Welcome to Chopping it Up. I'm your host, Mike hallon the senior restaurant food Service Analysts at Bloomberg Intelligence, our research and that a BIS five hundred analysts around the globe can be found exclusively on the Bloomberg terminal. If you enjoy the pod, I'd love it if you could leave us a review on Apple or Spotify. Today I'm joined by Vishal Agarwal, the founder and CEO of Checkmate. Thanks for joining me, Mishelle.
Thank you, Mike. Thanks for having me. It's fun to be here. I get your emails pretty regularly, Like I have a pretty good span blocker, but I get your emails pretty consistently consistently in my inbox. So glad to be here. Looking forward to seeing my name on there. Thank you man.
I'm excited for the interview. You look sharp in your LinkedIn profile. Pick be honest. Who sported the leather jacket first? Was it you for Jensen Huang and video ceo?
Yeah? I hadn't heard of in video back then. You know true story that pick is from my free wedding shoot. So we were doing a pre wedding shoot and I'm like, wait, I don't have a good LinkedIn profile picture. Can you just make one into a professional one? They're like sure, and the background I'm pretty sure it's not evident there. But the background is actually a shape shot. It's at
Madison Park here in Manhattan. I love that park, and the shake shot right in the middle there, so that's where it shot at.
Yeah, oh good stuff.
Man.
Listen for the record, I prefer your style. Jensen goes a little over the top in my personal opinion.
I will let him know. I think that's good feedback for him. Thank you.
All right, So let's start at the beginning. How did checkmate come to be?
How did Checkmate come to be? It's so funny. I'm based in New York. I've always been based here and moved here from India in about early twenty twelve. But the funniest thing is that this idea did spark off from San Francisco, right, so, as they say, the mothership always has some bearing no matter where you're at. I was working for an e commerce retail company here, wanted to try out something new, wanted to, you know, build
a solution to an existing problem. And I was dining in at at a restaurant at the SF airport and it was just taking an enormous amount of time for me to get my check and like I could miss my flight, right, So that's where the idea came from. Was the first idea that we had was to build a mobile app that you could use to pay and split your check when you're dining in in restaurants, so you know, you don't have to wait for the server to bring your check, you don't have to spend time
in splitting all of that. Right. That's why the name Checkmate and our website is it's a Checkmate dot Com because somebody was asking me for two hundred thousand dollars for Checkmate dot Com in twenty fifteen, and it's a Checkmate was twelve dollars. I said, that was one of the easiest decisions that I've ever made in my life. You know, I'll go with it to Checkmate dot com. So that's that's how we started, right, And then that's background.
That's great for the listeners. Mishal and I met at the very first Food on Demand conference, which was in Dallas back in twenty eighteen. Your comments about who owns customer data really calls the ruckus.
It did it did, like, I still remember that Drinkydinky hotel, that that small lobby that was supposed to be a conference based food and demand has come a massive, massive way since then. But you know, we started with that mobile app Checkmate, and I was going door to door selling to various restaurants and an operator said like, hey, listen, what are you selling me? Seems like a nice to have, but come here, come just come behind the counter and
I'll show you what the real problem is. And what he showed me, I'm like, okay, this is a problem worth solving. Where he had two POS systems and at least nine other tablets, and a customer had to tower over those tablets to place an order with the restaurants, so they were literally creating a wall between their customers and themselves. Like why do you exist in the first place? Right? That's how you know we looked at that problem. We said,
this is a problem worth solving. We went down the route of let's integrate these orders into the POS systems. You know, in a startup, you usually make if you make one hundred decisions, ninety eight of them, you're like, why in God's name did I make those? But there are a couple that stick with you through your journey. Right. The one thing that we decided since day one is we're not going to consolidate all of those orders into
yet another tablet. We'll go straight to the prs And that was a harder route, but it has served us so well and that's the entire foundation today on which our business has been built. So that's how we got the start with, you know, integrating third party platforms into the POS systems. A couple of POSS they had APIs
with the third party platforms. We scraped emails and pushed them through the POS system, became large enough for the third party platforms to give us API access and then grew from there.
Yeah, it was that was a crazy time tablet hell and people having to read off a tablet and punch the order into the POS ordering accuracies or through the roof.
Man.
That was definitely a good problem for you to solve.
Not just that though, not just that. The one thing that always blew my mind whenever I walked into a new restaurant here, especially in lunchtime, is all of those tablets will be going off at the same time, right, So imagine if you have a phone in your pocket, it starts ringing. What's your first instinct, like, have to shut it right? And I imagine you're a staff, you're a deployee standing behind the counter, there's a line of customers waiting, and you have six other mobile phones going
off at the same time. That always blew my mind. So it was really fun to solve it.
