The DroidDevCast

Ordermark CEO Alex Canter: Ghost Kitchens and the Evolution of the Restaurant Industry

Episode Summary

On this episode of The DroidDevCast podcast, Esper Platform Evangelist Rin Oliver sat down with Alex Canter, CEO at Ordermark, and Esper COO Shiv Sundar to discuss the evolution of the restaurant industry, ghost kitchens, and bringing new technology and logistics into the restaurant ordering and management experience. As a fourth-generation owner of the famous Jewish Canter's Deli in Los Angeles, Canter focused his energies on not only incorporating new technology into the restaurant, but in revolutionizing the order experience via third-party delivery options such as Uber Eats, GrubHub, and Doordash. It was through using these systems, which were designed independently, that spawned the idea for what is now known as Ordermark, a unified, single source of truth that manages all incoming orders to a restaurant kitchen, regardless of the third-party delivery system the order originated from.

Episode Notes

On this episode of The DroidDevCast podcast, Esper Platform Evangelist Rin Oliver sat down with Alex Canter, CEO at Ordermark, and Esper COO Shiv Sundar to discuss the evolution of the restaurant industry, ghost kitchens, and bringing new technology and logistics into the restaurant ordering and management experience. As a fourth-generation owner of the famous Jewish Canter's Deli in Los Angeles, Canter focused his energies on not only incorporating new technology into the restaurant, but in revolutionizing the order experience via third-party delivery options such as Uber Eats, GrubHub, and Doordash. It was through using these systems, which were designed independently, that spawned the idea for what is now known as Ordermark, a unified, single source of truth that manages all incoming orders to a restaurant kitchen, regardless of the third-party delivery system the order originated from.

In this Episode of The DroidDevCast: 

00:40 - Ordermark’s journey over the last few years

03:18 - The inspiration for creating Ordermark

05:27 - What are the food delivery and restaurant trends that will continue even after the Covid-19 pandemic?

08:12 - What was the message that resonated with restaurant owners?

13:01 - What are the benefits of having a ghost kitchen, and what are they?

16:37 - Words of advice for our listeners that may be in the restaurant industry as to why they should check out Ordermark

Episode Transcription

Rin Oliver (00:07):

Welcome to the DroidDevCast, a podcast brought to you by the team at Esper, bringing you the latest news, the thoughtful discussion, and insights into all things Android, Android DevOps and open source software development. I'm your host Rin Oliver, platform evangelist at Esper, and today I'm joined by Alex Canter, CEO at Ordermark and our co-host for today's episode, Esper COO Shiv Sundar. Alex and Shiv, thank you so much for joining me today.

 

Alex Canter (00:27):

Thanks for having us, happy to be here.

 

Rin Oliver (00:30):

We're here this week to discuss how online food delivery has evolved during the COVID-19 pandemic and explore why many restaurants are rapidly pivoting to launch ghost kitchens. So with that said, let's get started. Shiv, take it away.

 

Shiv Sundar (00:41):

Alex, good to meet you. Big news from Ordermark last week you around your Series C funding. To start off, can you talk a little bit about your journey in Ordermark and what you guys have accomplished the last few years.

 

Alex Canter (00:46):

Sure. I'm happy to back up to the beginning here. So, my family's background actually comes from the restaurant world. I'm the fourth generation of a famous Jewish deli here in Los Angeles called Canter's Deli. It's been in my family's business for 90 years now, and as I kind grew up taking on different positions in the business, one thing that I focused on constantly was bringing in new technology and adapting the restaurant for the next generation. And along the way we found a lot of success through third party delivery, specifically apps like Uber Eats and Doordash and GrubHub and many others, and each of these systems were designed independently. And so we wanted to think about how we can effectively create one system to manage all the incoming orders.

 

Alex Canter (01:52):

We have nine tablets, two laptops and a fax machine in the family business just to manage all those incoming orders. And it was kind of a disaster and operational nightmare. So really, we wanted to take a step back, re-imagine the whole online ordering experience from scratch in a restaurant and give kitchens a single device that can not only aggregate all the incoming online orders, but also give them a single menu and a single control center to manage their delivery business. And we started building our first version of the product back in 2017, out of the back of the deli, and immediately started finding product market fit and have ramped up quite aggressively over the last three years to work with over 5,000 restaurants across the United States, from mom and pop businesses up to large enterprise chains as well. And it's been an exciting journey that we've grown the team to over a hundred employees now, headquartered here in Los Angeles with an office out in Denver as well and we're kind of just getting started.

 

Shiv Sundar (03:02):

Wow, it's amazing learning from owning a deli to actually running one of the hardest food tech business in America.

 

Alex Canter (03:11):

Yeah. Well, when you feel the problem firsthand, it makes you very passionate to solve it. So...

