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US Restaurant Delivery Is In Need of a Makeover · Choppin’ It Up by Bloomberg Intelligence

0:22
Speaker 1: Welcome to Chopping It Up. I'm your host, Mike Halon,
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Speaker 1: the senior Restaurant and Food Service analyst at Bloomberg Intelligence.
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Speaker 1: Our research and that of bi's five hundred analysts around
0:31
Speaker 1: the globe can be found exclusively on the Bloomberg terminal. Today,
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Speaker 1: we're joined by Meredith Sandlin. Meredith is a CEO of
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Speaker 1: Empowered Delivery, a board director, an advisory board member, podcast hosts,
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Speaker 1: and author of the Delivering the Digital Restaurant books. So
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Speaker 1: I'm not gonna lie, Meredith. Going through your LinkedIn profile
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Speaker 1: really had me questioning my work ethic.
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Speaker 2: It's quite a few things. But I'm lucky to have
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Speaker 2: a lot of great people around me.
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Speaker 1: That's awesome, all right. I was going to ask, are
1:00
Speaker 1: you one of those people that just doesn't need to sleep?
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Speaker 1: And do you have any time management hacks you can
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Speaker 1: share with me?
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Speaker 2: M time management hacks, I would say, definitely have a
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Speaker 2: really supportive husband, so look into that. And then I
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Speaker 2: am a batch processor and I think that is key,
1:19
Speaker 2: which what I mean by that is like I read
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Speaker 2: my mail once a month, I read my email once
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Speaker 2: a day. I do not let my phone tell me
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Speaker 2: what it wants me to do. Ever, like, I've never
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Speaker 2: looked at a notification in my life.
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Speaker 1: That's good, that's great. Yeah, phones can be very distracting.
1:37
Speaker 1: Emails can be very distracting. We also have some messaging
1:40
Speaker 1: on the Boomberg, so yeah, we're constantly getting pinged. I
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Speaker 1: think that's a smart way to do it.
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Speaker 2: It's a lot. It makes it very hard to focus
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Speaker 2: on one thing for an extended period of time, and
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Speaker 2: your brain needs that in order to get all the
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Speaker 2: way through an idea.
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Speaker 1: All right, good stuff. So you started at Young Brands,
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Speaker 1: obviously a phenomenal brand and company.
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Speaker 2: What was your role there, Yeah, that's how I got
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Speaker 2: into restaurants. Previously, I'd been in private equity, and I
2:09
Speaker 2: went to Taco Bell in a role in finance and
2:13
Speaker 2: went there primarily because I got the opportunity to work
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Speaker 2: with Greg Creed and Melissa Laura. Greg was then the
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Speaker 2: CEO of Taco Bell, subsequently the CEO of Yam. Melissa
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Speaker 2: was the CFO. She sits on the boards of Canagra
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Speaker 2: and Nvidia.
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Speaker 1: Cool. Yeah, I got to overlap a little bit with
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Speaker 1: Greg covering the company. Obviously a legend in the restaurant space.
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Speaker 2: Absolutely amazing person.
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Speaker 1: Yeah, and then you made the jump to a startup
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Speaker 1: at Kitchen United. What are your thoughts about the future
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Speaker 1: of ghost kitchens. You know, their struggles over the last
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Speaker 1: couple of years have been widely publicized. What do you think.
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Speaker 2: Yeah, there's been some spectacular failures I think in the
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Speaker 2: delivery only space, both on the ghost kitchen side as
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Speaker 2: well as on the virtual brands side, and we tend
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Speaker 2: to focus on those failures because they have been so big.
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Speaker 2: But I hosted a panel recently at a conference of
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Speaker 2: folks doing virtual brands and delivery kitchens, and it was amazing.
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Speaker 2: The room was filled with people who are just quietly
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Speaker 2: doing this and doing it correctly and making it happen
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Speaker 2: and building businesses. And I think we've learned a lot
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Speaker 2: from the spectacular failures. I would say many of them
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Speaker 2: were just overfunded, funded sooner than they had the business
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Speaker 2: idea proven. And that's what made the spectacular failures, you know,
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Speaker 2: that's what made the failure so big. But folks who
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Speaker 2: are just building businesses that actually work and doing it
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Speaker 2: the way that you would build a restaurant, where they
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Speaker 2: build one and master it, and then a second, and
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Speaker 2: then master that and then four and master that there's
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Speaker 2: a lot of people out there making it happen.
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Speaker 1: What a novel thought, building your second and building your
4:02
Speaker 1: hundredth store, making sure you have the unit economics for
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Speaker 1: your second, third, and fourth store in line, and working
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Speaker 1: before you build your hundredth store. It's such a novel
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Speaker 1: novel idea.
