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Restaurant Loyalty Programs Need an Upgrade · Choppin’ It Up by Bloomberg Intelligence

0:21
Speaker 1: Welcome to Chopping It Up.
0:23
Speaker 2: I'm your host, Mike Hallon, the senior restaurant and food
0:25
Speaker 2: service analyst at Bloomberg Intelligence. Today we're joined by Zach Goldstein,
0:30
Speaker 2: CEO and founder of Thanks. Thanks for doing this, Zach.
0:34
Speaker 3: Yeah, I'm excited to Chop it Up.
0:36
Speaker 2: Yeah, man, listen, no pressure, but you participated in the
0:40
Speaker 2: most watched webinar I ever had at Bloomberg, so I'm
0:43
Speaker 2: expecting a banger today, hopefully to baby.
0:45
Speaker 1: Let you get some sleep this week.
0:47
Speaker 3: All right, let's do it.
0:49
Speaker 1: All right, good stuff?
0:50
Speaker 2: Why don't you tell the audience what Thanks does and
0:53
Speaker 2: what inspired you to start the company?
0:56
Speaker 3: Thanks as a guest engagement platform for restaurants. We help
1:00
Speaker 3: brands engage with consumers through digital so that's their app
1:04
Speaker 3: and web ordering experience, through other marketing channels such as email,
1:09
Speaker 3: push notifications, et cetera. And at the core of that
1:13
Speaker 3: is our loyalty CERM platform. Loyalty is a hot topic
1:17
Speaker 3: right now in the restaurant industry. I'm sure we'll spend
1:19
Speaker 3: a lot of time talking about it, but it's gone,
1:21
Speaker 3: in my opinion, from nice to have to must have,
1:24
Speaker 3: and that's why we're seeing so much attention on restaurant loyalty.
1:28
Speaker 1: Yeah, and so why don't you talk a little bit
1:30
Speaker 1: about that.
1:31
Speaker 2: Why are so many of the chains that we cover,
1:33
Speaker 2: Why are so many of the private chains revamping loyalty
1:36
Speaker 2: this year?
1:38
Speaker 3: Well, the revamping question is because their loyalty programs aren't working,
1:42
Speaker 3: and that's not an option anymore. We actually ran an
1:45
Speaker 3: assessment of a legacy loyalty program in the last month
1:48
Speaker 3: where right there in the dashboard it showed loyalty members
1:52
Speaker 3: spend five percent less than non loyalty members. And yet
1:56
Speaker 3: this restaurant wasn't in a hurry to make a change.
2:01
Speaker 3: That's not a way that you can survive in this
2:03
Speaker 3: industry right now. You have to be identifying ways to
2:08
Speaker 3: drive frequency. And it's mostly because we've taken check, we've
2:13
Speaker 3: taken price across the industry. That's creating some same store
2:17
Speaker 3: sales growth, but it's hiding very clear depression and frequency.
2:22
Speaker 3: And so if you don't know who your guests are
2:24
Speaker 3: and you don't have the tools to drive them back
2:26
Speaker 3: in for a second, third, or tenth purchase, you're kind
2:31
Speaker 3: of crossing your fingers and hoping your business will thrive.
2:34
Speaker 3: And that's not generally a good strategy. So the loyalty
2:37
Speaker 3: program is the answer to that. It's about knowing your guests,
2:42
Speaker 3: personalizing your interaction, giving them reasons to come to you
2:46
Speaker 3: as opposed to a third party or ultimately as opposed
2:49
Speaker 3: to a competitor. And that's the last piece that we
2:51
Speaker 3: could spend some time talking about, because if your loyalty
2:54
Speaker 3: program looks exactly like your competitors, and it's not doing
2:56
Speaker 3: you any good, So you need to be on brand
2:59
Speaker 3: and really perionalize what loyalty means to compete in twenty
3:03
Speaker 3: twenty four.
3:04
Speaker 2: And you mentioned to me when we spoke last week,
3:07
Speaker 2: what was it, sixty or seventy percent of customers make
3:09
Speaker 2: one transaction and that's it.
