale, we are
Speaker 2: now serving over seven hundred and fifty restaurant brands, including Denny's.
Speaker 2: Kelly Valaid, who you had as your last guest. It
Speaker 2: was fun to listen to her. Hear her voice this morning,
Speaker 2: hear your voice this morning as I prepared for this.
Speaker 2: But seven hundred and fifty plus brands. They represent eighty
Speaker 2: six thousand locations across the US and Canada. On the
Speaker 2: guest side of things, we see about ninety five million
Speaker 2: guests who order through OLO on an annual basis. And
Speaker 2: one fun fact that I'm particularly proud of is if
Speaker 2: you aggregate all of the sales that go through OLO
Speaker 2: in the past year. In twenty twenty four, our GMV
Speaker 2: our gross merchandise volume was twenty nine billion dollars, And
Speaker 2: to put that in perspective, if OLO were a restaurant,
Speaker 2: that would make us the second largest out there. We
Speaker 2: just passed Star. There are at twenty eight billion. To
Speaker 2: take the number two slot. The silver medal Number one
Speaker 2: is McDonald's. But I say that not just as a
Speaker 2: vanity metric that's fun to say, but really as something
Speaker 2: that demonstrates just how much volume is going through our platform,
Speaker 2: how it's built for reliability at scale, and the other
Speaker 2: really exciting thing is, that's just the digital sales that
Speaker 2: are going through OLO.
Speaker 3: When you think about.
Speaker 2: Our customer base, those eighty six thousand restaurants digital and
Speaker 2: non digital sales. If you take the stat that digital
Speaker 2: is about eighteen percent of the industry overall, and you
Speaker 2: extrapolate from that what they would be doing in total,
Speaker 2: it's about one hundred and sixty one billion dollars of
Speaker 2: sales volume, which is something around fifteen percent of overall
Speaker 2: restaurant industry sales. So we're proud of that. We're excited
Speaker 2: about that scale that we've achieved. At the same time,
Speaker 2: as I always say to the team, I am grateful
Speaker 2: for all of the things that led to this point,
Speaker 2: and I'm hugely unsatisfied there. We have miles to go
Speaker 2: before we sleep. There's so much opportunity for us to
Speaker 2: have a massive impact on our customers and this industry
Speaker 2: as a whole with the position that.
Speaker 3: We're in, with all the data that we have on
Speaker 3: our platform. All right, good stuff. Yeah.
Speaker 1: One of the companies we covered, Jack in the Box,
Speaker 1: they expanded their relationship with you recently. How much of
Speaker 1: your twenty twenty five growth is expected to come from
Speaker 1: deepening your current customer relationships versus onboarding new ones.
Speaker 2: Yeah, it's a great call out. Those are really the
Speaker 2: two big vectors of growth for us. So I'll break
Speaker 2: it down and then sort of compare them relatively. But
Speaker 2: Jack in the Box just at sticking with that case
Speaker 2: study they actually started with OLO just using our dispatch
Speaker 2: module and Dispatch for those who are unfamiliar, it's enabling
Speaker 2: brands to take delivery orders on their first party sites
Speaker 2: or apps. So even if you don't have your own
Speaker 2: delivery fleet, what dispatch does is a guest can order,
Speaker 2: they can put in their delivery address, schedule a delivery.
Speaker 2: We're then doing the matchmaking between that order and a
Speaker 2: delivery service provider courier who can come collect the order
Speaker 2: and deliver it to the guest. And it's a great
Speaker 2: platform for enabling brands to keep profitability on delivery transactions,
Speaker 2: meet the needs of that guest who wants delivery, and
Speaker 2: very importantly, I would argue, perhaps more importantly in the
Speaker 2: profitability component, keep that direct relationship with the guests. So
Speaker 2: if I want delivery, I'm going direct to Jack in
Speaker 2: the Box. I'm not going to a third party. Even
Speaker 2: knowing that I want Jack in the box where they
Speaker 2: don't get any of the data about me. So that's
Speaker 2: how we started working with them. They had a homegrown
Speaker 2: digital takeout platform, and then Dispatch took that homegrown platform
Speaker 2: and augmented it to become also delivery, and then over time
Speaker 2: they said, you know, this would make sense for us
Speaker 2: to work with Olo to replace our homegrown ordering platform,
Speaker 2: and we sold in sort of the core OLO order
Speaker 2: module to them. This most recent announcement was there expanding
Speaker 2: from that to also use Olo Rails, and that's the
Speaker 2: third component of what we call the order suite, which
Speaker 2: is ordering, Dispatch and Rails. What Rails enables is third
Speaker 2: party marketplace enablement, so syndicating the menu and the prices
Speaker 2: out to the third party marketplaces and then when orders
Speaker 2: originate from guests on those marketplaces, having that flow through
Speaker 2: the OLOAPI and directly.