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Speaker 2: It's certainly hard, and it's a different it's a different
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Speaker 2: kind of business in the sense that you must be
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Speaker 2: good at digital marketing, both in terms of customer acquisition,
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Speaker 2: but then also in terms of all the remarketing, and
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Speaker 2: you must understand the e commerce economics and how e
4:30
Speaker 2: commerce marketing math works, and you must be able to
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Speaker 2: measure all of those things. So that is certainly different,
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Speaker 2: but a lot of things are the same. You still
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Speaker 2: have to be a great restaurant offering great food that
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Speaker 2: connects with the guests in a genuine way and keeps
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Speaker 2: them coming back because you're offering a great experience.
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Speaker 1: Cool. So what attracted you to Empower Delivery?
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Speaker 2: Yeah, So I've known the founder of Cluster Truck, which
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Speaker 2: is the company that Empowered Deliveries spun out of, for
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Speaker 2: many years. I met him actually on another panel. He's
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Speaker 2: a really remarkable human being, incredibly generative, always coming up
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Speaker 2: with ideas and just ideas that no one else would
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Speaker 2: ever have. Very very smart man named Chris Baggett. He
5:16
Speaker 2: was one of the co founders of a company called
5:18
Speaker 2: Exact Target, which was sold to Salesforce for two and
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Speaker 2: a half billion dollars. Subsequently found a Compendium, sold that
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Speaker 2: to Oracle, and then, as you do, became a farmer
5:29
Speaker 2: after a couple of billion dollars of exits. I think
5:31
Speaker 2: that's what everyone does. And when he was a farmer,
5:34
Speaker 2: he found himself with too much Hamburger on his hands,
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Speaker 2: and so he bought some restaurants. And as you do,
5:41
Speaker 2: when truly you're a software guy with a lot of
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Speaker 2: ideas and you buy some restaurants, what you do is
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Speaker 2: you start making software. So he hired his CTO from Compendium,
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Speaker 2: and the two of them together founded Cluster Truck, and
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Speaker 2: Cluster Truck, for those people who don't know, it is
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Speaker 2: the largest and most profitable delivery kitchen in the US.
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Speaker 2: So when I say there's a bunch of people out
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Speaker 2: there just quietly doing the work, this is a great example.
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Speaker 2: They've made a delivery kitchen. The downtown Indianapolis location does
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Speaker 2: eight hundred two thousand transactions a day, first party ordering,
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Speaker 2: first party delivery, absolutely incredible, and in power delivery. I
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Speaker 2: was talking to Chris about what I should do with
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Speaker 2: my life after writing the book and taking him through
6:29
Speaker 2: some job options that I had, and he said, Meredith,
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Speaker 2: if you're going to go get a job, job, you
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Speaker 2: should come work here and we'll spin out the company.
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Speaker 2: And I said, oh, that's very funny. I'm going to
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Speaker 2: go back to a big company. I think that's where
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Speaker 2: I belong. And he said, well, just come see it.
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Speaker 2: Come see it. So I flew to Indianapolis and I
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Speaker 2: walked into this kitchen that was doing eight hundred two
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Speaker 2: thousand orders a day, and as a restaurant person, once
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Speaker 2: you see it, you cannot unsee it. It's just so
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Speaker 2: different from everything else. And it was obvious to me
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Speaker 2: that that is how restaurants should run, not just delivery kitchens,
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Speaker 2: but frankly all restaurants. And what I mean by that
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Speaker 2: and how it's different is truly it's like a smart
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Speaker 2: brain is running the kitchen, and then because of that
7:20
Speaker 2: smart brain coordinating all the activity, all of the features
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Speaker 2: that you might want in a modern digitally native restaurant
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Speaker 2: radiate out from that brain, whereas in the rest of
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Speaker 2: the restaurant industry it's individual, siloed pieces of software trying
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Speaker 2: to go after different opportunities and solve different problems, and
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Speaker 2: then the poor restaurant is stuck on the back end
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Speaker 2: trying to stitch it all together, which is very, very challenging.
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Speaker 1: Interesting, So can you talk a little bit more about
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Speaker 1: that delivery kitchen doing eight hundred to a thousand transactions
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Speaker 1: a day? So how many brands?
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Speaker 2: Yeah, they go to market all as Cluster Truck. That's
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Speaker 2: really the main brand, and that's what they do all
7:59
Speaker 2: of their market getting to consumers. As they do have
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Speaker 2: sub brands sort of underneath to help navigate the menu,
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Speaker 2: but really Cluster Truck is the main brand. Cluster Truck
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Speaker 2: is the only one that they list I think on DoorDash,
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Speaker 2: and if you were to ask a consumer about any
8:16
Speaker 2: of the sub brands, they wouldn't recognize them, but they
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Speaker 2: would recognize Cluster Truck. But it is a very complex
8:24
Speaker 2: and extended menu. So there are items as different on
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Speaker 2: the menu as pizza, hamburgers, salads, Thai food, fried rice.
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Speaker 2: I mean, just like this incredible range pasta of different
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Speaker 2: menu items, and part of their secret sauce is how
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Speaker 2: they execute so many different items without having just complete
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Speaker 2: chaos and a ton of waste in the back of
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Speaker 2: the house.
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Speaker 1: Yeah, yeah, it sounds. It sounds like a mission serving
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Speaker 1: an extended menu with a lot of different cuisines, for sure.
