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Craftable’s Zats on Using AI to Cut Eatery Costs · Choppin’ It Up by Bloomberg Intelligence

• 0:21
  Speaker 1: Welcome to Chopping It Up.
• 0:23
  Speaker 2: I'm your host, Mike Hanlon, the senior Restaurant and Food
• 0:25
  Speaker 2: Service analyst at Bloomberg Intelligence. Our research and that of
• 0:29
  Speaker 2: bi's five hundred analysts around the globe can be found
• 0:32
  Speaker 2: exclusively on the Bloomberg terminal. Today, we're joined by Sam Zatz,
• 0:36
  Speaker 2: co founder and CEO at CRAFTABWL.
• 0:38
  Speaker 1: How you doing Sam?
• 0:40
  Speaker 3: Hey, Mike Aydan, how's your day weekend?
• 0:42
  Speaker 2: It was nice, man, got to spend some time with
• 0:45
  Speaker 2: family and friends.
• 0:46
  Speaker 1: What about you? It was great?
• 0:47
  Speaker 3: It was great. See here in Texas, we had one
• 0:50
  Speaker 3: hundred degrees, then Labor Day hits and we're down now
• 0:53
  Speaker 3: to eighty five ninety degrees, so we can actually get
• 0:56
  Speaker 3: outside and finally have our summer in the South.
• 1:00
  Speaker 1: Did very nice. Yeah, we're lucky.
• 1:03
  Speaker 2: You know, we had a little bit of rain this weekend,
• 1:05
  Speaker 2: but this week has been absolutely glorious. Highs of eighties,
• 1:09
  Speaker 2: lows of fifty five. It's been absolutely perfect.
• 1:12
  Speaker 3: So that's right. You've got to enjoy it and hopefully
• 1:17
  Speaker 3: had some good family time as well.
• 1:19
  Speaker 2: Yeah, and so you're a California guy, right, so you
• 1:22
  Speaker 2: missed that California weather or what that's true?
• 1:25
  Speaker 3: That's true. So for most of my life was based
• 1:28
  Speaker 3: out of pale Alto and went to actually both of
• 1:32
  Speaker 3: the rival schools back on the West coast. So a
• 1:36
  Speaker 3: little bit of divided during the big game. But enjoy California.
• 1:41
  Speaker 3: But for the past five years, Texas and southern hospitality
• 1:44
  Speaker 3: has definitely been home for us here.
• 1:47
  Speaker 1: All right.
• 1:47
  Speaker 2: And so yeah, I saw you graduated from Berkeley with
• 1:51
  Speaker 2: an engineering degree, So we'll get to that in a second.
• 1:54
  Speaker 2: But have you ever read The Way of the Peaceful
• 1:56
  Speaker 2: Warrior by Dan Millman? I have not, but tell me
• 2:01
  Speaker 2: all right, So I just finished it.
• 2:03
  Speaker 1: It's a phenomenal book.
• 2:04
  Speaker 2: It's an oid to biograph, it's an auto biographical novel,
• 2:08
  Speaker 2: and it primarily takes place at Berkeley, in fact, the
• 2:12
  Speaker 2: gas station near Berkeley. It's about the author's spiritual journey.
• 2:16
  Speaker 2: So I highly recommend it.
• 2:19
  Speaker 3: And just about everybody at Berkeley has their own spiritual journey.
• 2:22
  Speaker 3: You can pick whether it's through football, through engineering, or
• 2:26
  Speaker 3: just by walking the streets to Telegraph Avenue. So you
• 2:30
  Speaker 3: get to pick your own ending there in your own journey.
• 2:32
  Speaker 3: So it's quite a special place.
• 2:35
  Speaker 2: Very cool man, all right. So as an engineer, how'd
• 2:37
  Speaker 2: you get into the restaurant business.
• 2:39
  Speaker 3: So I actually grew up in a family of restaurant tours.
• 2:43
  Speaker 3: Family were engineers from former Soviet Russia, and when my
• 2:48
  Speaker 3: grandparents came here, they of course needed to find a
• 2:52
  Speaker 3: family business, and of course my parents got us all
• 2:55
  Speaker 3: into the hospitality business. So we actually had a couple
• 2:59
  Speaker 3: of restaurants back in Palelto in the Peninsula, and it
• 3:05
  Speaker 3: was actually my first job helping out serving tables seeding
• 3:09
  Speaker 3: guests in our family's restaurants.
• 3:13
  Speaker 1: Very cool.
• 3:15
  Speaker 2: So once you talk a little bit about craftable and
• 3:18
  Speaker 2: how you came up with that idea.
