The Surprise Way To Drive Sales & Profits At Your Restaurant (Ep 201)

publication date: Oct 30, 2023
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author/source: Jaime Oikle with Zack Oates
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Running Restaurants | Restaurant Sales And Profits

 

Join Jaime Oikle from RunningRestaurants.com as he speaks with Zack Oates, the Founder and CEO of Ovation. Zack's energy, enthusiasm, and passion are off the charts in this episode. So, what's the answer to the question posed, "What is the surprise way to drive sales and profits for restaurants?" It all starts with FEEDBACK says Zack.

 

Listen in as we dig deep into:

 

Be sure to check out the episode. Find out more at https://www.ovationup.com and https://www.runningrestaurants.com.

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The Surprise Way To Drive Sales & Profits At Your Restaurant With Zack Oates

Ovation Story

We've got a great episode for you with Zack Oates, founder and CEO of Ovation. Zack, welcome. Thanks for joining in.

Jaime, so glad to be here, man.

You've done this. You've been on. We're going to go unscripted, but I want to start with your story, Ovation's story, Origin's story, and I'll just kind of ping-pong and go from there. Start us off.

Starting, I grew up in restaurants. My first job was at Friendly's. Love that peanut sauce. How good is that? That was my first job. My dad, when he retired from his first career, got into a bunch of businesses, car washes, cell phone stores, and restaurants. I was able to see it on both ends of the spectrum, the restaurant. I got into technology and built and sold a couple of tech companies. Then I wanted to get back into restaurants. I love this industry.

Think about it, Jaime. You have got some of the most fun, most crazy people in the world in this industry, because you’ve got to have a couple of screws loose to open up a restaurant, and I love the restaurant industry. I was thinking about my days working in the restaurant. One of the things I remember is that the goal of a restaurant is to create a great guest experience every single time, but the tools to measure that experience, they suck. No one likes to take a long survey. Online reviews are bashing these restaurants down.

What are they going to do? Go up to the restaurant and go up to the manager and say, “How was everything?” At the end of the day, what happens when we do those table touches? You go up and you say, “How was everything?” If it was good, you say, “It was good.” If it was bad, you say, “It was good,” then go leave a bad review. There needed to be a better way to engage with the guests to open that line of communication. The beauty of being in restaurants is that we can see what other industries are doing. They have things like live chat, real-time communication, and AI.

That's what we did with Ovation, a two-question survey that we ask after somebody places an online order or if someone scans their loyalty app. The questions are really simple. How was everything? They have five emojis. If they love it, we push them to leave five-star reviews. We push them to schedule catering orders. We push them to download the loyalty app if they haven't already. If they didn't love it, we ask them why. That feedback is private to the staff, and through the Ovation app, they can respond to that guest in three clicks.

Now, Jaime, here's the magic. We take all of the public reviews, we take all of that private feedback, and we use our system to break it down into over 30 scores per location so you know exactly what to fix where, so you know that you have an order accuracy issue on Wednesdays in Sheboygan because we're getting so much data. Even though it's unstructured, by getting all that data, we're able to run analytics on it and make it actionable while helping you retain that guest in real time. That's how we started combining my restaurant background and my passion for tech.

Feedback Engagement

I can see it there. You hit on a lot of the pain points at restaurants. I started scribbling because you hit a bunch of things. We'll go back to a few of them and we'll keep going. First of all, I want to push them to do something else. That aspect of it is the engagement you can do with tech versus if it was a comment card. It is what it is and you drop it somewhere. You're taking what they do, they give the five stars, and now you're pushing them down a funnel to do something else that's beneficial, or vice versa. They're not giving a great comment, so you're pushing them a different way. How have you learned that process to manage that, and what are some of the trends you're seeing with that aspect of it?

First of all, I just want to say this. For all restaurateurs out there, humans are not bad. The reason I say that is because if your only way to get guest communication is through your Yelp reviews, then you probably think humans suck because people are three times more likely to leave a negative review than a positive one. When you get upset that somebody leaves you a negative review, you should be getting upset. Every negative review loses you 30 customers. It hurts a lot. What we’ve found, though, is that when you lower the engagement threshold, when you lower the effort that it takes to give you feedback, people are much more willing to give you feedback. For example, someone is using a receipt survey. Like one of these guys here where it's like, “Go to this website, type in this 26-digit code, this four-digit store number, complete these 75 questions within 24 hours of your visit, write it on the return receipt on this coupon, bring it in within seven business days, and you can get a dollar off your taco.

