The Fourth Wave of Innovation
The Restaurant Industry
June 2021 - The global restaurant industry is being ravaged by a pandemic of near biblical proportions. Coronavirus (COVID-19) is changing the industry in ways we can't yet full understand. Off-premise sales were already over 60% of sales in the U.S., via catering, delivery and drive thru, suggesting a new industry taking shape. Now, it's nearly 100%, because dining rooms are closed. Re-opening an economy has never been tested before, so there is no data on what works and what doesn't, sector by sector. What's clear, is there will be carnage. Tens of thousands of restaurants will close permanently, under their current ownership. What percentage of these will reopen is a guess. It's unknown in part because investors are on the sidelines for now. Because restaurants operate on slim margins, angel investors generally invest based on personal relationships, ego and emotion, not ROI. Now, with a decimated market and unpredictable future, emotional investment gives way to pragmatism. Banks have never been an option, really, unless the enterprise is of sufficient size, and even then, it's a hard to find and fully secured. Private Equity is taking a pause, assessing how discounted the market will become before pouncing on bankruptcies and closures to expand their current portfolio under economically desirably metrics. It's a hot mess!
Prior to COVID-19 -Over the last 100 years, the restaurant industry has grown to become the nation’s second-largest private-sector employer with more than 15 million workers serving more than 170 million customers every day. Early projections indicate that restaurant and foodservice sales in 2019 will exceed $863 billion generated by one million restaurants, of which, 70% which are independent operators. However, 2020 saw a reduction of perhaps 100,000 restaurants and $210 billion in revenue. We all look to the second half of 2021 as the beginning of full recovery, tech innovation being adopted and deployed and new intelligent business models.
The $3 trillion global restaurant industry is massively relevant and vital to all economies. In the U.S. alone, over 1 million restaurants will generate more than $863 billion in sales and employ 14+ million employees in 2020. Restaurants are on the hunt for fresh ideas and new channels to improve sales and maintain margins. They must discover new sales channels and leverage new technologies.
Restaurant operators already suffer from a wide array of business challenges, not to mention any major business interruption (like a global pandemic). Operators must seek technical solutions that address bussiness challenges and change legacy business practices. Operators know that technology is transforming the global restaurant industry and many operators have increased the average annual investment from less than 1% historically, to nearly 3% of sales today. Because of this, they and we, seek solutions that address (a) demand generation (b) labor cost reduction (c) CRM and transaction data and insights; and (d) automation/AI for value creation and efficiency.
Even more impressive is the transformative effects restaurant tech is having on the industry globally, both B2C and B2B. Investors have sunk over $20 billion in restaurant technology startups in the last 10 years and ecosystem of cloud solutions can be confusing.
Now is the time to assess and reflect. Technology strategy needs to be supporting of business goals, brand strategy, growth ambitions and the new restaurant industry. Bailiwick Ventures can help.
Investment Focus | Forces of Change | Opportunity
As more operators turn to tech to improve their performance, it’s easy to get carried away with the many applications and softwares that will end up complicating the process. Technologies unification involves integrating cloud APIs to deliver simplified functionalities that allow operators to track their restaurant’s progress in real-time. Real-time tracking enables operators to constantly identify where and why sales are behaving the way they are, and to act on it accordingly. Visual tools such as dashboards allows this collected data to be readily accessible to operators, key stakeholders and even staff. This democratization of information leads to greater awareness and understanding of the business.
Technology Investment Division
There is great, passionate debate today, about nearly everything. Politics, lifestyle, the workplace, healthcare, childcare, even technology. There are basically two core perspectives. The All-in-One bungle that always positions the POS at the center of the universe, and everything else in supporting roles. The All-in-One solution positions the technology vendor as in control. That may be good for some brands. The POS may be swapped out for the website, if you are an agency, however. Then there is the alternative thesis, the unbundled, cloud-connect tech-stack where the brand is in control.Still integrated to a central data lake, where data is the center of the universe and all technology solutions and systems of record are working together. This will be a debate for years to come with both winning market share...with interesting uses cases and studies on which is best for the long term.
As restaurants reopen beginning May 2020, they won't be fully staffed. Dining rooms with 200 seats will begin at 50 seats, before easing covenants increase this these social distancing limits to 50% of capacity, or in this example, 100 seats. But there is more risk here. Separating patrons isn't the the complete solution. HVAC and air flow matters too. Staff wearing masks, eliminating table settings, throw-away menus, clinical sanitation between guest service is also important. The reality is the industry has displaced over 6 million employees. Even if everything could be reopened at 100% capacity today, consumers may not be ready to return. And, that's a staffing and prep management issue. Purchasing, inventory, staff scheduling, reservations are all unknowns. Prior sales data is useless. We are back to guessing. Having access to next generation productivity software that supports efficiency will be a key to managing costs and generating more real time insights to help manage in a new era.
Over 50% of all search is voice. This changes how consumers discover and order, make reservations. We also set our sights on the human interface and conversational commerce. This means using voice and text chatbots to enable consumers to order food, manage guest services, make reservations, manage guest satisfaction and engage interactively where billions of people are online already. The use of chatbots can also extend to B2B applications where operators from different verticals are able to order from other vendors. This accelerated ease of using voice platforms like Alexa, Google Assistant and Siri, and chatbots platforms like Facebook and Slack are permeating the industry as operators seek more efficient ways to quell the growing demands of their guests.
