Delivering The Digital Restaurant With Carl Orsbourne (Ep 188)

In this episode, Jaime Oikle of Running Restaurants.com speaks with Carl Orsbourne, COO at Juicer and Co-Author of Delivering the Digital Restaurant. Topics covered include:

What's in the book
Why restaurants need to embrace digital
Managing third-party ordering sites effectively
Thinking about customer data as the new oil
Dynamic pricing in the restaurant market
Tips for boosting profits
Maximizing kitchen potential with offers
The continuing trend of ghost kitchens
And more...

Be sure to check out the episode! Find out more at Juicer and Running Restaurants.

Thanks to our episode sponsor, Popmenu.

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Delivering The Digital Restaurant With Carl Orsbourne

Coming up on this episode, I speak with Carl Orsbourn, COO at JUICER and the co-author of Delivering the Digital Restaurant. In addition to the book, we talk about dynamic pricing and a variety of other restaurant marketing tips and tidbits.

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Welcome, Carl. Tell me about the book. I always want to learn about books because I feel like writing a book is an undertaking that is well worth hearing about. Tell me about that, what do you have?

The Importance Of Digitization In Restaurants

Hi, Jaime. Thanks for having me on. First of all, I’m really pleased to be able to meet you and your readers. The book, let me tell you, writing a book is no short ordeal. It's certainly something that took a lot of time, but in many ways, it was needed. My background has largely come from being in C-stores. I ran a C-store chain of a thousand sites, and I then moved into more of the startup space at the ghost kitchen company, Kitchen United.

It was there where I met pretty much every big restaurant group, a lot of independents, all struggling with digital disruption, everything that's happening with digitization and our industry. I was speaking to a lot of folks that were thinking about ghost kitchens. They were quite forward in their thinking around the innovation that came from that, but still, there was a begrudging reluctance to throw yourself in fully to the off-premise channel.

When I reflect on that particular moment, which of course was all pre-pandemic, my co-author and I said to each other, “Look, it'd be great if we could get a book to give to our clients or our prospects to help them understand why this thing is so exciting.” We agreed that it's a great idea. “Let's go on Amazon and look for such a book.”

Jaime, no such book existed. After we left Kitchen United, we came up with the idea of the book, which was to try and tell the story as to why digitization is so important, why the off-premise channel is something that's going to be a material add to the restaurant industry, even though it adds some friction into how restaurants run today. Of course, as we were starting to write the book, the pandemic happened.

I tell you one thing, Jaime, if ever there's another pandemic, write a book, because if you have writer's block, you can't go anywhere. You just got to keep going. It was a really interesting space. We interviewed over a hundred different executives, technology companies, and restaurants. We tried to tell the story as to why this is something to be excited about, and the book has become a bestseller in the US and several other countries.

We've just spoken to the Romanian restaurant association and are going to get it translated into Romanian, which is great. We've got another book coming out. It's called The Path to Digital Maturity and comes out later this month. It's going to be something that explores more about how to think and how to digitize your restaurant because now that we're out of the pandemic, we're in a place where the restaurant executive is having to think about, “I had to do what I had to do to survive through the pandemic.”

A lot of the decisions and choices that were made meant they’ve now got a very convoluted tech stack. That tech stack is cumbersome and perhaps not being optimally used. Of course, we're in tough times as well, potentially a recessionary environment pretty soon. If you take that into account, then you've also got the idea of how can I streamline the choices I'm making around technology.

This book is more about finding your spot on the path to digital maturity. It's got a bunch of how-to tips and a worksheet at the back of each chapter. It's helping restaurateurs find their spot and find what they need to do to progress their maturity in the space. There will be certain points where they say, “You know what? I'm done here.”

I don't want to go any further down this particular path, but we go all the way down to something which we say is the new restaurant category, the digital restaurant. We also talk about what technology companies need to do as well. It's been great. Writing a book is fascinating. It's enabled me to get onto several different areas where I've been able to speak about this, both in conferences here and abroad. It also led to JUICER as well, we're checking more about it.

I want to hear more about that. I wrote down a bunch of things as you were talking there. Definitely, the digital disruption was the key point that I wrote. Restaurants felt it coming for years. You're supposed to do this, you're supposed to do that. There's resistance in restaurants. I'm not telling you anything you don't know and anything restaurateurs don't know. No matter what mindset you come from, it's confusing because there are so many companies now that can offer solutions.