Speaker 3: Into the kitchen at the restaurant. So that was an.
Speaker 2: Exciting development and not unusual. That's typically how we work
Speaker 2: with brands in that top twenty five segment, which Jack
Speaker 2: in the Boxes will land with one module of our
Speaker 2: sixteen and expand the relationship from there.
Speaker 3: And I think that is.
Speaker 2: Maybe good lead into if you think about our ability
Speaker 2: to expand with existing customers. We just announced that our
Speaker 2: earnings call a couple weeks ago, we're at about three
Speaker 2: point seven modules average. If you take total number of
Speaker 2: modules used divided by total number of locations at eighty
Speaker 2: six thousand, and we have sixteen, so it gives you
Speaker 2: a sense of we're not even at twenty five percent
Speaker 2: of the way to having our customers on all of
Speaker 2: our modules. And that's a pretty good estimate of just
Speaker 2: how much more revenue expansion there is with them. I'll
Speaker 2: come back to that a second. And if you think
Speaker 2: about locations and the ability to land more brands, new
Speaker 2: brands and grow our location count, we're at eighty six thousand.
Speaker 2: We think that's against the backdrop of around three hundred
Speaker 2: thousand enterprise restaurant locations, and really that's how we define
Speaker 2: our market.
Speaker 3: There's a couple of.
Speaker 2: Exceptions here and there of very very small, sub five
Speaker 2: unit restaurant brands that work with those that really have
Speaker 2: the ambition of scale, but typically it's five to five
Speaker 2: plus unit locations and that's about three hundred thousand, So
Speaker 2: eighty six thousand against three hundred thousand. That gives you
Speaker 2: a sense of it's a little bit more than twenty
Speaker 2: five percent, but they're both huge opportunities for us to
Speaker 2: grow and scale. Just back to a brand.
Speaker 3: Using more of our modules.
Speaker 2: I look at a brand like honey Grow, and honey
Speaker 2: Grow is an awesome brand. Uses US for takeout, uses
Speaker 2: US for delivery, uses US for kiosks inside the restaurant,
Speaker 2: so very digitally penetrated, and uses US for payments on
Speaker 2: all of those ordering channels. If you look at what
Speaker 2: we make from a gross profit perspective at honey Grow
Speaker 2: locations versus our average engagement with the customer, we make
Speaker 2: about six point twenty five times more with honey Grow
Speaker 2: than we do with the average customer. And that's just
Speaker 2: a good illustration of our ability to grow with existing customers.
Speaker 2: And I'd say for twenty five our focus is not
Speaker 2: one or the other, it's really both, really in equal parts.
Speaker 2: There's a lot of opportunity for us in that top
Speaker 2: twenty five segment, especially now with a lot of brands
Speaker 2: who have built home Grown. Both think about it the
Speaker 2: way the Jack in the Box did and say, do
Speaker 2: I really want to continue supporting what is now like
Speaker 2: a pretty old and dated platform, or do I want
Speaker 2: to migrate over to OLO at a fraction of the
Speaker 2: cost benefit from all of their innovation. We spend ninety
Speaker 2: million dollars a year in R and D every single
Speaker 2: year and benefit from a library of four hundred partners
Speaker 2: in their partner network. And I think that approach is
Speaker 2: showing to be the better approach. Obviously I'm biased, but
Speaker 2: that seems to be when you look at over twelve
Speaker 2: brands since our IPO migrating off of homegrown platforms and
Speaker 2: onto OLO as a SaaS platform where they could benefit
Speaker 2: from all of that innovation of our ecosystem. I think
Speaker 2: you're seeing that that doesn't just make economic sense, it
Speaker 2: makes innovation sense too.