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Speaker 1: So Empower was spun out out of Cluster Truck.
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Speaker 2: That's right. So they, in order to make all of
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Speaker 2: this magic happen at the delivery kitchen, have really amazing
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Speaker 2: software that Dan mcbadden our CTO and his team built
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Speaker 2: custom for Cholester Truck. And so the idea was, let's
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Speaker 2: spin it out into a separate company and offer it
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Speaker 2: to other restaurants. Now a word of caution, because I
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Speaker 2: think everyone who's built their own software has this idea, Oh,
9:28
Speaker 2: we'll just spin it out and sell it to other people,
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Speaker 2: no matter what industry they're in. It sounds so easy.
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Speaker 2: It is not easy. So we've spent quite a bit
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Speaker 2: of time rebuilding aspects of the software to make it
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Speaker 2: multi tenant and configurable and really usable by someone else.
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Speaker 2: You know, you can imagine how different it is if
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Speaker 2: you're a restaurant with your own engineers working for you,
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Speaker 2: and they live you know they work right outside of
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Speaker 2: right upstairs from the restaurant. You can probably make it
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Speaker 2: so that only engineers can use it, right, But if
9:59
Speaker 2: you're go to be selling it to other people, you
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Speaker 2: have to make it so that a restaurant person can
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Speaker 2: use it.
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Speaker 1: Okay, So I guess who is Empower's target customer.
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Speaker 2: Anyone who does a substantial number of deliveries a day
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Speaker 2: out of a single location will benefit from the empowered
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Speaker 2: delivery approach. So I think it is becoming clear that
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Speaker 2: delivery the way it is currently constructed in the US
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Speaker 2: is not really working for anyone as a consumer. It's
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Speaker 2: extremely expensive, it's unreliable, might be slow, might be fast,
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Speaker 2: might be high quality, might be low quality, might be cold.
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Speaker 2: When you get it, you might be missing items. If
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Speaker 2: something's wrong, it can't be fixed. So not a great
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Speaker 2: consumer experience. And then from a driver perspective, you know,
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Speaker 2: there's articles all the time about the drivers being grumpy
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Speaker 2: about the situation and feeling that they're not being compensated
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Speaker 2: well enough, and consumers aren't tipping. Of course, consumers aren't
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Speaker 2: tipping because they perceive the fees to be so high
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Speaker 2: already that they don't have room left for the tip,
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Speaker 2: and then it's not really working for the restaurants either. Right,
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Speaker 2: the restaurants are losing so much in commission that they
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Speaker 2: have jacked the prices to make up for that, which
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Speaker 2: again is a terrible consumer experience, but even more than that,
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Speaker 2: it's an incredibly disjointed operational experience for the restaurant. And
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Speaker 2: what they've essentially done is seated control of their kitchen
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Speaker 2: to an outside party. Right, so that marketplace that's sending
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Speaker 2: in orders, or multiple marketplaces that are sending in orders,
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Speaker 2: are now sending them into the kitchen without knowing what's
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Speaker 2: going on in the kitchen. And then on the back end,
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Speaker 2: the driver's showing up. Maybe the item's done, maybe it's not.
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Speaker 2: So if the driver shows up and the item's not done,
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Speaker 2: they're waiting. If the food is done and the driver
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Speaker 2: hasn't shut up, the food is waiting. Both of those
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Speaker 2: things are a bad experience for either the guest or
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Speaker 2: the driver.
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Speaker 1: But we were told consumers knew it was a worse
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Speaker 1: experience and they were just going to accept it. Is
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Speaker 1: that part of the issue is that, you know, restaurants
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Speaker 1: were like, we'll just do it, and you know, people
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Speaker 1: accepted it during the pandemic in times that they had
12:09
Speaker 1: to or when they were afraid to go to restaurants.
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Speaker 1: And now that things have changed, you know that that's
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Speaker 1: turning them off? Is that? What's is it a combination?
12:18
Speaker 1: I guess it's a combination of that in terms of
12:20
Speaker 1: why the sales mix of a delivery into yeah drop right, yeah.
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Speaker 2: Look, the convenience is real and consumers love that. And
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Speaker 2: I do think for a long time, pandemic or no,
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Speaker 2: I do think for a long time, consumers were willing
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Speaker 2: to put up with a variable experience because the convenience
12:38
Speaker 2: was so valuable to them. But now that the prices
12:42
Speaker 2: are really starting to go up, I think you're starting
12:45
Speaker 2: to see consumers push back on that. You know, if
12:47
Speaker 2: I'm going to pay that much more, I expect it
12:50
Speaker 2: to be a good experience. And I don't know if
12:52
Speaker 2: you follow Lisa W. Miller and Associates, and they put
12:56
Speaker 2: out a recent blog post. Lisa is a consumer insights
13:01
Speaker 2: person and she does the same survey month after month,
13:04
Speaker 2: year every year, and so she has longitudinal data about
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Speaker 2: how consumers are feeling about things going on in the
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Speaker 2: restaurant industry. And she put out some data on delivery
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Speaker 2: specifically recently, and a couple of things very interesting about it.
