Episode 11: John Diloreto
John DiLoreto, president of North America at Flipdish, an online ordering and kiosk company join us for this episode. John has a background in finance and hospitality and talks about the need for restaurants to take control of their ordering channels. He believes kiosks and other technology can help restaurants confront the staffing crisis and wants to see restaurants use technology to better understand their customers.
Episode 11: John Diloreto
James: Thanks for joining us today, John.
John: James, thanks for having me. Excited to be here with you today.
James: Yeah. So your background is in technology and finance. Can you talk a little bit about your background and what brought you to Flipdish?
John: Sure. Happy to. So very fortunate to start my career in banking at Jp morgan for a number of years. And while it was a fantastic place to start a career, I found myself when I was reading through the journal, often flipping to the technology section instead of the finance and business section, and pretty quickly found out that I was probably in the wrong place and so was fortunate to go back to school and study a bit of computer science and as a result of that ended up as the first employee out of at the time a very small company called Go Parrot and a fortunate experience getting my introduction to the world of restaurant technology and helping a company go from its first employee to scaling up as a company. And as you probably saw in the news recently, Gawker was recently acquired by Square. And congratulations to them and a whole team on that. But after about a year working at Go carried a year change, I had an opportunity to join what at the time was a very successful European technology company that was looking to expand beyond Europe and make an impact in the North American markets and was recruited over to launch and lead and ultimately manage our business across the US, Canada, Mexico and parts of the Caribbean. So really excited to be a flip fish these days. We’ve got a lot going on, but for those that aren’t familiar with Flip Dish politicians, truly it’s an all in one digital commerce and marketing platform. And what we do is we help restaurant operators from independence all the way up to some of the largest ghost kitchens in the world, take orders directly from their customers, learn who their customers are through transparent, accessible data, and be able to remarket back to their customers all in a single platform. And so restaurants that work with a dish usually can eliminate somewhat at times up to six or seven or ten different technology companies or software vendors that they might work with and achieve all of that with a single platform within Flipdish. So not only can they acquire new customers through our advertising technology, but they can retain them through our loyalty and marketing technology and ultimately stay on the cutting edge, whether it’s kiosks or QR based ordering or traditional takeout and delivery technology.
James: My understanding is that Flipdish was kind of known originally more as just a restaurant website and app developer, and it’s gotten more into kiosks and QR codes. You know, I know kiosks are getting to be more common in restaurant locations. What kind of problems does it solve and what kind of conversations do you have with operators about implementing kiosks.
John: Sure. So happy to talk about that, but I can give you a little bit of the back story. So it is true, I flipped, started as a mobile app company for restaurants, and I can tell you why. The reason why was back in late 2015 or early 2016, a company at the time which is called Just Eat, which is for those that aren’t familiar, it’s essentially the European version of GrubHub had launched in Ireland. And at that time in Ireland, restaurateurs had no other option to sell their customers online versus versus selling through a marketplace which is quite expensive. And so the co-founders of Flipish, James and Conor McCarthy, who are still leading the business today, had the opportunity to empower restaurateurs to continue to maintain their connection directly with their customers, but to do so in a way that their customers were desiring, which was to order online in a super quick and easy way. Fun fact it actually takes less than 17 seconds to place your first order ever on a full dish mobile app or website, which is pretty much the industry standard, I promise you. But anyhow, so it started in mobile apps and we’ve kind of cascaded out into other technology on a piece of the kiosk program is that we actually started developing this in-house about, I don’t know, I would say maybe 2018, 2019. We began to iterate and develop the technology internally. And just when we started kind of launching the products in late 2019 at scale is when COVID happened and we thought, Oh shoot, we just spent three years of our R&D roadmap and development resources building a product that people are never going to use again because of COVID. But thankfully it wasn’t contact and surface borne. And so, you know, very fortunate that kiosks have actually been processed. A rating of late. And so to answer your original question, you know, what types of problems is it solving? What we’ve seen with kiosks is that kiosks have become a direct labor replacement for the traditional cashier experience. And I think what we typically are able to see is that in other industries and the perfect example to talk about is the airline industry. Not too long