Welcome to Chopping It Up. I'm your host, Mike Hanlon, the senior Restaurant and Food Service Analyst at Bloomberg Intelligence. Our research and that at bi's 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'd leave us a review on Apple or Spotify. Today we're joined by Raymond Howard, co founder and chief revenue and Growth officer of Xiosk. It's nice to meet you, Raymond.
Great to meet you, Mike, Thanks for having me.
Sure thing, man, So how did ziosk come to be?
Oh? Man, I tell you. I'll give you this short version.
There's certainly a much longer story. But you know, I'd had a lot of passion about starting a business going into graduate school back in the early two thousands, after spending probably a decade in corporate America, and it went back to SMU got my at that time, and around two thousand and three, two thousand and five, and finished up then and know it happened to meet a couple of a couple of weather guys there and got to know them and we had very similar interest just in
our desire to launch a business and were part of a entrepreneurship class coincidentally, and this whole idea of being able to pay at the table really birthed out of that class. We took it on as a term project. We really launched the idea and try to come up with something different and unique around solving a problem in
the industry that everybody has. We certainly experienced it as professionals in corporate America who were constantly traveling impatiently trying to get out of restaurants like a lot of consumers today.
And really the whole idea of being able to pay at the table, or what we think about is paying on demand, really launched out of an NBA class, and we really incubated the idea for the better part of a year year and a half, worked on nights and the weekend, sort of a year after graduating over the NBA and went back and I looked around town at Dallas and in other places for funding and you know,
lo and behold. Our professor at that time was a guy by the name of Jack Bam who was a serio entrepreneur had previously bought a concept called Kozamels from Brinker International and had launched and sold another restaurant brand, and so we ended up partner with him and we all launched the business together back in the you know, late two thousands and sort of the rest is history.
Yeah, it's a cool backstory, man. I'm sure the products evolved a lot over the last decade, especially post pandemic.
It has, you know, the pandemic I think was a marker for the industry. It was a marker for us.
You know, we had we had focused a lot in the early days around operational efficiency, really solving the pain of giving consumers more convenience and control the experience, and there was so much happening, you know, more broadly in the industry in retail and other places around self service, and we were really trying to find a way of just eliminating those friction points in the dining experience, particularly
around casual dining. But you know, as time has gone by, we really expanded the platform to really just a full comprehensive Sweetest Solutions to address a lot of the pain points and inefficiencies and the restaurant you know, not just in casual dining, but today even beyond and to find dining, polished casual, and a number of places and really tackling the the a lot of different digital touch points with
a consumer. And so even though it really started as a payment on demand being the killer app, it's really evolved there to become now a self service sort of application for merchants to be able to digitally create and change content, to make it more of a dynamic interaction with their guests, to be able to drive and influence you know, purchase behavior. Obviously we've extended that to include
you know, a lot of the things around loyalty. We obviously do a great job of collecting guest insights and data if you've seen some of the things that you know, other publicly traded companies out back and others are talking about in the industry today. So we collect you know, survey data from probably forty five percent of the guest of the ninety percent now that are actually paying at
the table. And so certainly the adoption since we launch the business has dramatically changed, and covid has done a lot to really create more of that self service environment. And you know, one of the business levers and I think business drivers have changed for a lot of the brands over time, and certainly our focus is continuing to evolve. The killer app still becomes pay at the table, and that's really a lot at the driver of the of the platform.
Interesting the survey data is that are those your proprietary surveys or do you have a third party that integrates into your software.
Yeah, it's our survey platform, Mike, and oftentimes that's modeled after what the brand is really looking to learn from the restaurant. You know, there's somewhat handicapped today in that most brands will only get thirty or forty responses per restaurant per month. We, on the other hand, you know, after going through a deployment, will will give them a thousand plus and so now you start to change the dynamic of the types of questions that you can ask.
And some of our customers will have one hundred and fifty questions and their bank but you know, any given customer may only answer seven. And I think part of that is because it's guest facing, it's real time, it's dynamic.
