SVB May Spur Cash Crunch for Restaurant Tech

who I'm about to introduce. It's the founders and managing partners of Branded Hospitality Ventures, Jimmy Frishling aka the Finance Guy and Michael Shaftsburgh aka Shatzy aka the restaurant Guy. I get yeah. They're restaurant tours, venture capitalists specializing in restaurant tech, newsletter writers, podcast hosts, Real reniss sons men. So thanks for doing this, guys. Pleasure, pleasure being here on the podcast with it Chopping it Up, Loving it.

I gotta tell you, I feel smarter just being on Bloomberg Intelligence show, like because I'm going back to my hood. I used to I used to be addicted to the Bloomberg terminal. I don't big Oh yeah, big customer, right, Jimmy, they owned you, They owned you. I was a customer for decades. Love love to still miss my Bloomberg terminal. Yeah. Well, listen, we've been trying to do something together for a long time,

so this is this is exciting. Man, I'm pummed. Well, I'm a big I'm a big I read the Bloomberg News on my feet on Apple every morning. I get all my news. It's the place to golug nice like that plug out. So thanks thanks to both of you for doing this special. Thanks to you, Shatsy. I've listened to your pot enough to know that you don't like being outnumbered by finance guys. No, this is not good. I not good for me to have two finance guys and just Shatsy. That's that's not good. I'm gonna have

to make it. Bring in resources. But I brought in books. I had books in my office that I brought in just I was reading last night. So I think I'm up for the challenge. Moses, you had to actually read the book. Oh no, No, I just brought the books into your office. Jim didn't read it because I called him up in here. That doesn't work. Well, listen, if it makes you feel any better, Jimmy's you know, outnumbered by a couple of jerseys. True, that's nut. Jimmy doesn't

like Jersey. Don't get dogs, don't give me, don't get me started my Jersey brothers and sisters. He doesn't know. He doesn't really like it. Undist. You know there was a tunnel, us bridge and tunnel guys man Um, All right, well, let's let's get started with the brand adventures origin story shotsy. I think you were reminding your own business running some restaurants when Jimmy came to with an idea, right, yeah, Well, you know, we've had restaurants for as you alluded to,

quite a few years, over twenty five years. Jimmy has been a friend of We've been friends for longer than over thirty years through mutual friends. Another one of our partners, Dean Palin and uh so. On the restaurant side, Jimmy has always been an investor of ours in our restaurants, so he's always been our restaurant partner. And I would say the extent was Jimmy had a lot of parties and events there. He drank a lot, he ate a lot, and spent a lot of time. So that was really

Jimmy's most of Jimmy. He really didn't have much to do with the restaurants outside of He enjoyed it, he used it, spent all he spent a lot of money there and he paid uh, you know, so it was great. It's so it was great having to him as a customer and all that. And yeah, and and and as time went on, you know, on the restaurant side, I mean we were always very using a lot of tech and innovation on the restaurant side as a customer. And that was the extent of of of our ore, you know,

getting into involved in technology and innovation. We were at customers. It was when we were renovating a restaurant Dukes on the Upper East Side that we started looking at technology to do self pooring beverage, and it was it was just it was really cool, and we're renovating this restaurant. We figured, you know, if we're gonna put all this time and money into it, we should come up with

something new and innovative. And I remember talking to Dean and Jimmy like we're gonna put into self pouring and Jimmy's like, oh, that's really cool. It's awesome. And that was the extent. It was really cool and awesome, and we put this self pouring beverage system and pour my beer and we got that going. It was really cool. We were selling a lot more beer, we were saving money, there was no lost customers. We were really loving it.

And to be honest, I became friendly with the founder and CEO, Josh Goodman and uh and and I just was thinking, I'm like, are you looking for investors? This seems really cool? And he's like, I am, I am, and I have a convertible note. I had no idea what a convertible note meant. Of course I pretended I did. I'm like, oh, yeah, we do that all the time. Quickly called Jimmy. I'm like, Jimmy, you know, Jimmy loved the self boring paverage. This is is. I told me there

was an investment opportunity. It's a convertible note. And that was really how it got started. And then Jimmy kind of took over with his finance cap and you know, met Josh and that's kind of like, really how it's spotted it the real skinny. That was our first investment. And Jimmy, I still don't know what a convertible note is. Jimmy has still hasn't told me, but that's how we started, you know, Mike going, I think chats person of all

that's accurate and the truth always sounds better. What I would say is, through working with Chatsy and our restaurant operators, what I discovered when I besides putting somebody to work, and the Chatty accuses me of eating and drinking too much or for free I paid up front, then I just kept eating and drinking. But but what Chatsy kind of brought brought awareness to me of was that it was all this technology being created for the industry, but that a lot of operators and the users of the

tech were being less consulted. And I argue that this industry is the most misunderstood because everyone applies their guest experience to what they think is actually going on at these venues, and they therefore have a false sense of familiarity. And I'm not blaming the guests. In fact, we as restaurant owners would even call them customers. We call them guests. We want the relationship, We want them to feel comfortable. But what we observed, and I said to Chatsy, you're

an SME, he said, what's that? As a subject matter expert? He said, what's that. I said, you are an operator, you're using this tech. The technologist should be speaking to you about the product market fit. And I've never seen an asset class that was, in my opinion, maybe not leveraging the available talent and experts that are that were available,

and that's what we tried to harness. So after making a few investments as as more of a hobby, we formalized Brandon and here we are, you know, almost five years later. As an remember I mean our first I don't know, our first half a dozen investments. I think, Jimmy, we're really done just through Jimmy, myself and our partner Dean. Jimmy was still doing his whatever he was, Yeah, he had a whole other business going on, and Dean was in real estate, and I was still running the restaurants.

So we were just you know, so it really and then it just took off. And I think that's what really makes you guys unique, being subject matter experts, being actually able to test some of these things in your restaurants is very unique in the industry, and it's pretty cool. Uh, Jimmy, can you talk a bit about your Core four that's your nickname for the ecosystem that that you guys have helped create, because I think that's another thing that really sets branded apart. Yeah, and thank you. I A. I

love the core four because it rhymes. It's always fun for me, a simple man that core files terrible what we came up without three? It was originally the core file drop Yeah, But now in all seriousness, the core four is our ecosystem. It is the community that we take very seriously. And I have to say, as a recovering Wall streeter um, the community that is in and around food service and hospitality is really quite a wonderful community.