3:12
Speaker 3: Yeah. In fact, the industry wide, we see somewhere between
3:16
Speaker 3: seventy and eighty five percent of revenue comes from just
3:20
Speaker 3: twenty percent to customers. You better know who those people are.
3:25
Speaker 3: You know. The two ways that loyalty most directly affects
3:29
Speaker 3: frequency if it's working, is driving first time purchasers to
3:33
Speaker 3: a third purchase because third purchasers are like ten times
3:37
Speaker 3: greater lifetime value. Or identifying your true regulars and keeping
3:44
Speaker 3: them locked in and preventing that fall off, and you
3:47
Speaker 3: got to be doing one or both of those if
3:49
Speaker 3: you expect frequency to stay flat or go up.
3:53
Speaker 2: Okay, cool, So who's doing it right and who's just
3:56
Speaker 2: kind of putting lipstick on a pig.
4:00
Speaker 3: So Chipotle famously years ago said we don't need a
4:05
Speaker 3: loyalty program and fast forward and the Chipotle loyalty program
4:10
Speaker 3: has been a big reason why they outperformed Food and
4:12
Speaker 3: Beverage Index in Decease for the last couple of years.
4:17
Speaker 3: That is because loyalty was not, by x get y,
4:21
Speaker 3: a really boring program. Loyalty was about driving people to
4:24
Speaker 3: digital channels, making that delightful guac mode exclusive access to
4:28
Speaker 3: the case idea. They were innovating and they got the
4:32
Speaker 3: results from it. Now there's a different side of the
4:35
Speaker 3: Chipotle coin, which is that gap has closed some and
4:40
Speaker 3: this is the challenge for restaurants considering whether to build
4:44
Speaker 3: their own technology or not. It's a constantly evolving space
4:48
Speaker 3: and to stay ahead and to keep getting the benefit,
4:51
Speaker 3: you have to keep innovating, and that's expensive and it
4:54
Speaker 3: requires specialization. And so we've seen some brands catch up
4:58
Speaker 3: to Chipotle in their competitive of space. In some cases,
5:02
Speaker 3: we're thanks to blame because we're helping brands catch up there.
5:06
Speaker 3: But that's that's closing the gap. Some that said it's
5:11
Speaker 3: they're a perfect proof point on when you do it right,
5:15
Speaker 3: what kind of advantage you can get.
5:17
Speaker 2: Very cool, you know, and we talked kind of about
5:20
Speaker 2: revamping the look and feel but versus you know, being
5:23
Speaker 2: fundamentally different, you know. And I think you mentioned Duncan
5:30
Speaker 2: was one. But because they were taking some risks there,
5:34
Speaker 2: can you talk about Duncan a little bit?
5:36
Speaker 1: Yeah.
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Speaker 3: I think there's two conclusions from Duncan and frankly from
5:40
Speaker 3: Starbucks before. If you need to change your loyalty program
5:45
Speaker 3: because it's not working or because the economics are not sustainable,
5:50
Speaker 3: you need to do it, and you're gonna see pushback
5:54
Speaker 3: from consumers if you've been locked into a program for
5:57
Speaker 3: ten years. So I think most of the coverage there
6:01
Speaker 3: actually drew the wrong conclusion, which is, Ooh, Duncan made
6:04
Speaker 3: a change and it was bad. Duncan made a change
6:07
Speaker 3: that they needed to make because their program was giving
6:09
Speaker 3: away too many discounts, and I comend them for making
6:12
Speaker 3: that change. The mistake happened years earlier when they launched
6:17
Speaker 3: a program and then never evolved, it never changed it
6:21
Speaker 3: For a decade, loyalty programs have often been set it
6:25
Speaker 3: and forget it, and brands often spend a lot of
6:28
Speaker 3: time worried about getting the first launch right. In my opinion,
6:33
Speaker 3: the first launch is the starting point to collect data,
6:36
Speaker 3: and you need to create a dynamic, constantly evolving loyalty program.