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Speaker 2: The percent of people who reported ordering delivery from a
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Speaker 2: full service restaurant in the last three months was down
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Speaker 2: ten points versus its peak in September of twenty three.
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Speaker 2: And yeah, that's a huge stop, right, And she has
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Speaker 2: a thesis that what consumers choose to do is things
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Speaker 2: that are joyful, and what they choose not to do
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Speaker 2: is things that are not joyful. And so she says, well,
13:46
Speaker 2: what's changed is that delivery is now not joyful. We're
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Speaker 2: seeing a study increase and the people who say delivery
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Speaker 2: isn't worth it. That's up seven points versus a year ago.
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Speaker 2: Eighty percent of people who've ordered delivery at some point
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Speaker 2: have had an issue with that delivery. They cite slow
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Speaker 2: delivery times. Thirty seven percent of people say delivery fees
14:11
Speaker 2: have gone up too much, and that's fees specifically, not
14:13
Speaker 2: just the underlying food cost. Twenty three percent said their
14:17
Speaker 2: order was not accurate, twenty four percent said food quality
14:21
Speaker 2: was worse than expected, eighteen percent food said food was
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Speaker 2: not the right temperature. I mean, those are pretty astounding numbers, right,
14:28
Speaker 2: and I think when the price was similar to what
14:31
Speaker 2: was in in store pricing, but you've got that convenience.
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Speaker 2: Consumers were willing to say, well, it's not quite as good,
14:39
Speaker 2: but it's pretty good for delivery. But once those prices
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Speaker 2: really start to go way, way, way up and the
14:45
Speaker 2: experience doesn't get any better, consumers start to question what
14:49
Speaker 2: they're doing. And we've already seen order volume actually go
14:52
Speaker 2: negative in the UK for delivery both Jordash and Uber.
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Speaker 2: It's very hard to te tell what's happening with their
15:01
Speaker 2: order volume because they conflate it with other countries, other verticals.
15:06
Speaker 2: There's a lot going on in their financials, so it's
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Speaker 2: really hard to read between the lines. It would appear
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Speaker 2: their order volume in restaurant US specifically is still growing,
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Speaker 2: but that growth rate is falling. I'm very curious after
15:19
Speaker 2: seeing Lisa's data come out if next quarter we actually
15:24
Speaker 2: start to see a decline in orders.
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Speaker 1: Yeah, i'd imagine, you know, to your point, it's more expensive,
15:30
Speaker 1: and you know you mentioned potentially the same experience. I'd
15:35
Speaker 1: imagine the experience is probably worse now that dining room
15:37
Speaker 1: traffic is back.
15:39
Speaker 2: I think that's probably true. Yeah, it's gotten more expensive
15:42
Speaker 2: and worse, and the other thing that's happening is that
15:47
Speaker 2: the platforms themselves are making the experience worse on purpose.
15:51
Speaker 2: And I think everyone can identify, especially New Yorkers where
15:56
Speaker 2: you're at, can identify with the rise of Uber. And
15:59
Speaker 2: when it first came out, you got a black car
16:01
Speaker 2: and it was amazing, and it came right away and
16:03
Speaker 2: it was like magical, right. And then over time they
16:06
Speaker 2: introduced all these new tiers of service, and all of
16:10
Speaker 2: a sudden, what you used to expect to be this
16:13
Speaker 2: is the experience became something that you got massively upcharged for.
16:17
Speaker 2: And now if you want your car to show up
16:19
Speaker 2: on time, if you want it to be a decent car,
16:22
Speaker 2: it's going to cost you twice as much as it
16:24
Speaker 2: used to, right. And the same thing is starting to
16:26
Speaker 2: happen on the delivery platforms. In order for them to
16:29
Speaker 2: make their network economics work, they have to start batching orders, right,
16:34
Speaker 2: So they're putting two three orders in a car on
16:38
Speaker 2: its way out to be delivered. And what that means
16:41
Speaker 2: as a consumer is that you might get the second order,
16:43
Speaker 2: it might take longer, your food might be cold by
16:46
Speaker 2: the time that you get it. It's very frustrating, you know,
16:48
Speaker 2: if you're sitting there on your phone watching the driver
16:50
Speaker 2: drive somewhere else. You can't figure out why, and you
16:54
Speaker 2: miss the quote time, like everything is just not as good. Well,
16:58
Speaker 2: have you noticed that you can now pay a two
17:01
Speaker 2: ninety nine fee to be the first person?
17:04
Speaker 1: I have not. I'm kind of old school. I stick
17:06
Speaker 1: with my you know, I'll use the apps for sure.
17:10
Speaker 1: Postmates or ber Eats is pretty popular by me in
17:13
Speaker 1: the New Jersey suburbs. So now I haven't noticed that,
17:17
Speaker 1: But I am kind of old school. I do have
17:18
Speaker 1: my favorite Chinese place and a couple of Italian places
17:21
Speaker 1: that are close by that have always done delivery really really,
17:24
Speaker 1: really well. And you know, I kind of won't sacrifice
17:28
Speaker 1: my quality as much as I think other people for convenience.