So you expanded your offering pretty significantly from there.
What was next? So obviously it was the right problem at the right time integrating third party orders into the POS systems. Worked with five guys on next larger enterprise customers. Rbs it's buyer Brands is also an investor in US, and as we scaled that out, what we realized was we can't survive if we are a one point solution, which means if you're only doing the third party degradation, they're going to last very long. So we had to diversify and add products that were tangential to what we
were already providing. The next obvious stop was first party ordering. We were working with brands like RB's Sonic, buffaloil Wings five guys, so we had the enterprise capability and now we wanted to add a first party ordering, and you know, referencing back to that all time famous conference, it was always a fight between of them versus us, first party versus third party, right, and my stance since then has always been, it's not them versus us, but a restaurant operator.
It's part of the same value chain to have both. Right, Unless you're a Dominos or a subway, you're not going to have the kind of marketing reach that a door Dash or a grap or a new Breed has. Use those platforms to gain customers, and when you've gotten some loyal customers, allow them to order directly with you. So it's part of the same bucket. We were only offering a part of that bucket. So then we added a
first party solution to us. So we acquired a company in March of twenty twenty three, right, very small company, really solid product, and started offering first party web and app solution and a very very strong catering platform as well. With it first party catering, so if somebody came to
your site, you could audit catering from there. What we've also done is built a Kiosk solution on top of that platform to basically be able to provide the customers a very holistic sense of their digital ordering channels, and like I was saying earlier, the fundamental foundation of all of this, the fundamental foundation has always been the POS integration, right, because if we think back to the days of multiple tablets on a tablet on a tabletop, what coused a
problem is these were all disintegrated, disjointed solutions. They were providing the revenue, but at what cost. I'm earning one hundred dollars, but it's costing me eighty dollars just to maintain that revenue. Right, at first, that one hundred dollars seemed good. When the accounting team got up, They're like, it's not that good. So what a lot of the enterprise customers started demanding was I just need a solution that works with my core system. And my core system
is the POS. So we have the third party integration built on top of the POS. The first party solution just works out of the box, integrated with the POS. Catering works with the POS. Kiosk you eighty six something on a POS, it goes out to all of your channels. Kiosk orders print to your POS. Right, So we're providing this holistic digital ordering suite to the restaurant operators, primarily
to enterprise operators. As we continued moving on, the next big opportunity that came to us was the drive through AI right or in general voice AI solution. Again, as we looked at the market and saw the rapid evolution of AI, we realized a lot of the companies that were developing these solutions were spending fifty percent of their
time and just doing POS integrations. That's when I, like bubbe hit like, we already have this right week, so why don't we do the other fifty So we acquired a small team along with the you know, code that they had developed and the software they developed, to start down this journey of developing a very robust right through AI and a voice AI solution again going to come back to the same point or just integrated with your
POS it just works right out of the game. So that's where the evolution of our journey has taken us to focusing on continue to provide enterprise grade digital ordering channels so that the restaurant operators can be omnipresent. All right, good stuff.
I'd like to dig into those verticals a little bit too. What kind of average check increases are your kiosk customers getting from the technology and how much of the improvement is more consistent up selling versus giving customers more time to browse the menu versus the fact that credit card customers just tend to spend more.
That was our hypothesis as well, right when we were getting into kiosk, Right, that's what everyone claimed, like, hey, we will increase your average check size by fifteen to twenty percent. We're not necessarily seeing that right at the end of the day, Like again, these I go back to the statement that one of the initial prisoner had told me, what's the nice to have versus what they must have? Chiosks have made a comeback into having into being a must have, whether it is going to increase
your average check size or not. Right when I've spoken with enterprise brands walked into their restaurants, spends time on the floor that have chaosks, their thought is it may or may not increase check size, it may or may not save labor, because those are the two biggest selling points of chiosks. Right, but today customers have come to expect a kiosk. So if you're not doing kiosk you're taking away one of their preferred channels. So it's not
necessarily about like, hey, come here and spend more. It's like, come use the channel that's more preferred to you. So if you want to come in browse at leisure, you don't want to have the social pressure of the person in front of you or the light behind you. Use a kiosk. Right. A couple of the brands that we spoke with and actually went and saw, what they said was we've just moved the labor from behind the counter
to the floor. You know what I'm saying. A customer walks in the door, You greet the customer, you tell them like, please order here. If you need assistance, I'm here. Otherwise I will leave you. Right, So you're increasing that touch point, you're taking away the barrier of that counter and the pos So it's been very eye opening in terms of how we are selling this. We did invent kiosks.