• 3:20
  Speaker 3: Yeah, So it was actually having grown up in restaurants
• 3:23
  Speaker 3: and then having spent some time in engineering school, I
• 3:27
  Speaker 3: really wanted to learn about businesses and really leveraging how
• 3:31
  Speaker 3: can technology help businesses become more profitable and operate smarter.
• 3:37
  Speaker 3: So I actually jumped into management consulting after my Berkeley
• 3:41
  Speaker 3: days where I did a lot of business transformation, and so,
• 3:45
  Speaker 3: of course, after my wrapped up consulting, started to get
• 3:48
  Speaker 3: more eager and excited to be more entrepreneurial. Ended up
• 3:53
  Speaker 3: in business school and I had explored a series of
• 3:59
  Speaker 3: various industry and then one day actually a good friend
• 4:01
  Speaker 3: of mine had called me and he had shared that
• 4:05
  Speaker 3: he had some great news, he had some very challenging news.
• 4:09
  Speaker 3: And that was actually the day he became the beverage
• 4:11
  Speaker 3: director of a well known restaurant in San Francisco. And
• 4:16
  Speaker 3: that day was great because you know, he had spent
• 4:19
  Speaker 3: ten years being a bar back, our tender, bar manager.
• 4:22
  Speaker 3: Ultimately becoming a beverage director. That day was also scary.
• 4:26
  Speaker 3: It was scary because he finally realized what beverage directors do,
• 4:30
  Speaker 3: and that's basically living about fourteen different Excel spreadsheets, one
• 4:34
  Speaker 3: for ordering, one for inventory, one for recipes, another for waste,
• 4:39
  Speaker 3: another for menu pricing and costing, and basically, you know,
• 4:43
  Speaker 3: the data's manual, it's difficult, it's disparate. And he was
• 4:50
  Speaker 3: basically asking me, you know, hey, Sam, you're the you're
• 4:53
  Speaker 3: the former consultant, you're the engineer. Hey, can you help
• 4:56
  Speaker 3: me understand you know, what is this whole bar P
• 4:59
  Speaker 3: and L and how do I download Excel? And that
• 5:03
  Speaker 3: was when I realized there's a huge opportunity to really
• 5:08
  Speaker 3: help our incredible industry really understand how to make better
• 5:12
  Speaker 3: operational decisions inside of the four walls of the restaurant.
• 5:17
  Speaker 1: Okay, and what was your typical customer?
• 5:19
  Speaker 2: Well, I guess before we get in there, why do
• 5:22
  Speaker 2: you talk a little bit more about the suite of
• 5:25
  Speaker 2: the products and what you offer and what it helps
• 5:29
  Speaker 2: do at the restaurant level.
• 5:31
  Speaker 1: Yeah.
• 5:31
  Speaker 3: Absolutely, So we take a operator first approach, which is
• 5:36
  Speaker 3: a little bit different than most other restaurant tech solutions.
• 5:39
  Speaker 3: And so what we mean by that is that we
• 5:42
  Speaker 3: look at what different functions and departments of the restaurant
• 5:45
  Speaker 3: or hospitality that we're serving. So we have a solution
• 5:49
  Speaker 3: called Beveger that's for your bar management, as restaurant profits
• 5:53
  Speaker 3: are won and lost at the bar program, as you
• 5:55
  Speaker 3: know all too well. And then a number of years
• 5:59
  Speaker 3: later we created product called food Ajert similarly it's for
• 6:03
  Speaker 3: culinary directors and for chefs that are trying to manage
• 6:06
  Speaker 3: their food cost management. And then after that we actually
• 6:11
  Speaker 3: realized and not as much realized, but received the feedback
• 6:15
  Speaker 3: that our food and beverage products were actually happened to
• 6:19
  Speaker 3: be in hotels, and believe it or not, hotels also
• 6:22
  Speaker 3: like to procure and manage and track inventory of non
• 6:25
  Speaker 3: F and B products as well, whether it's retail or
• 6:28
  Speaker 3: linens and things like that. So we actually have a
• 6:31
  Speaker 3: house product which is our non F and B for
• 6:35
  Speaker 3: all the operational decisions, again very similar to food and
• 6:38
  Speaker 3: beverage for the house departments. And then during COVID in
• 6:43
  Speaker 3: twenty twenty, we created our first real time analytics solution,
• 6:48
  Speaker 3: so think about delivering sales versus labor and understanding their
• 6:53
  Speaker 3: prime costs every fifteen minutes. So we're pretty excited about that.