6:39
Speaker 3: And if you do that, you train your guests that
6:41
Speaker 3: your loyalty program is dynamic, which means they embrace change,
6:46
Speaker 3: not fear it. And that's what modern loyalty programs are
6:50
Speaker 3: doing today. Much more personalized, much more choice, and much
6:54
Speaker 3: more dynamic.
6:56
Speaker 2: Yeah, Tim Hortons was a famous one because they came
6:58
Speaker 2: out pretty early and were like, yeah, we're just given
7:01
Speaker 2: discounts to people that were going to come anyway.
7:03
Speaker 3: Right.
7:05
Speaker 2: You mentioned a couple other names too. What about Sweet Green?
7:09
Speaker 2: What are they doing with their loyalty program right now?
7:10
Speaker 3: So I think sweet Greens strategy is a plus from
7:15
Speaker 3: a marketing standpoint. So one of the things that Sweet
7:19
Speaker 3: Green's innovated on is a concept called challenges, which we've
7:22
Speaker 3: now built into our platform as well. Identify a one
7:25
Speaker 3: time a month customer and get them to come twice
7:28
Speaker 3: and then give them the incentive. Identify a lunchtime customer
7:33
Speaker 3: and get them to try the dinner day part and
7:35
Speaker 3: then give them an incentive. That's the direction towards hyper personalization.
7:41
Speaker 3: Now you look at the Sweet Green stock price and
7:44
Speaker 3: you say, well, Zach, that's not paying off yet. I
7:47
Speaker 3: don't think that's because of the strategy. I think that's
7:49
Speaker 3: because iterating on that program when you've built all the
7:52
Speaker 3: technology yourself is just is very difficult. It's very expensive,
7:56
Speaker 3: and ultimately there's a lot of pressure on margins now,
8:00
Speaker 3: so that's one more place where there's pressure and margins.
8:04
Speaker 3: But whoever created that strategy, I believe you will see
8:08
Speaker 3: it work, likely at Sweet Green at some point, but
8:11
Speaker 3: you'll see it work elsewhere as well, because it's the
8:14
Speaker 3: right direction for the future of loyalty.
8:17
Speaker 2: Okay, Cole and the eight hundred pound gorilla McDonald's, how
8:20
Speaker 2: are they doing so?
8:22
Speaker 3: McDonald's is another one that said we don't need a
8:25
Speaker 3: loyalty program, and here we are fastest growing, largest loyalty
8:29
Speaker 3: program in the restaurant industry. I think the story of
8:34
Speaker 3: the McDonald's loyalty program is more a story of embracing
8:38
Speaker 3: digital than of loyalty specifically, though the two go very
8:42
Speaker 3: squarely hand in hand. There was an assumption in QSR
8:46
Speaker 3: that if you had great locations and an excellent drive
8:48
Speaker 3: through experience, digital was less critical. I think we're seeing
8:53
Speaker 3: very clear now it doesn't matter who you are. Digital
8:56
Speaker 3: is critical and building that direct relationship with customers is
9:00
Speaker 3: a must have. Why because millennials gen Z they value convenience,
9:07
Speaker 3: and convenience drive through is convenient. It's less convenient at
9:12
Speaker 3: the end of the day than ordering ahead and swooping
9:15
Speaker 3: in and picking up your food and continuing on with
9:17
Speaker 3: your day. And then the other benefit is that drive
9:21
Speaker 3: through still anonymous. Most of the customers that go through
9:24
Speaker 3: your drive through, you have no clue who they are,
9:26
Speaker 3: So what do you do to get them back into
9:28
Speaker 3: your drive through? A digital transaction has the ability for
9:32
Speaker 3: you to understand that guest, target them, get them back in,
9:36
Speaker 3: and make it easy for them to one click reorder.
9:39
Speaker 3: That's what's driving the growth of the McDonald's loyalty program,
9:44
Speaker 3: and that's why when brands look at, well, what do
9:47
Speaker 3: we do at things? We're not just a loyalty program.
