Latest / From Kitchen to C-Suite™ / PULSE! Today’s Hotel, Restaurant & Bar Industry News Deep Dive (08/13/2026)
Transcript
- Brad Peters: Welcome to Pulse, today's hotel, restaurant, and bar industry news, a deep dive from HRB Universal, navigating your industry. With insights from leaders ⁓ Wendy's bleeds about twelve point five percent of its foot traffic as a Wall Street takeover looms. A really bitter real estate bidding war erupts over the remains of a bankrupt drive-thru chain, and ⁓ Kava proves that aggressively hiking your own labor costs might just be the ultimate fast casual growth hack. Yeah, we are watching a real time stress test of the modern hospitality model right now. I mean, the operators who are just relying on the old playbook of slashing expenses to protect margin percentages, well, they're getting absolutely slaughtered. While the brands investing heavily in their physical footprints and human capital are just, you know, capturing all the market share, welcome to Pulse Today's Hotel, restaurant and bar industry news deep dive brought to you by HRB Universal. Right. And we are delivering the critical updates, trend analyses, and operational intelligence you need to stay ahead in hospitality. Exactly. So our mission today for this deep dive is to really unpack the exact operational, financial, and strategic levers that are separating the legacy giants who are currently just tripping over their own feet from the agile brands, flawlessly gliding over all these macroeconomic hurdles. Yeah, because the divide is getting wider every single quarter. It really is. So we are going to dissect the financial engineering behind some massive MA movements in the drive-through space. Figure out the mathematical reality of why traditional fast food pricing is fundamentally failing. And look at how smart operators are weaponizing unit level tech, management layers, and ⁓ crisis PR to protect their bottom lines. Sounds like a full plate today. Definitely. Let's start with the macro traffic crisis, because the pressure cooker of consumer demand is really cracking the fault lines in these legacy brands. I mean, Wendy's is basically the poster child for this right now, right? They just posted a massive Twelve point five percent drop in foot traffic. Yeah, and look, a double digit drop in foot traffic is an existential threat for any quick service restaurant. The entire QSR economic model relies on high volume to offset what we all know are notoriously thin margins. Right. It's a volume game. Exactly. Yeah. When you lose twelve point five percent of your transactions, your fixed costs, such as a rent, your salaried management, insurance utilities, they suddenly consume a drastically higher percentage of your overall revenue. Which means your unit economics just collapse very quickly. They fall off a cliff. Yeah. And that explains the immediate vulnerability at the corporate level. Because when a publicly traded brand bleeds traffic at that kind of rate, activist investors just smell blood in the water. Right. Which brings us to the hostile Wall Street takeover bid for Wendy's led by Nelson Peltz and his firm Tryon Partners. Yeah, and Tryon Partners specializes in this exact scenario. I mean, they target these legacy consumer brands that have Massive name recognition, but are really lagging in operational execution. So what is Peltz's typical playbook here? Well, it's highly predictable, honestly. He acquires a massive stake while the stock is depressed, launches a proxy fight to secure board seats, and then forces aggressive corporate restructuring. Meaning he starts selling things off? Basically, yeah. Usually that means spinning off company owned real estate to franchise operators to raise immediate capital, or slashing cork overhead, or even forcing a sale to private equity. And obviously, when an activist investor like Peltz starts circling, the executive suite goes into full self-preservation mode. We see this manifested in a trend that is just sweeping the industry right now. ⁓ the C-suite musical chairs. Exactly. Specifically targeting the marketing department. The traffic slumps, the board demands answers, and the immediate panic response seems to be, you know, fire the chief marketing officer. Because it is the easiest lever for a panic. Board of directors to pull. I mean, look at Red Robin. They just brought in Scott Hudler as their new CMO. And he has a massive pedigree, right? He worked at Whataburger, Duncan, Torchies. Yeah, heavy hitter. And Papa John's is doing the exact same thing right now, swapping out their CMO to ramp up mass marketing amid their own traffic struggles. The logic in the boardroom is always well, if transactions are down, the brand messaging must be stale. See, I am gonna push back aggressively on that boardroom logic. Let's hear it. I look at the traditional fast food pricing strategy over the last, say, three years, like pulling a rubber band. Legacy brands just kept stretching the prices, pushing combo meals past the twelve, thirteen, fourteen dollar mark. Just to protect their corporate margins against commodity inflation. Right. But