The Digital Restaurant
5 Headlines, 5 Opinions on the latest news on restaurants, tech, & off-premise growth
The Digital Restaurant
Will AI take 10%-40% of restaurant jobs?
Could your next meal be crafted by artificial intelligence? Tune in as we unwrap the layers of a tech-charged restaurant revolution, where NVIDIA's silicon brains may soon whisk up your dinner while unified commerce cooks up a seamlessly interconnected dining experience. We've sliced into the heart of the pizza-making world at the Vegas Pizza Expo, savored the digital-only innovation of Chick-fil-A's New York experiment, and peppered in Joe Kaskowski's seasoned insights. Our journey through the industry isn’t just about tasting the future; it's about savoring the rich blend of tradition and tech.
This week's menu also serves up a hearty discussion on the financial tech shake-up with Loop AI, stirring the pot on the sticky issues of third-party delivery woes. As we sift through the grit of transaction tracking and untangle the spaghetti of chargebacks and cancellations, we're seasoning our conversation with a dash of legislative spice from Florida's latest direct communication laws. It's a full course of strategizing and storytelling, plated with a side of personal experiences and a sprinkle of human essence that no robot chef could ever replicate. So, grab your fork and let's dig into the delicious details!
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Will Robotics and AI replace 40% of restaurant workers? How does LEGO help us understand unified commerce and join us with a peek inside the first digital-only Chick-fil-A? That's all ahead on this week's Digital Restaurant. The Digital Restaurant works like this we're going to ask each other five questions about headlines that affect the worlds of restaurants, off-premise and technology, but in some way tie back to our book series Delivering the Digital Restaurant. Are you ready? Let's go. Good morning, Meredith. How are you doing today?
Speaker 2:Very good. How are you, Carl?
Speaker 1:Very good. Thank you Fresh back from a nice trip to Carbo following your lead from last month, but you've been in Vegas recently.
Speaker 2:I sure have. Last week was the Pizza Expo, one of my favorite conferences. All restaurant conferences are fun because they're filled with restaurant people and, let's be honest, people who love people, food, hanging out generally pretty fun to be around, but the pizza people are next level. They are so just genuinely passionate and nice and excited to be there and share their pizza with you. It was really fun.
Speaker 1:What one thing did you learn about pizza that you haven't heard before?
Speaker 2:I personally learned how to spin a dough, make a pie. My spinning is not hacky sack next level Like some of the people at the show do in the contest but I learned how to make a pizza. I think I could competently make my own pizza now. That's more than I could do last week.
Speaker 1:I think you better test on Alicia and I before you take that public. I think that sounds dangerous, but either way, excited to hear about your new skills Not so new for many that have perhaps heard this term before. But our first question is around something that Joe Kaskowski wrote an article on last week around unified commerce, saying it's the new thing that everyone should take very seriously. Why is it important to you?
Speaker 2:I think this word first appeared when Q, the POS company, called themselves a unified commerce platform and probably many people scratched their heads and said I don't understand exactly what that means, but sure. And then Par was the next one to say unified commerce. I'm guessing that Joe thought I should look into this and find out what they mean by unified commerce and talk a little bit about it. So thank you, joe, for this article. You probably said it best when you said it's a bit like making Lego pieces that all fit together out of one set. You were quoted in the article, carl instead of trying to make something out of five different sets Now I'm going to make fun of you there, because that means that you are president business and you're probably busy with the crackle gluing the pieces together.
Speaker 1:Everything is awesome, Meredith. Everything is awesome.
Speaker 2:That fits with everything I know about you and your perfect tendencies, but it's really about making every piece of the technology talk to every other piece of the technology so that it's seamless and seamless for all users. I think a lot of attention has been paid to the consumer front end recently, trying to figure out how to make sure that loyalty points are available across all different channels, trying to make sure that the consumer is known, which even with loyalty programs, is not necessarily all the time. Restaurants have really struggled to get in store recognition of consumers, but that's really where the focus has been, and a true unified commerce platform would carry that all the way through the experience, whether it's from order through to fulfillment so the consumer through to whoever's handing off the food at the back end, whether it be a delivery driver or an employee, but also top to bottom, right from the order all the way through to the back of the house, so that everything's translating, and having all of that data shared in one place, having it all talk to each other. I think the win here is if you never have to export your work into another place and then combined tables together in Excel. If you've done that, then you've probably achieved unified commerce.
