Speaker 1: Welcome everyone to a very unique version of our recurring travel insights webinar. We'll be focusing on restaurant and dining, as Carolyn mentioned. Just as COVID-19 has impacted the travel industry in a signiﬁcant way, it's also impacted the dining world in equally dramatic fashion. Local restaurants are learning how to do takeout, creating outdoor seating space in the middle of the street, and unfortunately some are even closing their doors forever. The big chains and quick service establishments are making big changes as well. Starbucks is building more drive-thrus, McDonald's is improving their drive-thru wait time by 25 seconds, which is signiﬁcant. But on top of all that, what are people's willingness to go out to eat again? When are we going to be comfortable to go out to have a nice dinner inside a restaurant? Many believe that dining out, may be one of those barometers for people to start traveling again. So, help us understand what's going on in the dining sector and some of the key considerations. Our panelists today, we have Ming Tsai. Welcome Ming.
Ming Tsai: Thank you. Nice to be here. Thank you.
Speaker 1: Yep. Ming is the James Beard award winning chef owner of Blue Dragon in Massachusetts, and his latest venture BABA at the Yellowstone Club in Big Sky, Montana. We also have Sooho Choi. Welcome Sooho.
Sooho Choi: Thank you. Delighted to be here.
Speaker 1: Yep. Sooho is the EVP and global head of travel and hospitality at Publicis Sapient. As the global lead, he's got comprehensive responsibility to drive value for clients in the airline industry, hotels and resorts, cruise, travel services, and of course, restaurants and hospitality. Let me start the discussion off with a pun. I'll set the table for the audience, and Ming, Sooho would love to get your perspective. We're four months into the COVID pandemic. What is the current state of affairs from your perspective of the restaurant and dining industry right now. Sooho, what do you see? You see, you see a lot of different types of clients in this industry.
Sooho Choi: Yeah. Yeah, no, I can totally relate to you. I mean it's a rough time in the market. I would say maybe in macro terms, it's not as rough as say the airlines and hotels have gone through where they were down 90% as an overall business, but clearly the scaled chains are doing a little better than the independents, maybe substantially better. Right? So just a few data points. And some of this is primary research that we do. Some of it is through existing other sources, but the 2020s’ revenue in the industry is going to drop $240 billion, direct revenue, right? Not even the downstream, so eight million jobs lost. So I absolutely agree with Ming that it is a very challenging time in the market. That said, in places that are a little more drive-thru enabled, takeout enabled, more quick serve, fast, casual, quick serve in particular, they're holding up a little bit better.
Sooho Choi: They're down about, on average, across country, about 30%, and which is still rough, right? When your margins are as thin as you are, whether you are a McDonald's owner, a Burger King owner, or a chicken shop, you're not making money. Right? And so the focus is, how to respond to that. Pizza chains have done really well, candidly, right? If you look at the three largest pizza chain with delivery services here in North America, they're actually hiring tens of thousands of people to support the growth in their business, which sort of makes sense, right? Because they never had a large in-restaurant footprint to begin with, and we're already conﬁgured to be able to do the delivery structures and the response to serving people in their homes.
Sooho Choi: So I guess one last data point is timing wise and Ming mentioned this earlier, how long is it going to last? People's behavior are clearly changing and will continue to change, right? And some research we've done, we do it on a monthly basis through one of our sister[00:04:29] agencies, but 40% of the U.S. won't be ready to return to normal levels of restaurant and entertainment spend for the rest of the year, right? Under almost no circumstances or any circumstances. So it is a rough time. And there is a small segment of that up to 17 to 20% who may never get to the same level of spend. Right? And so even if we get to a place where there is a new normal, where we understand what's going to happen, there is that risk of that disposable income isn't going to go to dining out or not, which puts all of the industry under an enormous amount of pressure.
Sooho Choi: So it is a rough time. That said, there are things that we can do to respond to that and this whole dependence on mobile. And I would argue all digital channels, right? From however you engage with the customer, the ability to do more self service, the ability to, in an uncanny way, understand your customer and predict their needs and be able to address what they need, be able to time the food when you pull up to a pickup window. Right? All of those things are critical in the future. As we look at what the new world is going to look like. I do think we are going to struggle where this whole, three to four people deep in a bar thing is going to be a while before it comes back and forever is a long time.
Sooho Choi: Right? So I don't like to predict forever, but certainly for the foreseeable near-term future, but applying technology to really change the way we interact with our customers, service them and give them a consistent experience across channels, right? Whether you're ordering online and picking it up, whether you're having it delivered, whether you're using your phone, whether you are interacting with some sort of kiosk, but getting your operation to actually match the use of modern technology, right, with everything integrated behind the scenes so that it's seamless to the customer is absolutely a priority that we're seeing across our clients. The hard part, I think, Ming, for a smaller or independents is the out of the box solution for that type of stuff isn't quite as robust and easy to do from a white label perspective versus what a McDonald's or a Pizza Hut or anyone else could potentially enable, right? And so a bit of a balance, but we're looking forward to how technology can solve many of these problems. And mobile is clearly an important aspect of that.
