No-Shows Crimp Fine Dining Restaurant Profits

I recommended wines and a private club downtown. And it was terrifying because after maybe the first question, I had no idea what I was talking about, and they just prepped me in the morning and I was certainly not qualified. But it was a new private club and they moved me off of that job very quickly to just a regular waiter job. But yeah, so a lot of formative years in Georgetown related hospitality establishments.

restaurants who have worked in the industry for decades. In many cases, it's hard to even compare. It's like professional basketball player versus junior varsity So sure, yeah, it's not one industry, that's for sure.

a great podcast. Juan was awesome. So I was there for nine years, Mike and joined Noah Glass, the founder and CEO, when there were ten people and we were doing I don't know, two million dollars in revenue, and left a year after we went public with a couple of hundred million revenue and probably eight hundred or so employees, a very different company than when I started there and prior to Olo, I've been in the really the software and e commerce space for a long time since the

late nineties, starting at the first startup I worked at, which is called lending Tree, which is still around. It was a startup when I joined, eventually went public. It was eventually acquired by Interactive Corp. Then it was spun back out as a standalone public entity, and so I've been the e commerce and software space for a long time, like and yeah, joined Talk. Asked me why I joined Talk?

So it was really I wasn't sure I wanted to stay in the restaurant technology world, to be quite frank, you know, after nine years and watching the growth of Volo and the digital ordering part of the restaurant industry, I wasn't totally sure I wanted to stay in it solely because I like learning about new industries. I always find that fascinating, and I didn't want to, you know, get bored in a certain area, and I again like

I like to learn. But in meeting with Anthony Caslanoos, the founder of Squarespace they acquired Talk about two and a half years ago, and spending time with Nick Kokonas was the founder of Talk. Those two guys are incredible entrepreneurs, and you know, I felt like I was in a

good place. And I felt ultimately like like, you know, the fine dining category was one that is, like I was saying in the intro, like it's a different business in a different world, and I felt like I really needed to understand that I have my own perspective on fine dining, having not historically you know, been you know, had been someone who had grown up in the fine dining world at all, wasn't used to find dining as

a consumer to a very large extent as well. So I felt like this is a great opportunity to learn a very, very different part of the world. And the more I dug into talk, the more I realized we served, you know, beyond fine dining. We served the hospitality industry, you know, outside of restaurants and hotels and private clubs and wineries, which is a big part of our business.

So the challenges were were interesting and clear, and I felt like my background was the appropriate one and I felt like I could learn I had I've learned so much, Mike, it's been It's been an amazing experience.

they're way beyond that. They are incredible people to work with. And you know, we do our best to Talk to create an incredible software and e commerce product and get out of the way, you know, get out of the way of hospitality, make the product is easy to use so they can do their job and that's served and serve them with passions. So it's been great to watch and participate.

exceeds supply. Yet at the same time we have this no show issue at restaurants in the you know it's in the twenty percent still, twenty percent of people just make a reservation don't show up. So his thought was, well, wait, I could charge for this. I mean, I should charge for this. If I charged for this, I know the revenue I'm gonna have, I have the cash in the door. I could pay my you know, my food providers. I could pay my service people properly. I could pay my rent.

I know the money is coming in. And the original idea behind talk was merely that was the pre payment of reservations. Obviously, going along with that is you know, the table management and everything else you did, and the sort of core reservations platform. But that was the idea. The company started inside of the linear group that next in a linear and then really spun off from there. But I really caught fire amongst the fine dining world because you know, they had the same no show issues.

They had the same high food cost, high labor cost. I mean, we talked about people who worked in fine dining, they've done it for decades. They cost more, they turn over less, but they cost more the food they serve. You the component parts of that dish costs more, and so you know, talk really took off from there and really spread, you know, very rapidly into fine dining establishments all over the world. Today we serve restaurants in thirty

three countries, and we've moved beyond fine dining. But that was the original genesis of the idea. That was one way we're different. We continue, certainly, in my opinion, to be by far the most innovative of the the reservation platforms out there. There are many of them. They're probably more than a dozen reservation platforms out there, because every point of sale provider now has basic reservations that they give away to get you to buy the point of sale.