• 6:57
  Speaker 3: That was really eye opening as folks were shifting from
• 7:02
  Speaker 3: in person and in room dining to delivery and third
• 7:06
  Speaker 3: party and takeout. It really shifted the model of how
• 7:09
  Speaker 3: to manage sales, cogs and labor. And that's really where
• 7:12
  Speaker 3: we really dove in with our customers and created our
• 7:15
  Speaker 3: analytics solution. And so that's really the suite of Prafitable products,
• 7:20
  Speaker 3: and we serve all different segments of hospitality, whether it's restaurants, bars, QSRs, FSRS, hotels, resorts,
• 7:29
  Speaker 3: we even have a large collection of golf courses, country clubs,
• 7:33
  Speaker 3: entertainment venues, really anywhere where the operators are really trying
• 7:38
  Speaker 3: to make better day to day decisions, where you know
• 7:41
  Speaker 3: they're really trying to tackle the middle of that P
• 7:44
  Speaker 3: and L for prime cost and cogs and labor reporting
• 7:48
  Speaker 3: and management.
• 7:50
  Speaker 2: Yeah, which is so important right now with all the
• 7:53
  Speaker 2: labor and commodity and inflation we've seen over the last
• 7:56
  Speaker 2: handful of years.
• 7:57
  Speaker 1: And really, why I have you here today?
• 8:01
  Speaker 2: And it sounds like you're also helping the gms and
• 8:03
  Speaker 2: the beverage directors and a lot of the employees do
• 8:06
  Speaker 2: their jobs as well.
• 8:07
  Speaker 1: Does your product help with employee retention?
• 8:10
  Speaker 3: Yeah, Mike, So, employee retention is actually a huge element,
• 8:14
  Speaker 3: and it's one that we see the Craftable Solution helping
• 8:17
  Speaker 3: a lot of our restaurant partners. Just think about it.
• 8:21
  Speaker 3: Your bar manager, you're closing the month, it's two o'clock
• 8:24
  Speaker 3: in the morning, and now you've got six hours of
• 8:26
  Speaker 3: counting inventory. Or you're a chef and you're trying to
• 8:29
  Speaker 3: figure out how much do I order for the week,
• 8:32
  Speaker 3: but it's a holiday week, maybe it's just before labor
• 8:36
  Speaker 3: day a week ago, and you're trying to understand how
• 8:39
  Speaker 3: do I properly order so I don't have waste and
• 8:41
  Speaker 3: then have really overbearing food costs. And so those are
• 8:45
  Speaker 3: all decisions that we're helping our operators, whether it's the
• 8:48
  Speaker 3: bar manager, the general manager, or the culinary director and
• 8:52
  Speaker 3: even the director of ops really understand how do I
• 8:55
  Speaker 3: run those day to day, real time decisions that they're
• 8:58
  Speaker 3: making day and day out, and that they've relied really
• 9:01
  Speaker 3: on instinct and intuition and their handy dandy spreadsheet and clipboard.
• 9:08
  Speaker 3: And so that's really where the essence of craftable.
• 9:11
  Speaker 1: Comes very cool.
• 9:13
  Speaker 2: And you mentioned, you know, you you serve restaurant customers,
• 9:17
  Speaker 2: you know, across the spectrum and all the different sub
• 9:19
  Speaker 2: segments of the industry. What what's the typical size of
• 9:23
  Speaker 2: your customer?
• 9:25
  Speaker 3: So typical size of a graphical customers anywhere from five
• 9:28
  Speaker 3: to five hundred restaurant locations, and it could be a restaurant,
• 9:34
  Speaker 3: could be quick serve, it could be full serve, it
• 9:38
  Speaker 3: could even be full hotel hospitality. Really we're looking for
• 9:42
  Speaker 3: operators that are are are having either complex operations where
• 9:49
  Speaker 3: they're making a lot of various recipes with a lot
• 9:52
  Speaker 3: of menu changes, vendor changes, uh seasonality with staffing, or
• 9:57
  Speaker 3: we see another type of customer where they're looking to
• 10:00
  Speaker 3: have a very high velocity or speed in terms of
• 10:05
  Speaker 3: their feedback and their operations to the customer. So the
• 10:09
  Speaker 3: high velocity really are more chain franchise QSR type of
• 10:14
  Speaker 3: models where we really blend nicely, and then a lot
• 10:17
  Speaker 3: of the farm to table, complex big wine program, craft cocktails,
• 10:21
  Speaker 3: or even a whole hotel solution is really where that
• 10:24
  Speaker 3: more complex, sophisticated use case comes in. But we serve both.
• 10:28
  Speaker 1: Okay, very cool.
• 10:31
  Speaker 2: It sounds like you know you're doing a good bit
• 10:34
  Speaker 2: of sales forecasting right to help predict inventory needs and labor.