Speaker 1: Yeah, you mentioned three point seven modules per location. That
Speaker 1: was up from three point five the year prior. You
Speaker 1: know you mentioned honey Grow and a shout out to
Speaker 1: Justin We were emailing.
Speaker 3: Each other yesterday. I love that guy.
Speaker 1: You know, a place like honey a chain like honey Grow,
Speaker 1: and some of your most active users of the users
Speaker 1: that are using the most modules, about how many are
Speaker 1: they using?
Speaker 2: Well, we had this quarter an example with Crisp and Green,
Speaker 2: and I believe that they came on with nine modules
Speaker 2: at the onset of the relationship, and I think that
Speaker 2: might be a record. I don't know that to be true,
Speaker 2: but I'm pretty sure that's a record of the initiation
Speaker 2: of the relationship and a brand taking you know, the
Speaker 2: majority at nine over half of the modules.
Speaker 3: You know, it's interesting.
Speaker 2: We think a lot less about module penetration. We think
Speaker 2: more about the different suites, order, pay, and engage. And
Speaker 2: one of the big focuses that I called out on
Speaker 2: our earnings call a couple weeks back was having more
Speaker 2: brands that we call flywheel customers. And Flywheel customers means
Speaker 2: they're using OLO for order, for pay, and for engage,
Speaker 2: and so they're benefiting from that Flywheel effective more orders,
Speaker 2: more payments, that drives more guest data, that enables engaged
Speaker 2: to drive more orders and more payments with that guest data.
Speaker 2: And we had a bunch of brands that we announced
Speaker 2: as Flywheel customers this quarter. We talked about some of
Speaker 2: the success stories, but I think this year we're going
Speaker 2: to see a pronounced growth in the number of Flywheel brands.
Speaker 2: I just think it's meeting the moment that we're experiencing
Speaker 2: as an industry and like listening into the conversation with
Speaker 2: Kelly was a really good reminder of why it's imperative
Speaker 2: that brands think about how they can use guest data
Speaker 2: to get much more efficient and effective in their marketing
Speaker 2: and drive traffic, but not just any traffic, drive profitable traffic.
Speaker 3: And I think that is.
Speaker 2: Going to be something we talk a bunch about today.
Speaker 2: But I mean, that is this thing that I see
Speaker 2: as I guess sickness in our industry, this dependence on
Speaker 2: any tactic that is driving traffic, but even those and
Speaker 2: often those that are eroding the bottom line for franchisees.
Speaker 3: And that is that has a road to ruin.
Speaker 1: Yeah, that's for sure.
Speaker 3: Man.
Speaker 1: Have you ever disclosed what percentage of your customers are
Speaker 1: Flywheel customers using all three product suites?
Speaker 2: We haven't, And that's kind of a new concept. I
Speaker 2: mean Flywheel came out, we started using that terminology think
Speaker 2: about a quarter ago, and we talked about this quarter.
Speaker 2: Brands like California Fish Grill, which is an awesome example,
Speaker 2: like Honey Grow, they also use Kiosks with OLO and
Speaker 2: so they have a huge amount of data from takeout,
Speaker 2: from delivery, but also the in store transactions going across
Speaker 2: the Kiosk. All of those transactions are tied back to
Speaker 2: a guest identity and they just started to use Engage
Speaker 2: and the Engage platform has been transformative for them. And
Speaker 2: we have a great Cayse study up on our site.
Speaker 3: I'm excited.
Speaker 2: This week we have Mark Hardesan, who's the CMO a
Speaker 2: California Fish Grill, speaking at or Beyond for customer conference.
Speaker 2: But what they saw was that in a six month
Speaker 2: period they were able to grow their database of guests
Speaker 2: by forty one percent. They were able to grow their
Speaker 2: percentage of guests that were contactable, meaning not only are
Speaker 2: they known, but they have the permission from that guest
Speaker 2: to send them a message by twenty one percent. And
Speaker 2: then they used Engage to send out marketing. And marketing
Speaker 2: for us is email, text, in at message. You pick
Speaker 2: the right medium for the guest based on what we
Speaker 2: know is effected with them with the right message personalized
Speaker 2: for them at the right time. And they drove seven
Speaker 2: million dollars of sales that they attribute to those marketing campaigns.