17:30
Speaker 1: To be honest, that's.
17:32
Speaker 2: A classic New Yorker statement. I think, I mean, New
17:35
Speaker 2: York kind of invented delivery, right, the rest of us
17:38
Speaker 2: were just copying.
17:38
Speaker 1: Yeah, yeah, so I have not noticed it, but yeah,
17:41
Speaker 1: just another fee, that's it sounds exhausting. I'm sure a
17:45
Speaker 1: lot of customers are fed up.
17:47
Speaker 2: Yeah, pushing back on that. So so you have to
17:50
Speaker 2: ask yourself, like this disjointed system that results in a
17:54
Speaker 2: terrible and expensive experience, but consumers want it. That sounds
17:59
Speaker 2: like a situation for disruption, right, There's something consumers want.
18:03
Speaker 2: Current system is terrible at giving it to them. What
18:06
Speaker 2: if you could give it to them in a way
18:08
Speaker 2: that wasn't terrible. What if you could give it to
18:10
Speaker 2: them in a way that was cost effective and efficient
18:13
Speaker 2: and reliable. Oh my gosh, they would love it? Right,
18:17
Speaker 2: And that's what empowered delivery does. And that's why you
18:20
Speaker 2: see Cluster truck doing eight hundred and two thousand deliveries
18:23
Speaker 2: a day because the experience is so magical. As a consumer,
18:27
Speaker 2: you can't believe. Oh my gosh, it came on time,
18:30
Speaker 2: it's still hot, everyone was nice. It was so cheap.
18:33
Speaker 2: They didn't charge me a delivery fee, they didn't charge
18:36
Speaker 2: me a service fee, they didn't charge me a menual.
18:38
Speaker 2: How were they doing this? This is like pizza delivery
18:42
Speaker 2: in the eighties. It's incredible.
18:44
Speaker 1: Okay, So I mean part of it. How are they
18:47
Speaker 1: doing it right? How are you saving the customer money,
18:52
Speaker 1: saving the restaurant money, helping the drivers make more deliveries
18:57
Speaker 1: and more money as a part of it. You know,
19:01
Speaker 1: I know you've mentioned that like central brain part of
19:04
Speaker 1: the restaurant and how that everything builds off of that.
19:07
Speaker 1: But if you could talk a little bit more about
19:09
Speaker 1: how the process works.
19:12
Speaker 2: Absolutely, it's about coordination of resources and when you have
19:17
Speaker 2: a lot of different pieces of software and a lot
19:20
Speaker 2: of different frankly companies and entities involved. Right, drivers don't
19:24
Speaker 2: actually work for the restaurant or for the platform. The
19:28
Speaker 2: platform is a totally different company from the restaurant. Everyone's
19:31
Speaker 2: running on different software. Everyone's trying their best to make
19:34
Speaker 2: it work together, talk together. But that disjointed system inherently
19:41
Speaker 2: creates slack in the system right there, And slack is waste.
19:44
Speaker 2: Waste is cost, and that waste, that cost is what
19:50
Speaker 2: causes the experience to be bad and more expensive because
19:53
Speaker 2: now everyone has to get their piece of margin, everyone
19:55
Speaker 2: has to cover their cost, everyone has to pay for
19:58
Speaker 2: that waste in the system. If you you can get
20:00
Speaker 2: rid of that, then everything gets better. And that's what
20:04
Speaker 2: you love about your local Chinese and Italian places, right
20:09
Speaker 2: I bet you. They have their own drivers, and having
20:12
Speaker 2: your own drivers allows you to control that whole experience,
20:16
Speaker 2: both in terms of how you're conveying your brand to
20:18
Speaker 2: the consumer, but also in terms of linking together what's
20:22
Speaker 2: going on in the kitchen with what's going on with
20:24
Speaker 2: the driver, Right, Why make the food till I know
20:26
Speaker 2: where the driver is and the empower delivery system does
20:29
Speaker 2: that for everyone? Does it at scale? Now you have
20:33
Speaker 2: to be doing a lot of deliveries, probably not eight
20:36
Speaker 2: hundred a day for it to make sense, but you
20:38
Speaker 2: need to be doing probably one hundred a day for
20:40
Speaker 2: it to make sense. If you're doing five or ten
20:42
Speaker 2: out the back door, the software is not the right
20:44
Speaker 2: software for you. But if you are doing one hundred
20:48
Speaker 2: deliveries a day or more, then being able to coordinate
20:52
Speaker 2: that activity of where the driver is with what's going
20:56
Speaker 2: on in the kitchen, and then being able to tell
20:58
Speaker 2: the consumer about it, give them a real time quote
21:01
Speaker 2: time that they can trust that is accurate every single time.