 

When you lower the effort it takes to give you feedback, people are much more willing to give you feedback.

 

Very compelling.

Come on, right? Who's going to take these? I'll tell you who, crazy people. People who have 30 minutes to waste to get a dollar off their taco or you have people that are doing these, like they'll get emailed a link. How did we do? Fifty questions in this survey. Look, when you're taking that long of a survey, I don't know, Jaime, when was the last time you took one of those long surveys?

Dude, I won't do it. No, it's zero.

Zero, right? I mean, I talked to someone yesterday who said they did it because they wanted to get a free cookie. Guess how accurate his answers were. Give me my free cookie. What we're finding is when you lower that threshold, people are willing to give feedback. What we find is that 80% of your guests are going to give you five stars. That's the thing people ask me all the time. They're like, Zach, “I get the real-time feedback for the unhappy guests, but no one that is happy is going to take your survey.”

I'm like, “No, 80%,” which is why we did a study with a very large chain. They put us in some locations, didn't put us in others. They picked locations that are in the same city, with the same marketing budget, similar revenue, similar store size, and similar customer satisfaction before Ovation. They ran us for four months against a test group. At the end of those four months, the Ovation locations had three times more online reviews. They had 1.1 stars higher in online reviews, and to get this, the non-ovation locations increased revenue by 2%. The Ovation locations increased revenue by 11.5%.

What we're finding is that when you're focusing on guest feedback and when you're driving those happy customers to do something that's going to help you, they're willing to do it. They really are. You just have to make it easy for them. You cannot make it so hard all the time for people to give you feedback. The easier you make it for them to give you feedback, the easier you make it for them to go online, to place orders, to buy merch. They're willing to do it. You just need to make it easy for them.

Let me ask you a natural follow-up question. What makes it an easy process?

For example, when you click on Ovation, if you click the five stars or the heart eyes emojis because we have five emojis that we use. The reason that we know we've tested NPS scores, we've tested the 0 to 10, we've tested one to five, we've tested five stars. The emojis get the most accurate data. It's not around like, “What was this? Maybe that, maybe this.” It's basically how you feel about this. It doesn't matter what happened. What matters is how you feel about it. With a double heart eyes emoji, if somebody clicks that, most other surveys, what do they do?

They say, “Great, can you answer these 49 additional questions about your experience? What does Ovation do?” We say, “Great, can you share your experience online?” When they click it, boom, it drops them right into leaving a Google review, a Yelp review, or a Facebook review. If they click to schedule a catering order, boom, it drops them right into that catering order place, right into the merch store, and right into the link to download the loyalty app. We're removing clicks.

By removing clicks and adding options in there, you're able to drive that revenue. The other thing that we found, Jaime, is that people will take this survey every time they come in. Now, no 50-question survey is getting taken twice in a week, much less twice in a month, much less twice ever from the same guest, unless they want that dollar off their taco. With Ovation, they're willing to give feedback because they know it's quick.

What is the trigger though? What is the way they get prompted for feedback? Is it an app, or is it a QR code? What's that initial interaction?

What we do is we try to be wherever the guest is. You go on your mobile phone to CaliBBQ.media. At the bottom, it's going to say, “Have a question, click here to text us.” You click that button, and it opens up into a text conversation. If you have feedback for them, it just goes right into the Ovation system. That phone number is powered by Ovation. To the guest, it's just a text conversation. To Shawn Walchef, it gets plugged into Ovation and he can follow up on the trends of what's going on.

Somebody calls the store. Press 1, press 2, press 3 if you have feedback, and they'll get a link texted to them of the Ovation link. If they dine in, there's a QR code on the table. How did we do today? Two questions to enter for a $100 gift card. We have bag stuffers for third parties to convert them to first. Then we have fifteen integrations with online ordering and loyalty systems where they will get a text message as soon as they get their food.

Company History And Scope

The answer is there's a bunch of different ways to start that interaction process. That's what I wasn't sure about. I want to come back to the 3rd to 1st party thing in a little bit, but how long have you guys been at it? It sounds like you work nationwide, you can correct me if I'm wrong but tell a little bit more there.

We're in every single state in Canada. We started in 2016, and we were doing a lot of stuff for a lot of people. We had some partners that wanted to push us into other industries, and the product started to get fat and warty, meaning that there were just things on there that weren't for restaurants. During COVID, we cut out everything that was not feedback for restaurants. That's when we had a rebirth. It took us 3.5 years to get 300 locations. Then over the next two years, we added 2000. We've been growing quickly.