9:50
Speaker 3: We actually help brands launch best in class mobile applications
9:54
Speaker 3: digital ordering experiences, and that's because those are great channels
9:58
Speaker 3: for personalization as well. When you open up an app,
10:02
Speaker 3: you want to see your last order, and you can
10:05
Speaker 3: only do that if it's connected to your loyalty program.
10:08
Speaker 3: You want to see what rewards you have available to
10:10
Speaker 3: use so that it changes your perusing of the menu.
10:15
Speaker 3: If none of that's there or you don't see it
10:17
Speaker 3: till you're at the very last step of the checkout process.
10:20
Speaker 3: Because it's not a great experience, the brand's leaving money
10:24
Speaker 3: on the table. And this is the stuff that we're
10:25
Speaker 3: seeing McDonald's innovate on that others are catching up on.
10:30
Speaker 1: Yeah.
10:30
Speaker 2: Interesting, and it's so important right now because chains advertising
10:34
Speaker 2: budgets are creeping back up, so this cheaper digital marketing
10:39
Speaker 2: is definitely important.
10:41
Speaker 3: Well, there's an interesting concept of marketing budgets that were
10:44
Speaker 3: just a fixed percent of revenue for a long time,
10:46
Speaker 3: and some would say five and some would say two,
10:48
Speaker 3: and that number was completely pulled out of thin air,
10:52
Speaker 3: and that's not how other industries work. Your marketing budget
10:56
Speaker 3: should scale based on the return you're getting from your
10:59
Speaker 3: marketing budget, and if you can get a good return,
11:02
Speaker 3: you should keep throwing money against it. We're starting to
11:06
Speaker 3: see restaurants and they embrace that mentality. Wait a minute,
11:10
Speaker 3: my marketing, my loyalty program can be a revenue driver. Okay,
11:13
Speaker 3: then spending more money on the program is a good investment.
11:17
Speaker 3: I think as an industry, we're stuck thinking about Hey,
11:21
Speaker 3: the last time I spent a bunch of money and
11:22
Speaker 3: I upgraded my point of sale, it didn't drive any
11:24
Speaker 3: revenue lift. So I don't want to spend money. As
11:29
Speaker 3: we look at revenue driving technology investments, it needs to
11:33
Speaker 3: be evaluated differently based on ROI for sure.
11:38
Speaker 1: All right, I got one more for you, and then
11:39
Speaker 1: we can move on. Dominos.
11:42
Speaker 2: They revamped their loyalty They pointed to it as helping
11:48
Speaker 2: fourth quarter same source sales or trying to drive more
11:50
Speaker 2: light users and carry out users to.
11:53
Speaker 1: Come more frequently. You know, any opinions on that one.
11:57
Speaker 3: Yeah, I think it's a testament to doing change well. Actually,
12:00
Speaker 3: and you know, Dominos has said we're a technology company,
12:03
Speaker 3: and they have they have a very targeted reason why
12:08
Speaker 3: they've adjusted their loyalty program, and their early indicators show
12:12
Speaker 3: that it's working. And so I'm hopeful that the industry
12:16
Speaker 3: draws the opposite conclusion that that we drew when looking
12:19
Speaker 3: at Duncan. Here's an example of change is good and
12:22
Speaker 3: I think that's a better conclusion, as I mentioned before,
12:25
Speaker 3: than being fearful to adapt.
12:28
Speaker 1: All right, good stuff, all right?
12:30
Speaker 2: So should restaurant chains be building their own loyalty and
12:33
Speaker 2: their own restaurant tech or should they buy it?
12:36
Speaker 1: And you know?
12:37
Speaker 2: Or does the answer really hinge on the size and
12:39
Speaker 2: the resources of the company.