Improved communication and accessible education
F&B operators are increasingly aware of the importance of bridging gaps in communication between staff and consumers, as well as widening access to information that will inform them of better decisions to improve their service and business. Access to education will allow companies to understand their consumer better and allow them to decide how best to engage them. This means businesses can stay ahead of their consumers and anticipate their needs and wants — and anticipation is crucial in creating memorable guest experiences.
Automation - Food-maker robotics
The labor pool remains competitive and continues to shrink, the restaurant industry is particularly challenged to hire, train and retain quality and affordable FOH and BOH staff. Operators are no longer in control of their labor costs with state mandates for minimum wages increases and healthcare benefits. With thin margins, naturally, restaurant concepts must evolve in these changing and challenging times. Enter the food-maker robots that make and serve hamburgers, yogurt, pizza another food categories, just to start. We see low cost, high potential ROI's for entrepreneurs and existing operators and landlords. Food-maker robots and robot vending will affect how we conveniently consume fast food and snacks with no human interaction.
We invent, create, develop and invest
Restaurant Marketing and Technology Agency | Strategic Advisor
Agency: FOHBOH means Front of House, Back of House so we cover a lot of ground. But, we also know that technology is transforming the restaurant industry and this touches all FOH+BOH systems and persons and that's our bailiwick. FOHBOH combines Marketing and Operating data to provide prescriptive, actionable insights to both ops and marketing teams.
ResTech: We are digital transformation consultants, advising brands, investors and technology innovators on restaurant technology matters relating to tech-stack design and implementation.
MarTech: We are restaurant marketing experts and data hounds who believe that operators must make informed business decisions using insightful operating and marketing data.
Information: Our news and information newsletter inFOH, delivers curated information about the world of restaurant technology to thousands of industry professionals, since 2007.
Voice-enabled Restaurant Management Software
VoiceStar.ai voice-enables legacy restaurant management processes to save time and money. Beginning with VoiceINV™, operators at every restaurants, hotel, casino, bar and pub worldwide will be able to use the patent pending VoiceStar voice inventory and order automation software. This reduces the time it takes to complete a bar and food inventory by 80%.
Host [Ghost] Restaurant Operating System
Ghoster is a restaurant technology company with a novel business model targeting the fast growing "Ghost" restaurant marketplace. Ghoster partners with restaurant operators as "Host Restaurant Partners" to quickly leverage under utilized kitchen capacity to increase revenue and customer engagement.
Experience and Perspective
Our leadership team has broad reach to industry affiliates, business colleagues, restaurant leadership, and influencers, affiliates, dealers and media relationships. We bring decades of relevant experience to our investing partners and portfolio companies. We bring operations, culinary, development and corporate finance expertise. We have held BOH and FOH unit-level and C-level positions at regional and national chains. We are food and restaurant tech entrepreneurs, social media pioneers and digital transformation consultants.
We are practitioners and thought-leaders and with an operators' perspective. We are passionate about the restaurant industry and excited about how enabling technologies are transforming our industry every day. Technology helps create operational efficiencies leading to profitability and that make operators more competitive and relevant.
We have unique access to opportunities because we have been actively engaged as operators, digital media and Internet entrepreneurs, restaurateurs, financiers, food and restaurant technology sales and social media marketers for decades. We think automation is the new key to success in the broader foodservice industry. We have transaction experience as investment banker and entrepreneur. We live and work at the intersection of restaurant and technology working with clients and partners around the globe.
We are experienced entrepreneurs in food and beverage, restaurants, retail and Internet technology. We have an operator's perspective with vision and access to key resources required to execute on our plans. We invest, create and operate.
We invest in our own portfolio but can assist others in reaching their funding goals via Bailiwick Ventures.
Influencers and Though-Leaders
We created the first restaurant social media community and network in 2007. The purpose was to connect and engage operators and no-operators and inform the industry about new emerging technologies that are transforming the industry. FOHBOH.com, and the ResTech [infoh.com] Newsletter deliver news and information to over 80,000 industry professionals multiple times each week.
Digital Transformation Consulting
The restaurant industry is transitioning and we are helping to prepare it for these changes via FOHBOH.com, our restaurant technology + marketing technology agency and advisory firm. We've migrated from no-stack to tech-stack, to an integrated or unbundled cloud-tech platform era. What's is next? An integrated AI brain, or restaurant operating system as the new optimized central hub for all API-based utilities and data.
We're advising brands, investors, IT groups and innovators using our unique combination of restaurant operations, finance, technology and API integration expertise and M&A due diligence.
Founder | Managing Partner
Investor • Advisor • Entrepreneur
MICHAEL L. ATKINSON - Founder
Investor, Restaurateur and Technology Entrepreneur
Michael is a serial Investor, entrepreneur, speaker and restaurant technology multi-hyphenate living in Dallas, Texas. With more than four decades of industry experience as an operator, strategist, financier and technologist. Michael is a former consumer-sector investment banker who is deeply passionate and committed to solving restaurant business challenges using next generation technology to re-imagine what a restaurant technology Tech-Stack looks like in 2021.