Speaker 2: No discounts, no deals. It wasn't some sort of like
Speaker 2: here's a free item, here's a bogo, none of that.
Speaker 2: It was just about communicating with guests in a personalized way,
Speaker 2: utilizing the guest data that we gathered through Engage, telling
Speaker 2: that story and showing brands the light of like, there's
Speaker 2: a better way to do this. Now you can drive
Speaker 2: profitable traffic, not just traffic.
Speaker 3: At any expense.
Speaker 2: Is really I think going to be a big, big
Speaker 2: focus of the week this week at Beyond four. Giving
Speaker 2: the platform to the stage two brands like California Fishgrill
Speaker 2: and leaders like Mark who can tell that story and
Speaker 2: inspire other brands to try something new because the old
Speaker 2: playbook is not working.
Speaker 3: Right now, no doubt.
Speaker 1: Alllo announced a new partnership with Freedom Pay last month.
Speaker 1: How is this going to help you achieve your mission
Speaker 1: of digitizing all restaurant transactions?
Speaker 2: Yeah, I'm really excited about this partnership. And let me
Speaker 2: kind of frame it with some context. So about a
Speaker 2: year ago, at last year's Beyond four events, we announced olopay,
Speaker 2: leaving just the digital realm and be able to do
Speaker 2: card present transactions as well, and we announced that with
Speaker 2: POS partnerships, in other words, we would directly integrate to
Speaker 2: POS and be a payment processor through Adyen with those
Speaker 2: point of sale partners So we announced that with three
Speaker 2: point of sale partners, with Q, with NCR, and with Trey,
Speaker 2: that probably covered about thirty percent of our install base
Speaker 2: of customers, and people were really excited about that because
Speaker 2: the value proposition was not only will olpay make for
Speaker 2: a better payment experience in the digital realm with things
Speaker 2: like Apple Pay and Google Pay and card on file,
Speaker 2: et cetera, it will also do all those things in
Speaker 2: the non digital realm, and you will, as a brand,
Speaker 2: not just make your guests happier by doing that, but
Speaker 2: you will be able to tie all of the transactions
Speaker 2: that are happening through olpay back to a guest identity
Speaker 2: in the guest data platform. So this idea of payments
Speaker 2: linked to guest data is critical to the value proposition
Speaker 2: of olopay. So if you heard about this and you
Speaker 2: were on one of those POS platforms, you were excited.
Speaker 2: And if you heard about it and you weren't on
Speaker 2: one of those POS platforms, the inevitable next question was, Okay,
Speaker 2: but when are you going to get to my pos?
Speaker 2: You just said three, but you work with thirty six
Speaker 2: and what happened over the time from last year until
Speaker 2: now is one of our longest standing payments partner in
Speaker 2: Stripe Fords your relationship with Freedom Pay and Freedom Pay
Speaker 2: is already in use in a lot of our restaurant
Speaker 2: customers as a payment terminal sitting inside the restaurant that
Speaker 2: the guest is interfacing with.
Speaker 3: Stripe signed to deal with them.
Speaker 2: Immediately after that happened, we jumped in and said, hey,
Speaker 2: could we be the first big project that you work
Speaker 2: on in this Olo pay realm of Stripe and Freedom
Speaker 2: Pay enabling OLO to do Freedom pay broadly so we
Speaker 2: don't have to go POS by POS. We can do
Speaker 2: this kind of across the customer base to their credit
Speaker 2: Stripe Freedom Pay. They jumped on this. They've been amazing
Speaker 2: partners to one another, to us, and we were able
Speaker 2: to announce this partnership a couple weeks back. I think
Speaker 2: it was actually February fourth, if I'm remembering correctly. But
Speaker 2: this unlocks that same value proposition for the vast majority
Speaker 2: of our customers. So because Freedom Pay has already done
Speaker 2: thousands of POS and payment gateway integrations, so now you
Speaker 2: can instead of having the OLO going direct to your
Speaker 2: POS method of OLO being the payments provider, you can
Speaker 2: have Freedom Paid terminals there regardless of the pos that
Speaker 2: you're using, and importantly, you can still get all that
Speaker 2: guest data. You can get the transaction tied to the guests,
Speaker 2: and importantly you can also get item level detail, what
Speaker 2: did the guest order on this order. So you're right
Speaker 2: to mention that our goal is we want to get
Speaker 2: to one hundred percent digital, and traditionally that's meant every
Speaker 2: transaction going through a digital channel, whether that's a Kiosk
Speaker 2: or a digital order.