We know exactly what's on the check. We can make real time decisions about what we want to ask consumers in the mother So when you think about brands that are going through a brand transformation and they're trying to re engineer a menu, and you want to get specific data on an item that they're launching today, but you want to have insights into that in three days, not in two or three weeks. That's the kind of scale that we can bring to your data and your insights.
Are any of your clients able to react fast enough to those surveys to do kind of customer recovery?
Yeah, so that's a great question. You know, today we're not signaling to the brands in all cases. I will say some brands are taking advantage of that where we can message someone in the restaurant when we see a one or two or low score. You can recover those. You know, different brands, like I said, are leveraging the platform in different ways. So it really just depends on how they've implemented. There's a lot of flexibility there to unlock value where brands want to take advantage of that.
Yeah, it's cool. It's a great opportunity. How much faster are your clients earning their tables?
You know, it ranges. We I would say on the low end, we're definitely seeing five minutes plus, and a number of our brands have been very public about that, you know, I think out back most recently, you know, mentioned five minutes. We've historically seen you know, upwards of seven minutes from some of even our customers that went on the platform in twenty fifteen, twenty sixteen. Dard was one of those that was public about some of the early results. And in some cases we've seen nine minutes.
And so it kind of depends on the profile of the customer and how they operate today as to how much of the inefficiencies we can take out of the process. But for us, you know, that's always a win. You know, with some of our more recent products, with the handheld devices that were dropping off at the table as opposed to the tabletop devices that sit on the table, you know, because it's not on demand, you're still waiting on an
employee or server to drop that device off. Your GENA typically see a few minutes us, but it's still, you know, for a lot of brands, very meaningful impact to operational efficiency.
And those drop off as that more geared towards.
Some of the fine dining, it is, yes, you know, are you know, we're finding some fine dining brands like the notion of having servers have tablets they can use for ordering, But in many cases they don't want to lose the hospitality and that fine dining feel of the eye contact and so they but they still want to have a digital payment experience where they can then still get data and still be able to capture sort of payment in the moment when the guest is ready to leave.
And so you know, you're still going to see an impact there, just not to the extent that you would with a device on the table.
Interesting, uh, and I'd imagine tips and guest satisfaction gets a boost.
Tips, Yes, So we certainly see a tip tip increase
in the brands that we're in. The guest satisfaction you know, my well, I would tell you since COVID has probably been an even bigger dynamic because the labor constraints and even I think the talent pool has been, you know, in a much more challenging place for most brands, and so in you know, in a pre COVID scenario where we were very much playing a role in labor savings, and obviously we continue to see wages increase in certain places today, we're becoming more and more I would say,
not an ancillary part of the dining experience has shifted more into a necessary part of the dining experience, because brands know that they need to be able to improve the guest satisfaction because that's a future indicator of sales. And we've proven time and time again that attentiveness improves, you know, server attentiveness improves, your overall dining experience improves, and so we're no, we're making an impact on guest satisfaction.
And you kind of touched on this, but are many of your customers eliminating servers after installing their CIS tablets?
You know, it varies by brand and certainly by geography. Frankly, so if you're really focused on let's say the West Coast, you know, we now have brands on the platform that are very deliberate about having a tablet in the hand of the server that's specifically focused on ordering and moving, and really that frees them up to really focus on hospitality and what I would say are high value engagements with the guest where they're building relationship and they're building
check But then they've separated the things that are more transactional that the guests quite frankly, are more than happy and prefer just to do themselves at scale, which is around payment, loyalty survey, ordering another round of drinks. And so we're seeing more and more in high labor markets that those processes are being bifurcated. Now a low labor markets, you still have some states that are two fifteen, you know,
three dollars an hour. Most of those brands we see are leaning more toward one of the other solution, and obviously high favorability toward tabletop because of the you know, the business model of the ROI that we can provide. So it really depends by geography and by brand.