Speaker 1: And one thing about technology, if I may add, is this is exactly how you build loyalty. So you have a better chance. If you have a great technological platform, it's just going to be easy to order from them because they already know what you want. You want no onions and yes sauce, and this and that. And you push a button.
Sooho Choi: And I cannot stress the value of anyone who's got your app installed the amount of engagement you can get with that individual or those individuals that have it, whether they even belong to your loyalty program or not if you have one, right? In terms of some of the scale players, it gives you so much insight and perspective in terms of what's important to them, where they are, behavior ﬁrst party data that's going to enable really servicing them in a meaningful way.
Sooho Choi: You pair that with what some of these services that are out there, including some of our publicist groups, data services, as well as organizations like Kadara, places like Epsilon, where we have signiﬁcant amounts of third party data, you activate that and all of a sudden the way we are able to interact with the customers and target customers, especially the ones that you want to bring back, right, is signiﬁcantly enhanced and improved. Now, doing that at scale is the hard part. And that's really the reason why businesses like mine exists. [00:08:19] What what we're trying to do for our clients. On this thought of data and how do you engage your customers though, the beneﬁt, I think, that an independent has is for those that they do want to engage, they can tailor a lot more speciﬁcally on the messaging itself.
Sooho Choi: And so the messaging, and I would say the same thing about the larger chains in terms of but that gets more automated, right, and deployed in terms of being speciﬁc to the demographic—you don't want to market to somebody who's not comfortable going out to eat, right? And trying to get them to come out to eat, right? You don't want to market to somebody on a location where people aren't traveling to or can't go to, right? For example. Right? And so tailoring that messaging in a meaningful way is really, really important. Because what I have noticed, especially sort of in the standard email comms that we get from various different brands is there is a level of sameness, right? Not just to every, all the guests that they're marketing to, but there's a level of sameness, even from different companies and different brands.
Sooho Choi: It's clear and it's helpful, but it's kind of a little bit of sameness, right? So what is it about me that you are trying to touch and engage? And I think that's going to be, certainly a differentiator for all parties.
Speaker 1: How do you see consumers coming back to eating out? What are the restaurants need to be doing and need to be focused on to get them back as we, as this, as we anticipate this to improve, the situation to improve, what does that, what does that look like? Ming, why don't we push it to you?
Ming Tsai: Yeah. I mean, I think safety, safety is on everyone's mind, right? How can I go to Blue Dragon safely? And how do you communicate that? First, there's no guarantees. I mean, I literally am looking into buying a UV, make my restaurant UV. Like you walk in and the
Speaker 1: The whole thing?
Ming Tsai: The whole restaurant.
Speaker 1: Okay.
Ming Tsai: Right? So it cannot exist.
Speaker 1: Blue Dragon.
Ming Tsai: Blue Dragon. Literally, you may have to wear for a sustained period [00:10:22] you have to wear goggles or something, but there's restaurants you eat in the dark. So, if you had a UV restaurant that actually... Yeah, Blue Dragon, Blue [inaudible 00:10:30], then you could say guaranteed safe, right? The good news is, thank God, there's yet to be one case of COVID-19 being transferred through food. So my cooks preparing it, delivering it, and then that person got sick. So thank God, I hope that never happens because that would just, that would be the end of everything. Right? So, if you can somehow guarantee or beat the safest restaurant in the neighborhood or in the state or whatever, I think that is key to a lot of people. Maybe not, 10, 20% of people, but for most of the people, everyone on Carolyn's chart, those people want to be safe ﬁrst. Of course they want good food, good drink, all that. But safety is job one.
Speaker 1: There is something about early positive signals will build momentum, right? So we do need to make sure, and everyone has a bit of responsibility to make sure that when things become more ﬂexible and open or as things become more ﬂexible and open, that it's clear that it is not dramatically increasing risk. Right? So safety to Ming's point is key. I also believe and I heard this expression through one of the investment analysts that I was interacting with recently, but there's this world where we're in the stay at home mode, but there is a pent up demand for this leave my home mentality.
Ming Tsai: Absolutely.
Speaker 1: And dining is certainly one of those places where we anticipate that to come back in some force. And so whenever we do a survey or try to understand what proponents for spending or activity is, there's always an emotional component to it that is hard to predict, right? And so when things will come back is still a question, but we do believe that there is a substantial amount of demand, right? That people just need to get comfortable to come back to. And we in turn from a supplier perspective need to make sure that we are able to assure them and give them the safety and products that they're looking for.
Speaker 1: But I can't reiterate the importance of technology because ultimately I think there's an opportunity when they do come back to engage them in so many different, meaningful ways that perhaps were taken for granted in the past, because they just went out to eat. Right? And now we know what's going to make the experience special, make the experience special in a way. And, regardless of what tier of restaurant you're going to, and I think it'll certainly bode well for the owners who are able to do so.
Speaker 1: Ming, Sooho, thank you so much for participating and getting some of the insights out for the audience. We really appreciate your participation and want to thank you for providing your insights.