YI Chen - SVP Toast

Episode 5:Yi Chen

For Episode 6, we talk with Yi Chen, a vice president at Toast. As a child, Yi worked in his family’s restaurant and later became one of the first employees at Toast. We talked about how restaurants can improve customer service with technology and how each restaurant must utilize the technology that works for best for it. The key is creating a great customer experience. 

Episode transcription 

James: Welcome to Episode six of the Food Tech Podcast. I’m your host, James, publisher of Food Delivery News. For this episode, I talked to Yi Chen, a vice president at Toast. An immigrant from China, he grew up in a small town in Virginia and worked at his parent’s restaurant. His parents discouraged him from going into the restaurant business, but he became the fifth employee at Toast as an intern. I enjoyed the conversation. Yi used real world example from his parent’s restaurant and talked about how technology can create a better customer experience. He stressed that not every piece of technology is appropriate for an operator and restaurants must start small and build out the technology. Welcome to the show Yi.

Yi: Thank you, James

James: So real quick, tell me a little bit about your background. I understand you work at Toast, but that you originally kind of worked at your parents restaurant and have a background in the restaurant industry.

Yi: So my parents and us, we moved to the US to Southern Virginia when I was about eight years old, and we opened up a small restaurant there. I grew up working alongside my family, and I was often told by my parents that whatever I decided to do after, after this in my future career, that I am supposed to stay as far away as possible from the restaurant business. So I studied engineering at college and spent many years at General Electric before going to Boston for graduate school in business. Did not realize that I was going to end up building software platforms for restaurants of all sizes, and my parents was an early customer.

James: That was my understanding, is that your parent’s restaurant was one of Toast original clients. How did you end up at Toast?

Yi: Yeah. So when I was at business school, one of the angel investors had posted, I think, about four companies that he had invested in. And we’re looking to get some help from from summer interns. And I responded to that, I think was a Facebook post. And the investor introduced me to the founders. They were very early at the time, no customers, no revenue. I don’t even know if all the founders don’t quit their jobs yet to build this company. But that’s how I got connected to to toast. And I joined them as an intern. I was tasked with finding their first couple of customers. So I found a coffee shop in Cambridge that actually gave us a chance. And my cousin actually was part owner of that coffee shop. So there was another family connection that gave us a shot, but it was early days, so we had to do whatever it took from be scrappy to the customer to try out our product.

James: You guys have come a long way since that, especially over the last couple of years.

Yi: Yeah, yeah. We have definitely scaled a lot over the years. I think early on it was all word of mouth organic. Organic referrals, right. Which is a testament to just the products and services we’re building on in terms of really focusing on on building the best possible platform for restaurants.

James: So restaurants today have multiple channels to order from. What do you tell restaurants about first party ordering and the benefits of it?

Yi: So first point of order and just to define this for folks who may not understand so this is what I refer to, what we refer to as the awarding channel that’s directly owned or preferred by the restaurant. Right. This could be an online were inside a website when we’re experiencing a restaurant app or some sort of zero commission channel as well. When I say that the first party ordering is the best channel for restaurants and for yes, I’m often talking about how, you know, restaurants benefit tremendously from optimizing this channel. It’s usually the lowest cost for restaurants, which means actually better prices for consumers as well. And customers helps the restaurant bring forward their brand invoice. Right. It’s also an investment in the future successes of the restaurant by building this potential gold mine of customer profiles and customer data. Right. So I think how restaurant leverages this first party channel to drive traffic to their home. Our branded channels also accumulating customer data and profiles to then leverage and bring back the most loyal guests or offered differentiated, impersonal experiences in the future. So I think that’s how I think about how restaurants should think about in terms of the value and the potential of this channel.

James: Now, one of the benefits of first party ordering is capturing data. Once the data is captured, what can restaurants do with that once they have, you know, customers, email and phone number and that type of data?