ago, airline tickets were all booked over the phone and then became the advent of purchasing them online and then checking in in person and very quickly that went from in-person to checking in on a kiosk. And now it’s pretty much commonplace today when you walk into the airport, you can print your ticket right at the kiosk. Right. And so that same experience is what we’re seeing. And that same trend is what’s happening in the restaurant industry, where although you still can place an order over the phone or you can still walk in and place an order with an individual, consumers are increasingly finding that it’s actually much quicker and often much more convenient to simply go and check in yourself at a kiosk and place your order yourself at the kiosk. And really what we’re focused on doing it for Flipdish is taking technology that is utilized by these large, major chains like McDonald’s or Panera and Shake Shack and democratizing it and making this incredible technology affordable and accessible for local restaurants, independents. But more so, not only is it making it accessible, but we’re actually able to deliver a significant return on the bottom line. And that on average, typically when a restaurant introduces a kiosk, if they’re doing so as a replacement to cashier or a compliment to an existing cashier, we’re typically seeing somewhere between $1000 and $703,000 in savings per location per month, and that’s strictly based on the cost of labor.
James: Now, I would assume like there’s some people that just still prefer to use a human than would use a kiosk, I guess there are certain types of locations or kiosks work better than others.
John: So, you know, traditionally where we’ve seen the kind of the early adoption is definitely for quick service restaurants. So restaurants that customer would be typically ordering at a counter and really oftentimes it’s alleviating the queuing or the line buildup that occurs. But what we are seeing is that it is kind of expanding beyond these very transactional moments and it’s creating an opportunity for commerce to occur while still having what we call like the high touch, the hospitality moments of still having individuals be able to be a host, to be a greeter, to kind of engage with customers and still entertain and provide an incredible hospitality experience. But without having to take the credit card, swipe the credit card, pass it back, all of those types of experiences that aren’t really the wonderful components of hospitality.
James: So you’re saying it basically keeps the hospitality part, but the transaction can be more done on the technology?
John: Exactly. Kind of what you’re saying. Exactly. And really, you know, it’s funny with kind of the advent and kind of the switch over to Apple Pay or Google or Samsung Pay being so prevalent, I very much so see a world in the not too distant future where people probably don’t even carry their credit cards with them. I wouldn’t be surprised if you went on a college campus if individuals still even carry a full wallet anymore. And the beautiful thing about the kiosk is at least the ones that we provide certainly take apple pay. And so you could walk into a restaurant with just your cell phone and walk out with a burger or whatever it might be.
James: The adoption of technology like you talked about in the restaurant industry has lagged behind travel. Where do you think this is going? I mean, where do you see adoption kind of becoming? I mean, restaurants will never be a technology business, but technology is going to be a part of it. Where do you see over the next, say, 2 to 4 years kind of technology being part of the restaurant industry? I mean, I understand that it’s very different, right? Fine dining versus, you know, fast food, but kind of what’s your hunch?
John: So, you know, what I’ll do here is actually I’m going to paraphrase from one of our clients whose name is Tom Bunce, who runs a lovely burger chain called Bunsen. I think it’s about a seven location burger chain. And what he said when he was speaking to a group of politicians was that ultimately it’s inevitable that this technology is coming and that consumers are going to switch to this. You said really what the decision is, is do you want to be an early adopter or do you want to be kind of a late to the game follower? And I think really what that has to do is who are your customers as a restaurant? If your customers are younger, skewed, if they are Gen Z or millennial based customers? We would encourage to say being an early adopter is probably the right path for you, but if your customer base is perhaps Gen X or baby boomers or whatever it might be, it might be okay to not be an early adopter when it comes to adopting things that are a bit more kind of new age, like the idea of completing your entire dine in order on your cell phone, being able to open a tab with your dish QR code and order your drinks and then maybe later order your main courses. But really, I think what’s most important is never forgetting your customer and you know, the beauty of having a technology platform that shares your customer data as you actually get to know who your customer is and what their preferences are. And I think that’s a healthy conversation for each restaurant to have with itself internally is figuring out who are our customers and who do we want them to be and if they are a younger generation. Then increasingly be looking forward to how could a restaurant be an early adopter of this technology?