eventually the band snaps. A customer looks at a fifteen dollar burger in a paper bag that gets handed through a drive-thru window and they simply tap out. I mean, you cannot market your way out of a fundamentally broken price to value ratio. You really can't. And the data supports your pushback completely. The consumer is actively rejecting traditional fast food inflation. For 50 years, the QSR value proposition was this ironclad triad, right? It was cheap, fast, and consistent. Cheap being the key word there. Exactly. The moment you remove cheap from that equation, the psychological contract with the consumer is just broken. So all the LTOs and app discounts don't matter. Nope. The short-term limited time offers The app exclusive discounts, the traditional marketing band-aids, none of it works anymore because the baseline menu prices have fundamentally alienated the core demographic. And the contrast in the market right now really proves the point. Because while Wendy's is bleeding, Chili's has achieved a staggering twenty-one straight quarters of growth. Yeah, with sales climbing five percent. Right. I mean, if I'm gonna spend fifteen or sixteen dollars. I will gladly bypass the drive-thru, go sit down at Chili's, and let a server bring me a basket of chips and salsa. Of course you would. And the thing is, Chili's isn't running some groundbreaking avant-garde marketing campaign. No, they are just executing basic casual dining hospitality at a price point that suddenly feels like a huge bargain compared to a fast food combo. They completely capitalized on the pricing ceiling that fast food artificially created for itself. But you know, the most revealing case study in pricing psychology right now is actually Kava. ⁓ absolutely. They just posted a massive Q2. Yeah, let's look at the numbers. A nine point seven percent same store sales growth, a five point three percent bump in traffic, a thirty-one point three percent jump in revenue to over three hundred and sixty-five million dollars. And their average unit volumes, their AUVs, are now hitting three point one million dollars. That's huge. It is. But what is critical here is exactly where Kava is succeeding. Their CFO, Tricia Tolivar, noted that they are seeing tremendous performance in lower income trade areas. Which is wild. A Mediterranean fast casual concept thriving in lower income demographics that breaks all the traditional demographic modeling. Completely breaks it. Historically, a brand selling custom grain bowls in Harissa Avocado is hyper targeted at affluent suburban or high density urban office markets. So how are they capturing the lower income demographic that Wendy's and Papa John's are losing? Well, they made a deliberate structural choice to underprice inflation. What does that mean in practice? It means that while the legacy fast food brands passed every single cent of their rising commodity and labor costs onto the consumer just to protect their gross margin percentages, Kava chose to absorb a hit. So they took a hit to their margin percentage to maintain their value proposition. Exactly. They leveraged their growing scale to negotiate better distribution routing and better commodity contracts. And they kept their menu prices. Well below the broader inflationary rate. Okay, let's walk through the math on that because traditional restaurant accounting dictates that protecting your food cost percentage is the golden rule. But it's what they teach you in hospitality school. Right. So if an operator takes a margin hit just to keep prices low, they are usually on the fast track to insolvency. Sure. But the distinction here lies in the difference between percentages and raw dollars. I always say this you do not deposit percentages into a bank account. You deposit dollars. That's a great way to put it. Kava and other really smart operators are moving away from strict percentage based pricing and adopting a penny profit neutral strategy, especially for their premium items. Okay, break down the mechanics of a penny profit neutral strategy for me. How does an operator execute that without just destroying their profit and loss statement? We can use Kava's recent menu engineering as the exact blueprint for this. So in April, they introduced a pomegranate glazed salmon. And salmon is a highly volatile premium protein. Highly volatile. It is significantly more expensive to source, prep, and distribute than chicken. So when a customer orders that salmon bowl, the raw cost of goods sold for that specific transaction goes up dramatically. Which naturally depresses Kava's restaurant level margin on a percentage basis. Exactly. So let's run a hypothetical. If a standard chicken bowl costs them $3 to make and sells for eleven dollars, That's roughly a 27% food cost. Yielding $8 in gross profit. Right. Now, if the salmon bowl costs them $5.50 to make, traditional percentage pricing says they need to sell for $20 to maintain that exact same 27% food cost. But nobody is buying a $20 fast casual bowl on a random Tuesday. Precisely the dilemma. So instead of pricing it at $20, they price it at $13.50. Wow. Okay. So