But what we do from an innovation perspective continues to lead the industry across the board.

restaurant tours, who are far more capable of pricing. They know their guests better. But we do create products that allow them to experiment. We just release something called multi Experienced tables that we allow you now to take the risk out of pricing an interesting meal on a table. So you know, if I have a table available, a four top on a Friday, I may want to put a six course tasting menu on it and charge five hundred dollars, But maybe I'm a little nervous about that.

I'm not sure people will buy it, so maybe I'll put a I'll have that on there for a couple of days, but after two days, if no one's bought it, I can also offer a five course tasting menu for four hundred dollars or an ALLA card menu. So we allow you to control not just everything that's going on inside the four walls of the restaurant, but down to the table level. You can have this dynamic pricing at

a table level. So again, we don't tell the restaurant to our customer what to charge, but we do give them the tools to sort of maximize revenue. I've described TALK before as a revenue management company, and I think that's probably a decent way to think about us. So you know, if you have a restaurant, we can help you maximize revenue. Yes, we know, we help drive butts

and seats, which is critical. We help manage the tables, we help the front of house staff, but all of that is in service of maximizing the revenue for the restaurant.

But you know, the qs R consumer, you know, I've done a lot in the QSR space before they you know, generally speaking, you know you're if you're hitting the drive through line at Wendy's, you know, in a lunchtime crowd, you know exactly what the price is going to be. You may even have the exact change in your hand, and so you're really potentially screwing around with something that's almost sacrisanct to the guests and can drive the guest away to another store. For for talk, restaurants, they do

have the ability to dynamically priced. They could do it by day of the week, they could do it by table, they could do it by type of meal. Again, all the card versus price fix. But the consumer still has a choice. I mean, they're not pulling up to the drive through asking for their regular burger and being charged something differently. They are pre paying in many cases, but they know exactly what they're paying for, and they can make some of those choices before they go to the restaurant.

They can also make choices once they get there. I mean, oftentimes, I'm sure you've seen it. You go into a restaurant, you have a reservation, they want to potentially upsell you with the you know, the wine selection. The seller selection, maybe it's a caveat upgrade, whatever the case may be. So it's very clear, I think to the consumer, you know, how the restaurant is, you know, is sort of marketing the products that they're putting out in front of you.

there's no way we would allow that to talk. Now, some of our competitors own that data as well, and they're going to market to that guest. They may try to steer that guest to a different restaurant if they open that app. That's not our job. Our job is

to help the restaurant, help the restaurant market themselves. Restaurants are amazing marketers, and so we want to give them a platform to show great videos and great pictures and great descriptions, but we are not stepping in the middle of that relationship that.

To the extent they have discretionary income, they don't want to always go back for the same old menu. And so I talked earlier about this multi experienced table product that we just released. That's a way that we help the restaurant market something different to the guest. It's not just about the regular menu. It's like, here's an experience. So if you're a you know, an oyster bar, you know in Georgetown, you know, have an oyster shucking class.

You know, if you're known for your your beer selection, you have a beer tasting menu. Like these are things that are not unique. And again, restaurant tours are so creative.

They come up with this stuff on their own. We're just trying to help them touch the guest additional times and show the guests something that could be just another occasion to come back into the restaurant, you know, not just Mother's Day brunch, not just you know, Saint Patrick's Day, you know, green beer that you have, not just the Thanksgiving you know, takeaway meal, whatever the case may be. We want to give restaurant tours the experience, the ability

to be creative, be thoughtful. It's not just about experiences. But that's one way that we, you know, help them drive guests right back in. And we also give restaurant tours a marketing platform to reach out to guests. Again, we don't own that guest, so we just need to provide the tool to the restaurant tour so they can continue to have a conversation with their guests at the appropriate time.

