Ep 170: Restaurant Tech Trends & Future Developments: With Phil Crawford, CTO of CKE
We really hit a lot in a short time during my talk with Phil Crawford, CTO at CKE Restaurants, parent company of Carl's Jr and Hardee's including...
- Pandemic impacts on QSR
- Importance of push to tech
- Loyalty & Rewards
- Drive thru opportunities
- What's coming with AI & Robotics
- Ghost Kitchens
- Digital ordering, menu boards & kiosks
- Future growth
- and more...
Lots of good stuff in this one...Check out the episode...and article version below...
(Editor's Note: This session was recorded in May 2022 & aired in August 2022. At one point, the interview mentions Matthew Walls as head of development. Mr. Walls is no longer with the company. The end of the interview mentions an upcoming movie promotion tie-in. That was related to the release of Jurassic World Dominion. That promotion has since ended.)
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Jaime: I'm definitely into the tech side of operations so it was great getting a chance to speak with Phil Crawford, who is the Chief Technology Officer at CKE restaurants which you would otherwise know as the Carl's Jr. and Hardee's brands. We get into a lot of different tech and marketing aspects in this one. Before we get started on the tech and loyalty stuff, share a little background on yourself. I see Shake Shack & Yard House in your background. Now with CKE, tell me about it.
I've always been in the restaurant industry in some capacity either on the vendor side or the operations side. I've had the blessings to work with some amazing concepts and brands over time. Whether it be Yard House, which was acquired by Darden, who was known for great food, classic rock and beer, and who doesn't love beer? To my stint with Shake Shack and helping that amazing company become the juggernaut that it is and taking them public and building up the entire tech stack there, to a short stint with Godiva for a couple of years on the retail side of an amazing chocolatier brand worldwide. To now with CKE where we run the Carl's Jr and Hardee's brands worldwide. It's an amazing time for these brands as we continue to evolve our digital platforms & our products.
Jaime: COVID impacted the technology aspects of the restaurant business so much in a short amount of time. I'm sure that was the case for you folks as well. How did you see that?
Phil: Absolutely. Technology had to come to the forefront. We had to become a catalyst for change. Things were evolving so quickly, day in and day out, especially at CKE. We had to quickly adapt our brand and our overall platform for our consumers. Consumers were now leveraging their phones way more than before. Delivery took off. The catalyst was there and we had to become nimble and agile in every true sense of the word to get all our systems set up. Not only for guests, but also for corporate employees and field operations and restaurant management. To effectively keep in constant communications, to make sure that information was disseminated and make sure the supply chain was flowing.
From a technology standpoint, it was an amazing challenge. It was a good opportunity for us to spread our wings and do a lot of things that never would have been done in the traditional world. They would have stayed on the back burner. It would have been a three-year process rather than a three-month process.
Jaime: Right, one of the so-called silver linings of COVID has been all the technology and marketing learnings that had to take place. And had to take place fast. What I've said before is that as things get back to normal, I hope as an industry we don't lose those valuable lessons about how to serve faster. How to do take-out and delivery better. How to have better scheduling and labor systems in place and a whole lot more. Now, a lot of our content is more for independents and smaller operations. CKE meanwhile is talking about 1000's of locations, getting information transferred to a whole bunch of people at the same time must have elevated the challenge dramatically, no?
Phil: It did for sure but the good part about it was we had to think small even though we are big. We had to break it down to the micro level rather than the macro level. I think that was one of our keys for success. We had to think as a small independent operator as we adopted these changes. It's easy to have a broad stroke approach when you talk about 3000 domestic restaurants. But really, you have to get down to the rule of three. You have to start with three, focus on those three and try the different technologies, different solutions, different architectures in the small scope, and really get them refined. Then you can roll out on a global scale. I think that is the big key denominator. So, when you're talking about independent operators in times of change, remember, don't try to swallow the world in one big gulp. Take little steps.
I think that was the key to our overall success, especially when rolling out some of these newer technologies. It also taught us to fail fast and learn faster at the same time. But it was okay to accept our mistakes and failures. As long as you learn from it and move forward. That was key. I also think that having the operational buy in and marketing buy in, as well as finance buy in was extremely key to our success, because it was all hands on deck in order to achieve this. This wasn't just a technology initiative. This was a business initiative for us to get our system set up during this crazy time.
Jaime: I think it'd be really interesting to ask you a question that goes back in time. You've done tech work for restaurants for a while now. So, if you went back 5 years, 10 years, 20 years compared to what you can do now, with the phone, with cloud services, that's got to be a crazy change for you?