Yi: The benefit of data is this endless rain. When you think about it, you know, one of the most common use cases is to use the data to communicate with your guests. Right. With the whole digitalization of the restaurant experience, whether it’s our know online or even inside the restaurant, you know, it’s more important than ever to communicate and celebrate the restaurant brand with your guests. Right. You could communicate promotion and offers, right. You can also communicate your stories and why certain holidays or are celebrated by why they matter. Right. You can even communicate with your guests to do things like fun picnic tables and patios, even new location expansions. Right. And when I think about all the different ways that our customers have used their guest data right, to to build their brand, to promote their stories from other people. Their servers, their staff, their staffs to fund things that they can’t afford. Right to even like ask customers to come help them build their patio. We had a customer in Cambridge actually emailed their their guest and said, hey, we’re going to patio Saturday. We don’t have enough help, if you will. If you are open is a great weather. Come on, help us. And tons of people came out and help them build the patio. Right. So I guess that can also be used to reward and celebrate your most loyal guests. Right, who are part of your neighborhood. A community who loves supporting your restaurant business. Right. So so I think the benefits endless and there’s so many creative ways of using that data and we’ve seen our customers use in all sorts of interesting and innovative ways to help their business.

James: Yeah, I love that story about the deck because it shows that one of the most interesting thing or important things about the restaurant business is community and how it builds community through sharing meals and, you know, sharing drink. And that’s just a great story.

Yi: Yeah, definitely. And I think, you know, what’s interesting about small businesses, independent operators, the restaurant industry is one of the bedrock of the American economy and is one of the ones that still thrives in terms of being small and local and hyperlocal. Right, in that community. You know, we’ve seen a lot of disruption, whether it’s book businesses or flower businesses, disruption by big box retailers or e-commerce. Right. Restaurants have really fascinating, large, expansive industry where small businesses, small business owners can still thrive, which is really, really powerful, I think.

James: Yeah. And one of the things that a lot of restaurants are getting into is loyalty programs. How central are loyalty programs these days for the operation of a restauran

Yi: You know, I think loyalty programs have, you know, continued increasingly towards adoption. Right. I think restaurants, both big and small enterprises, know the value of, you know, taking direct control of their relationship with guests, right. Where they’re building personal experience, where they’re most loyal guests or helping them to win back the attention from potentially other other platforms. Loyalty programs is a great way to entice guests to share that information in exchange for valuable rewards, which would be savings, access to new experiences or unique menu items depending on the Russian concept. We have seeing also creative gamification of loyalty programs in making it fun and can be really effective way of engaging guests. And I think, you know with the acceleration of digital touchpoints right and the guests, you know, whether scanning a QR code, the table, going online, looking at digital menus, there’s a lot more opportunities now for restaurants to engage their guests in the digital in the digital workflow to actually entice and get guests to sign up for loyalty. Right. You know, I think I think this combination of different trends and tech stacks and platforms and guest behavior is really creating this like ripe environment. Right, for restaurants to really push for their brand, the loyalty program in exchange. The guest also gets a lot of value from that. So, you know, I think that’s some of the interesting trend that we’re seeing in terms of how quality process can really be powerful for restaurants.

James: Like when you talk to restaurants about loyalty programs, like how should they organize them, right? Like because I assume someone would organize them by like you by ten and get the 11th free or whatever. But I guess when you talk to restaurants about organizing a loyalty program, what kind of questions should they start asking?

Yi: Yeah. And, you know, I do think like something that is simple, easy to understand, you know, oftentimes is the most effective way. Right. Oftentimes, you know, locations which wants to do all sorts of different things. Right. To engage guests. And I would say you don’t really think about what is your value proposition, what does your brand stand for and how do you help that come to the forefront? There is a most simple ways of a point exchange, right? You or item exchange. You buy two coffees, get one free, you spend $100, you get a dollar off, right? Whatever the math calculus exchange might be. But then I think there are potentially more creative ways in terms of getting guests to come in and creating value and understanding what the what their needs are. We are seeing more and more restaurants use unique experiences access, right. That could drive truly loyalty, not just for transaction perspective, but actually loyal to your business, your brand. Right. That could be unique experiences around for some restaurants, maybe wine tasting that’s inclusive to give the customers. Maybe that could be exclusive menu items that only they’re. Yeah because it can get access to it might be first dibs at being able to reserve tables or doing away with or even skip the waitlist. Right. I think for every restaurant it’s really understanding who their customer base is and what they really value and providing that to them in a very engaging and fun way. And this is really important that each restaurant should think about and test and iterate and optimize for. This can be heart rate. It does require a lot to happen. And some restaurants outsource some of that. Some restaurants do it within themselves. But I think these are the things I would consider when thinking about how to launch and launch a very successful loyalty program with lots of customers who join are actively engaging in those programs.