• 10:42
  Speaker 1: Are you using AI to help with that process?
• 10:45
  Speaker 3: Yeah? Absolutely, so. We've spent the last three years developing
• 10:48
  Speaker 3: our own AI models, and really what we're doing is
• 10:52
  Speaker 3: we're providing a baseline based off of how your prior
• 10:55
  Speaker 3: sales are as well as we have over dozens of
• 10:58
  Speaker 3: data points and factors that feed into it. But what
• 11:01
  Speaker 3: we've really realized is that the win win is not
• 11:04
  Speaker 3: just to replace the general manager. One of my clients
• 11:08
  Speaker 3: very successful, he calls it lebotomizing when you actually start
• 11:12
  Speaker 3: to feed the answer to the GM versus having that
• 11:16
  Speaker 3: GM really understand customer and then being given them a baseline.
• 11:20
  Speaker 3: So we take a mixed approach, a hybrid approach, if
• 11:24
  Speaker 3: you will, where we generate an initial forecast from a
• 11:27
  Speaker 3: quantitative perspective, and then we welcome our clients to actually
• 11:31
  Speaker 3: add in any additional things that they may know are
• 11:33
  Speaker 3: coming that the model may have missed based off of
• 11:36
  Speaker 3: prior history and performance. But Mike, you're totally right. Everything
• 11:40
  Speaker 3: starts with the forecast. Once you've got a really strong forecast,
• 11:44
  Speaker 3: that's really where that beautiful real time feedback loop starts
• 11:47
  Speaker 3: to activate and spin and really drive an increased profitability,
• 11:52
  Speaker 3: whether it's what you're ordering, how you're staffing, what you're prepping,
• 11:56
  Speaker 3: and even how to maximize and optimize your menu so
• 11:59
  Speaker 3: you can optimiz Is it for engineering profitability? Ah?
• 12:02
  Speaker 1: Yeah, that was one of the questions I was going
• 12:04
  Speaker 1: to ask.
• 12:05
  Speaker 3: Sorry I beat you to it.
• 12:06
  Speaker 2: Yeah, you did so, so you do help with menu
• 12:09
  Speaker 2: pricing absolutely.
• 12:11
  Speaker 3: So we're not in the dynamic pricing arena yet, we're
• 12:16
  Speaker 3: looking really more towards the operational menu pricing, which is,
• 12:20
  Speaker 3: how do we bring together the price that you actually
• 12:22
  Speaker 3: are paying today, what your labor and your staffing is today,
• 12:26
  Speaker 3: and then what your menu profitability is today. So those
• 12:30
  Speaker 3: are things that you know, your grandfather's accounting system really
• 12:34
  Speaker 3: can't do, especially in such a high paced world that
• 12:36
  Speaker 3: we're currently live in.
• 12:37
  Speaker 1: In the restaurant space, yeah, yeah, for sure.
• 12:42
  Speaker 2: And I'd imagine it's down to the to the SKU, right,
• 12:45
  Speaker 2: so you can you know, you might have more pricing
• 12:49
  Speaker 2: power on a chicken cutlet sandwich because you sell thousands
• 12:53
  Speaker 2: and thousands of them a week versus maybe a chicken
• 12:57
  Speaker 2: salad or something like that.
• 12:59
  Speaker 1: Right.
• 12:59
  Speaker 3: Yeah, absolutely, we look at the profitability, we look at
• 13:03
  Speaker 3: the volume of the sale. We also are looking at
• 13:05
  Speaker 3: the supply chain. We're starting to look at, you know,
• 13:08
  Speaker 3: what are the prices that we're getting from the vendors
• 13:11
  Speaker 3: on Sunday, So you can start to think about, well,
• 13:13
  Speaker 3: how do I price my menu or what are the
• 13:15
  Speaker 3: items to actually lto and push forward and so again,
• 13:19
  Speaker 3: it all starts with the forecast, and the forecast is
• 13:20
  Speaker 3: what's going to help you with the purchasing, and then
• 13:22
  Speaker 3: that's how you can start to optimize the menu. A
• 13:25
  Speaker 3: lot of restaurants have a lot of stability and kind
• 13:29
  Speaker 3: of consistency, but everything around that restaurant is very dynamic,
• 13:34
  Speaker 3: and that's really what we're trying to help bridge between
• 13:37
  Speaker 3: the outside world and trying to make it a little
• 13:39
  Speaker 3: bit easier for operators to manage all those different forces inside.
• 13:43
  Speaker 1: Cool And are you doing that down to the individual restaurant.