the food cost jumps to roughly $40. Yes. On a spreadsheet that is looking only at percentages, that transaction looks like a massive downgrade. You're jumping from 27% to 40% food cost. Okay. But look at the raw dollars. They spent $5.50 to make it. They sold it for $13.50. So they still generated $8 in gross profit. Exactly. They kept the item penny profit neutral. The margin percentage shrank absolutely, but the raw dollars contributed to the bottom line remained identical. To the highly profitable chicken bowl. And the psychological benefit to the consumer is massive there. You offer a premium culinary experience, this glazed salmon, at an approachable price point, which just drives top line traffic. You don't alienate the guest with a massive price hike, but you maintain the raw cash flow required to pay your rent and your payroll. Are we seeing this anywhere else? ⁓ we are seeing this strategy deployed across all different categories right now to capture highly specific traffic. Like McDonald's is rolling out Red Bull energy drinks in select markets. Energy drinks are notoriously expensive to stock though. They are, but they drive afternoon off-peak traffic. Yep. And the beverage attachment rate deuces the overall ticket size in raw dollars. ⁓ I see. And Domino's just launched those rectangular personal pizzas. Right. The margins on a personal pizza are terrible compared to a large three-topping pie. But it captures the solo diner demographic, like the office worker on a lunch break. Who was previously vetoing dominoes entirely? Because they didn't want to buy a massive pizza for just themselves. So it is about driving raw traffic and total dollar contribution through strategic value rather than just hiking prices across the board to satisfy a theoretical margin percentage. Hit the nail on the head. Well, if pricing manipulation and marketing shakeups aren't the ultimate solution to this traffic crisis, sustained growth has to come from internal operational execution. How does it come from inside the house? Right. Which forces operators to look at their labor force. And this is where Kava's strategy gets genuinely counterintuitive. Of labor investments. Yeah, in late 2023 and aggressively through this year, Kava made a deliberate three percent incremental investment in wages. Plus, they introduced a brand new assistant general manager role in AGM to about seventy percent of their footprint. They're also rolling out premarinated chicken to actively lighten the daily workload on their prep cooks. Which sounds great, but traditional operators look at a three percent deliberate labor hike during a period of macroeconomic inflation as just straight up financial malpractice. I mean, the instinct in this industry is always to run shifts as lean as humanly possible, right? You cut overlapping manager hours and you push the general manager to work sixty five hours a week to cover the gaps. So I have to challenge the viability of this for the average operator? Because look, Kava has the luxury of Wall Street capital and massive economies of scale. True. For an independent restaurant group or a franchisee with maybe ten locations, prime costs, so your food and labor combined are already sitting around sixty-five percent of revenue. At least. If you deliberately inject another management salary into your P L and hike hourly wages by three percent, you are pushing prime cost to sixty-eight percent or sixty-nine percent. I mean you are functionally wiping out your EBITDA. How is adding an entirely new management layer not just bloated overhead? Well, your math is totally correct if you view labor strictly as a static, controllable expense. Yeah. But that model assumes that turnover and poor execution have zero financial cost. Which they obviously do. Exactly. Kava's leadership views the assistant general manager not as overhead, but as an insurance policy and a revenue driver. You have to consider the daily reality of a restaurant general manager right now. The burnout rate is catastrophic. Beyond catastrophic, they are handling hiring, firing, supply chain disruptions, angry guests, and then covering shifts on the line when hourly staff inevitably call out sick. It's like the middle relief pitcher analogy in baseball. You don't pay a middle relief pitcher to start the game. You pay them to come in during the seventh inning so your starting pitcher doesn't blow out their arm. That is a perfect analogy. The AGM takes the administrative and floor level pressure off the GM, which prevents that burnout. And what does that burnout actually cost? The cost is staggering. Industry data suggests that losing a competent general manager costs a restaurant anywhere from $15,000 to $25,000. Wow. Just in turnover costs. Yeah, in lost productivity, recruiting fees, training time, and the inevitable drop in operational execution while the position is vacant or occupied by a rookie. So paying an AGM a fifty-five thousand dollar salary mitigates that twenty-five thousand dollar risk almost immediately. There is also the aggressive expansion mandate to consider. Kava opened seventeen net