I can see restaurants getting overwhelmed. The pandemic changed everything. First of all, you already know, it was a panic. We had to get into all the digital stuff, online ordering, and delivery. For a few more minutes, talk about that aspect. People weren't prepared for it. They made some quick changes. What were the most impactful quick changes you saw restaurants make two or three years ago that got them up to speed?

The Role Of Third-Party Marketplaces

Every restaurant became a ghost kitchen because they weren't servicing their kind of on-premise guests. Restaurants had to make a very clear decision. They either had to shut themselves down, and sadly, 100,000 restaurants through the pandemic closed their doors forever. Here's another stat for you, before the pandemic, the US was second only to Japan in restaurants per capita.

Every restaurant became a ghost kitchen during the pandemic, facing the tough decision to go online or close down.

You could argue that it was already oversaturated with restaurants and choices for guests, which of course only adds to the competitive intensity for an already very difficult business model. In that sense, we're coming out of the pandemic, perhaps in an even better environment than before, but the answer to your question would be, they got themselves online.

They got themselves on the third-party marketplaces. Now, these third-party marketplaces often get a bad rap. There's a good reason for that bad rap, but similarly, I can assure you that without them, there'd be far more than 100,000 or so restaurants that would have closed their doors because without those third-party marketplaces, many restaurants would never have been able to continue.

Part of the trick in this is understanding that it's not just about being on them, you have to also optimize your presence on them. That could go from anything as simple as really good consistent photography, through to understanding that yes, you do have to advertise on these platforms to be able to stand out.

A Doordash to actual Uber Eats these days is like one of those 600-page Yellow Pages books. How are you going to find a restaurant in that kind of mixture? You have to be able to find a way to be able to stand out. One of the tips that we have in the new book, The Path To Digital Maturity, is that even spending just $3 to $5 a week and maintaining a presence on spend for advertising your presence on a third-party marketplace will teach the algorithm to continue to recognize that your restaurant is higher than someone that isn't.

Even if you take yourself off for a week, it's teaching the algorithm the other way as well. There are little bits and pieces that I think over the last few years, restaurants have perfected that understanding of how to optimize their presence. Now we're getting into more of the debate around customer data. I think a British economist about 20 years ago said that the new oil is data.

He's right because customer data is one of the things that often gets left in the background of this discussion. Everyone always wants to talk about the razor-thin profit margins you get through a third-party transaction but you're also not necessarily getting that customer data. Make sure you've got a direct channel, a channel where customers can understand more about you and your brand, where you can understand more about them and can perfect the offers that they are going to put in front of them.

That, I think, is going to be the next big focus area, certainly for the next few years, even from this point. The trick here is then creating a frictionless customer experience, that is the number of steps it takes from the customer coming onto your platform to the point when they check out. How many steps is that relative to what it takes for them to do the same on a third-party marketplace?

Frictionless experience, and then the ability for the restaurant to convert customers that perhaps have discovered your restaurant for the first time through DoorDash but now want to find out how can I develop that relationship with you. You have to be able to find mechanisms like giving a free entree away or giving them something, which might even be a loss leader for you and your restaurant for that next transaction, but only if they purchase through you and your direct channel.

Those two things, the third-party optimization and developing a party frictionless channel with a great conversion approach. Those are the two areas that we cover in the first two chapters of my new book, but also I think are probably the areas that need the most attention for restaurants up and down the country today.

Optimize your third-party presence and develop a frictionless direct channel. These are crucial to restaurant success today.

Yes, I will echo the frictionless part as a dad with three kids, we happen to eat out often. We're on the move. The phone becomes both a search device and a lot of times the ordering device for fast casual and so forth. Some folks do it dramatically better than others. That whole aspect of once I'm in the app, I ordered this recently. It's probably what I'm going to order again. Bing bang, boom in the cart, I'm out.

Things like that make a big difference versus going through pages and pages and redoing it every time. There's a lot to be said for the experience that the user has and that cannot be let down. In that same vein, I want to use optimize differently because, on the phone and mobile, there are ways to optimize the experience to one, make it easier, but two, to sell more. Have in your travels talked with the book, how are people using it to sell more and make recommendations, learn from customer data that you already talked about? Any kind of good tips to share there?