• 13:46
  Speaker 3: We're doing it down to the individual restaurant. We're doing
• 13:48
  Speaker 3: it down to the individual skew. We're doing it down
• 13:51
  Speaker 3: to the individual vendor skew that may roll up to
• 13:55
  Speaker 3: an inventory skew as well. So it's all about really
• 13:59
  Speaker 3: understanding and putting all the pieces togethers as we call it.
• 14:02
  Speaker 3: We like to connect all those dots together.
• 14:05
  Speaker 2: Yeah, I mean, strategic pricing has been huge that the
• 14:07
  Speaker 2: chains that we cover that had a really good handle
• 14:11
  Speaker 2: on it over the last few years have been able
• 14:13
  Speaker 2: to raise prices so much more. They've had such better
• 14:16
  Speaker 2: traffic than the chains that were behind the curve on
• 14:20
  Speaker 2: that one man.
• 14:22
  Speaker 3: Yeah, and stepping back, you can only continue to raise
• 14:25
  Speaker 3: prices so much as we're seeing and as the summer
• 14:27
  Speaker 3: has really proven, and so you know, raising prices will
• 14:31
  Speaker 3: only get you so far. And then it's really understanding, well,
• 14:34
  Speaker 3: how do I actually leverage all these new data sources
• 14:37
  Speaker 3: make better real time decisions to cut my excess costs
• 14:40
  Speaker 3: and waste so that way I can minimize the impact
• 14:44
  Speaker 3: on the customer and that's what will keep those guests
• 14:47
  Speaker 3: counts as high as possible.
• 14:49
  Speaker 2: Yeah, for sure, And you mentioned you're moving to real
• 14:52
  Speaker 2: time operations and flash reporting.
• 14:54
  Speaker 1: Can you talk about that. Yeah.
• 14:56
  Speaker 3: Absolutely, So what we've realized is again as the world
• 14:59
  Speaker 3: canntinues to get more and more complex and more and
• 15:02
  Speaker 3: more data points, is really about what we're calling the
• 15:06
  Speaker 3: continuous close or the continuous feedback loop, which is all
• 15:10
  Speaker 3: about how do we create that AI generated forecast which
• 15:13
  Speaker 3: is going to help you understand all the different parts
• 15:16
  Speaker 3: of the business, whether it's what you're purchasing, what you're staffing,
• 15:20
  Speaker 3: or what you're prepping. And then as you're starting to
• 15:23
  Speaker 3: get that feedback loop back, so how sales is coming in,
• 15:26
  Speaker 3: how labor is coming in, we start to bring that
• 15:29
  Speaker 3: forecast to actual and really it's a rolling real time
• 15:34
  Speaker 3: feedback loop, so your forecast gets replaced with your actual
• 15:39
  Speaker 3: and then you're re forecasting.
• 15:41
  Speaker 1: It's interesting, you know, and we talked last time too.
• 15:44
  Speaker 2: You talked about how important it is for finance and
• 15:48
  Speaker 2: ops to kind of work together when addressing the middle
• 15:52
  Speaker 2: of the.
• 15:52
  Speaker 1: P and L.
• 15:53
  Speaker 2: Can you talk a little bit about about that and
• 15:56
  Speaker 2: how you know, just maybe reducing your costs on an
• 16:00
  Speaker 2: item doesn't solve the problem for the long term.
• 16:02
  Speaker 3: Yeah. Absolutely, we see this set craft all all the time,
• 16:06
  Speaker 3: there will be a directive from finance that says you
• 16:10
  Speaker 3: need to go cut costs, and then operations really just
• 16:14
  Speaker 3: goes on a vendor or a skew item cost cutting exercise.
• 16:20
  Speaker 3: And back when I was in consulting, we actually did
• 16:22
  Speaker 3: these things called procurement studies where you really were just
• 16:24
  Speaker 3: trying to squeeze all of your costs and your expenditures.
• 16:29
  Speaker 3: That works maybe once, maybe twice, but it doesn't really
• 16:32
  Speaker 3: work for the long term, and it doesn't actually help
• 16:34
  Speaker 3: the overall long term profitability because you may squeeze or
• 16:39
  Speaker 3: you may cought or eliminate something because of the cost factors,
• 16:43
  Speaker 3: but now you're missing about well maybe it's going to
• 16:45
  Speaker 3: produce higher labor or it'll or you'll lose out on revenue.
• 16:49
  Speaker 3: And so stepping back to understand what the total implication
• 16:52
  Speaker 3: is and looking at it not as a cost driving
• 16:55
  Speaker 3: exercise but a profit driving exercise is really what we
• 17:00
  Speaker 3: partner with all of our clients around focusing on.