I'd imagine there's some upsell opportunities too, right, I'd imagine, you know, drink sales would probably increase, right.
Absolutely, yes, And you know, it's part of the beauty of bringing digital to the table as opposed to some of the more static things that are historically been in dining, which are bar books or table tents, you know, in some respects, then the fact that we're now bringing a self service content management platform to marketers is a dream for them because now they can not just take static images, they can create video that helps to create a compelling
story in a very enticing, appetitive pill for drinks or appetizers or desserts. And it's not just about delivering it. It's about delivering with the right message at the right time. So breakfast you may have, you know, one specific promotion. Lunch and dinner you may have different promotions. Happy hours
you may have different promotions. But even beyond just the day part, we can get granular even during that forty or fifty minute experience, so that you're only really focused on seeing desserts during the latter thirty minutes of the experience. And so now we're getting very specific about what we're trying to drive to create impulse purchase and stimulate sales
during that fifty minute experience. And so, you know, the CMO of Miller's Hell House, you know, was recently talking about that and some of the recent press release, and you know, those kind of things are game changers for a marketer when you can give them that kind of latitude down to a day part or down to a restaurant to make it very specific. And I think that's just the beginning when you start thinking about personalization and
the journey to personalization, which everybody's on today. How do you now start to think about marketing to certain types of personas and individuals as opposed to everybody universally just inside the full walls of an individual restaurant. And so that's kind of the journey that we're on.
Very cool, and it sounds like you've touched on some of them. But how does the differentiate itself in an increasingly crowded restaurant tech space.
It's you know, it's interesting. We are we're highly differentiated than what we do. Certainly, you know, from the idea of being guest facing technology that's always available. We're very differentiated from mobile. You know. I heard it said once when we started the business from a CEO of a
very large, publicly traded brand. You said, you know, when it comes to digital, I would rather control the brand experience at the table then relegate it to the consumer to control and opt in on their mobile phone, because we'll never win that battle. And I think he's right, and so I think the screen at the table and on the table really does a great job of engaging the consumer and certainly allow them to opt in in
the way that's meaningful for them. But it gives brand the brand the tools to be able to deliver the right message at the right time to the consumers in such a way that they can control that brand message. So that's highly differentiated, you know, I would say the other thing is we're very much agnostic to partners. You know, we're not the point of cell system, but we partner
with all the point of cell systems. We partner with processors in gateways and loyalty platforms, and so we're not trying to walk into a brand today and change their whole tech stack. We're trying to approach them in a way that's very frictionless and easy just to plug into their existing tech stack to minimize the amount of disruption that they're to incur to be able to opt to a platform like ours that's smart.
Pos changes cause a lot of disruption, so I know restaurant tours try to avoid it at all costs.
It's it's a big lift, you know, as you know, and some brands depend on you know who they are, you know, they oftentimes can view those types of platforms as an expense. And I think what's interesting about our platform is, you know, we can demonstrate that we can drive sales, that we can improve operational efficiencies, we can give you a great guest experience, we can deliver a feedback and a scalable way that you just can't get
at any other place. But we're also a revenue producing platform, and that we create opportunities to drive revenue through our own entertainment offerings, and that becomes a revenue that we then share back with the brands to subsidize the platform cost, to lower the hurdle for them on an ongoing basis.
And so it makes a very very partnership discussion, which we always view ourselves as a partner to our you know, our to our customer, to our customers and to the restaurant merchants as opposed to having a vendor vendor conversation.
What are the biggest revenue growth opportunities this year and next.
Yeah, so we've you know, we've been very focused, Michael historically, which is probably a typical for startup frankly, on a lot of enterprise brands. And today I think we've got six of the top ten already on the platform, and obviously you know a number of those will continue to add over the next twelve to twenty four months, and so there's still a lot of enterprise growth for us.