And if you've worked in the industry, you understand the camaraderie, the team work, the rolling eperence when he's getting your hands dirty. But the Core four is first and foremost the partner companies, the portfolio companies we invest in, and that's forty five of them, and they are a key part and the companies we're soliciting and seeking to bring on as our partner companies. These are the folks that are creating and developing the tech and innovation that is

operator centric. Our number one rule of investing is the technology has to be an ally and good for the operator. We're a B to B investor. We want to embolden operators to leverage tech to maximize margin optimization and bring efficiencies. We do not want to work with tech that goes through the operators and to the guests because inevitably, we think it creates friction and competition of who is the

guest loyal to. So as long standing operators, we've chosen to be on the side of other restaurateurs and focus on them, and that dovetails into the second vertical or the second you know a member of our core four, which is a hospitality network. Those are just that the owners and operators of venues that sell and serve F and B. So while it's dominated by restaurants, it includes hotels and airports and stadiums and arenas and beer gardens

anywhere F and be sold and served. That's the network, and we invite the network to join us on this journey of identifying and vetting and validating tech and innovation. The syndic is probably the most self explanatory. Other investors and strategic connections are those that have a not just a desire to see this industry survive, but actually want to see it thrive. These are the folks and very

large firms that sell into this industry. Ecolab, the leading kitchen start, the leading food safety firm in the market over three hundred thousand restaurants, Middle Being the leading kitchen manufacturer, Coke and Pepsi. Pepsi wants to sell a lot of food, a lot of snacks, and a lot of averages. They want this industry to fraud and we found that this combination allows us to accelerate our young companies. The network,

the syndicate and the connections. The joke on us says, we don't charge any of these folks, um and how do we make money? Volume but a bump. But no, in all seriousness, we invest in early stage companies and we leverage this network, the syndicate and the strategic connections to really advance these companies that are in line with our vision to improve margins and efficiencies for this industry. We love. So that was a longer explanation, Mike than you wanted. The chats is like, wow, he did that

short of than expected. No, that was it. That was about right. That was solid solid. That was the core four. Could you imagine it was the core eight? I mean it would be the stays. That's why I actually that's what initially was the core. Right now, I said, you know, I can't go on these calls anymore, Jimmy unless we chop we got were the four things core four because we got fifteen minutest down. But which it's important and it's it's uh, it's super smart and uh and I

love it. Um. So we got a lot to talk about today. I want to talk a lot about the companies that you're invested in. You know, this is the primary, uh, you know, reason for for me inviting you guys was to really dig into some of the companies that that you're investing. But but there's an eight hundred pound gorilla

in the room, and uh that's Silicon Valley Bank. So before we get into all the good stuff, I feel like no one ever really heard of sb SVB except for you know, except for startups and some venture formally, anyone ever heard of this. It's like Chase Bank of America, Well, what the hell is that? Well, I don't know that many you know, millionaires and billionaires, and so that's why I've never heard of Silicon bat right, Like that's the

only people they uh they banked for so yeah. In the venture in the venture world, in the early stage starts, everyone knows SVB. But I mean, like I was out for dinner last night with some friends. I mean outside of the news, they had no they had it had no effect on their life. They could care lesson nothing. They're in different industries, no effects in Massachusetts. Try to find went to the SPB branch that he could find

in Massachusetts and found that it wasn't affiliated. It wasn't There was no trip, it was no banking branch there, there was no SBB branch, and yet he had he had yes private wealth, and yet he had money. With this movie, He's like, where's the branch, where's the bank? Yeah, it's called online back. And I think that's one of

the things about SPB. It's running because before this all went down, no joke, I was talking to somebody about how much we loved SVB because set it for the account with them was all digital is super easy, you know, with thank you America and Chase Whill be nice. Nice. We need those guys, No, very nice, nobody. It's old school. It's like you want to open account, it's old it's you know, wet ink signature on a PDF, backs it back to me or email it back to SVB. It's

all digital. It's they you don't speak to anybody, so it's just injury. So it's a very it's a very hip way of doing business. Or it was a very hit for sure. So you know, things are changing quickly. Jimmy, you did a great job in the newsletter addressing the topic. You know, what, if any, are the lasting implications of the bank's failure on the tech industry. Yeah, it means a little bit of PTSD. I have to admit on Thursday afternoon when the news was coming across the wires,

it was actually a great week last week. There was a lot of very good work for branded and securing capital for ourselves and some of our companies. And I was having a nice week and then got the news n SVB and it reminded me a lot of fat rewind fifteen years ago or so with the Great Recession. First of all, my expectation and not that this is a perfect solution, but I do think the Fed, the Treasury, and the FDSC got it right. And the question was the speed of which they had to announce that all

depositors were. In fact, I'm going to be checked it and essentially guaranteed. I noted when I was coming to work on Monday morning, how somewhat peaceful it was walking from the subway age of the office, and I was thinking, had they not done this, what would today have looked like? Because I think we would have had a meaningful bank run, you know, I think one of the things that's changed.

And we're still dissecting all of this, but I do think social media, and it's not a blame of social media, but when we've dealt with the Great Recession and in previous crisises or in previous spats of great volatility, we have not had the fluidity and the speed of which things can go viral, the speed of which a Peter Teal could send out a notice or send out a message and through Twitter and social media and otherwise it

goes viral. And for if you're a holder of an account at a SBB or another meaningful regional, the ease of which you go online to move money and take it out or withdraw it is very fluid now. So I think it accelerated and exacerbated the crisis. It is not a perfect solution to guarantee the depositors. It is the right solution, but I will tell you that there does issue. Some concerns are on moral hazard. I do think there are other banks now some Signature already went under,

was taken over republics under some pressure. A behemoth like Credit Swiss. People have been looking at its balance sheet, its financials. The fact is no bank could withstand an exodus of the type of monumental proportion of deposits that was at risk of happening. So at the end of the day, depositors may very well need to be guaranteed. But then the question is is how do we almost convert this into utility, meaning the banking system, because you