• 17:02
  Speaker 2: Yeah, great, it's so important to have finance, operations marketing
• 17:06
  Speaker 2: all on the same team.
• 17:09
  Speaker 3: And oftentimes folks in finance may not have operator experience,
• 17:12
  Speaker 3: and so bridging the gap between the two is really important,
• 17:16
  Speaker 3: and finance is looking to generate financial statements, but operations
• 17:19
  Speaker 3: is really trying to manage the day to day and
• 17:22
  Speaker 3: so if finance can help with the reporting back to operations,
• 17:25
  Speaker 3: and operations can collaborate with finance to have them reach
• 17:28
  Speaker 3: their goals, that's really where we see a lot of
• 17:30
  Speaker 3: great growth and probably something that a lot of the
• 17:33
  Speaker 3: successful change that you're reporting on are having a lot
• 17:37
  Speaker 3: of success with.
• 17:38
  Speaker 1: Let's talk about commodity prices a bit.
• 17:40
  Speaker 2: Oil prices have been sliding lower, you know, probably a
• 17:44
  Speaker 2: lot of it. It's due to weaker economic data of
• 17:47
  Speaker 2: China also the US, but the soft commodities still remains stubborn.
• 17:51
  Speaker 3: Right.
• 17:52
  Speaker 2: We still have food costs remaining kind of high. So
• 17:56
  Speaker 2: what's your outlook on food inflation for the rest of
• 17:59
  Speaker 2: this year, maybe into twenty twenty five.
• 18:02
  Speaker 3: Yeah, so we see food inflation going down a little bit,
• 18:05
  Speaker 3: so it'll continue to the annual inflation will continue to
• 18:10
  Speaker 3: be in the in the one to three percent range
• 18:14
  Speaker 3: as we continue to see it, So we don't expect
• 18:16
  Speaker 3: to see more bumps, but you're still going to continue
• 18:21
  Speaker 3: to have high interest rates. They may be cut slightly
• 18:23
  Speaker 3: here and there, so the pressures that you're talking about
• 18:25
  Speaker 3: aren't going anywhere. I mean, let's face it, we're almost
• 18:28
  Speaker 3: twenty one percent higher than we were since the pandemic,
• 18:32
  Speaker 3: and that's not going to have any sort of relief.
• 18:34
  Speaker 3: So those high food costs are here to stay. Which
• 18:38
  Speaker 3: again and don't want to sound like a broken record,
• 18:40
  Speaker 3: but it's again where you know, we will start working
• 18:43
  Speaker 3: with one of our partners and we'll see that they're
• 18:46
  Speaker 3: buying chicken from five different vendors and that's really where
• 18:51
  Speaker 3: that real time decision loop and understanding, forecast and budget is.
• 18:55
  Speaker 3: You know, are we buying the right chicken? When are
• 18:57
  Speaker 3: we buying the chicken? And we'll see various swings on
• 19:01
  Speaker 3: the different skews of the chicken, and so really grasping
• 19:05
  Speaker 3: a good hand on the supply chain and again kind
• 19:07
  Speaker 3: of connecting to before, it's not about a cost cutting,
• 19:10
  Speaker 3: it's about let's talk with our vendors, let's talk with
• 19:12
  Speaker 3: our supply chain. How do we create a win win
• 19:14
  Speaker 3: relationship and be able to maybe cut down the five
• 19:18
  Speaker 3: SKUs to three SKUs and find a better alignment of
• 19:22
  Speaker 3: your supply chain with your distributors and your suppliers. We
• 19:25
  Speaker 3: see that as an immense opportunity and it's something that
• 19:28
  Speaker 3: we do day in and day out as we support our.
• 19:31
  Speaker 1: Customers digital sales.
• 19:34
  Speaker 2: What are you seeing from your customers in terms of
• 19:37
  Speaker 2: digital sales. We've seen kind of a reduction in digital sales.
• 19:42
  Speaker 2: I think maybe there could be some pushback here on
• 19:44
  Speaker 2: just the price that you know, some people are paying.
• 19:48
  Speaker 1: For third party delivery providers.