important to TALK. But if you look at just a product advisory board that we formed early in twenty twenty three, you could see across that just that product advisory board, we have very much fine dining folks on that board who are incredible contributors and upscale casual, neighborhood casual restaurants. So you know, the total addressable market for restaurants is quite large, but the total addressable market for fine dining

establishments is a tiny segment of restaurants. So, no doubt, in order for TALK to grow, we have to look at restaurants beyond fine dining. Now we will never not be in that category. And we're really lucky, Mike, Like when I walked in the door, we've done so much for fine dining that it's a matter like so much innovation had occurred at TALK, we can apply so much of that to casual dining establishments to upscale casual. You

know I just talked about experiences. Well, I'm very fortunate to have spent nine years at OLO, and now I know a lot of restaurant tours at much larger chains who can use the same exact concepts. They're probably not going to do pre payment. That's very unique, I think to you know, fine dining to a large extent, but there are plenty of other features and products that Talk already has. That's just a matter of marketing them to a different segment in the restaurant industry.

have pretty easy year over year comps coming up. But we haven't seen things really improve that much just yet. So I guess, you know, if you could share any trends that you're seeing with fine dining covers and check sizes in that segment of the industry.

I talked before about you know, Cavea ourselves wine supplement that has kind of going up and down certainly over the last year and a quarter. And the year over year comps for Q one are difficult to understand. And I'm talking about sort of same store sales. I'm not talking about new customers in twenty four over twenty three. I'm talking about the exact same customer cohort. Now, the problem is sometimes you know, dates change, or a number

of weekends in a you know, in a month. We had leap year this year, which throw things off, throw things off a little bit. Easter shift, Easter shift exactly. So we feel that pretty acutely in the numbers that we see come across the board. I will tell you though, I think to your point a minute ago, like it's so hard to read what's going on, and you see

the numbers from this week. So now the FED may not be cutting this year, is what I read in the journal, you know, like who knows, and you know, Bloomberg's re pouring similar stuff, Like the numbers that are coming across are really hard to figure out. I had an exec at a well known chain come and speak to the Talk team recently, and he was saying, I was talking about sort of wine and caviar, people buying that or not buying that. He said the same thing

in his chain. He said, it's not wine and caviar, but it was hot peppers and cheese sauce. And they saw a similar thing that people in twenty four and in twenty three as well were just not spending on that. So you know what's going on with income and you know interest rates. I think consumers are across any category, any demographic. You know, fine dining, I think you know incomes over one hundred thousand dollars. You know, they're driving

a lot of revenue to the restaurant industry. I think it's like sixty percent of the revenue the restaurant industry is one hundred thousand dollars income and above. But I think even that category is uncertain. What's going on right now? So cover count generally the same average order value, average check size, what however you want to call it. It's it's really fluctuating very heavily right now. So I'm playing a poor economist, so my apologies for that, but I

can't figure it out. I can't figure it out, and so it's varied, and again like the holidays and easter and leap year, that's just making it even harder to figure out.

you're going to make it through this period. But you know, I was talking to a consultant in the restaurant industry here in New York the other day, and he was saying his restaurant partners are are feeling it acutely right now in New York too. So if it's bad here in New York, you know it's bad in the US.

and it will be gone very quickly. You know, we do our level best to you know, to make sure that bots are not hitting talk. It is a constant effort of our engineering team. We use our own tools that we've created, we use third party tools that do a wonderful job. But you know, Mike, sometimes a bot can slip in there, or you know, just a regular human who wants to who has no intent of going, who just wants to try to resell something, which broadly speaking,

our restaurants really can't stand. And the reason they can't stand it is, I mean, there are several reasons, but number one, they want to know their guest, you know, who's coming in the door. Tell me about Mike. Okay, Mike's made the reservation. You know, I want to know who Mike is. I want to know what he likes. I want to know where he wants to sit. I want to know what kind windy drinks. I want to