new units in a single quarter, and they're projecting a fifteen percent long term growth rate in new restaurants. You cannot pour the concrete and open the doors on seventeen new restaurants in three months if you do not have a massive bench of trained, culturally aligned leaders. Ready to literally take the keys. So the AGM position operates as their internal farm system. Exactly. It allows their national expansion to happen at breakneck speed without diluting the brand standard because every single new store is being opened by someone who has spent a year internalizing the culture as an AGM. And that concept of internalizing culture brings us to a really brilliant framework from industry expert David Scott Peters. He points out a brutal reality for operators. He says culture is not what you say. Culture is what your team learns they can get away with. I love that quote. It is the most accurate description of restaurant operations I have ever heard. It hits hard. It really does. You can have beautifully laminated core value posters in the break room, and you can have a slick digital checklist for every prep recipe in the kitchen. But if the checklists are blindly checked off, the standard is ignored and the manager walks past the violation without saying a word, that violation instantly becomes your new culture. Peters argues that without middle management like Kava's new AGMs to enforce standards, Theoretical standards are just useless. If a tracker exists but nothing actually changes, you are leaking profit. Big time. He outlines seven principles to turn theoretical standards into inspectable manager behavior. Clear, trained, owned, visible, cadenced, coached, and protected. Let's actually stress test these principles. I think we should apply them to a high-risk operational standard. Let's look at fryer oil management. I know it sounds mundane. But degrading fryer oil ruins the flavor profile of your most profitable items, and changing it too often just destroys your supplies budget. Fryer oil management is the absolute perfect stress test. Okay, so the first principle is clear. The standard cannot be something vague like change the oil when it looks dark. Because that is totally subjective. Right. Clear means the standard is documented. Filter the oil at 2.0 bm and 9.00 pm daily. Check the oil with a calibration strip. If the reading is in the red zone, drop the oil and boil out the vap. But the second principle is trained, which means the manager cannot just hand the line, cook the operations manual and walk away. No, they have to physically demonstrate how to safely drain 350 degree oil, how to use the calibration strip, watch the cook perform the task, and sign off that the competency is actually achieved. Then third is owned. Accountability must be singular. It is not the kitchen staff's job to manage the fryers. It is John's job on the Tuesday morning shift. Right. So if the standard fails, the manager knows exactly who is accountable. You don't have everyone pointing fingers at each other. Exactly. Fourth is visible. The filtration log cannot be hidden in a binder in the back office. It needs to be a dry erase board or a mounted tablet directly above the fry station. So anyone walking down the line can see immediately if the two point zero zero pm filtration was missed. Fifth is cadenced. The inspection of the standard must be predictable and routine. So the AGM knows that at 2.15 PM every single day, they walk to the fry station, they verify the log is signed, and they visually inspect the oil quality. Sixth is coached. If the AGM walks up at two point one five and the oil hasn't been filtered, the response isn't just screaming at John. No, it is an immediate intervention to find the friction point. The manager asks, John, I see the oil wasn't filtered. Were you overwhelmed with tickets or did we run out of filter paper? You correct the behavior by solving the operational bottleneck rather than just punishing the person. Exactly. And the final, most critical principle is protected. The leadership team must protect the standard above all else. Meaning you do not let the filtration slide just because it is a busy Friday. Or because someone called out sick and you were short staffed. The moment leadership sacrifices the standard for convenience, the team learns what they can get away with and the culture degrades. The actionable takeaway here for the operators listening is to audit your own physical spaces today. Find one standard that is constantly slipping, whether it's prep yields, bathroom cleanliness, ticket times, and apply those seven principles. And honestly, if you do not have the management bandwidth to ensure that cadenced inspection and the coached follow-up, you need to reevaluate your labor model. You need that AGM layer. For sure, because once your internal operations and management bench are secured, you have the operational leverage to look outward. Yeah, when your house is in order, you can start capitalizing on the chaos of your competitors. Which is exactly what we are seeing in real estate. The real estate market right now is demonstrating