Speaker 2:I guess that's the sign. Until you get there, you probably have some ways to go, but really truly having all the data tied together. Then he goes into detail about how do you make this work. You might consolidate your tech vendors, which, as Carl, you and I have been talking about for a while. That's definitely coming slash already happening in a number of places and improving the integrations between those tech providers. Of course, you know what I say, carl Just go get rid of all of your tech providers and have one that is holistic to begin with, and then you don't need to worry about stitching things together. It is much easier, it turns out, to keep track of all of your data if it's all in one place.
Speaker 1:One of the things that Joe asked me in his research was about what's the difference between unified commerce and all-in-one technology packages. What's your answer to that?
Speaker 2:I think the word all-in-one is overused. It makes me crazy, actually, and I feel very badly for the restaurants out there, because people will say things like I'm your all-in-one delivery management platform, so you do everything like you do online ordering too. No, I just do delivery management. Then you're not all in one, no, I'm all in one. For that part of the business, it's just a meaningless term. I'm hopeful that unified commerce doesn't also likewise become a meaningless term, because I think right now it means something very specific. I think that's good. I hope it doesn't get watered down. Next question for you we had two interesting restaurant launches this week Chick-fil-a and Moe betters both launched new concepts this month. Tells about what they were and why we're so interested in them.
Speaker 1:Hmm, I'll bring up some images, meredith, because we like to share some of the images that we've seen here, because Chick-fil-a have been innovating, as ever. They're always innovating on. They went in the fast food space and this is their first ever Mobile pickup restaurant. I think it's gonna be in New York City and, look, it's another testament to the brand's adaptive strategy, right in response to this rising amount of digital orders that we're seeing. They've got a bunch of photos here that I'll take you through just so that you can see. For those of you watching us on YouTube, look, they've always been on the front end. They sit in our top five of restaurant brands and the stuff that we talk about all the time. But I guess, by foregoing traditional dining spaces and focusing exclusively on delivery mobile orders they're not just responding to things like just convenience and efficiency, but they're also really pioneering the way in which restaurants should think about digitally integrated restaurant models. This clearly is a pathway for not just better order pickups and real-time status boards, it's also enhancing, I think, the customer experience, because we've seen that folks are wanting reduced wait times, they're wanting to have a faster experience. They're increasingly not sitting in fast food restaurants anymore, and it's really what we talked about in our latest book, where we said the digital restaurant is going to actually Navigate towards either one channel or the other, as opposed to trying to do everything to everyone in one format, but it's not saying that every Chick-fil-A format will be like this. It's for where it makes most sense.
Speaker 1:The design of this particular location is a strategic move, I think, to cater to the fast-paced lifestyle of urban dwellers, particularly in bustling metropolises like New York, and, I think, by leveraging geo-fence and technology, as we're seeing in drive-through, chick-fil-a also ensures that the order process is as seamless at as time efficient as possible, and so I think the approach acknowledges this growing preference among consumers for quick service and convenience. What sets this apart, though, is this balance between efficiency and hospitality, and, when you look at the, the fact that this is a footprint of about three and a half thousand square feet mirror. So that is, I think, about just over half of what a typical format will be, but only four hundred of those three and a half thousand square feet is actually dedicated to front of house. That's a remarkable shift, I think, and so when you think about the operation itself, this location their forecast is only going to need 40 employees, and the article that we quoted in this actually says that's about 100 less than what a typical Chick-fil-A requires.
Speaker 2:Numbers are crazy. Right, this is their small unit. It's only 3,500 square feet. It's got a light labor deployment. There's only 40 people compared to any other restaurant. That is huge and a ton of people. So I'm guessing that they're anticipating the volumes. They're going to be really high coming out of this and hence all the space allocated to the kitchen.