James: I kind of agree with what you’re saying. I have a funny example or not funny, but I was at a kind of social mixer the other day in the restaurant or bar where it was. It wanted people to order on a QR code and this gentleman who was maybe mid to late sixties was like really struggling with trying to figure out a QR code, which in my opinion not that complicated, but it does show you that there is a bit of a generational shift in adoption of technology.
John: You know, there definitely is. But I think it’s funny. I think, you know, if you think back, maybe you’re your parents or grandparents or whatever it may be, I imagine there was a time when they said, I’m never using an ATM. I’m going to go inside and speak to the bank teller. And today, I imagine whatever that generation will be next, you know, the grandparents or the next years, you know, we’ll probably be using mobile banking. Right. And so in that same sense, you’re absolutely right. There is a generation there will always be people that say that’s not for me and that’s totally okay. And I think that’s what hospitality is all about, is recognizing like serving your customers no matter who they are, but knowing that that next generation of customers, they’re going to be just as savvy on their cell phones as the average person is on mobile banking today. So I think, you know, we don’t have to look too far into other industries to see where food will go eventually. But once again, always putting that customer at the center and being able to service them the manner that they choose and giving them optionality is really what we think is kind of one of the most important things. And I think that’s why you probably often hear an idea omnichannel commerce, and it’s because some people will choose to order on an app, some people will choose to order on a website. Some people may love a kiosk, and there will still be the people that love to make the phone call or stop in and talk in person. And those are all fantastic. And we believe you should give the customers that choice.
James: Yeah, I mean, I think omnichannel, it’s such a word used in our industry these days, but it just makes it more challenging for operators right now. People come in and then either sit down or, you know, takeout or whatever. But now there’s all these different touchpoints and it just makes it more challenging to operate a restaurant. Right, than it did, say, five, ten years ago.
John: Yeah. You know, I think historically the reason why omnichannel was difficult was because omnichannel meant having seven different technology partners and having to somehow get them to talk to one another or work with one another. And if you had one menu on GrubHub, an app on this company or a website with this company loyalty program with that company, if you needed to make a change or coordinate something, it took all this time and effort. And because of that, it really made it prohibitive for independents or local chains to adopt this technology. It was like, if you’re not Domino’s or you’re not Panera, no chance. But I think what’s really cool today is that there has been so much investment in restaurant technology over the past 5 to 10 years that it’s actually is accessible for independents. And it’s not only accessible, it’s affordable, and it can be a complete game changer to offer like full omni channel commerce. And it doesn’t have to be a fetish for when we say like the beauty of a restaurant tour to be able to pick up the phone and talk to their one customer success manager to talk about their entire digital commerce and marketing strategy is so much simpler than having to pick up seven different phone calls and talk to seven different vendors in kind of stitch it all together. And so we think it is extremely advantageous to a very busy and time stretched operator to be able to simplify as many of the key tasks as possible into sort of a single platform.
James: So I’ve seen you talk in another interview about comparing Toys R US and it’s outsourcing of technology to Amazon. What is the lesson that the restaurant industry can learn from that?