21:05
Speaker 2: Because you control the whole process, it just makes the
21:09
Speaker 2: whole experience better, takes the slack out of the system,
21:12
Speaker 2: removes all that cost, and makes it so that the
21:14
Speaker 2: consumer doesn't have to pay as much, the restaurant makes
21:17
Speaker 2: more money, and the driver can actually make more money too.
21:20
Speaker 1: Yeah, that part makes a lot of sense. I guess
21:23
Speaker 1: there'd be a couple of questions. I would have that
21:26
Speaker 1: some things that I think might be difficult at the moment.
21:29
Speaker 1: So number one, is finding drivers difficult for some of
21:34
Speaker 1: these restaurants, and what tools are they using to try
21:37
Speaker 1: to attract drivers.
21:39
Speaker 2: Yeah, well, maybe let's back up and say, just reiterated
21:44
Speaker 2: exactly what you said. This is a tool that requires
21:47
Speaker 2: you to have your own drivers. So just like your
21:49
Speaker 2: favorite restaurants in New Jersey, this is a tool that
21:53
Speaker 2: requires restaurants to have their own drivers. Now, I think
21:56
Speaker 2: the W two driver model is fundamentally broken. I think
22:00
Speaker 2: we see that with you know, the largest pizza hut
22:03
Speaker 2: franchises in California laying off their drivers. I think we
22:08
Speaker 2: see that with someone like Papa John's using surge capacity
22:11
Speaker 2: from the third parties when they're unable to get enough drivers.
22:16
Speaker 2: I think drivers just don't want to work W two anymore.
22:20
Speaker 2: They've been shown a better way. And as much as
22:22
Speaker 2: some drivers you know complain, oh I'm not getting tips,
22:25
Speaker 2: I'm not making a lot of money driving, there's also
22:27
Speaker 2: a lot of people who love doing it. And they
22:29
Speaker 2: love doing it because it's flexible, they can do it
22:32
Speaker 2: when they want or need to. They love doing it
22:36
Speaker 2: because they are not you know, sort of beholding to
22:39
Speaker 2: a specific company where they have to wear a uniform
22:42
Speaker 2: and show up on a certain day at a certain time. Right.
22:45
Speaker 2: Ten ninety nine Contract driving is just a better way
22:49
Speaker 2: to do that job. And so what this software does
22:52
Speaker 2: is make it possible for any restaurant to have its
22:55
Speaker 2: own ten ninety nine gig fleet of workers, So a
22:58
Speaker 2: dedicated on demand fleet. Everything that's easy about door, dashnuber
23:02
Speaker 2: and someone just showing up and taking an order, that's
23:05
Speaker 2: the same. Everything that's hard about that where it's disjointed
23:09
Speaker 2: and you don't know where they're coming or going, that's different. Right.
23:14
Speaker 2: So then now to your question, how do you get
23:17
Speaker 2: these drivers? How do you find it? Well, first, again,
23:20
Speaker 2: you have to start with the assumption that people actually
23:22
Speaker 2: want to work this way. And I think because we
23:25
Speaker 2: hear the noisy, bad cases of you know, I didn't
23:29
Speaker 2: get a tip or I waited a long time. Because
23:32
Speaker 2: we hear those, we tend to think, oh, driving is terrible.
23:35
Speaker 2: But when you actually talk to the drivers and ask
23:37
Speaker 2: them what they think. And I don't know if you do.
23:39
Speaker 2: I do this because I work in the industry. Every
23:41
Speaker 2: time I get in an uber or lyft, I ask
23:43
Speaker 2: my driver about their experience, why they do it, what
23:46
Speaker 2: their story is. It's very interesting and I call it
23:50
Speaker 2: the gig ATM. A lot of people do it like, oh,
23:54
Speaker 2: I need a few extra rects to buy a gift
23:55
Speaker 2: for my kid, or oh I'm saving up for a vacation,
23:58
Speaker 2: or oh, I'm trying to pay off my student debt,
24:00
Speaker 2: or oh this week, I just ran a bit short
24:04
Speaker 2: of money, so I'm driving a few extra hours. Right.
24:06
Speaker 2: It's literally it's so easy just to get in your car,
24:08
Speaker 2: go do something, or on your bike, go do something,
24:11
Speaker 2: make a bit of extra cash, and move on. People
24:15
Speaker 2: want to work this way, So start with that assumption
24:18
Speaker 2: and then go out and say, hey, I have a
24:22
Speaker 2: better gig for you. This one's better. You're not going
24:26
Speaker 2: to be driving all over the place wondering where your
24:28
Speaker 2: next job is coming from. You're going to get when
24:32
Speaker 2: you're engaged, a regular set of jobs and pretty regular pay.
24:37
Speaker 2: That's pretty reliable and you know what it is, and
24:40
Speaker 2: our system protects you. So the way the system is optimized,
24:45
Speaker 2: it is optimized for that driver to make sure that
24:48
Speaker 2: anyone who's in the system is going to get enough
24:50
Speaker 2: jobs per hour. It's not going to let the driver
24:52
Speaker 2: pool get diluted, which happens in the Uber DoorDash lift systems. Right,
24:57
Speaker 2: they let way too many drivers in and then the
25:00
Speaker 2: average driver can't make money because everyone chooses to drive
25:04
Speaker 2: at the same time. Right. The system won't let that happen.