We work with hundreds of brands nationwide, from brands that every single person in America has heard of to brands that are just down the street from here in Utah. We primarily focus on multi-location restaurants. The whole goal is like, “How do we help them to get more feedback, more reviews, more revenue?” That's where that's where a sweet spot is. Some of the great brands that we love to work with, they're brands that maybe they were using a feedback tool before, but they just realized that “I cannot do these long surveys anymore.” Or there are people who have wanted to do long surveys or secret shops, but just realized how dumb they are. You know what I mean?

Company Growth And Trends

I'm curious about one thing, many things, but in this case, you're getting a lot of learning. You're getting feedback from a wide swath of people, different concepts, different geolocations. What trends are coming out of it? What actionable things are the operators bringing to their next training session, to their next pre-shift meeting? What are some of the things that pull out and kind of success stories, case studies, and so forth? What do you think?

We had a pizza restaurant that had 30 locations, and one of their locations was giving them issues. It had lower satisfaction, lower reviews, and lower revenue, and they weren't sure exactly why. After using Ovation, we were able to show them that that location has a food prep issue. The reason we were able to show them that was because our system tagged 28 pieces of feedback per week having to do with food prep.

Either it was undercooked, overcooked, messy toppings, uneven toppings, too much cheese, or too little cheese. It just was all over the board. The average of the 30 stores was five complaints a week. This one had 28. He went in there, and once he used Ovation and saw that issue, he went in there, retrained everyone on how to make pizza, and complaints in one week went from 28 to 3.

Okay, big.

That is a huge indicator of guest satisfaction. When you look at making these operational changes that improve guest satisfaction, then there's somewhere between a 2 to 3-month lag of guest satisfaction and revenue. You can see this tried and true. When someone's online reputation takes a huge drop a couple of months later, their revenue is going to take a drop. With Ovation, we can see that as well. There's a correlation between guest satisfaction and revenue. It's not like this, “People are unhappy today so they're going to stop coming in tomorrow.

You can see what happens as you create this well of dissatisfied customers. What do they do? They start leaving reviews and losing your customers. They start telling people, losing customers. They opt to cater somewhere else, losing customers. They tell people, “Let's try another restaurant,” losing customers. Over time, every one of those bad experiences creates a drop in revenue later, which is why I tell restaurants all the time, Jaime, this is hand-to-hand combat. We've got to get these guests to come back because there are too many other options out there.

Managing Bad Experiences

There's way too many. This goes right to where I want to go next. Bad experiences happen. You're getting that feedback. Do you guys have an education part in what you do, maybe the answer is simply yes. How do you help guests or train your customers to manage that bad experience? It sounds like feedback is coming into them. People can overreact and yell back, which is not a good idea. What are some of the ways that you teach to manage those bad experiences and kind of convert them for the future?

That's a great question. First of all, what we do is we've found about seven templates that will cover 95% of restaurant issues. Now keep in mind, you've got 80% of your guests that take the Ovation Survey who are saying, “We love it.” They're automated. Your managers don't have to do anything with them. Now, if they don't have a good experience and they give you written feedback, 95% of that feedback could be handled with what I call “one thumb.” With the Ovation app, your manager clicks three buttons, and the guest gets a personalized text message using their name and the manager's name, along with an apology for the specific concern, such as order accuracy, cold food, soggy food, late food, and they can automatically attach a coupon as well to track when that guest comes back.

Now, 5% are going to be what I call “two-thumb answers,” where you're going to have to type something out. Those are very rare things. It doesn't make sense to create some AI template for. The thing is that by making it so easy to respond and by using our proven templates, we're able to get over 40% of unhappy guests to come back within a couple of months. Now, compare that to online reviews where you get 6% of people to come back if you're lucky, and you don't know when they come back because what am I going to do?

I'm going to email you a coupon, and then how do I know when you use that? How do I know that you're you when you use that coupon? With Ovation, it's all tagged to your phone number, and as soon as you use that coupon, I can see and I could engage with you one-on-one. That old style, Matra D, or Sam from Cheers, everyone knows your name. Team, we've gotta get back to that. We've got to get back to hospitality. I've got Danny's book, Danny Meyer's book right up on my shelf. Why? Because hospitality is more than just a good tool for restaurants. It's a way of business.

 

Hospitality is more than just a good tool for restaurants. It's a way of business.