We're not going to revolutionize kiosks, but we want to provide a channel that seamlessly just works out of the box and provides a great user experience for the brands and for the diners.
Yeah, it definitely frees up employees to do more high value jobs and just bring up a cash redit sure, right, and i'd imagine you know, your clients are seeing, you know, an impact on employee turnover and employee satisfaction.
We are starting to roll this out with a couple of pilot with one in rollout with another large enterprise customer in the three hundred plus location range, and the conversation with both of them started off is like, yeah, I don't think so we need Kiosk. I said, how do you know, why don't you try this out at one two locations on our die and see if it works. We won't charge anything, and if it doesn't work, you know,
keep the hardware or shape it back. We don't care, right, And that's maybe starting to see more openness and adoption. Take oh, our customers are actually coming in and using it, and now can we have more options there? And can we have pizza sliced in a few different ways there? Right? So yeah, that's what we're seeing exciting things about it.
Yeah, it's really interesting too how sometimes some of these companies are maybe a little too early with technology. I mean Jack in the Box installed Kiosks in their restaurants a decade ago. Wow, uninstalled them and then went back.
Did not know that? Wow?
Okay, yeah, yeah, So it's it's interesting, man. I think some can be a little too early. I know Brinkers tried out robot bussers right and those, but who knows, maybe a decade from now they will and things have.
Changed so much the hardware what you can do with the software.
So yeah, and catering is another interesting vertical. A lot of the companies I cover our working to expand their catering business, including Chapaulae through their Hat and the Ring. On their first quarter earnings call, are you seeing increasing demand from your customers for a catering solution?
Yeah, In addition to the drive through the a solution that we're working on, catering is our biggest opportunity. We have definitely seen that a lot of the brands are looky. The funny thing about catering is it's it's like an iceberg. Only twenty percent of it is visible above the surface. Eighty percent of the work actually happens behind behind the scenes.
So if it's a restaurant operator, you know, manager for a brand, their ability to take in orders, to schedule orders, to provide a timeline, to provide a cutoff, to do a minimum, to do a maximum, to reroute orders, to do a house account. All of these functionalities are actually behind the scenes. So the catering interface honestly is the easier one. And that's why when we looked at the catering market and then compare it with the solution that
we have, we were like, this is really good. And we actually ran this by a few independent consultants as well, and again that's where we are seeing a huge opportunity and scope for growth because now this gives the brands and ability to create a catering sales program around it and to create targets because now they have the tools and the solution that can empower them to do more. Right. So, yeah, definitely seeing a lot of growth there.
Very cool. Last year McDonald donalds they ended their AI voice trial with IBM after some well publicized issues. On the other hand, Taco Bell and Wendy's are ramping up their trials. What have been some of the issues with voice AI to date and when do you think it'll be ubiquitous.
When you think about voice AI, right, we're kind of segregating it into two aspects. One is a phone ordering AI. I think that's ubiquitous today, right if the people doing that can get the menu right. Right, It's not about the phone ordering, It's not about the AI anymore. It's
a huge comportit of that is the menu right. The number of people I personally get approached by somebody saying, hey, I have a phone AI startup and here's a demo, and my only question to them is have you ever connected this to a real pos and then have a customer order? That's when the rubber hits the road, right on the drive through AI side, which is where majority of our focus and attention is right now, where we
also see the largest opportunity. We think that market is, if not one, maybe two years out from being in a place where you can easily roll out and support hundreds and thousands of locations. Right now, what we are focused on is just one or two brands and getting the experience absolutely right for them. The long tail here, Mike, is really really law right. Just think about the interface. You open up your Uber Eats app and you want to order a chicken burger. They will tell you exactly
how to order it. They are guiding the interface. You think you are selecting, but they're telling you this is the only way to order. You select one year, two year, three? Here, how many modifiers, how many additions, divisions and submit? It's very very defined. Drive through AI boys AI takes away that interface, takes away those boundaries. So now like I myself listen to over one hundred live calls from customers every single week, my mind is the same order, how
many different ways can they be to order it? But there are because every individual is different, and that is what you know. Obviously, the technology is advanced massively and we are catching up. So what maybe was a five year time frame has become a one one and a half year time frame. But that's how we are looking at this is if we, as responsible restaurant technology solution providers, want to provide solution that the brands can rely on, that they can trust us with, we have to go
slough first. If we start saying like we haven't drive through the ice solution that's at ninety five percent accuracy and I can service twenty brands at the same time,
you're going to burn the entire industry down. No one's ever going to trust anyone else ever again, right, So again, it just feels like, you know, it's a new startup all over again, and we are working on this problem, being deep in the trenches and traveling next week to be on site, to be to listen to actual customer interactions. But such an exciting, such an exciting space to be in and to solve problems for.