Speaker 3: In a way, that's kind of a dated.
Speaker 2: Notion because if you have the ability to pull a
Speaker 2: digital level of data from every transaction, those that are
Speaker 2: going through a digital channel and those that are the
Speaker 2: vast majority eighty two percent that are going through a
Speaker 2: non digital channel, you've effectively jump cut to that one
Speaker 2: hundred percent digital future in one fil suite. That's why
Speaker 2: we're so excited and why our customers are so excited
Speaker 2: about ollapay card present, and why freedom Pay was. The
Speaker 2: big unlock of that is it enables you as a
Speaker 2: brand to see every guest in your guest data platform
Speaker 2: and from a guest perspective, see every transaction they've placed,
Speaker 2: digital and non digital, all collated back to the profile
Speaker 2: that you have about that guest with the level of
Speaker 2: detail of what items did Mike order, what ingredients did
Speaker 2: he modify or ad or remove or substitute. That's a
Speaker 2: really powerful level of data that if you think about
Speaker 2: a world in which we have access to all of
Speaker 2: this guest data and now we can unleash AI and
Speaker 2: machine learning to do personalization to get to segment of
Speaker 2: one is kind of the north star, like, how do
Speaker 2: I speak to you in a way that is perfectly
Speaker 2: tuned to appeal to you, not the same message out
Speaker 2: to everybody, but one to one marketing. In reality, that's
Speaker 2: what this enables, really for the first time in our industry,
Speaker 2: and it's it's exactly this thing that we experience when
Speaker 2: we use Spotify or we use Netflix and we're like, oh,
Speaker 2: that's a banger of a song on my Discover weekly
Speaker 2: this week.
Speaker 3: How do they know I would like this song so much?
Speaker 2: Well, it's because of the massive data set of other users,
Speaker 2: other consumers that look just like you, and using what's
Speaker 2: called collaborative filtering to find that lookalike audience to see
Speaker 2: what they're listening to that you've never listened to, and say,
Speaker 2: Mike's going to like this one, and the same thing
Speaker 2: can now be done with restaurants. You know, what does
Speaker 2: a restaurant They're going to show you your favorite order
Speaker 2: that you've ordered every time, because most of the time
Speaker 2: you're going to reorder that. But what's the next best
Speaker 2: thing to show you? That has been a crapshoot. People
Speaker 2: just say do you want fries? Do you want to drink?
Speaker 2: It's just been generic. Now it can be intensely personalized,
Speaker 2: hyper personalized just to you. And I think that's a
Speaker 2: really powerful new tool for brands to expand the number
Speaker 2: of cravings that they're guests, their best guests, every guest
Speaker 2: has of their brand. That inherently is going to up
Speaker 2: the frequency. If I'm craving things, not one thing from
Speaker 2: your menu, I'm going to come more often for sure.
Speaker 1: Yeah, it's exciting because obviously one to one marketing has
Speaker 1: got so much potential, right and we've been slowly moving
Speaker 1: towards towards towards it. But yeah, it's exciting. When is
Speaker 1: it going to be available for your customers?
Speaker 2: So we announced in our call it's midyear this year.
Speaker 2: We are already out in the market our go to
Speaker 2: market team talking to our customers about this. The concept
Speaker 2: of olopay in cart present is not a new one
Speaker 2: because we started talking about it a year ago.
Speaker 3: But the notion that.
Speaker 2: It's now available broadly, that's the new thing. And for
Speaker 2: those call it seventy percent of our customers who weren't
Speaker 2: on one of those direct pos relationships that we already announced,
Speaker 2: they're the ones who are now going to and saying, hey,
Speaker 2: you can now play in this realm too, And you
Speaker 2: don't have to wait for us to go one by
Speaker 2: one through a list of thirty six different point of
Speaker 2: sale providers until we get to yours. You can do
Speaker 2: it through Freedom Pay.