James: I like that idea of making loyalty more of like a VIP experience versus just like, you know, by ten and get one one free or something like that. That’s I think experience marketing is such a underutilized thing these days. So as you know, QSR and fast casuals have seen tremendous growth over the last two years. Can you talk a little bit about the toast for quick service and what it does for the industry?

Yi: Sure. You know, it’s a pretty flexible platform. And we do serve restaurants of all sizes. I think for QSR and fast casual like that, that’s a huge part of our customer base and we continue to invest heavily there in terms of the product, right. When I think about the platform that we built, whether it’s guest facing displays to be screens for quick service to how we operate the kitchen under high stress, high volume environments with kitchen display systems to how we might print tickets to packaging sandwiches and items to sticky labels. Like there’s, there’s so many features of functionality that a platform like Toast offers because we go so deep in the Russian vertical. This restaurants are our bread and butter. We serve food service industry as a as focus area, and therefore we can really develop the technology that helps us in fast casual restaurants. Thrive. Right. And then in terms of, you know, we’ve been talking a lot about guest data and loyalty, etc., the way that QSR, fast casual restaurants operate. You know, there’s a lot of touchpoints there, right, in terms of the habitual nature of guests who might order lunches or coffees or quick meals right from these restaurants. That’s really, really interesting in terms of being able to accumulate guest data and building your program around that. So I think all those things combined really makes, makes, tells a compelling platform for fast, casual, quick service restaurants. And then beyond kind of the front, the house and the operating model and the guest. Matt right on toast also offers many other mechanisms in general for restaurants to to engage grant right. Whether that’s in operating payroll for their employees, whether it’s as capital to help them expand and grow, whether they want to buy some picnic tables or expand the patio or even open new locations. So I think it’s it’s the full stack platform that really becomes really powerful for restaurants in terms of just heavy focus on the restaurant history and for all the things that we do. And lastly, I’ll say, is that the employee base that we have right to every two or three employees I toast out like myself, have a deep connection to the restaurant industry, whether that’s working, restaurants, maybe operating, even owning restaurants with them, whether it’s chefs, cashiers, GM, general managers, owners, right. We’re really a company that’s built for restaurants with even with the employees that we we hire and bring to our company.

James: Now, changing to more fine dining, I have a question about the QR code and ordering from the table at several restaurants I’ve been at recently. Have had that with Toast. You know, I guess part of it is you don’t have the human experience of ordering, but there’s the efficiency. What do you talk to restaurants about QR codes at the table?

Yi: Yep, yep, definitely. You know, we call this our kind of mobile dining solutions, right? And it composes be able to operate in order and pay at the table. It could be just a digital menu, right. With payments or could just be payments. So I think part of this platform, we believe, is highly flexible to adapt to the model that a restaurant may want. Right. Some restaurants may be all in fully auto repair the table where they have a QR code table. And that’s the only way to do ordering pay. Right. There are also restaurants your to a question that you fine dining that maybe only want to use it for the digital menu interface right where is instead of having a customer paper menu they’re using scan the QR code to look at a digital menu with really rich media, foot photography, etcetera, etcetera. Do you still have a conversation with the server? Right in that in that note. So I think our product adapt to the service model is ordering pay the product for all finding restaurants probably not. Right. You might be depending on how you think about it. In some ways, I think about the technology. Bill could be a psychic, right? It could be a way that if you wanted to pay quickly and get off to a show or to do something and rushing to or you have another appointment, it’s a really, really efficient way of being able to piece your dining experience a meal with a technology in your back pocket. So I would say that, you know, we do talk to restaurants. We do talk about, you know, different ways they could use the technology. And some are much more adaptive to, you know, a fully service situation. Others are using it more of a companion product to their their staff in terms of how they serve their tables. But, you know, with certain guests, certain certain consumers really, really like the product. Others prefer the traditional ways of of a paper menu of physical menu or a digital menu. Right. So I think when we talk to restaurants, we are looking at how we adapt our products to them and then how do we actually serve them in the best way possible. So is the future where every single restaurant is going to have a QR code on the table? Maybe it might take some time. But what is that QR code actually doing? May change based on your concept. Based on what this cast wanted to write. It could be used to call a server to come back to your table. Right. It could be used to order another round of drinks. Or it could be used to just look at a menu. Or can be used just as a paint mechanism. So I think that’s the type of flexibility that Toast is building towards to offer our customers and guests exactly what their needs are for their operating model.