can't have you know, these ballouts. And let's be clear, it's not called a ballout because the taxpayers not on the hook. Let me tell you something terrible. Any losses, any losses on SVB or Signature are gonna have to be paid for, and it might be paid for in an assessment on these banks, which may then be paid for by an increase in any number of fees that are charged to the consumer. So it's never going to

be free. But I will tell you that I still think we're it's always paid for by the taxpayers, so one way or another, right Jimmy, Yes, so yes, and we're working through it. For branded. Our book of business has weathered the storm as well as I ever could have asked, and we banked with SVB. We weren't getting loans from them, we weren't getting investments from them, we

weren't borrowing from them. I do think to your question Mike on what's going to do to the industry, I do think there is a concern that there are a number of very large players that were getting a lot of their fuel and the oxygen from the likes of an SVB or another regional and my concern is that that is removed, which it is. No venture death's going to come. Venture death gonna be more expensive if it's

available at all. So I do think there are a few levers in the world of finance which are greasing and supplying oxygen to the system that are now going to be shut off. So I certainly think there was a lot of headwinds in our industry. A big correction this is going to contribute to that. I'm expecting sixty ninety days at least of dissecting what transpired. And it may be longer, but I think we're it's contributing to a risk off environment, which is obviously a problem for

many young companies. But I will say a greater tragedy was averted the right decision was made to guarantee deposits, even though there was no perfect solution. I agree. I agree with what you're saying there, Jimbo. One day, the weekend was was really just hectic and everyone's scrambling. Were these companies. I mean, from our perspective, where our partner companies you may make payroll. I mean all they were gonna have was two hundred and fifty grand. That's all

they were gonna have. And that doesn't go very far, no, wet Mike. We had to do the work forty five companies. Who do they bank with? Who else they bank with? Who's with SVB, Who's got liquidity? What are people's runways in light of the frozen capital, all the while expecting the Fed or Treasury or FDSC to announce the guarantee deposits. But you couldn't rely on that. So a lot of lines of you know, a lot of liquidity was being amassed quietly in case that the right decision wasn't reached.

So but if you Saturday morning, Saturday morning, they were saying they were not garry, they were two fifty. That was it. Saturday morning, That's what they were saying. So wasn't until really Sunday. So well, Mike pleased to call to yelling and said, listen, let's gett Listen to me, listen, let's go. We're going. We're going. I got Jimmy and shatsy. I'm chopping it up. I got a good I got a good story. Tell me what'sppen. Well, it sounds like

Jimmy's got some work to do now. He's got to teach her at forty five companies how to how to ladder T short term T bills, Yes, yes, custodial accounts. We gotta we gotta work on a lot of places to hold liquidity. There are a lot of ways to do it today. It was very busy on Monday, all the people at Chase and b of A because they were setting up new accounts. It's like crazy, yeah, because you know, our bankers were going nuts just setting up

new accounts. Yeah, because those two aren't going anywhere. So if you think about the size of deposits, I believe the size of the you want to use the core for another way, City Bank, JP, Morgan, Bank of America, Wells far ago. Since the Great Procession, I think they now control almost ninety percent of the deposits of this country.

They've only increased in size. Too big to fail now became too big not to banque like you have to bank with them almost, which is going to be really I think a challenge in whether or not they should be utilities more than than something other than Yeah, if you think about SVB, they said it was the thirteenth largest by deposit. The spread between the number one and two and three and thirteen, it's it's quite quite a big spread. You'd think that thirtail's that's pretty big, not

compared to number one, two and three. Yeah, you'd think we'd want to diversify a risk, but apparently that's we've gone the opposite ways in the last forty or so years. All right, cool, thanks for that. M let's see schatsy, how many how many funds we got forty five? Wait? How many fun does branded have? You have forty five

companies that you're invested in. How many funds is branded have and you know, out of those forty five companies that you've invested in, you know, do you have any successful exits that you'd like to bring And that's a great question. We had forty five investments. We were fortunate

to have a couple of exits. So our earliest investments Bbot, which was a order and pay with the phone using QR codes, which probably doesn't sound that cool and happening right now because since the pandemics, QR codes became all the rage. QR codes has been around since ninety four. I don't think people paid much attention to QR codes. I know most people looked at them a little weird. They're like, I don't know what that is. I'm certainly not gonna use it because I don't need to use

it and what it is. Pandemic came and boy that changed. But so we invested in Bbot. Uh. You know, fortunately we saw that kind of trend where your phone was a great way to order and pay. Going back to um to Dukes one of our restaurants on the Upper East Side, as we put in the self pouring beverage system on another technology that we kind of brought on

and and test it out. Was order and pay with the phone, a little QR codes on the tables and again this was back in like seventeen or eighteen, and you could just use your phone scan a QR code and you could just order beers, order wings, order burgers and pay, put your credit card in and pay. And it was really a labor saver. A lot of young people went there. And you know, if I asked my kid to call up a pizza place and place in order for a pizza, my kid would rather starve to

death then do that. Like if you can't order with your phone, like the idea of speaking to a server, that was just he preferred not to do that. You know, my kids would rather just order a burrito on their phone, go grab it, not speak by and eat it and you know, and go on Instagram, you know what I mean. So it was so at Dukes, which was a very young happening place. People love the idea of ordering and pay. So Bbot was ordering pay QR codes. Uh. That got

bought by door Dash. Uh. So we're super excited about that. Then another early investment we made, which is go Parrot again also uh noticing the trend of of of of off premise of people uh liking to stay home and and stream Netflix and and Disney Plus and watch on their eighty five inch Samsung TV. I mean, it was

a trend that we've seen for years happening. Um so all part of our omni channel vertical that we had quite a few investments in, so Go Parrot was white label online ordering and really slick user nface, really great experience work with a lot of big QSR brands, and Square also known as Block bought that to to beef up their offering to their restaurants. So so both of those companies where our first two exits and really fantastic wins for branded and all of the investors so super

excited about that. So we have two funds and we just launched our third fund. Going back to that question, and so now we have Branded Hospitality Venture Fund three

which we are just launching. And Jimmy certainly as the finance guy, could speak much more in depth about that, but I think just looking at our partner companies and what we look at, you know, we spent a lot of time breaking down verticals and areas that we felt were really important in the restaurant space and as I said, omni channel so off premise order and pay with the phone, all of all of those things were really important. You know. Automation I think is a big buzz today, so certainly

paying a lot of attention to automation. I think when people hear automation, I think they immediately go to robots and like the Jetsons and was at Rosie and I don't know, I don't We don't look at automation quite like that. I mean, robots are an element. I think anything that is is because using tech knowledge become more efficient. We look at his automation. So I mean we've invested in companies that I mean just scanning invoices and ocr and and and the ability that that goes right into

your into your accounts payable or general Edger whatever. I mean, that's automation. You know that that a bookkeeper doesn't have to type key in everything, so that's that's a form of automation. So all those kind of things are things that we're looking at. And of course today I think customer engagement and loyalty is still very much top of mind.