You know, we have continued to expand our offerings into fine dining, polish casual, you know, not just focused then on one sector of casual dying, but expanding into adjacent markets so that that will be that will create new
opportunities for us. We're obviously have a huge focus on you know, middle market small business, and so that's creating a lot of opportunity for us for growth as well and hasn't been a huge focus for us historically, but certainly, you know, we think that we can improve the operational efficiency for all restaurants, regardless of size, and so we're absolutely doubling down on and being very focused about that growth.
And then I think, you know, just beyond the tabletop and the dining room, we've got handheld solutions now to really position ourselves to be able to take and improve the experience of guests and the team member behind the bar for curbside and so really trying to address all the friction points around payment, loyalty survey regardless of where you are in the front of the house. And so it's really a comprehensive suite of front of house those solutions,
and so that's that's happening in real time. There's a lot that we're working on relative to AI, tokenization and personalization. You know, there is a lot of interest and we constantly hear feedback from brand saying, how can you help us get more data? How can we understand more about
who our guests are? And so we have historically focused on enabling and enhancing I would say, the loyalty members for a brand, which is typically twenty five percent of their guest, Well, what about the other seventy five percent that you don't know who they are? And so now we're very focused on helping them establish a digital relationship with the other seventy five percent because we think that's
the growth engine for traffic going forward. And how because we're sitting in front of the guest, can we help you unlock and understand and build profiles around who those consumers are to enable those brands to be able to target and drive personalized offers to them.
Operations and market a great place to play. Man, it's two of the most important things in the restaurant space. And you're seeing a lot of chains that have struggled over the last decade or so really focus on those two to turn things around.
Yeah, they really have. And you know, I would say probably the big one of the big stories of that recently obviously is Chili's and they've done a tremendous job really marketing and getting people into the restaurant. But you know, I think even they would say, marketing's job is to get them to the restaurant, but then you have to satisfy them and deliver on the promise when they get there, to make sure they come back. And that's really where
operations comes in. And I would say what's interesting about our position is we're really catering to both of those. We're really trying to help them improve the experience of the consumer while they're there, but we're also trying to help marketing understand who their consumers are so they can help get them back more often.
Good stuff and certainty was a term commonly heard on first quarter earning calls. Have Chains pulled back on their tech investments this year?
Well, you know, I won't speak for everyone, I will tell you it hasn't been pulled back from our point of view. You know, this has been a year of tremendous growth for US as was last year, and I think from where we're sitting even looking at to next year, you know, we're looking at a very promising you know,
next twelve to twenty four months. So you know, I think relative to you know, some types of technology that are less proven, I just think they're having to be very prescriptive and a bit more decisive to know exactly where they're going to make the investments to know they're
getting the returns. But you know, for platform like hours that you know, we've got lots of proof points out there now, and lots of brands like Texas Roadhouse and Miller's l House and Chili's and you know, probably four Garden's brands out there today, and we've got a lot that we can point to where you know, many that those brands are performing well. And I think many of the brands that are in a more challenging situation or looking to them and saying, boy, what are we doing different?
How are they moving forward and getting ahead? And so I think it's creating an opportunity for us, frankly, but I can't speak for I can't say that for everyone or.
Your biggest competitors, both for your hospitality platform and more generally for restaurant CAPEX dollars.
Yeah, I think you know, the POS business obviously is a big investment for brands, and naturally that creates both opportunity for the restaurants, but I think it just creates a lot of change management when then they're building, and so you know, oftentimes we find if they're going through a POS transition, it doesn't necessarily mean that they're not
wanting to engage and leverage our platform. It just means that they can only undergo so much change at any given time, and so oftentimes it's as much about sequencing and it doesn't mean not ever, It just probably means not now, and so that ends up being a lot of the conversations that we're having today. You know, there was a point in time where I think we were really evaluating where does mobile fit and where does QR fit and some of those other technologies in a post
COVID environment. But I think where we are today, most companies have sort of pulled back on QR strategies and even APP strategies, because if you think about trying to make an impact to your operation, it really comes down to adoption and if you can't get adoption, then the amount of impact you can have to your overall brand and inside the four walls of the restaurant is minimized.