Speaker 1: All right, good stuff. And on the topic guest data
Speaker 1: and personalization, who do you think is doing it right?
Speaker 1: Out of maybe some of the large brands that are
Speaker 1: doing it in house, Are there anyone that you know
Speaker 1: you kind of look towards and say, I think they're
Speaker 1: moving in the right direction and this is something that
Speaker 1: we should try to emulate.
Speaker 2: Yeah, I mean, look to the speaker list at beyond
Speaker 2: four and you'll see examples of the people that we
Speaker 2: want to give the mic to because they're going to
Speaker 2: educate the rest of the audience around how to do it. Right,
Speaker 2: and I think first amongst those is Matt Eisenacher at
Speaker 2: First Watch. It is just a clinic in how to
Speaker 2: use guest data and personalization to drive the right messaging
Speaker 2: to the right guests at the right time, over the
Speaker 2: right medium. They do it best. They are shotting a
Speaker 2: light in what's possible. I'm thrilled with the success that
Speaker 2: they're having, the investment that they're making and marketing not
Speaker 2: in like a yeah, we're going to run some Super
Speaker 2: Bowl ads kind of lazy way, in a this thing
Speaker 2: works and it's precise and it's efficient and it's effective.
Speaker 2: We're going to dial it up and double down on this.
Speaker 2: And he's just a remarkable leader. And then I mentioned
Speaker 2: you know, Mark Hardison and a bunch of others, Justine
Speaker 2: at Bartaco, smaller brand, but like they've really bought into
Speaker 2: this idea of we all see personalization being an effective
Speaker 2: thing in every other industry.
Speaker 3: Why not restaurants.
Speaker 2: We have all this data, why not collate it guests
Speaker 2: by guest, identify the best guests, and think about how
Speaker 2: we turn every guest into one of our best guests,
Speaker 2: and go find more that look just like our best guests.
Speaker 2: That's a superpower, and it's going to differentiate the brands
Speaker 2: that thrive during this time and those that use the
Speaker 2: old playbook and don't make it.
Speaker 1: And ol pay is growing very fast. Obviously that's more
Speaker 1: of a volume business, so i'd imagine it'd be a
Speaker 1: nice boost to your operating margin dollars, but not necessarily
Speaker 1: the margins. Have you spoken about the impact to your
Speaker 1: margins and twenty five.
Speaker 2: Yeah, I mean so just to cover off on that.
Speaker 2: Ola pay has grown really quickly and the opportunity ahead
Speaker 2: is massive, So we grew In twenty twenty two, we
Speaker 2: did two hundred and fifty million dollars of payments volume
Speaker 2: through olipay. In twenty three we did a billion, and
Speaker 2: then last year in twenty four we did two point
Speaker 2: eight billion, So from two fifty to two point eight billion,
Speaker 2: at more than ten x, more than eleven x in
Speaker 2: that two year period. But again that's against a backdrop
Speaker 2: of twenty nine billion dollars in gross merchandise volume two
Speaker 2: point eight over over twenty nine, so we're not even
Speaker 2: at ten percent penetrated for olopay card not present meaning
Speaker 2: transactions that are digital transactions, and we've just unlocked that
Speaker 2: full one hundred and sixty one billion in gross merchandise
Speaker 2: volume that our eighty six thousand restaurants do as addressable sellable,
Speaker 2: addressable market SAM for olpay Card Now Present and Card
Speaker 2: Present went from twenty nine bills to an additional one
Speaker 2: hundred and thirty two one hundred and sixty one billion.
Speaker 2: So from that perspective, two point eight billion. We're thrilled
Speaker 2: about the progress, but we're not even at two percent
Speaker 2: of the total opportunity. And like I said, there's a
Speaker 2: reason why brands want to do this. It's not oh,
Speaker 2: it's a great revenue opportunity for OLO. It is this
Speaker 2: is uniquely helping you to harvest guest data with the
Speaker 2: guest permission into that guest data platform and compete on
Speaker 2: a whole different level with your competition. From a margin perspective,
Speaker 2: you're right, payments is a volume game. The more volume
Speaker 2: you do, the better you're economics, the lower your costs,
Speaker 2: and so the better your economics, the higher your margin.
