We recently video chatted with Meredith Sandland, a multi-hyphenate author, advisor, and board member with deep roots in the food industry, including her role as Chief Development Officer at Taco Bell. Meredith is also a trusted business advisor to HighPoint Associates.
In her newly published book, Delivering the Digital Restaurant: Your Roadmap to the Future of Food (which is a #1 Best Seller on Amazon), Meredith, along with co-author Carl Orsbourn, takes a close look at what changes are transforming the restaurant industry. These include the world of off-premise food and the massive impact (Meredith says disruption) restaurants in the U.S. will have to confront because of it. What’s the path forward for this industry according to the book’s authors? In a word: Digital.
Whether or not you’re in the food industry, Meredith’s book is full of intriguing insights and very much worth a read. Our conversation will give you an idea of what’s inside.
HPA: So, what made you want to write a book about the disruption the restaurant industry is facing?
MS: When I was working at Yum! Brands, the largest restaurant company in the world, we were building a lot of traditional Taco Bells as well as new urban concepts. For the traditional locations, although they performed well, I noticed that their co-tenants were starting to struggle. Places like malls and big box retail. In urban locations, things were even more extreme. In places like New York City, we were seeing digital delivery orders as high as 30% of sales – this was before companies like DoorDash became household names. I started to ask myself, why are we building the restaurants we are building in the places we are building them when consumer behavior is changing so much?
At that point, I met Kitchen United, a Google-Ventures backed ghost kitchen. And I realized that they were building the thing that I, as the restaurant chain decision-maker, wished existed – a kitchen fully optimized for digital, off-premise food consumption.
Over the next three years, my co-author Carl Orsbourn and I met with every major restaurant chain in America as well as a lot of independents. It became clear that most restaurants didn’t understand the magnitude of the change that was occurring.
So we decided to do a deep dive to get a pulse on the state of the restaurant industry as a whole, to get a sense of growing trends, and meet some of the incredible innovators who are disrupting the industry. We felt a book was the quickest way to reach the most people with our message: The only way for a restaurant to thrive going forward is through digital.
HPA: The book feels like a bit of a cautionary tale for restaurant owners. Who did you write Delivering the Digital Restaurant for: Is it large, national fast food chains? Local or regional restaurant groups? Small, independent restaurants?
MS: The book is useful for both big chain executives and independent restaurants. There is a cautionary tale element to it – you’ll remember that a similar disruption in retail eliminated some storied brands and shook up local retail offerings. But it’s also a ray of hope. This last year has been hard, particularly for independent restaurants. There is so much innovation that can make restaurants more successful going forward.
HPA: Why small restaurants? You come from a large restaurant chain background.
MS: Well, half of the restaurants in the industry have only one to four locations. These are largely “mom-and-pop” establishments. The other half of the restaurant industry is comprised of large chains like you mentioned.
The latter spend billions a year on marketing, so they can afford to invest in technology innovation. The smaller operations deserve a heads-up about what’s coming so they can make changes necessary to staying in business. We saw so many independent restaurants temporarily or permanently close during the pandemic, it was heartbreaking. We don’t want to see this happen because of dramatic changes coming to the industry.
The great news is, because of the Cloud and SAAS, technology access has been democratized. What used to be available only to large chains through in-house software development is now available to everyone for a small monthly fee. Restaurants just have to decide if they want to engage in this new digital way of doing business.
HPA: What are some of those changes? According to your book, ghost kitchens seem to play a fairly central role. They also sound ominous.
MS: They do sound a bit dark! In the book, we title the chapter “Ghost Kitchens (Aren’t So Scary)” because the name brings up the wrong image. But ghost kitchens are super interesting because they are optimized for delivery and let people order food for takeout and delivery from about a dozen different restaurants located under one roof.
HPA: So we can expect ghost kitchens to become more mainstream?
MS: Absolutely. And what I find really fascinating about them is that they are a much more efficient way to produce food locally and offer a much more efficient use of space and utilities. A ghost kitchen can fit 10-20 different concepts in the space of a single casual dining restaurant. It can also produce as much food as 10-20 different concepts for 5x the amount of electricity. As our country becomes more densely populated, these kinds of savings are critical. Ghost kitchens will continue to play a central role in the transformation of the restaurant industry as a whole.
HPA: Why is delivery so critical? We’ve heard a lot of restaurants express frustration with it.
MS: Delivery is now a must for restaurants. It’s not necessarily instead of in-person dining, but offering delivery to customers is key to profitability because that’s what people want today. And not just because of COVID-19, but that certainly sped up the appetite for food delivery.
Consumers today want convenience, they want personalization, and they have the disposable income to pay for both. The first three chapters of Delivering the Digital Restaurant are a deep dive into the modern American consumer for exactly this reason. These chapters explain why consumers want delivery so much – and therefore why it’s not optional for restaurants.
The challenge is, delivery as it mostly exists today is a lot less profitable for restaurants than in-person dining or takeout, and it’s more expensive for the consumer. So we need to step away from the old delivery infrastructure and embrace a new kind of business model that does delivery well in a more operationally optimized and profitable way. If it seems like a radical shift in the restaurant industry, that’s because it is. But it’s definitely doable.
HPA: If you had some parting advice for small, independent restaurants, what would it be?
MS: The most important thing is to have a digital relationship with customers. And that means having your menu online and providing online ordering. People want to be able to make food choices and that’s much easier in today’s digital world. If a restaurant doesn’t have a digital presence, they are not in the choice equation. Discovery online is key.
What’s interesting is that restaurants are innately innovative. Maybe not technologically, but certainly in terms of changing menus, offering new flavors and ingredients, shifting to consumer preferences. So the mindset of innovation is there.
HPA: And for the chains?
MS: Digital is not an “also” for your business. It is a fundamental mindset shift. The entire business model needs to change. If you just throw your menu up online, or go into a ghost kitchen without doing anything else differently, it won’t work. In the book, we compare this to the evolution of the drive-thru: Initially, restaurants just put a window on the side of their building and thought, “Great, we’ll get a few extra orders from cars.” They quickly learned that the entire restaurant needed to be rethought to enable the drive-thru business. Drive-thru revenue now makes up about 70% of revenue at a typical fast-food restaurant. Clearly that’s more than a few extra orders! And from drive-thru “stacks” to digital order boards to drive-thru make lines, the restaurant itself has evolved to deliver great food fast and at a value.
HPA: My last question is, what does the new world order for restaurants look like? Will independent restaurants even exist in 5 or 10 years?
MS: Yes, they will exist! But there will be a shakeout for those that don’t embrace digital. And of course, off-prem food will have an impact. But I for one love eating at restaurants and will continue looking forward to doing so.
Delivering the Digital Restaurant: Your Roadmap to the Future of Food is now available for purchase on Amazon.