Yeah, it's really interesting. I remember hearing a few years ago that, you know, one of the major problems was more about accents and dialects being understood but by the voice AI. But now it sounds like it shifted more to menu customization. So is that is that accent park kind of solved?
It's improved. You know, I have been told very clearly by my engineering team never to use the word solved or fixed when it comes to AI. You know how kind of inherit like. It's now become inherited in how I speak has become better. It's improved. It's not going to be completely solved. And that's where I go back to saying, the long tail here is really long. Right, you can hit that eighty percent mark, That twenty percent
is going to be very It's not hard. But if you're not dedicated and focused on it, and you have your attention all over the place, then you're going to be stuck between eighty and eighty two percent for the rest of your life. But it has to be a very concerted client by client effort to say, for your brand, this is how your customers order. You know, again, it comes from a place of listening to real customer calls
and recordings. The same person in three different chicken burger brands the same order, their customers will speak it out in a different way. The way you order a Chick fil A versus Popeyes versus you know, your KFC. It's fairy, very different. That's why it requires so much effort on a per brand, per region basis to make sure you get it right. And you know, we are even coming across situations with the menu differs from region to region.
And it's a national brand. You know, you have thousands of locations across the country, but just because of some people, because of customers in a specific region ordering their chicken in a specific way has forced that brand to make a slightly more nuanced menu in that region. You have to account for that, right, So that's where we're seeing the challenges come up versus you know, rolling out a
third party integration solution at scale. Now, that's a solved problem, right, you know the steps you have to take to get there, but drive through. We're being very very cautious and how what we promise and what we tell the brands.
Yeah, it's really interesting. Staying on the topic of AI, restaurant industries being inundated with AI solutions. I think some of them were also known as big data solutions a couple of years ago, but I think a lot of them would fit into that nice to have category which we spoke to earlier, excluding the areas you know you're playing in. What restaurant pain points are AI best suited to solve?
Was watching an interview by Jeff Bezos, right, and he made a statement that really stuck with me. Right, he said, AI now is like electricity. It will make better everything that it runs through. Right. That made me think. So that was one part of the conversation. Right then, I was interviewing another candidate and I was talking to him about his application of AI and what he's doing, and
he's like Michell. Today, the restaurant operators, if they have a problem, they literally call me and tell me like I'm sorry, I forgot my password, right, So that's how behind they are on tech adoption. How are you going to make them adopt AI? I tried to combine these two conversations, and I said, do you know how electricity works? Like? Not really? I said, but you know when you switch out the light, your bug goes on. That's what AI
should do the restaurant operators. We should basically help solve the problems for the restaurant operators while AI works in the background. That's how I'm thinking about the application of AI in an industry that has always been to like, hey, your tech backward. You know, by the way, I think
the restaurant industry is take backward. Is tech backward not because of their fault, but because of our fault at some level, because we take people have come and said we'll solve all of your problems on heaven and Earth and everything in between. So they've become skeptical. But we need to understand what their problems were were that they couldn't solve earlier. But now AI can solve, right, So we have to approach it from a perspective of what's your problem? Not how can I make you use AI?
That's not an answer right. I run seventy locations in Florida, and I have no idea what happens. But suddenly, like at any point in time, seven percent of my stores are offline in on the third party platforms. That's the problem. Now, let's solve that using AI, making it more intelligent, either telling you when your stores are going offline or telling
you in advance. Hey, keep a lookout. These four stores are a problem, and usually they go offline because of high drive away time, So that's what you should be looking for. So basically, AI is helping us find the needle in the haystack, pinpoint the problem, and not worry about your other sixty three stores, but just focus on these seven stores. That's how we are approaching the application of AI in the restaurant space. And by the way,
that password problem also solvable by AI. I mean you don't have to use air for that, but get rid of using a password for God's sake, not right, Like I don't even input user in my password on my Chase banking app. It's faciety. There's different solutions to the problems. It's not always the I, but our goal is like always come at it from a problem perspective.
Good stuff, man, this was fun. Thanks for doing it. It's a checkmate dot com right if you want to find out more about that Checkmate.
Thank you so much for you appreciate you having me here on Mike.
You got it man. I also want to thank the audience for tuning in. If you like the discussion, please share it with your friends and colleagues. Check back soon for an interview with Felix Linn, the CEO of HF Foods Group.