25:07
Speaker 2: It only lets the right emberve drivers in because it's
25:10
Speaker 2: dynamically matching ordered demand with drivers supply.
25:15
Speaker 1: It's interesting and it's really interesting that the gig economy
25:18
Speaker 1: seems to have really broken the W two model. Right,
25:21
Speaker 1: people you know kind of want to work on demand.
25:25
Speaker 1: How often can they get paid?
25:27
Speaker 2: We currently paid drivers out daily. There's a little bit
25:31
Speaker 2: of a leg on just money getting transferred, but there's
25:35
Speaker 2: also just like undoor Rusher Uber a daily pay option
25:38
Speaker 2: where they can pull the money down there.
25:39
Speaker 1: Yeah, that's cool. And I've heard of you know, some
25:42
Speaker 1: companies working on hourly payment.
25:45
Speaker 2: Yeah, right, And just that alone is huge. And when
25:49
Speaker 2: you think about it, like how did we end up
25:50
Speaker 2: in this place? Like how did we design our economy
25:53
Speaker 2: so that you have to work for two entire weeks
25:56
Speaker 2: before you get a paycheck? That is so crazy?
25:59
Speaker 1: Like what it probably was first created when interest rates
26:02
Speaker 1: are really really high, so that the employers can carry
26:05
Speaker 1: the float.
26:06
Speaker 2: Made money on the float. I don't know. It seems
26:09
Speaker 2: nuts right now now that you can get paid daily,
26:11
Speaker 2: Like who would wait two weeks to get paid and
26:13
Speaker 2: what did they do for those two weeks? How did
26:15
Speaker 2: they eat?
26:15
Speaker 1: I don't know for sure, And so all right. The
26:18
Speaker 1: other question I would have would be about for driver insurance.
26:22
Speaker 1: You know, I've heard of some restaurants, especially smaller mom
26:27
Speaker 1: and pop shops, maybe having an issue in terms of
26:29
Speaker 1: acquiring driver insurance. I'd assume that would depend on the
26:34
Speaker 1: state in the region. But is that an issues sometimes
26:37
Speaker 1: for customers?
26:39
Speaker 2: Yeah, insurance is a state by state thing. For sure.
26:41
Speaker 2: It's called hired non owned auto insurance or each and away.
26:45
Speaker 2: It's the same insurance that a pizza place would carry
26:49
Speaker 2: that has their own drivers. And I have heard in
26:54
Speaker 2: some places it can be more or less difficult to get,
26:56
Speaker 2: but we have not seen any of our customers have
26:58
Speaker 2: trouble yet.
26:59
Speaker 1: Okay, good, all right. And we spoke about delivery mix
27:01
Speaker 1: and how it's falling. You know where do you think
27:04
Speaker 1: and obviously it's going to be dynamic, it's going to
27:06
Speaker 1: be changing, but you know where do you think the
27:10
Speaker 1: delivery can ultimately shake out as a percentage of total
27:13
Speaker 1: US restaurant sales in the intermedia. In the longer term, well.
27:17
Speaker 2: The intermedia maybe in the short term, I think it's
27:20
Speaker 2: actually going to go down, right. I think consumers are
27:25
Speaker 2: getting to a place where, as we said, it's not
27:27
Speaker 2: worth it delivery specifically, but generally, prices have gone up
27:30
Speaker 2: so much on so many things. They have to save somewhere,
27:34
Speaker 2: and that's probably one of the easiest places to save
27:37
Speaker 2: is to go procure their own food rather than having
27:40
Speaker 2: someone bring it to them. So I think in the
27:42
Speaker 2: short term it will go down. I think in the
27:45
Speaker 2: intermediate term it'll kind of settle out to a pretty
27:48
Speaker 2: stable place wherever that is. But then in the long term,
27:52
Speaker 2: I think innovations like empower delivery and what we're talking
27:56
Speaker 2: about that allow delivery to be higher quality and cheaper
28:01
Speaker 2: will cause delivery to actually go up to a new high.
28:05
Speaker 2: And I think, you know, we look in countries that
28:08
Speaker 2: have really low labor costs, and delivery can be as
28:11
Speaker 2: much as seventy percent of restaurant sales. Right. Kitchens are smaller,
28:16
Speaker 2: people eat out more often. Restaurants don't have a front
28:20
Speaker 2: of house. They might have a very significant ghost kitchen
28:24
Speaker 2: or delivery kitchen build out. They're kind of skipping ahead
28:27
Speaker 2: directly to the next generation, if you will, right, skipping
28:31
Speaker 2: the landline. In the US, we have an install base
28:35
Speaker 2: of six hundred thousand restaurants that are built the way
28:37
Speaker 2: they're built, and we're not going to throw them all
28:38
Speaker 2: away and start over, right, So it is more likely
28:42
Speaker 2: in the US will never get to that like seventy
28:45
Speaker 2: percent of sales, but I wouldn't be surprised if we
28:48
Speaker 2: don't get to fifty percent of restaurant.