Speaker 2: It's also true that in the card present realm.
Speaker 3: You have a mix.
Speaker 2: Sometimes people are using debit cards and you have a
Speaker 2: better lower cost than those debit cards for processing. You
Speaker 2: have better spread on those but look, I think honey
Speaker 2: Grow is a perfect example for that as well. I
Speaker 2: mean they are using OLO pay for their digital transactions
Speaker 2: inclusive of all of their in restaurant transactions that are
Speaker 2: done through Kiosk in the way that their service model works,
Speaker 2: and that's in large part why from a revenue perspective,
Speaker 2: from a gross profit perspective, there's six and a half
Speaker 2: times the average restaurant the gross profit per unit of
Speaker 2: a Honey Grow versus the typical gross profit that we
Speaker 2: receive per unit. So it just illustrates that there's a
Speaker 2: lot of business opportunity for OLO in payments. It's a
Speaker 2: lower margin revenue stream, of course, but there's meaningful margin,
Speaker 2: meaningful gross profit dollars within payments, and there's huge runway
Speaker 2: for us to grow into while being on the restaurant
Speaker 2: side and helping them do something that is going to
Speaker 2: make their business better.
Speaker 3: All right, good stuff, and we covered a lot.
Speaker 1: But are there any other twenty twenty five growth opportunities
Speaker 1: or priorities that they're focused on.
Speaker 3: Yeah?
Speaker 2: I think the only other big focus area for us
Speaker 2: is in catering, and I talked to about this a
Speaker 2: lot on the earnings call A couple weeks back. But
Speaker 2: catering is just this like sleeping giant. It is currently
Speaker 2: a sixty billion dollar end market. I think it's growing.
Speaker 2: In grand View Research, if I'm remembering correctly, is the
Speaker 2: source of this data. I think it's growing to one
Speaker 2: hundred and thirty two billion over the coming years five
Speaker 2: six years, So it's already really big. It's doubling. It's
Speaker 2: found money for so many brands. I mean, all they
Speaker 2: need is a tool to enable them to serve catering customers,
Speaker 2: and that is what that's the gap that we filled
Speaker 2: with our Catering Plus module. So it is a purpose
Speaker 2: built for catering module that enables brands to take large
Speaker 2: format orders and then all of our other modules connect
Speaker 2: in to it. So if you want to deliver those orders,
Speaker 2: dispatch fits in there. If you want to get delivery sorry,
Speaker 2: if you want to get catering demand from a marketplace,
Speaker 2: we have a partnership with easy cater that plugs in there.
Speaker 2: If you want to do payments, O to pay, if
Speaker 2: you want to do marketing out to those catering customers, engage.
Speaker 2: I mean, it's really cool to see the power of
Speaker 2: OLO as a modular platform. A new beachhead and catering
Speaker 2: and then how all those modules can attach to it.
Speaker 2: And I'd say one thing that I love about catering.
Speaker 2: We talked about expanding the relationship with existing customers and
Speaker 2: landing new brands. Catering has been great on both fronts.
Speaker 2: It's great to expand existing relationships. It's an easy upsell,
Speaker 2: it's a layup to stick with the basketball theme. For
Speaker 2: Top twenty five brands, especially who have built a homegrown
Speaker 2: tech stact, many of them have not built a catering solution,
Speaker 2: and if we can cozy up to them with a
Speaker 2: catering solution, show what we can do in the catering realm,
Speaker 2: we think that's a great way to initiate relationships with
Speaker 2: those brands. Hugely active pipeline of conversations in the Top
Speaker 2: twenty five and really everywhere with catering. And then when
Speaker 2: they see, wow, look at what Olo is able to
Speaker 2: do as a SaaS platform that's reliable, that's at scale,
Speaker 2: then they can really start to actively have the debate
Speaker 2: internally of does it really make sense for us to
Speaker 2: be spending hundreds of millions of dollars annually to support
Speaker 2: a homegrown platform when we could do it for half
Speaker 2: the cost or less if we moved over to Olo
Speaker 2: for the core ordering platform and just repurpose our finances
Speaker 2: to build on top. I think that is the most
Speaker 2: exciting thing about catering to me, and just an industry
Speaker 2: that is looking for, you know, found money, they'll take it,
Speaker 2: and catering is a big pot of found money for
Speaker 2: so many brands who have whether it's offices with return
Speaker 2: to office, or school groups or churches or sports teams,
Speaker 2: just a massive audience of folks that want their food
Speaker 2: in that format and we can make it easy, like
Speaker 2: a giant easy button for enabling a catering program.