Yes, I think so. The way I would express this, and let's come back to that comment earlier about why are restaurant owners so reluctant about digitization, especially delivery. They're reluctant because they're not usually technologists. They love food, they love hospitality, and they love seeing the smiles on their customer's faces when they're dining inside their restaurant.

Restaurant owners love food and hospitality, not tech. Their passion is seeing customers' smiles, not digitization.

That's what drew them into this line of work. Delivery doesn't get them anything to know about who their customer is. They don't get to see the smiles and they are also getting an experience that is less from a profit margin than what they'd get from their on-premise. You can understand that reluctance. Let me position it like this for you.

Enhancing Customer Experience With Data

The very best server experience that you've ever had is where someone has remembered you, Jaime, and your kids that come in, they remember that the kids have a food allergy here, or that they love this particular type of wine that you and your partner might enjoy. In that sense, when you remember those things, it's a very exciting opportunity for that server to be able to then give that experience on the second or third showing.

When they do that on the second or third showing when a customer comes in again and they remember, they make them feel like that customer is the most important in the entirety of their experiences. With that in mind, imagine you're having a great experience where the server remembers what your kids ordered last time or what you and your wife’s favorite wine is. Those little moments are the things that create our best experiences in restaurants because they make you feel special.

Now, that's great, but the best server isn't there on every shift. You might not always have the best server working in your team across every single one of your restaurant locations. With customer data, you can make that experience happen every time. I think that is the piece that is so exciting about if you use customer data correctly, how can you indeed make that happen?

The best server isn't always on every shift, but with customer data, you can create a personalized experience every time.

What do I mean by that? Think about the best e-commerce company out there today, Amazon. Jaime, your homepage on Amazon is completely different from my homepage. Even where you're now starting to see on Amazon recommended for you or buy this again, that will be the future of a digital menu where they recognize that I might be gluten intolerant.

Why put any items on my menu in front of me that have gluten in it? Makes no sense at all, does it? If I'm there, order it. Things like that, which again, you can differentiate on a digital platform. Now, are some restaurants starting to do this? They are in a way. Taco Bell, for example, has the veggie mode on their kiosk on the premise, where you can actually press a little button and suddenly all you see are menu items that just have vegetarian-friendly items.

I think those are different things that can happen when you can use customer data but if you can use it to create a one-to-one relationship, that is the journey we're on. We're on a journey now where we're going to be able to get to a place where customers feel like they're getting an Amazon-type experience, not there yet, but we're heading there.

I'll just digress for a second. My Amazon page loves me because I swear to God, we're VIPs and we order everything under the sun from those people. Yes, they are the classic example of who does it well. Suggest one thing, you like this, you might like that. You come back, you've just looked at what you may be interested in.

Those are the things that encourage sales. Everybody can learn from them without fail. Let's go to juice it for a little bit and we can ping pong back and forth to other stuff, but let's talk about what you guys do there. I'm very curious to hear that because that's taking tech in a different direction as well. What have you got?

My co-founders have all come from another industry, hospitality travel, and in many ways, Jaime, when you think about technology disruption, well, hotels and airlines have been through a digital disruption themselves. It just happens to be several years earlier. My co-founders, Drew Patterson and Ashwin Kamlani, they're both from the hotel industry, and Drew was the previous CEO of JetSetter. He was the founding CMO, I believe, at KAYAK. He’s seen this thing before.

He spoke to Ashwin, our CEO, and he said, “This thing that's happening in restaurants right now, it's pretty interesting, isn’t it? Because when you see what they're going through with these marketplaces and the pressures, it's very similar to what Expedia and KAYAK were doing back in the day. With that in mind, why don't we think about what happens in our industry and see that that's probably going to come in our direction as well for restaurants?”

In that regard, he said, “What's the next thing?” The two of them just said, pricing. When you've got this ability to take dynamic pricing in the same way as we saw it in hotels and airlines, then why couldn't this happen for restaurants too? They reached out to me, it was during December time, they just read the book and we were having a chat about it.

I said that this makes so much sense because, much like we were just talking about with the customer experience, prices also allow you to help restaurants. It also helps you help the guest experience too. You might go, “What do you mean by that?” I wrote an article for Nation’s Restaurant News in June of 2022 with Meredith about the idea of throttling and how throttling is bad for restaurants.