John: Yeah, so that was just my good buddy Zack Oates from Ovation. That is a wonderful technology company out there. We love what they do. You know the story behind it. I love telling it because it’s like in hindsight, it’s like I can’t believe this actually happened. It sounds like it’s a made up story, but the kind of short of it is essentially back in the early 2000, Toys R US decided that their e-commerce business, meaning selling toys online, was not a fundamental part of who Toys R US was and wasn’t going to be important as part of their strategy going forward. So Toys R US literally outsource their e-commerce business to Amazon, who ran it on their behalf for about a year or so. And I forget how the full details of it, but essentially what ended up happening is Amazon became a company that actually became an absolute expert in what it meant to sell toys online. And they went on to be a category leader. And Toys R US instead lost learning that compensated by outsourcing the whole piece and eventually, as we all know, went into bankruptcy. And so I tell this story to shout to the rooftops, to tell people that outsourcing your business to DoorDash is the same thing as outsourcing Toys R US is business to Amazon. And that the reason being is every time a transaction happens on DoorDash, DoorDash is learning more and more about what food sellers, what neighborhoods, who the customers are. And what they’re doing is exactly what Amazon did, which is turn around and build. Marts can sell in direct competition with the restaurants that are selling on their platform and ultimately taking their customers away from them and making them their own customers. And so what I always say to people is like, you know, it’s one thing to do. We can speak about marketplace commerce later, a little bit of that. But ultimately, if you’re not owning your core competencies, which is selling directly to your customers online, you’re only just taking the slow, long route to ultimately losing that relationship with your customers. And so we always say to people quite clearly is that you don’t want to be dependent upon a marketplace to run a key portion of your business. And if your off premise sales are anywhere greater than 10%, we would call that a key portion of your business.
James: Yeah. So why don’t you talk a little bit. What do you think the role of third party delivery is right now in the restaurant industry? You know, with pandemic, I mean, a lot of people leaned on DoorDash and Uber and GrubHub. And now that they’re rethinking the strategy, I guess, what role do you think third party delivery has in the restaurant industry?
John: So there’s a couple of different things that are occurring. So I think Marketplace Commerce, I think always will serve a role for probably two pieces. The first piece is like marketplace. Commerce will always be an opportunity if the ability to get your brand out there with low investment. The downside of that is you’re essentially doing it at a discount to your own brand. So, yes, you can post your brand on DoorDash or yes, you could list your brand on Amazon, but you’re going to do so at a very steep price of one paying a high marketplace fee, upwards of 35%, and to not having any idea of who’s purchasing from you. And the challenge with that when you’re first starting is you have no way to communicate with your customer and figure out, did you like this? What would you like differently? Was a good experience? Is it a bad experience? Because ultimately the marketplace is keeping that from you. And so when it comes to getting up and up and running, yes, it’s an easy way to do it. But we kind of look at it as sort of the easy route, but it may not necessarily be the best long term route yet. So that was kind of that piece that’s going on. But the other thing that is evolving that I think is really important understand, is that marketplaces are decoupling, meaning the delivery component is getting separated out from the marketplace component. And that’s really important. And what that means is companies like Uber and DoorDash and there’s many other fantastic delivery companies out there are doing the same thing that DHL or UPS or FedEx does on behalf of retail companies out there. They’re fulfilling the delivery component and they’re doing so at a fixed fee. That does not charge a percentage. And the wonderful thing is, as a company like Flip Dish can offer that delivery network to independent restaurants who don’t need to go through the work of trying to figure out how to set it up themselves the way that I did. And so there is an opportunity to take advantage of the delivery fleets without having to pay the marketplace commissions or be listed on the marketplace or to sell through the marketplace. So I think that’s a really important distinction that’s playing out and one that should be embraced by independents as an opportunity to continue to leverage delivery networks, but without having to pay a high marketplace fee.
James: Yeah. So you’re talking about white label delivery, right? Correct. Where people are ordering through first-party websites and then the drivers being called from wherever, like DoorDash or whatever it is. Right. I mean, I think a lot of operators don’t even realize that that is an option for them and they only have to pay, you know what, the $7, whatever the delivery fee is. I mean, do you have to educate a lot of operators about what white label delivery is?