It's something that we're still putting a lot of time in so so we have three funds and continue to look for interesting solutions in the early stage in the food service and hospitality space. You got to add some more color. I mean, Mike's asking the restaurant guy. He's asking me finance questions. I'm passionately sting here. I think he was right to ask. It's when I have two quick things, I promise I really will be. He was right to ask me that question. I think that he won't.

I think it was well, he was right because he was. Let me tell you why, um to get money out of Brandon, you need to get two yeses. And to be clear, for all your finance people out there, you all know, the lead left is the top dog. The experts. Shatsy and our team of subject matter experts are operators,

the people that have been into trenches. Their lead left. Intentionally, the finance guy and my investment team we are on the rights because we want the experts to tell us what's important to them and if they like a company from a we would want to use this, we need this. Then the investment team does its work. But if the operators don't care or it doesn't get them excited. The operators aren't going to work on challenger problem or number

sixteen or sixty eight. It's like top one through five maybe. So what we try to do is pick the themes that are most pressing to operators, and then if Shatsy and the team of experts say yes, we love it, then we evaluate it for investments. So I think Mike was right to start with you, Shatsy on this question because that's how we Ultimately we're looking for stuff that makes operators really given us. And the last thing I'll say, I'll let you go, shats What all your listeners Mike

should conclude is our focus group is really shot. Just three sons, sha Shat, just three gen z sons basically dictate everything we do because my dad might say, why are you creating all this tech and ruining my experience? I'm my dad. You might have more disposable income than Shatsy's three kids, but they're many more consumers the age of Shatsy's three kids, So we got to focus on what that group wants. Yeah, no, no, I appreciate that. I guess. I guess. The thing is I've ever called

an expert and anything before Jimmy. So, I guess that's what through me the subject matter expert. No one's ever said that you're an expert. Shats, you're an expert. Thank you, most definitely right now, most definitely. Yes, there you go, Mikey. So, Jimmy, how much have multiples contracted in the last eighteen months and have there been any changes to supply of potential

deals for you guys? Yeah? If I. By the way, something we look at a lot, and I will tell you that I think the first order of business than any investor or the market for looking at is the multiple typically on revenues typically and the arr the annual occurring revenues. And I kind of was watching, you know, back in two thousand and fourteen, you know, an eight nine times multiple on revenues would have been a good number.

And then I went back a little further before the Great Recession, we were at three four x. Then during the Great Recession, which is something we're benchmark in particular in light of the SVB and the signature and other you know, the banking situation during the Great Recession, it fell below two x. So there was a risk off environment.

For those of you who remember that period, then we stepped up and had a as the quantitative easing, as stimulus, as lending, an easy money let's say, was being poured into the system. We watched it go from a below two x, as I said, twenty fourteen eight nine, at two and eighteen ten x, and then in twenty twenty kind of the breakout year of potentially um you know, what's what was it? What was greenspans, irrational exuberance. We found ourselves in the mid teens one hundred x Jimmy

the benchmark. Anytime you're talking about multiples, you're at the risk of generalizing, and I don't want to do that, but from an industry average, and obviously every company needs to be looked at and dissected for its own merits. But we tapped out at twenty to twenty, you know, at around a thirteen to seventeen times multiple. We've come cratering down, I would say, even touching a low of four x. Right now. We're about at right now, we're

about a seven times multiple. So we are below where we were in two thousand and fourteen, which is a number I put forward. We're still well above the pre Great Recession numbers. So I think the multiples are healthy. What I wouldn't want to say to any of your listeners, the multiple on revenues is one indicator. It is just one, i'd even say, somewhat easy thing to look at. Then you got to dig in. So if you see a company that's trading it fifty times multiple or something, I

just do that number out randomly, you know it. Maybe that's obscene, but then you got to dig in and find out why. And it was trading into two x multiple, maybe that seems perfunctory, but then again find out why. So again I think you want to use these multiples as indications and maybe a little bit indicative guideline. You cannot rely on that solely from an investment perspective. But right now we are in around of seven times multiple.

I think we've bounced off the low. I think the SVB and debacle will certainly keep us at steady state, if not fluctuating. But I think, you know, Honor about the eight nine, which is twenty fourteen, seems to be a good number to me. That's great color, you know, and it sounds like if things got got worse, they would provide some pretty good opportunities for you guys shatsy. You know you mentioned digital ordering and QR codes, right,

they've become ubiquitous. When you're talking about digital ordering, it reminded me of this meme that I saw. It was like digital ordering, Lets me do my two favorite things, sit on the cow to not talk to people. I mean we talked. I didn't know he would ask me that talk about it. That's what I talked about earlier, right, And that's my kids and so and these two things have been you know, QR codes and digital ordering have

been you have become ubiquitous. You know, do you have any um companies in your portfolios right now that that are really doing a good job of this? Yeah, we do. As as I mentioned earlier, it was a It was a very big part of our investment thesis. It still remains a part of our investment thesis. Uh you know, I you know, the world has changed the way we do business. I think the way we eat. Uh. You know, I like to say optionality. I think, Um, you know,

Jimmy mentioned his dad. I love his dad. I got caught with his dad a week ago Jimmy's birthday. He cornered me for about an hour. Give me a war stories. Uh but um, you know, he doesn't like using QR codes and he doesn't want to order and pay with his phone. He's eighty something years old. It's not the way he do business, you know. But you know if

you talk, but you know. So, I think the idea of flexibility and choice and optionality is great because you know what, there's people that are the young folks out there. That's all they know and they want to do that, so they should be able to that. So I think for the way we look at things at the restaurant level and hospitality, I think it is great to have the flexibility. You know, if you go to a hotel and they allow kiosks to check in, I think it's great.