Now for your readers who perhaps don't know what throttling is, it's where you turn off your digital gateway for orders. You turn off your marketplaces or you turn off your direct channel because your kitchen is too busy. It's a busy Friday night and you're focused on your on-premise customers. I advocate in that particular article to say that this doesn't make any sense at all. You would never shut your doors on a busy Friday night to your on-premise guests. Why on earth are you doing it to your digital guests who might be discovering your brand for the very first time?

Dynamic pricing is something that can help with this. By raising the prices, maybe just by 50 cents, 60 cents for an item, you might quell some of that demand a little bit and therefore really only get the customers that want to order from you but reduce the demand a little bit in those periods, but also maximize the profitability as well, wherever possible.

Similarly, on a Monday at 03:00 PM, or maybe it's slightly earlier in the afternoon when a couple is thinking about what they should have for the family dinner tonight. If they are incentivized to order ahead at a slightly cheaper price, and again, perhaps through a first-party channel, maybe dynamic pricing can also then drive volume during the shoulder periods of key demand periods.

What Juicer is doing is we're bringing a data-driven approach to pricing. We take a year's worth of restaurant POS data. We put that through our data scientist team and the algorithms that we have to be able to recommend price changes based on the elasticity determined by every product on the menu. Some products are very elastic and very responsive to price changes, and others are not. In a very controlled manner, we then use that to make price changes on the menu for off-premise channels.

What we've been able to find, at least in our trials, because the company's only been up and running for about a year now. What we've found so far is results of anywhere between three to 6% improvement on bottom line off-premise channels, which is huge when you think about what the next margins are already today. We're excited about it. There's a long journey ahead. The product roadmap, for example, is going to start to incorporate things like weather, when it's a rainy day outside, does that affect what your prices should be?

It certainly might affect your demand across different channels. What about when a big event is on? We got the Super Bowl, those types of things. How should that change your pricing? What about when you are factoring in the cost of products? When your suppliers are increasing prices on certain items, how should that change things? What about the delivery time? Is a customer willing to pay a little bit more if you can get something out of the door five minutes earlier than another location?

All of these different pieces, as well as competitive pricing, are great ways of being able to determine the most optimal price point. When you think about how restaurants determine prices today, they're using blunt instruments. It's not a fine art today. We're trying to help restaurants price more effectively and ultimately create a situation where their restaurant doors are open both on-premise and off-premise and create a better guest experience.

With data-driven dynamic pricing, restaurants can keep their doors open both on-premise and off-premise, enhancing the guest experience.

The Concept Of Dynamic Pricing

It's an interesting space that you're in and we're at the beginning of it, but it already happens in a lot of other places. You talked about hotels and airlines, you pay dramatically different prices for the same hotel room for reasons we never know as the customer. Same thing for the airlines. Of course, the landscape was here and doing stuff, but you never know what that person is paying for that seat next to you on the airplane. It could be twice as much for the same seat.

Same thing in the hotel room. They could be paying $50 less or $50 more. We've accepted it as consumers. You would think it should be fair. You should think everyone should pay the price. It does not happen in those industries. It does not happen with tickets for events, for football games, or concerts.

People pay dramatically different prices for the same experience. Then they pay dramatically more in the sub-hub secondary marketplaces for the same experiences. In those instances, the artist is not always able to capitalize on that. Meanwhile, the middleman capitalizes on that. I'm just talking offhand because of stuff you already know, but restaurants, how can you capture the full dollars that are available?

Some people are completely flexible to pay more on a Friday night for a special celebration at a restaurant that they want to spend at. You don't always have to charge the same rate. I'll give you a super basic example of this, I was out your way in California last week and we were in new restaurants. We walked up to one place and the menu board had lunch prices and dinner prices.

Same thing, $16.95 at lunch, $19.95 at dinner. I know that it's not an uncommon thing, but it's also like, “It's the same thing. I'm just coming later and you're charging me more because it's dinner.” It's not a completely new idea that prices are different at different times, but to be dynamic on a phone where the price is never really set or on mobile or on all the stuff you're talking about. I want you to elaborate more because you know much more about it. The price can just come onto the phone and I could say, “I paid $7.95 last week for my hamburger, but it's $10.95 today, but I'm hungry.” Boom.