just how aggressive well capitalized brands can be. ⁓ it is a bloodbath out there. Let's talk about the chaos surrounding Salad and Go. The drive-thru salad concept filed for Chapter 11 bankruptcy in early August, closing 70 stores. They attempted a really aggressive expansion into the Texas market, completely overleveraged themselves, and took a massive hit from the cyclosparisis supply chain outbreak. And their collapse immediately triggered one of the most aggressive real estate bidding wars we have seen in the drive-thru sector in a long time. Yeah, Dutch Bros, the drive-thru coffee giant, submitted an exclusive $105 million bid for 51 of those defunct salad and go sites. While simultaneously negotiating for fourteen additional sites in Texas and Oklahoma. Right. But then Seven Brew, who is a massive, rapidly expanding competitor in that exact same drive-thru coffee space, immediately launched a counter offensive. Yeah, their illegal team went straight into bankruptcy court and attacked the Dush Bros exclusive letter of intent. Specifically, Dutch Brews had negotiated a $10 million termination fee into their bid. And Seven Brew argued this was essentially a poison pill designed to be totally unfair to the auction process. Let's unpack the mechanics of bankruptcy real estate for a second. Because Dutch Bros position themselves as what is called the stocking horse bidder. Yeah, in bankruptcy, a stocking horse makes the initial baseline bid on the assets. It sets the floor. Right. And to compensate them for the time and legal expense of doing all the Due diligence to set that floor price, the court often allows a termination fee or a breakup fee. Meaning if another company outbids the stocking horse, the new buyer has to pay that fee to the stocking horse. So Savabrew is looking at the math here. If they want those 51 locations, they don't just have to beat the $105 million bid. They effectively have to pay a ten million dollar penalty on top of it just to play the game. Which drastically inflates their acquisition costs. It does. So the question is, why fight so hard for the remains of a failed salad concept? I mean, it's like vultures fighting over a carcass. Why not just buy empty dirt lots and build their own coffee stands? Because of the absolute nightmare that is modern municipal zoning. ⁓ it's gotten so bad. Post COVID, cities across the country have instituted severe restrictions and in some cases outright bans. On new drive-thru construction. Because of the traffic backups from massive drive-thru operations just spilling into public streets, it caused a huge municipal backlash. Exactly. Getting a new drive-thru, permitted, zoned, environmentally cleared, and then finally pouring the concrete can take two to three years and millions in impact fees. So Dutch Bros and Sevenbrew aren't buying the Salad and Go brand at all. They are just buying the legal zoning variances. Yes. They are buying the pre-poured concrete pads and the pre-approved traffic flow ingress and egress. Wow. So they are weaponizing a competitor's bankruptcy to shortcut a three-year development pipeline into a three-month conversion project. That's exactly the play. Sevenbrew recently overhauled their loyalty system and launched a new app. Their internal operations are totally primed for scaling. They know the only bottleneck to their growth right now is physical real estate. So they are willing to fight a bitter legal battle just to gobble up. Prime already zoned drive-through footprints. This is the smartest move they could make. Now we mentioned the salad and go bankruptcy wasn't just a failure of real estate overexpansion. It was severely compounded by a supply chain failure. Yeah. The cyclospora and salmonella outbreaks tied to Taylor Farms, Mexico. Right. Which resulted in roughly six thousand cases of illness across fifteen states. A six thousand case outbreak tied to your core ingredient, which is shredded iceberg lettuce. Is basically an extinction level event for a brand built on health and freshness. And it creates a massive chilling effect across the entire category. Look at Sweet Green. They were in the middle of a really delicate turnaround effort regarding their unit economics and they saw their traffic stall completely. Just because the consumer associates the entire salad category with the CDC headline. Exactly. Guilt by association. But look at the divergence in crisis management between Kava and Taco Bell during this exact same period. Kava handled it through structural defense while Taco Bell went on the offensive with, well, cultural distraction. Let's look at Kava first, because their defense is just a masterclass in supply chain architecture. Their CFO publicly confirmed they do not source any produce from Taylor Farms, Mexico. They avoided the contamination entirely because they built supply chain redundancy. They don't rely on a single massive regional distributor. Furthermore, their menu is highly diversified. So even if a consumer is temporarily terrified of lettuce, Kava's core mix is heavily weighted toward grains, pitas, and roasted proteins. So their