28:49
Speaker 1: Sales, Okay, cool. I enjoyed that in your books, kind
28:55
Speaker 1: of the case studies talking about the different dynamics of
28:59
Speaker 1: different in national markets and their percentages of delivery and
29:02
Speaker 1: what kind of factored into some of those things. I
29:05
Speaker 1: think the examples in India with some of those like
29:07
Speaker 1: food runners in Indi India was were like super super
29:11
Speaker 1: interesting to me.
29:12
Speaker 2: Yeah, isn't that amazing? Amazing They've been doing that for
29:15
Speaker 2: a very long time. They've got it totally dialed in,
29:18
Speaker 2: and they've been doing it without software. They have like
29:20
Speaker 2: some weird like mental software. I think, very able to
29:25
Speaker 2: do it.
29:25
Speaker 1: Very impressive for sure. All Right, And what do you
29:28
Speaker 1: think about Amazon taking a bigger stake in Grubhub and
29:31
Speaker 1: the recent edition of Grubhub Plus to Prime.
29:35
Speaker 2: I think it's pretty exciting. I agree with the way
29:38
Speaker 2: Kristin Holly said, are we watching the world's slowest acquisition.
29:44
Speaker 2: I think it'll be very interesting to see if they
29:46
Speaker 2: end up owning it. I think it's huge for grub
29:49
Speaker 2: ab access to all of those customers. I think Amazon's
29:55
Speaker 2: been trying to get into this space for a very
29:56
Speaker 2: long time. It's hard to be the everything store and
29:59
Speaker 2: not restaurant food, right, It's such a big part of
30:03
Speaker 2: our economy. I've tried it. I thought it was pretty good.
30:09
Speaker 2: What I didn't love about it is that all the
30:11
Speaker 2: advertising said free grub Hub Plus, and certainly there was
30:17
Speaker 2: no delivery fee, but there was still a service fee,
30:22
Speaker 2: so that's not totally free. And then even weirder, the
30:27
Speaker 2: service fee changed in between the cart and the checkout page,
30:31
Speaker 2: so it went from like three dollars and sixty cents
30:33
Speaker 2: service fee, and then once I got to the checkout
30:35
Speaker 2: page it said something like other fees, they had changed
30:38
Speaker 2: the name and I went to five sixty. Oh wow,
30:41
Speaker 2: I thought that was very odd, very odd. Didn't seem
30:44
Speaker 2: like an Amazon like experience. I'm not sure if Amazon
30:49
Speaker 2: knows that grub Hub's doing that. Yeah, so Amazon, if
30:52
Speaker 2: you're listening, I want to look into that.
30:55
Speaker 1: I mean, transports so important when I when you're dealing
30:58
Speaker 1: with customers. You know, That's why the discussions about dynamic
31:03
Speaker 1: pricing so many heated discussions. I guess about about it, right,
31:07
Speaker 1: because transparency is so important and I think factors into
31:09
Speaker 1: your decision making when you're going to go out for lunch, right.
31:12
Speaker 2: Yeah, absolutely. And I think the thing about the service
31:15
Speaker 2: fees is that when you're comparing options online, you don't
31:19
Speaker 2: see the service fees. So you're comparing, Oh, this one
31:22
Speaker 2: has free delivery, this one has reduced price delivery, this
31:25
Speaker 2: one has full price delivery. You're making your choice based
31:28
Speaker 2: on what you can see, and then you get to
31:29
Speaker 2: the end and there's a fee that you weren't aware of.
31:33
Speaker 2: That I think is what is so annoying about it.
31:35
Speaker 1: Yeah, not a great customer experience, but very cool. Meredith,
31:40
Speaker 1: this is a very interesting conversation. Where can our listeners
31:43
Speaker 1: go to find out more about empower delivery?
31:47
Speaker 2: Yeah, we would love to have folks visit Empower dot Delivery.
31:53
Speaker 2: On that website, you can take a video tour of
31:56
Speaker 2: how the software works. You can schedule a demo, reach
32:00
Speaker 2: out to us, speak with us directly. We would absolutely
32:04
Speaker 2: love to share the software with anyone again who's doing
32:08
Speaker 2: lots and lots of deliveries every day and who is
32:11
Speaker 2: just fed up with having other people's drivers and orders
32:17
Speaker 2: messing up their kitchen.
32:18
Speaker 1: I love it, and I love it that it's an
32:20
Speaker 1: option for a better option for even independent restaurants. Anybody
32:24
Speaker 1: that's helping out the smaller mama pops out there, you
32:29
Speaker 1: know I support and appreciate, So thanks again for doing this.
32:34
Speaker 1: You're great. A big thanks to the audience for tuning
32:36
Speaker 1: in as well. If you liked the episode, please share
32:38
Speaker 1: it with your friends and colleagues. Check back soon for
32:41
Speaker 1: a conversation with Christine Barone, CEO of Dutch Pros