12:43
Speaker 3: I don't think there's a one size fits all. That said,
12:47
Speaker 3: I would speculate that you can count on two hands
12:51
Speaker 3: the number of restaurants that could actually pull off being
12:54
Speaker 3: a technology brand and being a food brand, and it
12:58
Speaker 3: may be one hand if we're honest. It effectively comes
13:02
Speaker 3: down to access to cheap cost of capital, because technology
13:05
Speaker 3: is expensive and it requires an upfront investment in order
13:09
Speaker 3: to get the long term return, and most restaurants don't
13:12
Speaker 3: have access to cheap enough capital to be a technology company.
13:17
Speaker 3: Then there's the second problem of you have access to
13:20
Speaker 3: cheap capital, do you know what to do with it?
13:22
Speaker 3: And recruiting top notch talent even if you've got the
13:26
Speaker 3: money to pay them. If you're a restaurant. In machine learning,
13:30
Speaker 3: data analytics. Some can pull it off, but it's hard.
13:34
Speaker 3: It's hard for technology to companies to compete with each
13:36
Speaker 3: other because that's the second piece. As I mentioned with Chipotle,
13:41
Speaker 3: it's not about launch an innovative technology and yay, we're
13:44
Speaker 3: ahead and we'll reap the benefits. You have to launch
13:47
Speaker 3: the technology, and then you have to keep iterating and
13:50
Speaker 3: staying ahead because the pace is just constantly evolving. So
13:55
Speaker 3: most restaurants can't and shouldn't be That's why SAW where
14:00
Speaker 3: as a service has taken over other industries where you
14:03
Speaker 3: focus on your core and you buy software as a
14:06
Speaker 3: service solutions, and frankly we do that as a technology company.
14:11
Speaker 3: There are a lot of things that we should be
14:13
Speaker 3: best in class at, and then there are things A
14:17
Speaker 3: lot of our back end data infrastructure we don't need
14:21
Speaker 3: to run servers. We should not be building data pipelines.
14:25
Speaker 3: There are there are technologies that do that better. We
14:29
Speaker 3: spend a lot of money on Snowflake. Our restaurants probably
14:33
Speaker 3: don't appreciate how much of a cost that is for us,
14:36
Speaker 3: but that's because if we were to replicate all that stuff,
14:40
Speaker 3: our solution would be way less innovative. We'd move much
14:44
Speaker 3: more slowly and frankly, we'd likely have to charge more.
14:47
Speaker 2: That's interesting, and yeah, Wingstop should be an interesting test
14:51
Speaker 2: for that.
14:52
Speaker 1: Yes, the billdo versus buy it? Right?
14:55
Speaker 3: That's right. I think that is a big, bold bet.
14:59
Speaker 3: They've publicly ported fifty million or something already sunk into
15:03
Speaker 3: their technology. That's a lot. But I think the bigger
15:07
Speaker 3: question is they're gonna sink another one hundred if they're
15:10
Speaker 3: going to really pull this off, and they may be
15:15
Speaker 3: able to get the return on that, but that's a
15:17
Speaker 3: high bar.
15:18
Speaker 2: Okay, there's a lot of pressure on some of these
15:20
Speaker 2: public tech companies to expand their wallets share with the customers.
15:23
Speaker 1: Right. Can you speak to the cycles of all in
15:25
Speaker 1: one tech?
15:27
Speaker 3: Yeah, all of this goes in cycles. But yeah, you're
15:31
Speaker 3: seeing Toasts and OLO talk about average revenue per location
15:36
Speaker 3: as a big metric for them, and it makes sense.
15:41
Speaker 3: Restaurants on the surface want fewer technologies that they have
15:45
Speaker 3: to buy and integrate because that's easier. On the flip side,
15:50
Speaker 3: restaurants are increasingly under pressure to drive comps up and
15:57
Speaker 3: traffic in particular, and when it comes to things that
16:01
Speaker 3: can impact traffic, they need best in class solutions and
16:05
Speaker 3: so we're going to see that tension play out.
16:08
Speaker 1: For sure.
