Editor’s note: At this year’s National Restaurant Association Show, QSR caught up with restaurant executives to get their take on 2023’s biggest topics and what’s on the mind of operators. We’ll share their insights and observations from the floor, thoughts on the future, and what matters most headed into the back half of the year and beyond.
What’s on your innovation radar this year?
I’m looking at digital transformation at the store level. Having digital checklists, digital optimization, where it can help you complete more tasks and offer reminders—things of that nature. I know there are some companies doing it, but now there are new players on the block that have come at the right time so they can innovate it. We’re doing the AI at the drive-thru already. We’re already invested in a pilot.
I was going to ask you to chime in on AI, but we’re already talking about it. So elaborate on how you all are deploying it, and the overall potential.
Well, where it works in the restaurant space is it helps to reallocate labor. And it helps people focus on primary operational objectives while AI, for example, at the drive-thru, we’re able to take an order so that person can focus on drinks with Tastee-Freeze and do other things that don’t slow them down. AI has a spot in a lot of different capabilities, but for us, we’re focusing right now on that portion. Why we like Presto is they talk about using your phone in the future, where you can speak into it to place your order. So now it becomes not only the digital ordering setup, but also it’s your speakerbox. And then we can get inside the restaurant as you walk into the space. We talked about it at the Food on Demand conference, too. It will be able to use kiosks as you walk up and face integration (inside the dining room). No one has even scratched the surface yet. We’re excited about what that can bring to us, because I think for our brand, which is primarily drive-thru focused, if we can redistribute that person to focus on making hot dogs, food safety, food temperature, that’s a win for everybody. It’s a win for the profitability of the restaurants, too. That’s why we have to learn an ROI on the process—for ourselves, not what the sales people tell us. That’s the challenge.
What’s the big topic a year from now for you all?
Growth, accelerating growth within our business model, because right now we’re opening in Ecuador next month. The CEO, J.R. Galardi, and I are headed to Santiago, Chile, and we just signed a 15-store deal there. We’re really excited about the expansion with international and obviously the fact that we’re here at the National Restaurant Association Show. We’re here because we want to sell franchisees franchises. We’re getting a lot of good interest. We’re growing in Arkansas, which we’re super excited about. Arkansas allows us to go to a neighboring state. As we embark there, it helps us with our distribution. Now, we open up Arkansas, it helps us flow outward, we can get closer to North Carolina (where this editor lives). We’re so excited about our growth because we have such a fun, unique brand. Different building types. Super flexible. We’re being very creative. We have our current franchisees, who are still growing and buying franchises. We have a great franchise deal incentive. But our growth of getting new blood in the system; we just met with a group out of Nebraska, signed a deal there. Montana. So for us, we’ve stayed primarily in the Southwest corridor. We’re branching out to unfamiliar areas, but we’re doing it strategically.
Talk about the growth agility.
Our Arkansas friends, who are opening up next month, we’ve already approved five of their sites. They’re ready to go. A 20-store deal. Great group of guys to work with. Building on that momentum is awesome for all of us. It talks about how we expand, how we expand our team internally. We just moved our office. There’s just a lot of excitement, a lot of buzz within our corporate office. And for our small community of employees who have worked for our corporate office—65 employees representing 340 restaurants. Growth helps that, too. As we grow, it helps us open up what we do.
We’re also looking at host or ghost kitchens. That’s exciting for us. We just launched a three store. We call it host kitchen because it’s another brand that we’ll sell our products out of. We have one outside of Atlanta, one outside of Santa Barbara. They’re ordering Uber, DoorDash, Postmates, whatever. They’re clicking it and the algorithm says there’s Wienerschnitzel here. This allows us to sell our products in someone else’s kitchen who reached out to us. They came to us and said, ‘hey we have downtime, can we sell your products?’ We’re really excited about that because we’re in the early stages. You think about it, we have international going next month, Arkansas stores opening probably first week of June, we have the three host kitchens that just launched May 2, AI started April 14. So there’s some very exciting opportunities for us.
How many stores is the AI piloting in?
We’re doing it in three. We started in one to clear out the cobwebs and get all the dust off. We have a weekly cadence call. Next week, we start the other one in Oceanside, California. We’ve got one in Laguna Hills—our first one. Then you’ve got one in an A frame in a coastal town right on the street. We want to see what happens when a big truck comes up or there’s a lot of traffic. So we’re testing all those things.
Let’s dive deeper into that.
I wanted to get excited with a good volume store that’s local to us. We spend a lot of time there. We have the operator actually on our weekly cadence calls. The problem is the crew members are so used to taking drive-thrus, we found out all the technology and data is coming to us. So they’re just jumping in. We have to say, ‘no, stay away. We need to test this. We need you to make the ice cream. Clean something. Don’t jump in.’ That’s the hard thing—change is hard for the crew members. But so far, we’ve seen great success without attributing data to it. We’re not really saving labor hours—we’re reallocating them. So now, I’ve gotten to the next state where a month in, I had an operator peel people off the schedule. Or covering breaks. I asked him, ‘so how is it working?’ He goes, ‘I get to go to the customer upfront while nobody is at the drive-thru.’ Before, it was somebody is at the drive-thru, I’ve got to do both. So that’s good. The timing works.
What’s fascinating about AI, I didn’t think about this. It came to me. I got to write the script. I physically wrote everything. I know everything it says. So when I go through the drive-thru, it’s weird. I’m getting a little cheesy. I’m like would you like to add hot crispy fries. I couldn’t get a crew member to say that. They’d be like, ‘do you want fries with that?’ because they’re always in a hurry. I hear it playback and it’s pretty cool. I heard this lady, all she did is come in for two ice cream cones. I want two soft serve ice cream cones. And it wasn’t even the vernacular we told the AI it was going to say, but it picked it up. It goes, ‘OK, so you want two self-serve cones.’ Yes. Then it goes, ‘would you like to add hot crispy fries with that?” And the lady was like, ‘what?’ Would you like to add hot crispy fries with that? Oh, yeah. I’ll have a large. I thought, what the hell. There’s no way. Our normal crew member wouldn’t say that. What we’re trying to do now is bundle it, because if you order a combo meal, I’ll be able to look at you and hear you and ask, ‘do you want to make it all beef, do you want cheese with that, what size drink?’ It takes too many steps. On the fly, I changed all the wording. The fact the AI computerized it, you can easily implement something like that. That’s what I like. If we run out of something, we send a message and it removes it. If you go through the drive-thru and ask for a Froot Loops cone and we ran out of it, it will know.
I think the advancement of it is very exciting. We’re trying to see all capabilities of it.
How did you make it more “human?”
We changed the language from a male to female and then we actually sped it up 1.4X. We’re talking about how does it do sentiment? That’s the hardest thing for technology to do. When I have my customer feedback form, when somebody is calling in or typing in, they want to pick up frustrated words so you can say this customer is frustrated. The AI is trying to do that. If I said, ‘I just want two hot dogs. I just want two hot dogs.’ It’s got to learn through repetition that you don’t say, ‘do you want an Oreo shake, do you want this,’ as we programmed it. That’s the biggest homework assignment that they have. I think as we get more repetitive and do it, the 90 days will tell us a big story. At that point, obviously we’ve got to figure out the ROI. But so far, we’re really pleased with them and working with them [Presto].