Phil: It is because I remember back when the cloud first came up or broadband came up, people were like, ooh, scary. I don't know, if you want to go there. Now it's second nature. In our evolution in the hospitality and restaurant industry we need to take notice from our peers in the travel industry, in healthcare and manufacturing. Also worldwide. We sometimes put blinders on in the states. A lot of this technology has already been proven overseas in a variety of markets. It works. It has been tried and tested. There's just a lower level of adoption in the states.
It's really understanding how that technology adapts to your business and which technology fits your business. If you would have talked about AI five years ago when Google Home and Alexa came out, we all thought it'd be nuts for that to be in restaurants. But now it's here, right? It's about trying to make sure that you set yourself up for future success and not future failure by adapting some of these technologies, while also having the leverage to move your business forward.
Jaime: You mentioned AI. While the average operator is probably not ready for AI yet, the bigger folks, like yourself, are definitely getting ready for it. Where do you guys see it? Is it, "Hey Jaime likes burgers, and he usually orders this, but sometimes he orders for his kids as well. It's Thursday and timewise it's after the game and he's probably going to want four burgers for the whole family. What ways are you guys using it?
Phil: So that's one way, right? AI can make personalization possible. AI can anticipate the consumer's needs. I would make the joke that we want to know more about the consumer than they know about themselves by leveraging AI.
It's also inside the four walls, it's AI with drive thru so instead of talking to a person, you're talking to a bot. Or robotics in the kitchen. AI can do product production management by leveraging some of these technologies. It lessens the burden on the operation. With, hopefully, the overall premise that it actually elevates the guest experience.
Imagine a world in the future where not only the AI know it's Thursday and you usually get burgers and fries for your family, but it can actually pivot your order to the restaurant that's less busy to get your product for you more conveniently and quicker. Or it sees you're on your way home and it knows the line is too long in the restaurant so will have it delivered to you at home.
There are all these different things that are coming forth with all this different data. That really is the next catalyst for change. It's just becoming more of the norm, more of the instant gratification, instant on demand for consumers. More importantly, understanding what the consumers really want is where the industry is going. Especially in QSR, which is a very combative industry. There's a lot of competition, and we're all clamoring for that individual guest.
Jaime: Yes, on that competitive front, the average consumer has a wide range of options for QSR breakfast/lunch/dinner. Why am I going to choose you over the other 5 to 10 to 20 local options? What are some ways that CKE looks to get forefront in the customer's mind? Is it an app notification? Email? SMS? All of the above?
Phil: All of the above! Every which way we can. We just recently launched our app and loyalty programs as well. We've made some good partnerships that allow us to do geofencing which works great with in app notifications or SMS notifications. We're also looking at partnerships for map integration. If you're going down the road and you happen to hit a geofence or a barrier and you have the app, it prompts you and says hey, there's a Carl's or Hardee's two miles down the way. Interested in getting a famous star or a big heart? Or you pop up your map program and you might see a Carl's Jr. on the highway up at the next stop. There are all these different ways for us to proactively engage our consumers and guests to drive them. Additionally, there's also the marketing side of it, headed by my friend and colleague, Chad Crawford (no relation,) where you can actually leverage the day part as well as the different loyalty engines to drive consumers to those restaurants or markets.
Jaime: Let's talk more about loyalty. Pretty much every restaurant is in the reward points system game these days, and they should be because it works. For CKE, how do you think about loyalty and rewards? How do you think about frequency and creating the incentive to come back into the restaurant?
Phil: So, I'll put my marketing hat on, which is scary from a technology standpoint, but it's kind of fun, because really the two departments have now merged together, right? Marketing and technology are playing hand in hand. Very few brands of our scale and scope don't need a loyalty program. I think it's extremely important for brands to have the loyalty program in and of itself. The consumer nowadays wants to feel rewarded. Take the airlines industry and the amount of loyalty and frequency they get by their frequent fliers. It's the same thing for restaurants. In our world, we took the same methodology from QSR, but we were late to the game, we never really had a true loyalty program inside of Carl's or Hardee's. They were fragmented and regionalized.
We had to create a national standard, which we've done with the My Rewards App. The beauty of that is that it works at individual restaurants throughout the states. The best part about it is that it's simple. We made it based off stars. Our logo is happy star so why not do stars. It's earn and burn, for every point, you get stars, and you have different tiers 100, 300, 500, but also there's exclusive and loyalty rewards inside the app as well for those that join the program.