• 19:51
  Speaker 3: What do you see in Yeah, so what we're seeing
• 19:54
  Speaker 3: is the demand has definitely gone down than we had
• 19:57
  Speaker 3: coming out of the pandemic. I think folks are to
• 20:00
  Speaker 3: get back into the restaurants, get back into hospitality really
• 20:04
  Speaker 3: the reason why you and I love this industry. But
• 20:07
  Speaker 3: the digital sales, I think that the restaurant tours are
• 20:11
  Speaker 3: starting to catch up with the technology companies and they're
• 20:13
  Speaker 3: starting to price in a lot of those commissions and
• 20:16
  Speaker 3: extra fees, especially when you look at returns and chargebacks
• 20:20
  Speaker 3: and things like that, which we see accumulate quite quickly
• 20:24
  Speaker 3: for the restaurant tour. And so what that's driving is
• 20:27
  Speaker 3: that the restaurants are starting to put higher prices on
• 20:29
  Speaker 3: those menus, and so you're seeing more and more menu
• 20:32
  Speaker 3: variation versus based on the different channels of where that
• 20:37
  Speaker 3: restaurant is available.
• 20:39
  Speaker 1: Okay, and you know AI obviously all the rage.
• 20:43
  Speaker 2: I have to ask the question, outside of craftable, what
• 20:48
  Speaker 2: AI functionalities and technologies do you think are best for restaurants.
• 20:55
  Speaker 3: Gosh, there's so much opportunity in a to take a
• 21:01
  Speaker 3: lot of the manual and the repetitive tasks. I think
• 21:05
  Speaker 3: a lot of the buzz and a lot of the
• 21:07
  Speaker 3: Silicon Valley type story telling about how AI is going to,
• 21:12
  Speaker 3: you know, take over lives and is going to replace
• 21:16
  Speaker 3: you and me. I think that's a little bit of
• 21:18
  Speaker 3: hyper belief you if you really ask me candidly speaking,
• 21:22
  Speaker 3: but where where does AI really do a great job.
• 21:25
  Speaker 3: It's anything that's super repetitive, super manual, super consistent, where
• 21:31
  Speaker 3: there's a lot of data that can be processed in
• 21:33
  Speaker 3: a short amount of time. And that's really anything that's
• 21:37
  Speaker 3: revolving around the communication with the customer, around the menu,
• 21:40
  Speaker 3: for example, providing customer service, being able to analyze data
• 21:46
  Speaker 3: like prior sales, being able to look at competitor or
• 21:51
  Speaker 3: benchmark data. I'm sure you guys are using a ton
• 21:53
  Speaker 3: of AI just to just to synthesize and analyze everything
• 21:57
  Speaker 3: that you're doing at Bloomberg as well. That's really where
• 22:00
  Speaker 3: I think the essence of it. I think the storylines
• 22:03
  Speaker 3: around AI, I think that those are just those are
• 22:07
  Speaker 3: just buzzwords at the moment.
• 22:09
  Speaker 1: Yeah, got to get those tech valuations up there.
• 22:12
  Speaker 3: You go. They've had some softening valuations, so we got
• 22:16
  Speaker 3: to keep coming back. I mean, I remember we were
• 22:18
  Speaker 3: talking about AI back at back in Berkeley and we
• 22:22
  Speaker 3: were twenty thirty years into the beginning of AI. So
• 22:25
  Speaker 3: AI is not new, you know, it's really if you remember,
• 22:29
  Speaker 3: the prior buzz was big data, so it's just another
• 22:34
  Speaker 3: generation and evaluation bump. As you're suggesting.
• 22:39
  Speaker 2: Yeah, it's funny. We use Cognoviy Labs. We'll give a
• 22:43
  Speaker 2: shout out to one of our partners. They analyze Twitter
• 22:48
  Speaker 2: data or x data for us on marketing programs and
• 22:52
  Speaker 2: just you know, emotions around different brands and they do
• 22:57
  Speaker 2: a great job. But we've been using them since sixteen, right,
• 23:01
  Speaker 2: there's been like actual versus theoretical forecasting data that maybe
• 23:07
  Speaker 2: not the most advanced AI, but that's been around this
• 23:11
  Speaker 2: industry for a little while. So it's always it's always
• 23:15
  Speaker 2: interesting to hear all these people that think AI really
• 23:18
  Speaker 2: was just invented with chat GBT.
• 23:21
  Speaker 3: Yeah, it's totally funny you say that, because you know,
• 23:25
  Speaker 3: I'll speak to some industry veterans and they'll be like,
• 23:29
  Speaker 3: back in the day, we didn't call it AI. We
• 23:31
  Speaker 3: just called it an Excel model, and that was our forecast.