Speaker 1:Absolutely. And, of course, this isn't the only prototype they're working on. They've got a drive-through prototype as well, and that goes to the point I made before, in the sense that you've got to have the right solution for the right need states and the right locations that you're operating in. So, look, I don't think this is just a test concept. I think this is probably a signpost for where the restaurant industry is heading the focus on digital integration, operational efficiency, maintaining the brand ethos across technological advancement. But it's not just for the Chick-fil-A's. You mentioned two brands, right? So Moe Betters, which is a 50-unit brand, a Hawaiian concept, also announced this week their opening of a digital delivery kitchen, and they're doing that in Kansas City. But they're not doing it in isolation. There are five other locations in Kansas City which it's working in collaboration with, and so much like we talked about this. In the latter stages of the path to digital maturity, when you've got enough digital revenue coming through your business and it's starting to impact the efficacy of your on premise or your current operation, that's where things like this can really help. It's almost like a relief in the valve of steam on top of the operational pressure cooker, if you will. So I think it's going to be not the only one that we talk about this year. I think we're going to see a lot more concepts like this come out in the months ahead.
Speaker 1:Ok, but before we go on, I have to put my usual request up. Meredith, if you have yet to subscribe to the digital restaurant, please do. If you're on YouTube, you can click the subscribe button, hit the bell so that you get notified every time we have a new video come out. Of course, if you're listening to us on a podcast, please subscribe there, and wherever you're listening to us, we would always appreciate. A nice five star rating Makes Meredith stay in particular, and you know, look at that smile. Who doesn't want that smile from Meredith? All right, question three this is an interesting one. Peter Backman and his newsletter, the Delivery World, was sent through to us. We thought it was interesting because it talked about the differences between smaller restaurants and bigger restaurants and how they work together in terms of paying for, basically, this delivery ecosystem to work. Can you tell us a bit more about that?
Speaker 2:First of all, anyone who doesn't know who Peter Backman is, you should. He has an absolutely excellent podcast called the Delivery Prophets Got a little bit of a European player to it. He's based in the UK, so he talks a little bit more about things that are happening over there, but the themes are very consistent. As we found with our podcast last week when we went through the European Restaurant Trends Report, there's not a lot of unusual things going on that do not also apply over here.
Speaker 2:This week's blog post from Peter was no exception. He was talking about how small brands subsidize larger brands. He started out with a couple of examples from places that we all find familiar. Things like distributors as an example, where really large brands are maybe going to take distribution in-house or they're going to be such a large percentage of a distributor's business that they're going to get a fantastic deal and it's the smaller guys who usually end up paying full fare. Then he applied that same concept to the delivery world. I think everyone knows that the big brands are able to leverage their brand power and their incredible order volume to get better deals on third-party platforms in terms of commissions and delivery rates. Then can a smaller restaurant get His conclusion from the state of affairs is that for these platforms to work, they really, in effect, are using those small restaurant players paying the higher fees to subsidize those larger ones that are paying lower fees, which I think is a very interesting way to look at it.
Speaker 2:We tend to look at their blended profitability, which they're starting to get close to, and we don't really break it down that way. It's pay to break it down for us. It raises a lot of questions, probably questions that our small restaurant friends or indie friends have had the whole time, but nevertheless, paints it black and white. Okay, carl, you and your future is at 10 to 40% of restaurant workers be replaced by AI. It's a huge employer. It's the second largest private employer in the United States, so that would be a pretty big deal if it got affected that much.
Speaker 1:Yeah, it's an article that CNN was referring to in reference to a White House report, and there's a number of things on this. Of course, it's a sensationalist headline to get us into this topic, and I'm going to play a video because there's a couple of things that I think are important for us to take on sex before asking that question. The first part of this video is NVIDIA's CEO recently talking at a conference about why their new chips are enabling greater level of depth perception and that's opened up a new suite of capabilities when it comes to robotics across not just restaurants, but all sectors, in particular manufacturing. And then what follows his few words? There is then a demo from a company called Figure 8 that's working with chat, gpt and OpenAI functionality to enable a humanoid robot to follow some commands using the capability that the CEO was mentioning before. So let's watch that first and we'll chat about it afterwards.
Speaker 4:Pre-programmed. They're either following rails on the ground digital rails or they'd be following April tags, but in the future they're going to have perception. And the reason why you want that is so that you could easily program it. You say I would like to go from point A to point B and it will figure out a way to navigate its way there. So by only programming waypoints the entire route could be adaptive. So we have the world's first CUDA accelerated motion planner that is geometry aware. You put something in front of it, it comes up with a new plan and articulates around it. It has excellent perception for pose estimation of a 3D object. Not just not it's pose in 2D, but it's pose in 3D. So it has to imagine what's around and how best to grab it. Hey, figure 1, what do you see right now?