James: Yeah, it is funny how the QR code has made a revival after what, a decade of kind of floundering and not being part of the technology platform, right? Yeah.

Yi: Yeah, it’s actually really interesting. When Toast first started 2011, 2012, the founders were actually trying to build a product around the table, splitting checks. Right. Checking in on consumers side. And at the time, right, it was the first iPhone edition. WI-fi and LTE and Internet speeds were not there. POS systems were very archaic. Integrations were hard. That’s actually why we pivoted to building a restaurant table from my point of sale and payment and others, because it was so hard to make this work. And sure enough, you know, a decade later, with the pandemic, with the celebration of this, you know, now it’s all back. The whole tableside mobile payments, mobile ordering, you know, is rolling back. So it’s very interesting. They were ahead of their time in terms of the technology in front of them they were trying to build for consumers.

James: Yeah. So now I know a lot of restaurant owners these days get overwhelmed by the amount of technology choices these days. Like, what would you tell restaurant operators, especially smaller operators, about trying to understand their options and how to utilize the technology?

Yi: Yes, you know, the industry’s definitely filled with a lot of, you know, legacy tech point solutions. Some don’t have the ability to really help restaurants become truly successful. I would really focus on finding solutions that are easy to learn, easy to use, easy to integrate with your existing tech stack. I would say don’t try to do everything all at once. You know, pick one thing and really focus on that sale and work first on that first party. You know, if there’s one thing to pick, you know, start with that, right? Roll that out, learn from it. Like look for errors, improve and expand. There are a lot of articles out there about like how to best optimize your restaurant, right. For for this new era of digital experiences. Right. One of the small things I tell all my neighborhood restaurants to do is to make sure you Google My Business optimize. Make sure your first party or links is highlighted under Google as the preferred channel so that it sits above everybody else. Right. And that’s where all the traffic is going to get clicked with somebody such as your restaurant group. So I think there are a lot of these simple steps that are simple to do that can really help operators optimize their best channels that are most most affordable with the lowest commissions that helps them build their guest network. It helps them build a guest data platform. Right. So so that’s something I would say. And then there are probably a lot of apps, right? Once you get that right, how do you optimize your website? How do you optimize your social media channels? Right. And then how do you optimize even your in-store experience in terms of getting guests to opt into your loyalty programs, to give up their content commission so that you can create a connection, a communication channel with those guests. So that that’s what comes to mind when I think about recommendations in terms of how to help, you know, restaurant owners, restaurant operators not be intimidated by technology, but embrace it, right, and start simple, start small and grow from that.

James: I like what you said about starting simple with something like just Google My Business because people don’t think about how important that foundational work is before you get into the more complicated stuff.

Yi: Exactly. And I think, you know, in the simple things can be really powerful. Right. Just because it’s simple does not mean that you can drive thousands of dollars additional revenue to to your platform. So I would suggest that the simple, low hanging fruit could actually be some of the largest impact to restaurant business. So don’t overlook those.

James: One final question here. I guess, how does technology fit in to making a better user experience?

Yi: I think it’s a lot of the things that we’ve talked about. You know, when I think about going back to my my parent’s restaurant, they’ve been there for close to 30 years. Right. I moved moved in the early nineties. And what’s what’s amazing is when customers walk in, they know who the the police officers are. They know the high school coaches and teachers. They know the coal miners. It’s a very magical experience because you have multi generations of people that come in and buy from grandparents to parents to their kids. But that magic kind of goes away when they come up to Boston to visit me or go to California to visit my brother, because whoever is working there don’t have that knowledge right and don’t have the kind of the CRM, the customer relationship management in their brain. And I think where technology comes in is how do we create that sort of personalized magic experience, even if the question has been there for 30 years and then don’t know, everyone that walks in is how can we use technology to create magical experiences, personalized hospitality driven experiences when people come in? Because I think, you know, you and I talked about how food is a kind of the sacred spirits. Right? It’s all in all cultures. It’s usually used to celebrate social. Actions, celebrate special events and celebrate friendships. Right. And I think technology can be a companion, can be a sidekick to making that even better, even more robust and not creepy. Right. So so those are things I think about as a leader. I toast to think about how can we continue to innovate and build some of these tools and functionalities to help restaurants right in this area of driving demand for restaurants, but also building better connections between guests and restaurants.

James: Well, thank you so much. I enjoyed the conversation.

Yi: Thank you. I really doing as well. Thank you for inviting me to the podcast, James.