I don't think that should be the only way you should be able to check in. I think it's great to be able to do that. However, for Jimmy's dad and the people like that, it's nice if he doesn't have to do that. You know, maybe have eight kiosks and maybe there's one ambassador who you don't want to use the keys, let me help you out. You know. I love the digital keys. I'm a big Marriott guy, so I love that some hotels you get a digital key. You don't even have to do it, you know, to

see anybody. You literally walk in that door, go right to your room, open up that key. In fact, Mmy and I were on a conference, I don't know where, We're going to Tallas whatever, and we were coming we were coming in late and I we landed and we're coming in late. We hadn't eaten, and I noticed that not only could you check in at this particular hotel and it wasn't marry a property, you could check in and get your digital key. It said would you like

to order food to your room? We ordered burgers and some beers and fries. And I'm telling you it was so seamless, you know. The Uber dropped us off the hotel. We went to the room, the key, it worked, It opened up the door, knock, knock, knock. About five minutes later there was my food. It was beautiful. So I think that this kind of tech is really the convenience factor is wonderful. It's seamless, it's great, you know. And I will tell you another story, very different story. Jimmy

and are another conference. I think you may have been there, Mike, but we were checking in down in Vegas, and they had about eight kiosks to check they were all broken. None of them work, not one of them worked. I don't know if that was on purpose to torture all of us going to that conference, because they knew that we were like restaurant and finance people. And you went in and there were four hundred people online to check in,

and I knew everybody online. We were all laughing, stand like, this is ridiculous that you can't use your phone to check in. So I just love I love the automation. I love the idea of the QR codes and and and and just the digital ordering, etc. But anytime you can make things more communing easier for your guest, I think it's wonderful. But I do like the idea of optionality, flexibility, you know. Uh. And to your point, I think in our portfolio we have always put a lot of time

and energy exploring and finding great companies. One that comes to mind right now, go tab As, a company we invested in. U does a fantastic job. You know, he was solving a problem his um. He had a brew house, a brewpub, and and he couldn't find any any solution that would work for him to to to make it easier for the staff to order. He built it himself. This is going back quite a few years. He's been around for a while now, and and Tim's a great CEO.

He's got a great solution. So it's still top of mind without a doubt. Fun Boy And yeah, and I do like Bondoy for sure. Jimmy, I won't mention that hotel in Vegas that and had all those kiosks down, but I was there, and I know which hotel you know either. Yeah, Jimmy, Inflation and the margin pressure that comes with it doesn't seem to be going away as quickly as we would like. So can you speak about

a portfolio company that's helping restaurants save money right now? Yeah? Absolutely, I think UM, Look, this is one of the biggest headwinds UM and issues that we as an industry are facing. Labor certainly ranks very high in the list. UM. I think two thirds of our restaurant restaurants in this country are really independents and and SMBs UM and they really are not afforded the same types of breakpoints and buying power that the larger enterprise UM groups are are afforded.

So I will say that given the focus we are now, and there's several different ways to attack you know, inflation in the margin pressure. One of them is to address procurement and the supply chain. And granted has two companies in that space, both Cut and Dry and Simple Simple Marketplace and Cut and Dry are very focused on helping really actually try party help them, manufacturers, help the distributors,

help the restaurants. Each company does in a slightly different way, but very much focused on group buying and discounts and transparency into the process. Recipe management to me, if you think about you know, you know, I'm not a golfer, but I understand the concept of you know, yes I really have. You know, you drive, you drive, you drive for show, and you put for dough. If you think about putting, that's the back of the house. That is your recipe management. That is is your chef and the

team buying efficiently. And I think, you know, companies like Mes and companies like Galley are all about empowering you know, the chef, the backup house to order better have greater insights than they're really important data and analytics. You know, every restaurant operator I deal with tells me about their gut,

their instinct and their experience. My argument to them is, you use data and analytics, watch how much smarter and how much better your gut, your instincts, and your experience becomes. And we leaned in heavily with investments and ingest aim kind of a posh you know, a Verro three point zero for those in the industry, and then Brizzo Food Metrics is scrubbing publicly available data to again empower operators and those selling in the industry just to be so

much smarter. So they're different ways to battle inflation and margin pressure. And those are some of the examples in which we leaned to too. Very cool shotsy who's innovating with robotics and automation. Yeah, I gotta tell you some great companies out there. Again, I think the one that everyone talks about, We're not invested, But I think the one that everyone always talks about is Meso Robotics and Mike Bell and the team over there and what they're doing.

I think that gives you an idea. It's robotics is very very hard, very capital intense of U. I think it also it requires some restaurants. Yeah, you just can't retrofit your kitchen to throw in the the the flip by or the chip be or the you know. So it's it's but I mean they're doing great stuff, and I think it's it's it's what's happening in the industry. And for people to say that it'll never happen, don't

say that, because it's happening. It's happening. You know, we have mostly full serfined dine here in New York City. I don't see that happening as quickly, but in the quick serve, in mundane tasks that are just repeatable and repeatable and repeatable, I think it's happening. I mean, like I said, I mean for us poor might be or self pooring beverage system. I mean, that's robotics, it's automation.

It's low it's low hanging fruit. It's you know, when you go to a dunkin Donuts or Starbucks and you order a coffee and all they do is take a cup put ice and then they fill it and you wait there. I mean that could all be done by yourself. So to me, it's low hanging fruits, so easy for some of these restaurant operations to just take that task and let the customers do it. Certainly, and if you want to have, like I said, if you want to

have optionality, you can. But like we'd installed the self pooring beverage system in our restaurants, it you still could order a beer, you could still order a cocktail. You didn't have to do this self or if you didn't want to, But a lot of people chose to. I think the other thing that's really interesting in the automation side, again, because it's not just robotics. I think dynamic pricing is something that it's been around for a long time. It's

certainly it's it's a form of automation. You know, those prices like we talked about in hotel rooms and airlines, they go up and down based and supplying the demand. I know, when it's snow and here in a city, that uber can cost you a thousand dollars to go uptown, maybe two thousand. SHIMMI my right, you're so good. Number good. It's a couple of thousand dollars town, you know. And if you don't want to take the uber for a

couple of thousand dollars, you can walk. I mean, what can I tell you, But I mean one company that we invested in, Juicer, is really taking the online ordering kind of menus and saying basically, you know, I don't want to say surge pricing, it's just supplying to mend. It's it's there's times where you know, the demand is very high and and and maybe the pricing can can go up and down accordingly. I think so many industries we know in the in the travel leisure hospitality space,

they've already done it. I think every industry car rental, hotels, airlines, um, the ride share, they've all done it. So I think restaurants is the only industry left kind of that. The amusement parks do it, you know, they all do it. So so every industry that we know in this in this travel leisure in hospitality, uh does it except for restaurants. So I think it has to be done right and thoughtful.