 

Shiv Sundar (03:18):

Yeah, I can see that. One thing about Ordermark [inaudible 00:03:25], you guys envisioned food delivery and cloud kitchens way before the pandemic struck, and what was the inspiration or what was the insight that you guys had that you guys prepared a few years before?

 

Alex Canter (03:41):

Yeah so, the way that consumers are interfacing with restaurants is changing drastically, not too different from what happened kind of in the e-commerce phase of retail, where all these brick and mortar businesses had to learn to become digital businesses. And then when people want to shop, they just go online rather than going to an actual store. The same thing is happening in the restaurant world.

 

Alex Canter (04:05):

So when people are hungry now, instead of getting in their car and going to a restaurant, they open up one of the many online ordering apps, browse through and choose their lunch to be delivered to them. And that really opens up this whole new wave and opportunity to create virtual brands that only exist on these online ordering services, that don't have any physical brick and mortar business and location and service a different category of consumers.

 

Alex Canter (04:37):

So, if you're a pizza restaurant and you can actually launch a wing brand and now have two ways to reach consumers out of the same kitchen using the same overhead and the same staff. And it's really just a very fast paced, changing industry that we're in right now, especially when you think about the impact that COVID has had on the industry. When we looked back or when we thought about the future of what this industry looks like, we saw this shift happening already, and we envisioned over the next 10 years, a growing percentage of these orders to originate through mobile orders rather than in-person. And COVID has definitely accelerated 10 years of advancement in a matter of months, I would say.

 

Shiv Sundar (05:27):

It's pretty interesting. I think our next question was on COVID. You actually answered it. I would actually jump next, and you have seen rapid transformation in food delivery in the last eight months, right? One of the things that they talk about COVID is like certain things that happened [inaudible 00:05:46] that happens in the [inaudible 00:05:49] continues to stay on forever. What are the trends, do you think, that will continue to accelerate even when life becomes normal post-COVID?

 

Alex Canter (06:00):

Yeah, well, I don't know if life will ever be normal again compared to what we used to know. I think permanently business travel has changed. The need for offices is different now. There's a lot of companies that are committing to a forever distributed workforce, and that really does change a lot for this industry. Catering is a category that got wiped out this year. I foresee catering looking different in the future, especially office catering.

 

Alex Canter (06:30):

I would say one of the things that is definitely here to stay is that every single restaurant will have some sort of off-premise strategy or percentage of their orders moving forward. Pre-pandemic, I think there were certain category of restaurants that made more sense for delivery and off premise. And now you see even the highest end steak houses creating some sort of offering that's designed for an off-premise solution. We've seen everything from meal kits, to frozen packaged goods, to restaurants turning into more like a grocery store offering. If you would have told me that there were coffee shops selling a dozen eggs, I would have told you that it probably would not happen, but now that's happening everywhere. Every restaurant is turning into this local grocery store, market offering to support the local community. And I think that, moving forward that will continue to remain the new normal.

 

Shiv Sundar (07:36):

Yeah, and it makes a lot of sense, a lot of insights into how restaurants are going to transform. I think it would be easier for smaller restaurants than for larger chains. [inaudible 00:07:47] The change is going to be much harder for them compared to this mom and pop shops.

 

Alex Canter (07:52):

Well, one advantage that the chains have here versus the mom and pops is that they have deeper pockets. They've got private equity backing. Sometimes they've got investors, so they can weather this sort of a storm better than a mom and pop restaurant can. Obviously PPP funding helped a couple of months back, but now that money is running dry. It's really challenging for these mom and pop businesses to get creative and figure out ways to keep their doors open right now, and I foresee more mom and pops not surviving than chains.

 

Shiv Sundar (08:28):

Makes sense. Right now, Ordermark is a big brand and they know you, Alex personally, but when you start off early on, what was the message that made people attracted with Ordermark construct a completely different way of delivery, right? What was that single message that you actually [inaudible 00:08:52] owners?

 

Alex Canter (08:53):

Yeah, I think what we were really solving for resonated really well with the timing of what was happening in this industry. I mentioned many brick and mortar restaurants learning how to become digital businesses. Many of them were not set up for it, not designed for it, and there's not a lot of products and services and tools to help them along the way.

 

Alex Canter (09:15):

So when we came in and we offered a technology solution to not only simplify the online orders coming in, but to actually enable restaurants to take on more orders, layering in incremental revenue, I think that really resonated well with these restaurants. You can all use some extra orders. There are many examples where we had a restaurant that was just using one or two platforms, like only on GrubHub or Doordash. And we came in and gave them a single device to manage all their delivery orders, and then we were able to turn on several other channels for them, which grew their delivery business revenue, sometimes three to 10X based on where they were at before. And I think once they see the return on the investment so immediately, it's it's kind of a no-brainer.