16:09
Speaker 3: There's also risk. There's risk in consolidating, and so we've
16:14
Speaker 3: seen some indication that brands want to go with all
16:18
Speaker 3: in one, but we've also seen some indication of brands
16:21
Speaker 3: actually separating because they don't want their loyalty program tied
16:26
Speaker 3: to their point of sale vendor, or they don't want
16:29
Speaker 3: their ordering tied to their payments. And it's going to
16:35
Speaker 3: be at this stage in the cycle, we're going to
16:36
Speaker 3: see brands go both directions. But ultimately, I think that
16:41
Speaker 3: if it's an all in one, you're optimizing for cost
16:44
Speaker 3: and efficiency and you're willing to sacrifice on the long
16:48
Speaker 3: term results, but you're getting a much more efficient buy
16:52
Speaker 3: of software. If it's specialized, you're probably going to spend
16:56
Speaker 3: more money, but you're probably able to get more result
17:00
Speaker 3: if you use it well. And that's going to be
17:02
Speaker 3: a brand by brand calculation.
17:05
Speaker 2: Yeah, it's interesting, and you mentioned to me too that
17:07
Speaker 2: it kind of concentrates the risk for the technology company.
17:10
Speaker 3: For sure, and I think we're seeing that with some
17:13
Speaker 3: of these public comps. As you lose a big brand,
17:17
Speaker 3: a subway, a wingstop, it's pretty painful in the public markets,
17:22
Speaker 3: and that's probably fair. Those are big brands. On the
17:29
Speaker 3: flip side, this is a trillion dollar category. Now. Losing
17:33
Speaker 3: one customer does not make or break any of these
17:36
Speaker 3: software vendors.
17:38
Speaker 1: Cool.
17:40
Speaker 2: When these fourth quarter earnings call, new CEO Kirk Tanner
17:43
Speaker 2: spoke about testing dynamic pricing next year and people went berserk.
17:48
Speaker 2: So you know, the restaurant industry doesn't have the same
17:52
Speaker 2: supply constraints that impact hotels and airlines. Will restaurant customers
17:57
Speaker 2: ever accept dynamic pricing?
18:00
Speaker 3: Strung customers have been accepting dynamic pricing for eternity. This
18:05
Speaker 3: was a messaging problem. What do you do with effective marketing?
18:11
Speaker 3: You drive customers to do things that you don't think
18:15
Speaker 3: they would have done otherwise, often with discounts. That's dynamic pricing.
18:22
Speaker 3: At the end of the day, when you know that
18:24
Speaker 3: you are slow on Wednesday, when you know that you
18:27
Speaker 3: are slow at the dinner day part because you're thought
18:30
Speaker 3: of as a lunch brand, you create incentives, often through
18:34
Speaker 3: your loyalty program, to get consumers to think of you
18:37
Speaker 3: in a different way, and then you hope that behavior
18:40
Speaker 3: sticks without a dependency on the incentive. That is dynamic pricing.
18:46
Speaker 3: I think the mistake here is thinking about it, and frankly,
18:49
Speaker 3: Wendy's got caught up in a rough pr cycle that
18:52
Speaker 3: I'm not sure they did anything wrong. But when you
18:55
Speaker 3: think about it as surge pricing, because as you said,
18:58
Speaker 3: this is not an industry where there's really a supply
19:01
Speaker 3: and demand need for surge pricing, but dynamic pricing that
19:05
Speaker 3: goes the other direction whatever. The opposite word of surge
19:08
Speaker 3: is where it goes down when traffic is low to
19:11
Speaker 3: create value. That is a smarter way to apply a
19:15
Speaker 3: value menu. That's a way loyalty programs have been succeeding
19:19
Speaker 3: for a long time, and this new industry of dynamic
19:21
Speaker 3: pricing is about applying machine learning to do that type
19:25
Speaker 3: of iteration way more quickly. But it's not, at any
19:30
Speaker 3: end of the day, some thing that consumers should be
19:34
Speaker 3: scared of. In fact, I expect consumers would embrace it
19:37
Speaker 3: and have been embracing it for years.