Speaker 5:I see a red apple on a plate, in the center of the table, a drying rack with cups and a plate and you standing nearby with your hand on the table. Great, can I have something to eat? Sure thing.
Speaker 3:Great. Can you explain why you did what you just did while you pick up this trash?
Speaker 5:On it. So I gave you the apple because it's the only edible item I could provide you with from the table.
Speaker 3:Great, Based on the scene right now. Where do you think the dish is in front of you? Go next.
Speaker 5:The dishes on the table, like that plate and cup, are likely to go into the drying rack next Great, can you put them there, of course, All right, how do you think you did? I think I did pretty well. The apple found its new owner, the trash is gone and the tableware is right where it belongs. I agree, Thanks. Figure 1.
Speaker 1:You're welcome. Wow, that's almost like something out of Hollywood there. I would say that guy needs to get better at saying please and thank you, because he's really rude to these things. They could be busting us around one day. Now look, first of all, this week it was reported, as I mentioned, that about 10% of jobs are going to get lost to AI, and it was also reported in that same article that 40% of those in the third desalination of earnings would be affected seriously by it.
Speaker 1:So, as you mentioned, meredith big workforce, when we talk about restaurants, it's an industry that supports 10%, I think, of the American workforce, and this whole thing does open up a few thoughts on where we could see things like this appear in. Could a robot be programmed to wash dishes, prep certain ingredients and place them to a refrigerated holding unit? Would this remove a repetitive and somewhat less love role in the restaurant kitchen? What we're not hearing right now is about robotics and AI being able to interpret things like taste or smell. So I think those of you that are in the culinary arts and fine dining scene are safe, but if what we're seeing on this demo here from the company has given hundreds of millions of funding and chip makers like NVIDIA are soaring to huge gains in the S&P and NASDAQ, it's no surprise why everyone right now is talking about AI. That's where I think we get lost on this definition of AI, because 95% of the stuff we hear when someone says, oh, it's artificial intelligence, this artificial intelligence, that it's not. It's advanced algorithms. But when you can use AI to help support interpretation of facts, interpret a visual environment around you and then, with that knowledge, adapt actions to accommodate those facts and environments, that's where I think we're going to really see AI come to the fore. This is where I think there's a big difference between what we often turn towards when we think of a flippy the robot burger maker and where we see the next generation of AI-enabled robotics and where it's going to take us.
Speaker 1:I think we'll see robots play a role in the kitchen at some point, especially when you're talking about repetitive tasks that are commonly undertaken clean up and prep in particular.
Speaker 1:But that's only going to happen if and when the cost to doing so comes down, and we know, as we've seen in many other areas of automation, it's still quite expensive and I think we're probably a few good years away from being able to see it, but what the Nvidia CEO was also in the news on was saying don't teach your kids programming.
Speaker 1:Teach them prompt engineering, and what prompt engineering is about how you clearly articulate what you want when you want it, in the same way as you heard the guy speak to the robot there with very clear instructions and I don't know about you, meredith, but when I speak to an Alexa or a Google Home or an Apple Siri, if you get it wrong then you get some very weird results. And so I think what we'll find is that humans are still going to play a role in initially training and setting up the robotics to learn and understand a process, but then also prompt them to do the things when they're required. The last thing I'll mention is very interesting to hear the tonality of that robot's voice, that it was a human shaped robot. It's almost like we're trying to say they are humanoid in nature and it's almost like they were trying to give them a personality, and that was a little scary.
Speaker 2:That was a little scary. I think he even at some point said he did.
Speaker 1:That's what he is.
Speaker 2:And honestly I thought oh, this is fake. There's just a guy on a microphone in the background talking, because no robot would say. But I think actually they put that in there to make it disarming and seem like it, as you said, is very humanoid. Now it turns out humans are pretty remarkable. We can do a lot of really cool stuff, so maybe the humanoid shape and approach isn't that better.
Speaker 1:Absolutely, and maybe it'll make them folks that we want to work alongside as opposed to replace. So we'll have to see, I think. As I say, I think this is going to be a while yet before we see it in our restaurant kitchens. But when we talk about labor crisis is when we talk about the challenges associated to attract people into our industry. I can see a place in the future for them. The question is when and at what cost to the wider societal and economic condition. Okay, let's move on Our last article this week about a company I know well, Loop AI. They have raised $6 million and it'd be great for you to tell everyone a bit about Loop AI and what they're doing to help restaurants and why that problem exists.