traffic dipped briefly on the macro headline fear, but then rebounded quickly to mid-single digits. Because they proved to the consumer that they did not possess a single point of failure. Taco Bell, on the other hand, sources massive amounts of shredded lettuce. They are highly exposed to agricultural outbreaks. Huge exposure. But they avoided the media fallout almost entirely by dropping a massive commercial campaign for the cheesy Gordita Crunch, reaching the global Latin music superstar Peso Pluma. It literally functioned like tossing a flashbang grenade into a crowded room. It totally did. The moment the CDC headline started gaining traction, Taco Bell just hijacked the algorithmic cycle. It is a brilliant, albeit pretty risky, manipulation of modern media. I mean, you cannot sustainably rely solely on celebrity marketing to cover up genuine operational risks or supply chain toxicity. Of course not. However, in the short term, Taco Bell used extreme cultural relevance to dominate the social media narrative. Food influencers and digital media outlets stopped tracking stomach bugs and immediately pivoted to making taste test TikToks and pop culture commentary about Peso Pluma eating a cheesy Gordita crunch. They manufactured a distraction that bought their supply chain managers the breathing room they needed to verify their lettuce sourcing without the brand taking a massive public relations beating. The actionable takeaways for leadership here are strictly binary. On the defensive side, you have to audit your supply chain redundancies today. If your entire regional operation relies on one distributor specific farm for a core ingredient, you are putting hundreds of millions in brand equity at the mercy of a single E. coli outbreak. And on the offensive side. Your real estate and marketing teams need to be predatory. Real estate strategists should be actively monitoring the debt leverage and traffic counts of competitors in their trade areas, ready to launch a stocking horse bid the moment a vulnerable competitor enters restructuring. And marketing teams need a flashbang asset, like a finalized LTO or a major influencer partnership just sitting in the vault, ready to deploy the moment negative macro industry news threatens your sector. The reality, however, of Executing all of this, the hyper-specific menu engineering to maintain penny profit neutrality, auditing complex supply chain logistics, and monitoring competitor real estate debt is that human managers do not have the cognitive bandwidth or the hours in the day to do it. They just don't. The administrative burden has maxed out the human capability of the general manager. Which forces the evolution of the restaurant tech stack. For the last ten years, restaurant tech has essentially been passive reporting. Yeah, it basically just spits out a massive Excel spreadsheet at the end of the month telling you how much money you lost. Right. But the evolution we are seeing right now is a shift from passive reporting to active unit level problem solving through artificial intelligence. And Craftable's recent launch of Crafty is really the tipping point for this evolution. Right. We have to separate this from the generic AI chatbots everyone is used to, though. Because a generative language model trained on the open internet acts like a carnival fortune teller for a restaurant manager. Exactly. You ask it for advice, it gives you vague platitudes like to lower food costs, try reducing portion sizes. It is totally useless in a real operational environment. Whereas Crafty operates much more like a forensic accountant. Yes, because it is a narrow AI model, purpose built for hospitality, and it runs exclusively on an operator's actual real-time operational data. So it integrates via API directly into the point of sale system, the labor scheduling software, the electronic data interchange for vendor invoices, and the inventory logs. Right. So a general manager isn't asking for generic advice. They can type into the interface, why is our chocolate cake costing twice as much to produce at the downtown location compared to our three suburban stores this week? And because the AI is querying a read-only database of the exact operational metrics from the last seven days, It returns the mathematical reality in seconds. It parses the data and responds, you know, the downtown location is purchasing chocolate from a secondary vendor whose catalog price is forty percent higher. Furthermore, the waste log shows a fifteen percent increase in burnt cakes at this location on the Friday night shift, pointing to a training issue with the new pastry cook. It diagnoses the supply chain variants and the labor execution variants simultaneously. Exactly. And the claim is that it can even draft a costed recipe or generate a vendor purchase order based on real-time pricing catalogs. Now I have to play devil's advocate here regarding trust. Go for it. We are talking about veteran general managers who have spent twenty years trusting their gut and their own clipboard inventory. Are we realistically at a point where a seasoned operator is going to