 

Just because you're hiring teenagers who don't care as much as you do, doesn't mean that they cannot care as much as you do. Again, just like with your guests, you get the feedback from your guests by making it easy. You get your staff to respond by making it easy. If you could say, I'm going to help you be an awesome manager and win back any guests who have a problem with three clicks, I just need to push these buttons and you can do it. They will do it. We've found that time and time again, they want to be good managers.

I wrote down that buzzword, “one thumb option.” That ability to do it quickly. I'm just speculating here, but like, “That issue, that, that,” and then it assembles the email, the text, whatever, like that's a big deal versus traditionally. “I see an email. Man, I'm busy. I got to respond to it. I got to sit down. I got to type. I got to recreate the same few sentences that I've done twenty times. I should have managed. Wouldn't it be good if I did a template?” That's a big deal. I didn't realize that. I do like that. Sometimes you need two thumbs and you have to type something out.

Think about this, Jaime, right? You could handle five conversations at a time on Ovation. How many phone calls can you handle at the time of an angry guest? One, right? It takes about fifteen seconds to do a two-thumb response. It takes six and a half minutes, on average, for a customer complaint call. What we're doing is not only are we giving guests a chance to vent, but we're reducing those guests that are calling during the peak hour when you don't want your managers dealing with an upset Ken or Karen. Then they can handle it as soon as the rush is over, they pull out their phone and respond to the three people who had issues.

One thing you asked about with Trends is if you want to up your game. One of the big things that we found is you are six times more likely to get negative feedback about order accuracy off-prem than on-prem. Those off-prem order accuracy issues, they are ragers because if I order three burgers and I get two, it sends you into a tizzy. Granted, and people are like, “Calm down, it's a $3 burger.” I'm like, “But let's look at the vending machine principle.” When you put a dollar into a vending machine and you get your chocolate bar out, Jaime, do you go and tell all of your friends about that?

No. I see where this is going.

If you put a dollar in and two candy bars come out, are you going to tell a couple of people? They'd be like, “I got two candy bars, that's cool.” Now, Jaime, if you put a dollar in and your candy bar doesn't come out, that shirt is getting ripped off, that vending machine getting carried over your head, you're ramming into it. You are furious for the rest of the day. It's a dollar, but it's the principle. Humans hate to feel fleeced.

There's a couple of places we order from and we call it the surprise. You get the drive through, and you come back home and it's literally a surprise. What did we actually get versus what we ordered? You're like, “They screwed up again.” It's $2, it's $3 of that. It's not the end of the world, but like when it's not what you wanted to eat and you're already home and it's ten minutes later, you're not going back. You're pissed. You're not happy. It's a big miss. It's something simple that you should be able to solve 99 points something percent of the time. You probably have a better number for it.

Look at Chick-fil-A. They are a machine of accuracy. No, granted, they’re not a cheesecake factory but why is it that they are in the industry reports? They're over 10% higher with order accuracy than the next closest brand. They care, they take time, and they double check. We have to train our people. We have to expo because that creates an experience where you're losing trust. If you break it down, Jaime, what is loyalty? Loyalty is I trust I'm going to get what I asked for. I trust that they're going to be the same every time.

You've got your base level of loyalty, which is called convenience, which is, “It's on my way home. It's cheap. It's easy to get to.” You have your next level of consistency, and that's where trust comes in. Then you have your top tier of loyalty. This is what I call the three cons. You have convenience, consistency, and the top tier. This is where you get raving fans, which is connection. Are you connecting with your guests? Do they care about you because they know that you care about them? How do you show that you care about them? You respond to their feedback.

 

Your base level of loyalty is convenience. The next level is consistency. That's where trust comes in. Then, you have your top tier of loyalty, where you get raving fans, which is connection.

 

You ask for their feedback. You make it easy. Not 30 minutes for a dollar easy, but two questions easy and to say, “No, I do care, Jaime, about what you think. I would love some feedback.” For example, after this call, I'm going to ask you, Jaime, I'm going to say, “Jaime, I'd love your feedback on how that podcast went.” I genuinely want it because you're someone that I respect who's done 200 plus of these things, and you've seen a lot. I'm going to want your feedback. That's going to, I'm going to be able to learn from you and connect with you, and then I'll be able to improve later. I think that's what we need to do as restaurants. We've got to get better at that.