You spend more you accumulate more, and those points can be redeemed for free food and beverage. And who doesn't like free food and beverage, right? Additionally, now we understand the consumer sentiment. Who buys what, when they buy it, the frequency they buy, what they like, what they don't like, and then leveraging that into the loyalty program.
We can now build contextual personalized offers and/or specials for guests. Case in point, if I can run a report of anybody who loves bacon and push them an offer of free bacon on a burger or upsell for 50 cents, you would be amazed how many folks actually clamor to that.
If I wanted to leverage the technology platforms to drive more consumers we could promote double star points between two and five, which might be a slow period for us. There are a variety of different triggers that the marketing team can now pull. It's a lot of A versus B versus C, and figuring out what works and what doesn't work and what the consumer likes and what consumer don't like. That kind of testing never would have been possible without this kind of guest data. Loyalty gets us that guest data and the system rewards those guests for giving us that information.
Jaime: Can you build surprise into the system where I just suddenly get something? I may not have earned it, but boom, you're throwing it at me. What do you think?
Phil: Exciting area for us. Some restaurants in the future may only have drive thru, curbside and pickup and or lockers. We have restaurants that have single drive thrus that are converting to dual drive thru. Some with no footprint inside.
I think if we can leverage technology, whether it be with geofencing or otherwise or you just confirm your name with the order window and the food is ready to go. Things can move through quicker, that's a game changer. Logistical engines that can run drive thru from a modeling standpoint to get cars through quicker, but also deliver the same quality product we have, whether inside the restaurant or not.
I think if you look at the overall scheme of how our restaurants built, we're looking at virtual kitchens and ghost kitchens that are drive thru only. Everything's on the table right now. We're learning from international partners as well. There's so much to learn!
Jaime: Models are definitely changing. The model you mentioned for a ghost kitchen...are you thinking of it in the case of there's just a facility over here and they're pumping out the food and it's getting delivered? Things like that. Is that where you go?
Phil: That's exactly correct. You actually might re-leverage a restaurant that may not be doing well with a local drive thru. We make that a delivery point and run orders through that as a ghost kitchen. Maybe there's a virtual dining concept inside of our restaurant where you can run multiple products out of a restaurant and maximize the efficiency in the actual real estate you have there. I think ghost kitchens and virtual kitchens are going to be big for us moving forward. We can now put a miniscule footprint out there but put a lot more ROI through it by just delivering product out a window or through a drive thru. It's a more economic model for QSR. You still have some places that want dining rooms, but that's why you have different models and different builds.
Jaime: I read about you guys doing some store reimaging. How do you think about that? Does that involve you from the tech side? Or is that more design and so forth?
Phil: It's heavily involved with tech. The technology has to work within the new ecosystem. Whether it be a very basic technology stack there, or every single facet. Automated drive thrus, or lockers or curbside or pickup or to-go screens or pickup only -- all the different technologies that we're playing with have to work inside those models. Some restaurants can be super tech heavy. Some restaurants just need the very basic tech. However, you've got to make sure to test it all and try the different models and be able to build these where you can do an ala carte model. I want this plus this plus this from a technology component. And there's your technology package for that restaurant. It really allows our franchisee and corporate operations to pick what fits best for the local market where they want to build.
Jaime: Another tech area I'm sure you're experimenting with is digital menu boards. There's probably a lot you can do there in terms of feature items and price changes? What's going on for you with kiosks and digital boards?
Phil: We're in the process now of revamping that entire product set itself. We're talking to a couple different providers to roll out the latest and greatest technology and digital menu boards. Imagine the screen says, "Hey, Phil, welcome back." It knows who you are and the order automatically fires. If you look at menu simplification, the print costs are gone for digital menu boards. If you have to do an inflation price adjustment, that's simple. If you need to 86 an item, simple, it comes down off the digital menu board. There's a lot of benefits of digital menu boards if you have the right partner. But more importantly if you have the right strategy of how it works within your brand.
Jaime: You're in a fun space getting to see a lot of stuff coming down the pike. Anything that we didn't touch on that you want to bring up. You want to send folks to any websites?
Phil: For folks that haven't tried our new app, visit the app stores and go ahead and give it a download. Let us know how it works. We're heavy on hearing consumer feedback. If you haven't visited us in a long time, come check us out and experience the products.
Jaime: Thanks Phil, I appreciate you joining me.
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Jaime Oikle is the Owner & Founder of RunningRestaurants.com, a comprehensive web site for restaurant owners & managers filled with marketing, operations, service, people & tech tips to help restaurants profit and succeed.