welcome him by name. I want to re welcome him if he's a regular, you know, I want to you know, bring something over to his table from chef because you know, you know, I know Mike and he's always been great to us, and like that is destroyed in this bot and resale environment and that kind of hospitality, which is what if certainly in the fine dining world they practice every day they wake up out of bed for is to have that kind of experience with their guests. They

hate that too. And by the way, the other idea that you know someone's going to it's like your concert tickets a tool someone's gonna you know, go and resell it and charge a fortune for restaurants. Even in fine dining, people have this idea that you know, when I talked about sort of high income people, they do drive the restaurant business. But it's not always high income people who

are going to these fine dining establishments. Oftentimes, you people who are saving up for a long time to experience that, and these resta runs want those guests coming in. They don't want them to be pushed out of the restaurants because someone's going to resell a ticket. So it's really it's a bad thing for the industry for so many reasons, and so we do our best. We work a lot

a lot on trying to stop this. You know, I actually worked in the security software space for a long time, and you know, it's it's a game of whack a mole, and it's kind of a game of pushing the bots to somewhere else, right, Like, don't attack us because we're pretty good at this. Go find it somewhere else where you can you know, you can attack. And that that's the security software game, I think to a very large extent.

But we won't really rest on our laurels here because you know what, the good damages the restaurant industry.

generally Tuesday, Wednesday, Thursday, and you know, so a few things. One, you want to get them before they go home if they're commuting back to Jersey or Long Island, if they're in New York. Two, it's the people who are working from home in the cities who are finishing up early. They're not commuting home. They're already in the city, and so they're going to go and have an earlier meal. Well, they don't have an hour and a half commune anymore. So,

for lots of reasons, meal time has changed. The six pm the six pm reservation is way more difficult to get than it used to be, and the nine pm reservation may not even be something that a restaurant takes any more. I mean, we absolutely have customers who, many of them in big cities, who have stopped serving after a certain time for several reasons. One is sort of population density, commuter density has changed, and also crime is

going up in certain cities. So in the big cities like Chicago and New York and others San Francisco, you know, they're feeling that pretty acutely, and they are adjusting to make sure that they are guests and their employees who are closing up and then going out late, you know, bring stuff out into the alleys and bringing the trash like that is a more dangerous proposition that it used to be in some places. So yeah, things have changed.

is different. It is a it's more than just a job there, It is a career for those folks. You can feel it acutely and how they you know, how they interact with you as you're if you're a guest in these places. So staffing is you know, across the restaurant industry, staffing is is a challenge. I'm very lucky to be on the board of a company called seven Shifts, which does scheduling for restaurants, and you know, we could

see it there. We serve you know, much more casual dining, but also SMBs outside of casual and you know, no doubt that across North America, staffing is an issue and fine dining will always be less of an issue.

and what they're making. So you know, what are you hearing. I guess from your fine dining customers.

of course, and you know, folks are salary. It can vary greatly, but you know, as an industry, it's it's it's going to be interesting and it's going to be problematic and it's gonna you know, it's certainly going to drive more innovation because you know, in the QSR world, people will not be able to afford you know, this wage, and that's an issue and the path for growth in the restaurant industry, you know, oftentimes starts as a cashier and a qs are and you know what this, what

this minimum wage law can do is eliminate, you know, a traditional job for so many people. And it's such a great way to grow and get into this incredible industry. And you know, I don't know how the average restaurant tour can survive some of these some of these changes in the law. I mean, people think of these unfortunate at all to have worked with some many of these

large chains. And people think of these large chains is you know, massive companies, but typically they're a franchise or franchise e. So a franchise e is a small business person. The name may say McDonald's, but it's not McDonald's, you know, it's like, you know, Mike and Matts is really the company it's And so you know, I really fear for what this will do, and it will change a lot. The fine dining world will be changed less, no doubt

about that. But you know, long term, you know, if you are choking off the entry point to people into the industry, it will affect fine dining. You won't have people who want to be in the restaurant industry because plenty of people in fine dining start out, you know as cashiers McDonald's.