19:40
Speaker 2: Yeah, look a happy hour, Right, you're leverage in the
19:42
Speaker 2: box at a time where people may not be using it, right,
19:46
Speaker 2: That's right. Yeah, that's it's interesting, and that's an interesting take.
19:52
Speaker 1: Talk to me.
19:53
Speaker 2: Everybody talks about it, but you know, I think you
19:56
Speaker 2: have some interesting insights about it. Can you talk to
19:57
Speaker 2: me a little bit about AI and the restaurant business
20:00
Speaker 2: right now and what you think is going to work
20:02
Speaker 2: and what is maybe just hype?
20:05
Speaker 3: Yeah, public restaurant leaders don't want to say it, so
20:10
Speaker 3: I'll say it. Which is the most obvious application of
20:14
Speaker 3: AI is on cost savings back of house and it's
20:16
Speaker 3: about combating labor costs. And we're going to see more
20:21
Speaker 3: and more of that absolutely, whether it's voice ordering so
20:24
Speaker 3: that a human doesn't have to take that order, it's kiosks,
20:29
Speaker 3: it's reducing rote prep time of things in the kitchen.
20:33
Speaker 3: We're going to see robotics in AI in those places
20:36
Speaker 3: and it's directly for cost savings and opportunities. People will
20:41
Speaker 3: dance around it. We can redeploy labor, et cetera. But
20:45
Speaker 3: we know what they're actually focused on, and it makes sense.
20:48
Speaker 3: Labor costs are rising rapidly. Where I think it's a
20:52
Speaker 3: lot less proven is what does it do for front
20:54
Speaker 3: of house? You know, consumer facing tech today. You know
20:58
Speaker 3: the big moment we're in an AI is driven by
21:01
Speaker 3: open AIS hype cycle right now, and it's all about
21:03
Speaker 3: generative AI. I mean, you can write three sentences and
21:06
Speaker 3: get a sixty second video that is mind blowing that
21:09
Speaker 3: has no value to restaurants. Any restaurant that believes that
21:14
Speaker 3: they can then use that forgets that at the end
21:17
Speaker 3: of the day, they're a marketing business. You produce good food,
21:20
Speaker 3: but your brand is key in your a marketing business,
21:23
Speaker 3: and great creed formacy of young is on our board,
21:26
Speaker 3: and he reminds us constantly that that's our job is
21:29
Speaker 3: to help restaurants be great marketers because that's core to
21:32
Speaker 3: what they do. So I don't think generative AI is
21:36
Speaker 3: the breakthrough there that said five eight years ago marketing
21:41
Speaker 3: and restaurants will send the same email to every single
21:44
Speaker 3: one of your consumers, pat yourself on the back when
21:46
Speaker 3: you get a good open rate, no clue whether it
21:49
Speaker 3: drove revenue, and spray and pray marketing Today, with technology
21:54
Speaker 3: like Thanks, brands are doing much more personalization out of
21:58
Speaker 3: the box. Thanks has about a hund undred pre built
22:00
Speaker 3: segments that divide your customers into. But still that's not
22:05
Speaker 3: one to one personalization. And I think machine learning will
22:10
Speaker 3: give the opportunity to really build hyper segmentation in marketing
22:15
Speaker 3: that doesn't require the manual effort or insight of your
22:19
Speaker 3: marketing team. We're working on doing more and more of
22:23
Speaker 3: that right now, and I do think that's an opportunity
22:26
Speaker 3: and it's going to be a reason why brands want
22:28
Speaker 3: to use a SaaS solution like thanks as opposed to
22:32
Speaker 3: build it themselves, because the ability to train a machine
22:35
Speaker 3: learning model across brands and then to the benefit of
22:40
Speaker 3: each individual brand, it's just much easier than trying to
22:43
Speaker 3: train on just one brand's data, where you might draw
22:46
Speaker 3: the wrong conclusion about your customer.
22:49
Speaker 1: Yeah, that's very cool, man.