hand over the financial keys to their supply budget to a chatbot? Trust is the ultimate bottleneck for AI adoption and hospitality, without a doubt. The reason earlier iterations failed is that they operated in a black box. They told the manager what to order, but couldn't explain why. Right. What makes this specific architecture effective is absolute transparency. It shows the math. Give me an example of how it proves the math to a skeptical GM. So the AI alerts the manager that the food cost on premium steaks is running high. Instead of stopping there, it maps out the variance. It shows the GM, based on the exact number of steaks sold through the POS this week and the standard recipe yield, your theoretical suit cost should be twenty eight point four percent. Okay. However, based on the invoices paid to the meat purveyor and the physical inventory counted on Sunday, your actual food cost is thirty one point nine percent. So it isolates the three point five percent gap? Yes. It isolates the 3.5% variance and identifies exactly where the dollars leaked. Was the delivery short weighted by the vendor? Was the trim waste too high during prep? Did front of house comp too many stakes without wringing them in properly? So the GM doesn't have to spend three hours cross-referencing paper invoices against the POS terminal to find the leak. The AI surfaces the math instantly, allowing the GM to verify it with their own eyes. And crucially, these systems require a human bottleneck for execution. The AI does the heavy lifting of data mining and drafts the purchase order, but it cannot spend the money. The general manager must review the drafted order and physically click approve to send it to the vendor. It preserves human operational control while eliminating all the administrative drudgery. And that elimination of drudgery is the entire point. If we connect this back to David Scott Peters' principles of coaching and protecting the standard or Kava's investment in management layers, the goal of technology is not to replace the manager. Right, if a GM is freed from spending three hours a day locked in a back office doing data entry on spreadsheets, they can reallocate those three hours to the floor. They could observe the line cooks, temp the fryer oil, touch tables, and actually elevate the hospitality experience. Which brings us to a fascinating paradox to close out our analysis today. We started by looking at how the macroeconomic stress test is devastating legacy brands relying on old pricing algorithms and marketing tricks. While agile brands are thriving. And the divergence really all comes down to where these brands allocate their resources. Exactly. It is profoundly ironic that in an era where the broader business world is obsessed with fully automating the future and removing human labor, the hospitality brands that are actually capturing market share and driving massive revenue growth like Kava and Chili's are doing so by investing heavier than ever in the humans running the floor. They're using backend technology to optimize the math. So they can afford to invest in the human element of service. So here's the final thought for you to mull over as you analyze your own PL this week. If Purpose Built AI can now instantly calculate your theoretical to actual food cost variances and draft your vendor purchase orders in seconds, what is your excuse for not reallocating every single minute of that saved administrative time into training your people, protecting your operational standards, and perfecting the guest experience? The operators who answer that question by getting back out onto the floor will be the ones who survive the current market correction. That wraps up today's edition of Pulse. Before you get back to your floor or executive suite, make sure to check out the other powerful shows in the HRB Universal Network. Yeah, we have Kitchen to C suite, your definitive roadmap for advancing hospitality careers from entry level up to executive leadership. And Mies Umplace, culture first leadership and organizational strategies focused on safety. Compliance and building top-tier workplace culture. Plus the Recipe for Results podcast Extra Fast, High Impact Extras, packed with operational tactics and actionable solutions. And 86ing the bad habits, cutting out systemic operational flaws, bad leadership habits, and inefficient practices across hotels, bars, and restaurants. This podcast is supported by the generous commitment of our sponsors, and we extend a special thank you to HRB Universal. Their dedication to providing comprehensive resources and promoting excellence is key to empowering professionals across the culinary and hospitality industries. We also want to acknowledge the Plate and Poor Collective Equity Partner Program. This initiative exemplifies a true commitment to fostering shared success and equitable growth within the food and beverage sector, helping entrepreneurs build a more inclusive and thriving future. The journey to the C-suite is fueled by innovation, relentless dedication, and the right network. 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