At the end of the day, I think that it's coming and I'm seeing a lot of that, and I think that's a form of automation where the pricing will change based on the blind dement. So we're super excited about that. And of course voice is top of mind. It's very, very challenging because you know, I don't have an accent. You know, I speak beautiful English, right, but there are people in the country. I speak swell speak, I speak good English, but there are people that that

that have accents. So think about how complicated a drive through is doing voice when you know there's someone like me and the the you know, the the automation recognizes me immediately, but then there's someone else that's you know, from another part of the country has that. It's it's challenging. All kidding aside, Uh, you know, we we we've bet on on on some some voice like valiant Ai doing

drive through again. Labor saver, time saver. It's just a form of automation, and I think you're going to see a lot more of that, and so we're super excited about that. I think there's a lot of really great opportunity and it's just at the end of the day, I think the consumer is going to benefit. The restaurants or the hotels are going to benefit by becoming more efficient, reducing labor, and I think overall, for the most part, a better customer experience. It's not always going to be,

but as it gets better and better. I mean sometimes you call up and you and you try and use the automation. It's like, tell me what you want and it just doesn't get it, you know. So it's it's hard, and it can be challenging and it can be frustrating. But think of how far we've come, and I think we're getting there. So I think you're going to see a lot more of that. Why did you just tell me the movie you want to see? Exactly? It could

be challenging, you know, but yes, Grammar got it right. Um, Yeah, there's some cool examples that dynamic pricing is is very interesting to me. I mean, strategic pricing, being able to price down to the change of prices down to the zip code has been been a huge boon to the chains that I cover, been able to you know, it's enabled them to raise prices more than they probably otherwise could have. And it looks like dynamic pricing could be another good option. So there's another I just want to

mention another thing. There's also like another company, Tables, we invested in and also founded by we love restaurant We love restaurant operators that kind of get involved in solutions to help operators because I feel like they kind of know the pain point rather than like, you know, a tech person that just knows tech. So so Frasier's a guy who's been the restaurant business, you know, his whole life, and he saw an opportunity with the idea about you know,

it's really it's really great. Is it's not just making a reservation, but what about picking the table you want to sit at? What about knowing I don't want to sit by the bathroom, I don't want to you know, the restaurant. Maybe it's a special occasion. You get to see the whole three D immersive layout of the restaurant. And again, that whole three D camera has gotten so much better over the years. It is a fabulous experience.

You pick the exact table you want to sit at, You book that table, you know, and maybe pay a couple of bucks to guarantee that table. So it's a great revenue revenue generator for the restaurant, and I think for a lot of operators and for guests. I think the guests will be like, wow, I could pick the table I want, so I don't have to come to the restaurant and be like, really, that's the table they got for me, And so table's get a lot of

traction the full serve space, so to another. You know, so the dynamic pricing is not just in the in the QSR space on menus. There's also this idea that well, you know, if I go to a restaurant on Monday, should that be exactly the same price the entire experience as it does on a Friday Friday? Are you hard

to get a reservation Monday? Not as hard? You know? So, I think we're going to see a lot more of that kind of technology and experience coming into restaurants, and I think the customers will embrace it because they already have in so many other areas. Yeah, Jimmy, who's doing a good job leveraging AI or machine learning tech? Yeah? I think. Oh way, Shagi covered a lot of there. I tell you, jim companies you already mentioned like fifty of them company, I mean when they involved it, I

love it. I'll say the following to you to answer your question, mister Allen. Um Agot is a company um that we like a lot in the leveraging AI machine learning. A goot is a company that really is back of house and it's using cameras, UM and the AI to ensure that the orders that are leaving the kitchen are accurate, are complete, particularly in thinking around off premise, either delivery

or takeaway UM. Joe Pesci famously made a comment about what they do to you at the drive through in one of those Weak and Weapon movies, about how you may not be treated as well because by the time you find out your order is wrong, your X miles down the road. And I will not repeat mister Peschi's line, but he's he's right, And what I would say the value but a goot, particularly particularly is for a restaurant to successfully or have a positive positive virgin on an

off premise item, particularly delivery. They're playing with pennies and if you have to if you forget the soy sauce for the sushi, the catch up for the fries, or you forget the fries, or you forget one of the items and you get the phone call from that guest A, you get the black eye as the restaurant B you got to send out another person to deliver that extra item you've wiped out and you have a loss on

that item. So the importance of using a company like in a good cameras AI to ensure that the orders are leaving the kitchen are accurate or their red flag if they're not complete. I think that's the type of thing that is going to really help operators. Is it's sexy or the guests really know what's going on the enter is they don't, but if their orders are not incomplete, they're going to be a happier guest, better for the restaurant. I like it. I think it's sexy personally so, but

I'm a restaurant nerdbody. Nobody likes cameras more than you might have cameras and mirrors too. I guess cameras very six.

All right, before this takes a turn and Chatsy's yes, I think came all right, chats Esg's a hot button issue right now for a lot of reasons, but a big one is is it's really hard to measure environmental impact for a lot of different you know, just in general, it's just hard to measure the environmental impact of using different solutions, right So branded, however, the smart guys that that you are have made at least two investments that I know in companies that are making a meaningful and

measurable impact on the environment. So what are these companies don't Yeah, no, it's a great question. I think we look at things, um, like, we have a vertical sustainability, which is our environmental play. Um. So we look at that, and I think in restaurants, with all the takeout and all the delivery, that has an environmental impact for sure, because a lot of waste produced. Um you know. So there's a lot of companies out there that are trying

to solve for that. There are some companies are solving by simply making the delivery containers biodegradable and using all different you know, they're using coconut husks and and and and and left over whatever to make things biodegradable. That's great. There's also companies that are trying to look at you know, reusable things. Um so. So Dispatch Goods is a company we invest in that's looking at it from a reusable standpoint. Um.