22:50
Speaker 2: I'm sure a lot of restaurant chains and looking forward
22:52
Speaker 2: to getting to that day, you know, because loyalty has
22:56
Speaker 2: been such a you know, important topic business for a while,
23:01
Speaker 2: right and the first cycle was I don't know, twenty seventeen,
23:05
Speaker 2: twenty eighteen, and as you mentioned, a lot of them,
23:09
Speaker 2: you know, have been unsuccessful in you know, getting to
23:12
Speaker 2: that one to one marketing spot and they're given another
23:16
Speaker 2: shot right now. So it's going to be really interesting
23:19
Speaker 2: to watch.
23:21
Speaker 3: I agree, and I think it's because brands assume changing
23:25
Speaker 3: your loyalty program is scary. As we've talked about the
23:28
Speaker 3: actual structure, they also assume changing that technology is scary,
23:33
Speaker 3: and it's because as an industry, we're so impacted by
23:38
Speaker 3: how turbulent the point of sale experience has always been.
23:44
Speaker 3: Every restaurant has changed their point of sale, and it
23:47
Speaker 3: never goes as well as they're told it's going to go.
23:50
Speaker 3: It never goes as quickly, and so I think restaurants
23:53
Speaker 3: are programmed to think, wait a minute, changing other technologies hard.
23:57
Speaker 3: We did a loyalty reef, we did a lot to
23:59
Speaker 3: refresh yesterday. We did a loyalty refresh the day before
24:03
Speaker 3: transitioning from legacy solutions. The consumers woke up their app refreshed.
24:07
Speaker 3: All their loyalty print points were still there, all their
24:09
Speaker 3: rewards were still there, but the underlying technology had changed.
24:13
Speaker 3: It's not as scary as brands make it out to me.
24:16
Speaker 1: That's great.
24:17
Speaker 2: Yeah, POS which stands for something else, and then ERP
24:21
Speaker 2: solutions too. I think give give a lot of tech
24:25
Speaker 2: technology a bad name.
24:28
Speaker 1: Zach, thanks for this.
24:29
Speaker 2: I don't get a lot of color into some of
24:30
Speaker 2: these loyalty programs, So I really appreciate you. I appreciate
24:35
Speaker 2: the work you're doing at Thanks, and I look forward
24:37
Speaker 2: to continuing.
24:39
Speaker 1: To follow your story. And I wish you nothing but
24:42
Speaker 1: good luck man.
24:43
Speaker 3: I enjoy this. I think the more that we talk
24:45
Speaker 3: about the actual data that's driving, that's driving frequency, and
24:51
Speaker 3: that's ultimately leading to, you know, the same store sales
24:54
Speaker 3: growth that the industry relies on, the better off will
24:58
Speaker 3: be as a category. And your questions and your coverage
25:01
Speaker 3: help with that a lot. That's what's going to drive
25:04
Speaker 3: brands to be smarter in their loyalty structure, in their
25:08
Speaker 3: use of data because they're getting questions from you about
25:11
Speaker 3: whether it's working. So I share the appreciation.
25:15
Speaker 1: Yeah, thanks man.
25:17
Speaker 2: Yeah, they need all the help they can get right
25:19
Speaker 2: now in terms of driving traffic, that's for sure. Where
25:21
Speaker 2: can the audience go to find more out about Thanks.
25:25
Speaker 3: Thanks is Tha n X dot com. I regularly talk
25:30
Speaker 3: on LinkedIn about this, trying to bring educational resources to
25:35
Speaker 3: the industry, so you can find me Zach Goldstein on
25:37
Speaker 3: LinkedIn And I appreciate the time, Mike, good stuff.
25:41
Speaker 2: I will also want to thank the audience for tuning in.
25:44
Speaker 2: If you liked the episode, please share it with your
25:46
Speaker 2: friends and colleagues. Check back in a couple of weeks
25:48
Speaker 2: for a discussion with Brandon Guthrie, general partner and co
25:52
Speaker 2: founder of CHTRNGE Capital Partner