go to a kiosk to place. That's not going to happen. No, no, no, it's not plus you know, you know the plus many other types of restaurants. But you know that certainly will happen almost everywhere else in California. And I really I just think the downstream effects of a law like this have not been carefully considered. You know, wages, you know, the tax rolls from taxing payroll like like, I'm sure there's some smart people in California. I'm not sure they worked on this law.

to distinguish between the technical players out there. We all, I'm guilty of it. We are all using the same phraseology, the same nomenclature always, you know, every sale, every tech salesperson ever uses the same language, and it's it's extremely frustrating for the operators, the restaurant tours, the owners, and it's very hard for them to tell the differences, and so oftentimes what you see is a flight to sort

of a single provider. And so the whole idea of best of breed is going to go away if you can't prove you're any different from anyone else. And if I'm a restaurant tour and I'm not a technologist, you know, and it's just easier for me to do a deal with, you know, a point of sale provider, because they're going to have point of sale and payments and labor scheduling

and reservations and it's one neck to choke. And oh, by the way, because of wages, I can't really afford a tech guy or gal anymore, and so I don't really have someone, you know, I can't you know, maybe can call my nephew or my niece and they know something about technology, but that's really not a long term solution. So there's this flight to sort of single neck to choke that is problematic because that's not where the innovation happens.

And so for me, as sort of a best of breed provider, it does give me pause and I think that will also drive some of the consolidation that will inevitably occur in twenty twenty four. There are too many players out there, and consolidation has already happened a few. We were lucky Tolo to get out into in the market. Toast was able to get out. You know, some other folks are out like door Dash as well. I don't see, you know, certainly, depending what the FED does. IPO markets

have opened a little bit, y'all. I don't even know who would be on the docket from a restaurant tech perspective to get out right now. And if that doesn't happen, depending on how long their investors have been in the companies, then they're going to look for other exits and that's going to look like M and A.

go take over. Now, we may want to move that concept somewhere else. So across the board restaurant tech, restaurants themselves, this will be an interesting year. We saw some interesting small deals recently, child Now just did one. Chill is great company similar to Olo but serving SMBs based out in La Their CEO Chris, just did a good deal there.

So we'll see, you know, marginal deals like that. I mean marginal in a pejorative way, I mean smaller deals, and you know, we'll see if there's you know, growth beyond that. But certainly in terms of absolute number of restaurant tech companies that will that will decline in twenty twenty four.

like the food was out of this world. The service was out of this world. But the experience, you know, I talked about experiences, Like at one point they served the beef bourgignon that Julia Child was famous for, and they brought over like this vintage little TV and plopped it on the table and it started to play like

an episode of her show. It was like brilliant, and all the plating was on like her types of plates, and you know, it's just again, the food was incredible, but the experience and the way it was presented and the way it was described and and you know her books The Joy Cooking, the joy in which they took

and presenting. It was like it's special. I mean, that's part of the fine dining world I never knew about, like honestly, I mean, you know, I was more of a booeyemonger's guy if you remember those Oh yeah, well exactly. So a great sandwich shop in Georgetown that great sandwiches. But the way that you know, the folks at Next did you know, did this sort of meal and experience and it's just like it was. It was just like breathtaking.

So I'm gonna I'm gonna shout out you know Next the Linear Group and the spectacular experience I had there.

driving back to Long Island. You know, the person who's serving the coffee didn't know who I was, didn't know why it was there, but the way they described the coffee. And then a guy walked in and the person behind the counter said, oh, and this is the farmer that's delivering the Milton I'm putting in your coffee. It's like, whoa, this is incredible. So, yeah, there are some amazing places

out there. There really are, and I think, you know, we need to continually do a better job at talk at allowing those types of places to promote themselves better to their guests and just give them more tools to provide that sense of hospitality that you know, quite frankly, you're not going to get at the bootymonger. It's a

very different world. And so we need to do a great job of, you know, helping them, you know, promote themselves and you know, get more guests in the door more often to experience you know what I'm fortunate to be able to experience from time to time.