I think people are funny. Um they don't recognize that when you go into a restaurant, they glass and the silverware and the fork that you're using, Um, that was reused by the way. Someone else ate on that. And we watched it and you're now using it, So it's being reused. Yeah. And then and then people like when you go to a hotel, that towel and the sheets, by the way, that's being reused. Someone else used it. Yeah, so people are like, reuse that. I got to reuse

something at someone else used? Like you're doing it all the time. What's the problem, you know? So it's just wrapping your head around reusing. It's hard. We're all doing it every day that we eat in a restaurant. You go to a hotel, you know that rent a car. Someone else sat in there. God knows what they were doing in that car, you know what I mean. So it's being so that's what And then and then another company again approaching it a little differently. Is just the

overproduction of food. You know, you go into a lot of these convenience stores, et cetera. The the the grabbing goes. They're making a lot of sandwich is a lot of salads, and a lot of that's based on on you know, uh, last week, last year, numbers all different, all different kinds of algorithms and things like that, about how many sandwiches I've produced today, how many turkey, how many ham, you know,

and it's it's all you know. Some of it's guessworks, some of it's based on numbers, this, that and the other thing. So Cope is a company that's looking at that as um, well, if you did make too much and and look, restaurants don't want to produce too much. You want to produce just the right amount. But at the end of the day, you might produce too much. And if you produced too much. Copy is making it really easy for that restaurant to donate that to a

food bank, which is good for everybody. Checking a lot of boxes. They're getting credit for it with the whole different tax incentives through local and federal and state levels of government, which is great for everybody. Then they're also having a really great tracking system of what they're producing too much of when they're producing too much, to try and not produce too much because I mean their goal, I mean, everybody wants to give to charity. That's a

great thing. But the idea is not making sandwiches every day so I can then just give it the charity. I mean, they can find other ways of doing that that are probably less expensive, like just writing a check to that charity. So copy is doing really great things. They're signing great contracts with a lot of really big national restaurant groups, national chains, and it's really an interesting way.

And so we fell in love with this company because it was just so interesting that a lot of restaurants, you know, they make too much food. They know what to do it, they're giving it to food banks, but they're getting any cred it for it. So this is now tracking it getting credit for it, so they're saving money, they're still doing great things for the community. So really excited about what they're doing. So I think sustainability is top of mind for us. We're always looking for solutions

to help. But I think it's got to be really frictionless. If you make it really complicated, really difficult for the consumer and for the operator, then they just prefer not to you know. So I think those are companies that are making it really easy. I just want to add to that the esc components. It's a hot topic. You're right, it's awesome, and I think generally this industry wants to do the right thing, want to do nice, good things. To your point, it's got to have a positive return

on the investment. It has to be contributing to the business, and the business has to have a compelling return on that investment. Otherwise the operator is not going to you know, basically utilize emerging in denovo company that's doing really nice things, but it's not affording them a contribution to their own business model and their own again return of the investment, multipot invested capital, etc. So it's got to be contributing to the root value of that business. That's who we

think Cope and Dispatch are doing for. Yeah, that's awesome. Um I'd like to shift gears to a topic that's very close to my heart. That's booze. Uh shats you have any other investments and that what's that? Yeah, I know that's close to Uh, that's close to Jimmy and might as well. That's how I met you guys right over beers that I see are Um So shats you have any other investments? In alcohol space? That's been a challenging space for us for a meread of reasons. It's uh,

it's it's something we always look at. We gotta we have a very robust pipeline into the non alcoholic space and the alcoholic space. I just say the beverage space. We always have a robust pipeline. We look at it a lot. Um. I think that the bottom line is we don't have anything in that space at the particular moment. However, we look at it a lot. And I think, um become because of a restaurant guy. So I see all

these brands all the time. I gotta be honest with you, I'm always scratching my head as to why a brand does really well. And I don't know if anyone really knows why. I mean, there was a time where, um, you know, um, I think was Sammy Hagar was the first real famous person to come out with I think it was Kabba Wabo, you know, and and and that was a success. And but that was very early. There

weren't a lot of celebrities doing that. And then I think, um, George Clooney and and and Randy Gerber did Casa Amigos and that was like a monster success, like a billion dollars sale. And I think then a lot of celebrities jumped in, and I think everyone's like, well, the celebrities attach it, It's gonna be good. And and I think we've learned that's not necessarily the case, it doesn't. You know,

celebrity attachment doesn't mean it's good. Um, a lot of rappers and artists have gotten into it and it hasn't been successful. So I think it's just for us, it's not We're more focused on I think technology, and we're focused on like how to you know, operators and and solutions to help them grow their sales and reduce costs

and things like that. So I think when I look at the beverage space, you know, I'm sure some people come along that really you know, checks the lock boxes for us, but we haven't found it yet and so we're still looking. But I think it's it's a very challenging space there. You know, you go to a seven eleven or a Delhi or whatever, and if you look at the beverage selection of ice teas or or or or or you know, energy drinks, I mean there's so many. And is it the packaging that attracts you? Is it

the flavor that attracts you? Is it the endorsement? You know? I look at that Liquid Death it's water and a can, water and a can, and it just got bought I think in BEV bought it for a couple hundred million dollars. I think it's just water and a can. You know, so to answer question, yeah, it's just I mean, you know, so, it's just it's pol in spring in a can that says like what dead? That's all. It is almost as good as almost pizza, pizza the cup delicious exactly. You know.