John: You know, we do. And I think a lot of it is we consult with them and help them navigate and figure out what is the best option for them. Is it utilizing Lyft’s delivery service? Is it Uber or is it DoorDash? Depending on availability rates and what’s most important to them? Is it speed of service, pricing, you name it. We also have the ability to help them toggle back and forth between a couple of different vendors, depending on if it’s a catering delivery or just a regular delivery order, you name it, and we’re possible. We even like to go so far as to actually helping our operators take those first steps of doing a little bit of their own delivery where it makes sense or maybe, you know, just in the first mile, but outsourcing mile two and beyond to a company like a DoorDash drive. But yes, certainly it’s something that I think a large part of it, we spend time helping educate our customers on opportunities to ultimately improve the bottom line, similar to the shift over to kiosks and the ability to save, you know, between roughly one 7 to $3000 a month for location. We’re also seeing businesses that shift over to first party commerce with delivery as a service network are also they have that ability to save upwards of several thousand dollars per location per month by investing in that direct channel.
James: Now, I assume you want to talk to your clients about getting off of the marketplaces where they move to first party and their own website. What are some strategies for doing that? I mean, it’s not easy. I mean I mean, you can get easy customer acquisition with the third party marketplaces, but trying to switch them to first party can be a challenge. What are some strategies you might recommend? Sure.
John: So I’m happy to share what we do. And I can speak to like our proprietary sort of like flywheel mechanism that we’ve built that has a lot of success. But I’m also in share components that any operator can do that. Doesn’t need to require utilizing our software. First off that after setting up your proper technology stack, meaning you do have easily accessible web commerce, mobile app commerce being kind of omnichannel and accessible to your customers. When setting that up, one of the most important things that we talk about is it needs to be very, very easy for your customer to place their first order. And the reason it is, is if a customer gets on your website, you force them to create a complex account where they have to type in their email, get a confirm, retype in their email, create a password if they’re steps like that. A customer is immediately just going to go back to whatever account they already have, whether it’s Uber, DoorDash, you name it. So one of the big pieces in making sure that your commerce that you set up is so frictionless that a customer is not going to second guess, why am I ordering direct? And so, like the way we’ve designed our system is an example is it only requires the customer to put their phone number in. It sends them a text with the code. They enter that and they’re logged in. That’s right. No messy account set up after you’re kind of over that piece up, your systems are set up. One of the big things that we always talk about that gets neglected for whatever reason is customer acquisition. And by customer acquisition we mean it flourishes. We actually run Google ads on behalf of our customers in addition to sometimes Facebook and Instagram that helps them convert new customers into their funnel, meaning new customers into their own commerce. And so what we specifically help restaurants do is we help them put up targeted Google AdWords that are specific to their cuisine types. So that reference, specifically the types of food that they offer that are specific around just the dayparts that they operate. So catered around the lunch or dinner hours, for example, and that are specifically only geo located for their specific delivery address or where their ability is to track customers for a pick up radius. And the whole idea behind that is you can actually really target a very specific group of people who are then much more likely to convert. And right now, we’re still seeing about a 532% return on investment for every dollar spent on Google AdWords in terms of dollars spent in sales that come in. And so the beauty of that piece is that it’s really all about bringing new customers to your website, to your mobile app, through your funnel. And then what’s really special about after you acquire these new customers who, you know, information about is the ability to then retarget them, whether it’s via a loyalty program, whether it’s through an SMS campaign, an email campaign, you name it, those customers are then essentially free to market to once they’re in your system. In addition to that, there’s a lot of other like tried and true tactics that we educate and tell our customers about. A big piece is having investing in physical store signage. You want to educate your customers and let them know, hey, we have a mobile app, hey, you can order on our website. And it’s really easy. And by the way, you might get a free drink every fifth order. Or by the way, we do offer a 10% discount on all of our pick up orders instead of ordering out a delivery marketplace, things like that, that really speak to customers. We also, you know, basics like we are. Every time a customer comes on board with us, we give them a print marketing kit. We very give them thousands of fliers affixed to every one of their takeout bags that has an easy QR code that allows customers to very easily get on their website or mobile app, make that frictionless commerce experience as smooth as possible. And then really, it’s about thinking about what your strategy is for your restaurant. Are you looking to invest in a catering program? Are you looking to grow your pick up business and really thinking strategically about what you want to accomplish over a period of time?