I think that example of lunch and dinner prices is a great one. I would say, “Happy hours,” is probably the most obvious dynamic pricing moment. Where you have prices low during a particularly low-demand period, but also a great opportunity to grow the average trade value because people will buy more. One thing I will correct just on our thinking around it is that we don't anticipate such sizable shifts that you might see in a hotel or an airline ticket.

We don't see the equivalent of Uber surge pricing being the right thing to do for restaurants because typically when you're ordering a hotel room, you're doing it a few weeks ahead or a few months ahead. Therefore, you've got some time to make the right choice. Similarly, there's a limited amount of supply at times.

When you're on your phone and you're on DoorDash, you're a few clicks away with your thumb from an alternative. That, I think, is probably the reason why having too dramatic a swing in price is going to be something that would negatively impact the guest experience. We're very purposeful about not impacting the guest experience.

Almost to the point where we would say when we've monitored guest sentiment ratings across those that we've been doing this with so far. We haven't seen any reference to price, any reference to value come up in review data, or anything attributed to ratings. That therefore means that the ranges we're operating in and when we work with a restaurant, we ask them, “What's the range that you'd like us to work with?” “What are the guardrails here?”

Some will say, “I don't want you to go any less than negative 10% and I don't want you to go any more than 15%.” That's fine. That allows the algorithm to work within those boundaries and also protects the restaurant's brand because we don't want a situation in which a customer is lost for good. We want to make sure that this customer gets a great experience during the time that they're there in front of that particular restaurant.

One of the ways we do that when we're doing trials is that we focus on one category first. We focus on that one category. That way, even at maybe a 10% or 12% price increase, if the customer feels they're seeing an abusive price point, they can category switch to another category and still get something from that restaurant.

We're not seeing that in the evidence so far, but we're making sure that we are very mindful of protecting the customer experience throughout all of this. I think it's because of the plentiful amount of restaurant choices that someone has, especially in the digital environment, that you're not going to see surge pricing become a prevalent force, at least for restaurants.

The Future Of Dynamic Pricing In Restaurants

It's a very interesting point. You definitely can't go through dramatic swings of double prices and so forth, but there's that flexibility where the customer is willing to pay both up and down. Perhaps even more in some cases for sure. Very interesting stuff. I want to stay in touch. I want to bring you back because I want to talk more about this stuff. Anything as we close that we didn't touch on that you want to touch on? If you want to send them to find the book, send them to the website. What do you call it?

Please check out, I'll give you both websites. The book is DeliveringTheDigitalRestaurant.com. If you head there, you'll be able to see not only the blog that Meredith and I put out, we have a podcast of our own, Jaime, called, it's now been renamed The Digital Restaurant, but it's better known as the Monday Minute.

We spend ten to twelve minutes every couple of weeks talking about the top headlines affecting restaurants, off-premise and technology that we think the average restaurateur will find of interest and will help them on their journey. At the same location, it's your direct channel, if you will, to be able to get both copies of the book.

We've got a special combo promo right now with the original book and the new one that's out later this month can be bought for $30. Go to DeliveringTheDigitalRestaurant.com to get that. If you'd like to learn more about dynamic pricing and what we're doing at JUICER, then head to JuicerPricing.com. There, you'll find myself and Ashwin, our CEO, talking about the themes of dynamic pricing, why we're doing what we're doing, and the approach.

You'll find also when you connect with us on LinkedIn, we're very transparent about the journey we're on in building a business. Anyone who's building a business, I think, will find it interesting because we're talking about the challenges that come up on that journey. I think it's kind of refreshing to have a startup entrepreneur being as transparent and vulnerable, if you will. It's a good way, we've had a lot of exciting feedback from folks who are in a similar position. I'd love to encourage folks to check out JuicerPricing.com and of course, reach out to me on LinkedIn if you'd like to learn more.

The space that you're in is, 1) Very exciting, but 2) I'm sure it's fast-paced, changing, and you're climbing. You hit a wall and then you have to pivot and make some changes. It's interesting to see that journey. Folks, check out DeliveringTheDigitalRestaurant.com. Get that book to get into some of the tips they're talking about and then JuicerPricing.com. Carl Orsbourn, CEO of Juicer and author of Delivering the Digital Restaurant. Thank you for being with me. Folks, stay tuned to us here at RunningRestaurants.com for more operations tips, marketing, service, and more. We'll see you next time. Thanks much.