The only thing Mike I would add to that is as branded's thesis is to be an operator centric, investor and accelerator. I can tell you, on one hand, with all five fingers remaining, how many restaurants or food and beverage owner operators have said to a chatty, can you help me find a vodka, help me find a spirit, help me find a brown spirit, help me find a

new fill in the blank. Um. Truthfully, it just doesn't happen. Um. What they do ask is for is how do I improve my margins on my off premise and my delivery? What do I do? How do I reduce my labor in the prices or middle voages up cashiers? Can I how can I adjust? You know, watch what shake Shack's doing leveraging kiosks and then having guest ambassadors help the guests. But there are there're not gonna be no cashiers at a shake shack. That's the type of work we like

to do. And while I love the beverage base, particularly as a customer, the fact is none of our members of our network are saying that they can't operate effect effectively their businesses unless we would recommend a bourbon. Respectfully, they just don't need us for that. So we have to find our right place and right now. Just being a sponsor of a beverage I don't think we can add the type of value in that domain that we can in tech and innovation. Yeah. So, uh, it's a

crowded space. So yeah, So it's more like investments like poor my Beer and things like that. But we do drink a lot, Yes, so we do support industry. I've been I've been told we might be over supporting. I've been told we might be. We don't under cane, we don't undersupport. Yes, yeah, we have, we have. We We

we have a lot of fun. I will say that we make a bunch of barrels every year, a few barrels that Jimmy and I help help you know, curate and and and taste and create and and we have a lot of fun making barrels and sharing that with our friends. So so I think that's probably our biggest investment in that space. Very cool, Jimmy. Are any of your portfolio companies raising money right now? Who are they

and what makes them interesting? Yeah? There are quite a few, actually, and I'll divide our portfolio really into a third or third or third that's not an exact number, but a third of the companies had you know, secured their financing, extended their runways, you know, two plus years before the correction and the pullback, and they are now a they're very well positioned, and they get to zero and and

focus on their business. The other two thirds, there's a category that had maybe you know, eight to twelve months but maybe less than a year, and they had to figure out how they're going to attack the market, and they are. And then too, the companies that were absolutely raising and then the correction, the pullback really at the end of this past summer at twenty two and now into a tough late third and fourth quarter and a

challenging first quarter. They're the ones that are a little more in a challenging position because the backdrop for risk aversion, or rather risk aversion is high. They need to raise money, so they're going to market. What I would say is the following. And I've been doing emerging markets and alternative asset classes for a long time. Unfortunately, the single best time to invest is when the fear factor is high.

It's when the masses have pulled out. The multiples as we talked about, have come down, and this is the most attractive. The pendulum has completely shifted and the valuations are in my opinion, more attractive today than when we launch the business. The terms, the protective provisions, the respect for capital is absolutely more attractive today than it's been since we launch this business. So my comment to investors, it is understandable why you want to sit on the

sidelines and wait. I will only tell you that what brand it's done, and I mean certainly have companies in the delivery space, in the guest feedback space, in the loyalty space. I don't want to do anything that's gonna hurt my fineral licenses or Bloomberg Channel. I will mention companies that were very excited by such as Incentivio, multi multi faceted bundled solution in the delivery space and loyalty and engagement, ovation in the feedback space zach O. It's

a favorite son of the industry. Spendo Loyalty, pure loyalty, frictionless and a wonderful growing company in chats who and image in Copia our ESG sustainability. My overarching comment though, is less about individual companies and it is more about this is a great time to invest in this transforming industry. And what Brand is trying to do is create a

dedicated focus and diversified way of approaching. It's that's a little commercial on us, but I sincerely believe the attractive is at this moment and the one of the reasons it's so high is because capitals on the sideline and I respect that. But for those whoe to dip their toes into water, call me Jimmy, give at your cell phone. Well well, well we'll get to that at the end. That's how we'll wrap this up. You can give out

We'll give out Jimmy's cell phone. Yeah. But in the meantime, you know, I was told that you guys wanted to include a branded segment. I don't know what you guys are doing today is a quick fire you are making. My understand that you were permitting us to do the branded Quickfire. Is this true? You were letting us do the branded Quickfire on Chopping it Up? Yes, sir, so chopping it Up Branded quick Fire Edition. Yep, this is this is the first time this has ever happened. This

is unbelievable. Mike, I'm gonna ask you five lightning round questions on your Chopping It Up show. We're doing the Bran quick Fire. Are you ready? Mike? Yeah, I'm excited. Man, snow or sun Son. Where are you eating dinner tonight? Oh that's a good question. Um, Honestly, there's a fantastic Chinese spot. I think I'm I think I'm ordering in tonight, ordering using digital ordering platform ts Mom give a shout out ts Mom Montclair, New Jersey to do There we Go,

There we Go spawns. This segment is sponsored by what is your favorite place to travel? Oh? Man? Uh, I just got back from Park City, Utah. Man, and it's gorgeous. You know we were we were snowboarding. I was snowboarding with my son, uh for a long weekend. It was it was spectacular. I don't know if that's my all time favorite, but but it's your favorite right now? It's Yeah, I've been there. What's your favorite food city in the world. I mean it's got to be New York, right, I

think so you were thinking Modfield, New Jersey. But I mean, okay, if you were a channel Jimmy Ryan to a game of pin pin the tail on the donkey, who would you have better odds of beating Jimmy? I think I would go with Jimmy. Yeah, because you got a bum leg Jimmy. So, I don't know what the effect of affecting. I don't know what it is. But there we go. Here we go. The Brandon quick Fire chopping it up a dish with Mike Halan. That was great. Thank you

Michael letting us do that. Yeah, that's awesome and I'm glad to I'm happy to do it. It was fun, all right. So where can our listeners, you know, thanks again for doing this. You guys are fantastic. I'm big fans of your your podcast Hospitality hang Out. You can find it anywhere you listen to your podcasts. Where else can our listeners go to find more information out about Brandon? Yeah, it's quicking to find us. I think you go to

Brandon Strategic dot com. AM I right, Jimmy, Brandon state dot com is a great place to navigate all things you know. I agree. I'd also throw a shout out to Boom dot store, our marketplace for the industry, buy the industry, Boom Boom dot store. I got to tell you all your needs, all your wants right there for the industry, always, always free for operators to use. Great place to find technology for the hospital and food service space. And sign up for the newsletter. Sign up for the

Brandon newsletter. It's fantastic. Branded Weekend Update. Oh yeah, I forgot that one. Yeah, I go to the what is that the weekend Update dot news weekend News. Check it out. Thanks thanks for letting us plug everything. This is awesome. You got it man, Thanks for doing this. I'm glad we finally got the bi and branded uh uh you know, co branded event podcast whatever it is together finally on the bucks Man. It's great. Mike. We appreciate you. I

appreciate it. Thanks so much. And to Brandon, thank you. My brand