• 23:34
  Speaker 3: And so now all of a sudden, you know, that
• 23:37
  Speaker 3: Excel model became a big data model and now it's
• 23:39
  Speaker 3: just a chat GBT AI under the hood. I got
• 23:42
  Speaker 3: to tell you, it's all pretty much the same. There's
• 23:45
  Speaker 3: obviously a lot of different enhancements and ways to move forward,
• 23:51
  Speaker 3: and they're just making that data synthesis faster, just like
• 23:54
  Speaker 3: what you're seeing in terms of that, and you know,
• 23:56
  Speaker 3: similar one to your use case that we see that
• 23:59
  Speaker 3: rush as are starting to warm up to is really
• 24:02
  Speaker 3: analyzing sentiment and customer feedback. So whether you're thinking about
• 24:07
  Speaker 3: your Yelp reviews, your Google reviews, there's a bunch of
• 24:11
  Speaker 3: different in restaurant feedback providers. But really the goal and
• 24:16
  Speaker 3: where AI can do a really great job is bringing
• 24:18
  Speaker 3: all those channels together and really providing you know, the
• 24:21
  Speaker 3: qualitative feedback from the voice of the customer. And then
• 24:26
  Speaker 3: you can bring in tools like craftable to understand the
• 24:28
  Speaker 3: operational quantitative feedback, and now you're really painting a story
• 24:32
  Speaker 3: between the synthesis from an AI and then actual models
• 24:36
  Speaker 3: and what the KPIs are in the business.
• 24:40
  Speaker 2: Yeah, that's a great use case. You know, I'm definitely
• 24:44
  Speaker 2: you know, it's why I asked the question. I'm just
• 24:45
  Speaker 2: curious to see which which use cases prove basically an
• 24:51
  Speaker 2: ROI before others.
• 24:55
  Speaker 1: Right.
• 24:55
  Speaker 2: You know, we've heard of some difficulties some change have
• 25:00
  Speaker 2: had with a lot of different things right now, Voice
• 25:02
  Speaker 2: ordering is one that we've seen some chains give give
• 25:06
  Speaker 2: up on because it was a lot harder than they
• 25:08
  Speaker 2: thought than they thought it would be.
• 25:10
  Speaker 3: You know, we continuously are studying this and looking at
• 25:15
  Speaker 3: all of our different partners and how they're using AI.
• 25:19
  Speaker 3: The bulk of the bulk of where we've seen it successful,
• 25:23
  Speaker 3: it's going to stem from customer service. And I think
• 25:28
  Speaker 3: we've seen that for probably before we got in this
• 25:31
  Speaker 3: aihype with a lot of the chatbots. I think that's
• 25:33
  Speaker 3: really the sophistication and what we would call like step one,
• 25:37
  Speaker 3: and then I think it's really it's not really AI
• 25:40
  Speaker 3: ordering or AI marketing, it's really AI synthesis. And I
• 25:45
  Speaker 3: think that's I think sometimes where operators are missing the bigger,
• 25:52
  Speaker 3: the lower hanging fruit opportunity of where AI can help them.
• 25:55
  Speaker 3: It's basically to understand various data points and to be
• 25:59
  Speaker 3: able to capture them and get a holistic view very quickly,
• 26:04
  Speaker 3: much faster than you and I can manually browse through
• 26:06
  Speaker 3: different websites or sources or data sets. And so it's
• 26:11
  Speaker 3: I don't think that we're seeing fundamental use cases where
• 26:16
  Speaker 3: it's dominated as an end to end solution, but a
• 26:20
  Speaker 3: lot of areas where you can think about it's AI
• 26:23
  Speaker 3: powered but to be to be determined whether or not
• 26:28
  Speaker 3: we can see AI delivered. And I think that's where
• 26:31
  Speaker 3: the exciting inflection point of where we are today.
• 26:34
  Speaker 1: Is good stuff.
• 26:36
  Speaker 2: Yeah, man, it's going to be fun to watch it
• 26:38
  Speaker 2: all unfold over the next few years.
• 26:41
  Speaker 1: Thanks for doing this. This was fun. Where can our
• 26:43
  Speaker 1: listeners go to find out more about craftable?
• 26:46
  Speaker 3: Yeah? So we're at craftable dot com and we partner
• 26:50
  Speaker 3: with restaurants and hospitality groups coast to coast. You're not
• 26:55
  Speaker 3: too small, You're not too big. We really are eager
• 26:58
  Speaker 3: and excited to partner with high hospitality professionals that are
• 27:01
  Speaker 3: really looking to improve their operations and seeking that real
• 27:04
  Speaker 3: time feedback loop for making those decisions. So really excited
• 27:09
  Speaker 3: and thank you again for bringing this together, Mike sure Thing.
• 27:14
  Speaker 2: I want to thank the audience for tuning in. If
• 27:16
  Speaker 2: you liked the episode, please subscribe and leave us a review.
• 27:19
  Speaker 2: Check back soon for a conversation with George Felix, Brinker's
• 27:23
  Speaker 2: chief marketing officer.