Steve Young Connection

Good stuff, man. I'm going to go a little sideways because I saw something on your site that just intrigued me on your board of advisors. Steve Young. Quarterback, great. San Francisco is just a legend. Steve Young, what's the connection there? What are you doing?

My dad, his first career I mentioned earlier was football. He played fourteen years in the NFL, three Super Bowls, and five Pro Bowls. I mean, like the guy's a beast. He still has just solid abs. Works out six days a week. Anyway, he played with Steve in college and then ended up playing with him at the 49ers as well. They played together. When I was living out in San Francisco for Ovation, I called up Steve and said, “Let's grab lunch.” By the way, quick story about him. He is such a good guy, but he's super busy. I showed up at his office three hours early so I could sit down in the cafe and do some work while I was waiting for him.

His assistant called me and said, “Mr. Oates, I'm so sorry, but Mr. Young had an appointment that he forgot about. Can we reschedule?” I was like, “I'm actually in the office right now.” She's like, “Let me call him real quick.” All of a sudden, I'm sitting there back to work and I hear, “Zacksters.” I turned over and I'm like, “Yeah.” He's like, “Let's go.” There's Steve. I was like, “Where are we going?” He's like, “I got carpool.” I'm thinking, I'm like, “What do you mean you got carpool?” Sure enough, we jump into his Honda Odyssey, and we go pick up his daughter and her friends from school and go drop them off at their houses.

Carpool, like the school carpool.

He legit had a carpool. Anyway, he's just that kind of guy and has been such a great support and awesome friend through the years.

Content Creation

Good stuff. You see him on TV. I watch him growing up, just great stuff there. I want to go back to your site for a second. You do a podcast yourself, you guys do case studies, and you produce content for the industry. Tell me about that.

One of our values is innovation builds value. That's for each other, for the industry, and for our customers. One of the things about the industry is we do a podcast, we do it at least once a week. We've got 220 episodes out and it's all around getting industry experts to share their secrets to grow your business. We've had some great guests on. One day we'll get you, Jaime. People from Kelly McPherson, who's a CIO of RBI and now CTO for Danny Myers Union Square Hospitality Group, Robert Earl, Wade Allen, and Jeffrey Alexander. We've had some awesome guests, Stephen Covey came on. The original member, the founding member of the Jamaican bobsled team, we got him on as well. Anyway, we bring on some fun coming up.

One of my first questions there would be, where did you run? Did he run in the middle? Did he run in the back end? Did they do the team bobsled? I don't know, that's fascinating.

That episode, though, is really good because there were some things that they didn't put in the movie because it was too unbelievable. It didn't test well. Consumers, like viewers, didn't think that it was real. They had to take it out of the movie. Anyway, fascinating stuff there. Check out “Given Ovation,” which is our podcast. You can check us out online, OvationUp.com to find the podcast, to find case studies, and to find tips to help you in your restaurant journey.

At social too. What were your bigger platforms? Where are you guys out there?

We're on LinkedIn as Ovation Up. You can find me, Zack Oates, on LinkedIn. You can find us on Instagram as well.

Closing Remarks

I was going to close up. Before I do that, last parting shots, last thoughts, industry stuff, where things are going, where you're going to be. I don't know when this is going to air, but I know you go out to shows, anything you want to share?

I've got 30 shows this year. We're doing a lot but I think the one thing I will just say to leave you with one message is that we don't serve customers in the restaurant industry. We don't even serve guests in the restaurant industry. We serve humans. The reason I bring that up is because the same things that make us happy, that make us sad, that make us loyal, that make us build a connection outside of the restaurants are what make us happy and build loyalty and engage inside the restaurants.

At the end of the day, the most universal human desire is the desire to feel important. If you help your guests, your customers, and your humans to feel important, they will come back. If you don't, they will find somewhere else to dine. That would be probably the last little nugget that I would want to leave.

 

At the end of the day, the most universal human desire is the desire to feel important.

 

It is. I would go to my book, but we're going to wrap up. That's something I read all the time that absolutely is one of the tough things you need to do. Make other people feel important, and so I appreciate that. Let's do this. Zack, it's from Ovation. You can find them at OvationUp.com, as well as the socials that Zach mentioned. Go there as a starting point for more great restaurant marketing, operations, service people, and tech tips. Stay tuned to us here at RunningRestaurants.com. Please hit that like button and subscribe button so you can check us out and review us. Since we've been talking about reviews, please review us on the platforms of your choice. We would very much appreciate that. We'll see you next time. Thanks, Zack.

Thank you.

 

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