Speaker 2:Congratulations Loop AI. We always love to hear our funding news. It's deserved and very exciting. Loop, I would say, is the best funded of a group of companies who do something very similar, other ones being companies like Vush or GrubCon, who help keep track of what's going on with third party revenue, especially in the case of ChargeVex. So they're helping a lot with the accounting and tracking and tying specific transactions to specific events and then, when things go awry and there's maybe order cancellation or things like that, helping to intervene and argue with DoorDash and Uber and the like on the restaurants behalf to get money back. Very useful and, I think, as you said, a good tool for the CFO. We've got a lot of tools out there that benefit marketing and operations, but this is one that's really going to benefit the CFO.
Speaker 2:All of that being said, the fact that it is needed to begin with is what bothers me here. The fact that it is so difficult to keep track of what's going on with revenue and then matching that to actual transactions and then further matching that to cancellations and chargebacks and then further having to argue about said cancellations and chargebacks is a symptom of what's wrong with this third-party delivery system. One opportunity could be that the third parties themselves do a better job with reporting. Do less cancellations and chargebacks. Don't blame the restaurant as often when something is missing. Don't charge for the entire order when it's just the Coke that's not there.
Speaker 2:There's a lot of other things that would be better than having to get yet another piece of technology to solve a problem that shouldn't exist in the first place. I think we all agree in the best world, what would happen is we would get direct first-party orders from our consumer and we would be, as restaurants, responsible for doing customer win back and correcting any problems as they arise. But that's not the world we're in. The world we're in is a very complicated third-party world where you've got a restaurant, you've got a platform, you've got a driver who's employed by neither one of them, and then you've got the consumer. That complicated state of affairs, as long as it exists that way, is going to lead to a lot of questions, a lot of complexity. That probably needs yet another piece of software if it.
Speaker 1:Yeah, I think you're right. The challenge that exists is because you've always got this middleman right. You have this middleman involved in the sense of a marketplace, and last time we reported about the new regulation in Florida where the restaurant is going to have this ability to talk to the consumer. I wonder whether platforms like Looper are going to be able to help or hinder in that regard and how that's going to play out, because I think everyone's going to be watching Florida.
Speaker 2:It's very rampant in the restaurant industry. It also happens on the supplier end, especially with the small restaurants, where they just don't have the same power, both in terms of market power but also in terms of manpower, to keep track of what's going on with their suppliers. You often hear stories of the price of potatoes or whatever, doubled overnight. Why did that happen? You go back and ask and it turns out oh, we'll fix that, we'll fix that, and they bring it back down. But if you hadn't asked, it just would have been doubled forever, right? And they know that there's nobody sitting there on the other side looking through every single bill, asking every single question. And they can't do it with the big guys because, of course, the big guys employ fleets of people and technology to keep track of all this stuff. It makes me wonder is it just the restaurant industry that has these challenges? Is it just because of the fragmentation and so many different SMBs in the space that bigger companies think that they can do things like this?
Speaker 1:Yes, it's the nature of the fulfillment of it as well, isn't it? It's because it's something that is ordered very close to the moment when it's fulfilled. You don't run into customer issues on Expedio or bookingcom, for example, because it's not typically for something that's going to be fulfilled within that hour. You don't see Amazon when they're doing their hour-long deliveries necessarily fulfilling from independent retailers it's usually from one of their fulfillment centers, so it feels like it probably is just a restaurant-only type of issue. Doesn't necessarily mean we haven't solved for the problems yet. Ultimately, I think it does come down to really developing the right format, like we talked about in the second article, and then also being able to just keep that focus and operation so that you are creating a better experience for our premise customers. Meredith, we could keep talking about these things all day long, as always, but our time is up. Thank you, azza, for joining us.
Speaker 1:If you have any questions, any comments about what we've discussed today. Do you think robots are going to be appearing in your kitchen sometime soon? What do you think about unified commerce? Is it the future? Please let us know. Always love to receive your comments and if you have any articles yourself that you'd like us to cover. Please send them on, but until next time. Thanks for listening. The Digital Restaurant podcast is available for you to follow and subscribe wherever you listen to your podcasts, watch us, rate us and subscribe to the Digital Restaurant on YouTube, and follow along on all our social media digital restaurant channels. Thanks for listening.
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