Speaker 1: Yeah, we're seeing more families catering holidays. Crackerbile just reported
Speaker 1: a really nice quarter and they credited they're catering business
Speaker 1: for Thanksgiving and Christmas.
Speaker 2: I have seen some things in this industry that amaze me.
Speaker 2: At at top of that list is the cracker barrel
Speaker 2: Thanksgiving demand and execution. It is unbelievable how many people
Speaker 2: are using cracker barrel in that way and how they
Speaker 2: nail it year after year. And it's been fun for
Speaker 2: us to be that sort of wind beneath their wings
Speaker 2: from a digital perspective to take this massive demand and
Speaker 2: make it easy for them to operationalize with things like,
Speaker 2: you know, what is their capacity management strategy? How do
Speaker 2: we throttle orders appropriately?
Speaker 3: There's just a lot of you know, x's.
Speaker 2: And o's strategy perspective to make that work the way
Speaker 2: that it does, and they nail it every year.
Speaker 3: It's crazy.
Speaker 1: Yeah, it's exciting what they're what they're doing over there.
Speaker 1: Are you growing the sales team?
Speaker 2: We are, Yeah, And one thing that's been fun for
Speaker 2: me personally is that I have gotten much more. I've
Speaker 2: been much more on the road with the sales team
Speaker 2: over the past quarter. And that's everything from pitches to
Speaker 2: new customers, you know, or talking to existing customers about
Speaker 2: new things.
Speaker 3: That we're doing.
Speaker 2: And I think a lot of the time it's like,
Speaker 2: you know us as the ordering platform, and we're so
Speaker 2: much more than that. Now, let us reintroduce all the
Speaker 2: things that we're doing and why what we've done with
Speaker 2: you and ordering oftentimes for many years is like the
Speaker 2: seed crystal for this much larger guest engagement opportunity we're
Speaker 2: now thinking about as ultimately guest data leading to guest
Speaker 2: intelligence and then leading to guest experience management as a practice.
Speaker 2: That's really what OLO is today. So it's been fun
Speaker 2: for me. It's sort of like a new founding moment
Speaker 2: to be out with customers, telling that much larger story
Speaker 2: and explaining to them, why again say this to my
Speaker 2: team all the time. We've come a long way. It's
Speaker 2: been twenty years, but we're not at the top of
Speaker 2: Everest right now. Like right now we're at base camp.
Speaker 2: Like it's been hard, we're catching our breath, but like
Speaker 2: I see the mountaintop and it's beautiful up there, and
Speaker 2: that's where we're going to go over the next twenty years.
Speaker 2: And it's all around this guest data, guest intelligence, guest
Speaker 2: experience management vision. So telling that story to our customers
Speaker 2: and having the credibility of the relationship that we've built
Speaker 2: over that time, but showing them what's next is super
Speaker 2: energizing for me.
Speaker 3: So I'm having fun.
Speaker 1: That's awesome, man, I think that's a perfect place to
Speaker 1: wrap it up. Thanks again for doing this, man. I
Speaker 1: love I love following OLO and following the story, and
Speaker 1: I'm looking forward, you know, to continuing tracking your progress.
Speaker 2: Thanks Mike, Thank you for chopping it up with me.
Speaker 1: Yeah, sure thing man. I'm sure I'll see you out
Speaker 1: and about on the restaurant conference circuit this year. I
Speaker 1: want to thank the audience for tuning in. Go to
Speaker 1: olo dot com to find out more about the company.
Speaker 1: If you liked our discussion, please share it with your
Speaker 1: friends and colleagues. Check back next week for an interview
Speaker 1: with Liz Williams, CEO of l Poyo Loco