And because we've been able to get to you know, ninety and in some cases, you know, like Chile's most recently ninety five percent plus adoption now delivering hospitality at scale, and so that that's that's something we feel good about. That you know, was a big advantage for us. But I would say typically it's as much sequencing around pos and change management as anything.
Okay, national force full service brands like Chili's, like we just spoke about, are kind of making a comeback this year. Chili's is skewing the data, you know, but Texas Roadhouse, Cracker Barrel, Cheesecake Factory, they all outperformed QSR by a sizable margin in the first quarter, you know, outside of the easier sales comparisons. You know, what do you attribute their better result?
Yeah, that's a great question. You know. I think they've done a very good job of executing inside of the four walls and really coupled with marketing. I mean, if you look at Texas Roadhouse, they're not as active in their marketing. But they've been very consistent on delivering a a value proposition over the years, and they continue, I think to win with their guests and really knowing who
their guests are. And so, you know, I have a lot of admiration for that group because they really deliver on the promise that they communicate to their guests and their value proposition, and I think they're well positioned to continue to perform, for sure, you know. And in Chili's case, you know, they've just they've put together a great plan I think to really attract consumers, especially those that are looking for value, and the value that they're providing is
really delivering on that. They've done a great job execution, I think, on that promise that they're making to their consumers, and I think they'll continue to win.
Yeah, those two have been fun to follow, for sure. What trends are you watching most closely in restaurant technology over the next two or three years?
Yeah, Look, I think there's I think we're still early days an AI. Obviously, you know, we're investing in it, we're leveraging AI. Uh, but there's so much innovation happening in AI, and it'll be interesting to see what use cases when I think we're living in an age right now similar to almost what you did in the you know, the dot com days. Everything was dot com and today
everybody's attaching AI to everything that they're doing. And so I think it's going to come down to real world use cases that can unlock real value out of the insight that you can deliver. Yeah, I think where we're positioned is really interesting because AI is almost a necessity to consume all of the data that we can collect on behalf of the restaurants at scale, and so you know,
it becomes a necessary ingredient to what we're doing. So that's one of the reasons why we're super excited about it. But you know, we'll invest in that even beyond just a lot of the survey data to drive some of the insights. So AI's got a tremendous amount of potential opportunity. And I would say the other you know, we continue
to hear more and more about guest data profile. How do I learn more about the consumers that are not part of your standard pointspace loyalty platforms, and how do I continue to build a picture in an understanding of who those guests are so I can drive repeat traffic, and so a lot of focus being placed on data where it can help them drive consumer behavior and repeat visits.
And what's your vision for a smart table experience maybe five years down the road.
Yeah, so that's that's always a fun one. Lots of ideas there. You know, we we're thinking about AI in a few different ways. You know, it's not just about automating the experience. It's really about taking some of the information that we can get out of the data at scale and creating what we think about as human and
tell legence. So how can we make the servers smarter about who's sitting at the table before they even approach the table, and anything you can do there to make guests feel like they are known and they're a regular, even though they may not be a regular that goes to a restaurant every single week, we think just adds to the special occasion that they want to have in the sense that they want to be known and understood.
And we think that's got a tremendous amount of opportunity where our platforms, whether it's handheld or tabletop, can all communicate to create an ecosystem where the guest and the team members are sharing information to create that kind of dynamic inside of the restaurant.
Yeah. I love that. Man. Everybody wants to go to a place where you're treated like a regular.
For sure. Absolutely, this is great.
Thanks for doing this, Raymond.
Yeah, thank you so much for having us. Mike, you got it.
I want to also thank the audience for tuning in. If you'd like to learn more about Ziosco to ziosk dot com, z I O s K, and if you liked our discussion, please share with your friends and colleagues. Check back soon for an interview with Mike Lukianoff, the founder and CEO of Signal Flare AI