James: Now you work with several Ghost Kitchen brands. You know, I think that there’s a whole different model of trying to understand how to grow a ghost kitchen brand. But what do you think the difference is? Growing a virtual brand and a brick and mortar brands.
John: Yeah. So the basics is that without being on Main Street, you’re going to call it, customers aren’t just going to walk by and discover your brand. And so what that means is you need to actually double down your efforts, if not more, on shouting your brand out from the rooftops, essentially, to make sure that people discover and find who you are. That can mean a number of different things. That can mean Google AdWords or Instagram and Facebook like we talked about. But it can also be achieved through other mechanisms that you might have seen quite popular. So for example, there’s this brand that we work with called Pop Shoe, and their strategy is partnering with really prominent, well-known either celebrities or influencers or personalities who have a very passionate customer base who they’re able to connect with. And so they’re able to speak about their brand, whether it’s on TikTok or Instagram or YouTube, live, whatever it might be. They’re able to connect directly with their customer base and drive that engagement, drive that understanding of who the brand is. And what I would say to people is like, it is possible this has been done. You don’t have to look too far. Like in the retail industry, whether it’s Harry’s with razors or Warby Parker was glassware and eyewear, those two companies started strictly online. But what they did do is they got their story out. They advertise their products, they told their narrative, they explained who they were. They differentiated themselves from any other glasses company or any other razor company out there. And that’s why they succeeded, because they had a really compelling brand and they had a really compelling message that they brought to their customers. Now, later on, ironically, of course, both of those companies went into brick and mortars and started on stores. And I actually think we’re going to see the same thing with virtual brands. Going to see these brands that are so successful that they end up actually opening up physical storefronts. But that’s really it. If you’re if you’re not overinvesting in marketing, really, we say unfortunately, there’s not really a shot to make it because people will not organically discover you.
James: Yeah, well, I mean, I think that the restaurant, whether it’s virtual or whether it’s, you know, brick and mortar, it is a certain geographical location. Right. Like you’re not having to market to everybody in the entire country. So even traditional, I think advertising like billboards and mail or coupons and all these things still I think could work in a virtual environment to try and get your name out there. It doesn’t have to necessarily be like Google AdWords or whatever. Right. I mean, I think there’s a lot of traditional advertising techniques that could.
John: Work in the virtual world. Yeah. I mean, we’ve seen there’s been a lot of press recently about how it’s very difficult for independents to make it into Ghost Kitchen new brands, too. And I think it is true that the odds are more favorable for a brand like a Wingstop or like a Chick fil A that already has strong demand. And they’re essentially just fulfilling that excess demand from another location that is heavily weighted in their favor. But for a brand that has a unique story or that has a really unique profile, whether they’re able we’ve seen them connecting with their local communities, being able to be kind of a local presence and coming outside of the kitchen and being present for their customers and their clients and telling that story and a number of different platforms, as you alluded to, and really having an opportunity to stand out and differentiate themselves and have a lot of success. But without that really diligent, thoughtful investment in marketing and branding, we think it’s rather difficult.
James: Yeah, I agree with you. Well, hey, I’d like to thank you so much for the conversation today. I really enjoyed it.
John: Yeah. James, thank you so much for having me on. It was a pleasure chatting with you. And for anyone interested in learning more about Flipdish, you can find us at Flipdish dot com or on social media or on LinkedIn. But thank you very much for having me, James. I appreciate it.