 

Shiv Sundar (10:08):

Makes sense. I think that my last question before I hand over to Rin. What's next? SoftBank, CHT is a big milestone for any startup, especially in Esper. We are a few years behind you guys, but it's a monument of milestone for you guys, and has the vision changed and what are the next amazing things that we can expect from Ordermark?

 

Alex Canter (10:36):

Yeah. So, right now we're really looking at all the ways in which we can make the most impact for our restaurant customers, and how do we move the needle with layering in as much incremental revenue as possible? And one thing that we've uncovered that has been wildly successful, especially in a post-pandemic world, has been the emergence of Next Bite and creating virtual restaurant brands that exist only on delivery, that we can actually turn on out of the back of these kitchens.

 

Alex Canter (11:08):

So we've got restaurants across the country now that have underutilized kitchens and we're constantly thinking of how can we bring these restaurants additional orders? How do we get more orders flowing into their kitchen? And when we're able to turn on some of these incremental brands that we're doing with within the next portfolio, we're able to make that impact and sometimes layer in 10, 20, $30,000 a month in incremental gross sales in each of these brands that we're bringing to these restaurants.

 

Alex Canter (11:41):

So, that's been a big area of focus for us as of recently. When we think about the impact that we can make on a restaurant, there's nothing greater that we can be doing them in this moment. And that's why we're continuing to invest in our brand development process. In October, we launched our first celebrity partnership with, with the rapper Wiz Khalifa to build like a concept called Hotbox by Wiz, which was kind of a stoner brand, but it's very effective in driving that incremental order volume to our restaurants that need those orders. And I can't tell you how many times we've had a restaurant tell us, "You're literally keeping our doors open with these extra orders right now." And that makes it all worth it, and satisfying and it's what keeps the team motivated. And I'm so proud of what we've accomplished and the way that we've been able to pivot our strategy and just think about ways in which we can really be helpful to these restaurants who are really struggling in this time.

 

Rin Oliver (12:42):

That makes a lot of sense. And actually, I'm going to step in here and we're going to talk a little bit about ghost kitchens, actually. I saw the term in the show notes and up until a couple of days ago, I had never really heard of a ghost kitchen. What is it? And why are today's restaurants setting them up? If you're a smaller restaurant in particular, what's the benefit of having a ghost kitchen?

 

Alex Canter (13:04):

Yeah. So the term ghost kitchen is this new industry term to describe a kitchen that is designed specifically for the purpose of off-premise and delivery. There are a couple of businesses out there that are building additional real estate, almost like we work model, but for kitchens to have an optimized low overhead delivery business. And that is the reason why it's called the ghost kitchens, is because you can't physically go to the restaurant. It appears to be a restaurant when you open up Uber Eats and Doordash, but it's really being made out of tiny kitchen somewhere out of the back of an existing restaurant, for example. There's a lot of terms that have emerged in this world.

 

Alex Canter (13:53):

We aren't really focused on building additional real estate. Our goal is not what we're in the business of. We actually believe that there's already too much kitchen space across the 800,000 brick and mortar businesses that are in the U.S. That was already too many restaurants to need additional commissary kitchens or delivery only facilities. We believe more in a strategy where we can leverage the existing infrastructure of a restaurant, like my family's restaurant, where we actually layered in our first virtual concept, which was a grilled cheese brand, out of the same kitchen that we were producing Canter's food. And that enabled us to take on an extra 25, 30 orders a day using the same staff, the rent is fixed, the lights are already on. So it's really profitable incremental order volume that we're layering in by adding a second or third brand out of the same restaurant that's already operating. And it's a really exciting opportunity that's available as an option for restaurants today.

 

Rin Oliver (15:01):

That's really smart. I'm also Jewish, so I'm like, "Yay." That makes a lot of sense because that revenue is already paid for, they already have those line chefs, they already have those ingredients, those costs have already happened, so they can leverage that and create more orders by having that opportunity available to them, yes?

 

Alex Canter (15:22):

Yeah, that's really what's happening here, is like a restaurant has those fixed costs, like we mentioned, and because of that, layering in that incremental order volume is very profitable revenue. Sometimes it could be up to 30% profit margin, which is unheard of in the restaurant industry.

 

Alex Canter (15:41):

Usually a restaurant is benchmarking to make 5 to 10% profit margin on their orders, and even that is a struggle for many restaurants. Most restaurants actually fail within the first year or two. And so, going into something that's already operating and layering in this incremental revenue is a great new tool for restaurants to expand their offering. We always encourage restaurants to be on all the different channels that are available and relevant in a zip code. For Canter's that was 14 different online ordering systems. But even once we were on 14 online ordering systems, the way for us to then layer in even further revenue was to look at these virtual restaurant concepts and to start layering in more brands so that we're capturing different audiences and reaching new customers that maybe aren't in the mood for deli today.

 

Rin Oliver (16:37):

That's very true. Last thing, Alex, do you have any words of advice for our listeners that may be in the restaurant industry as to why they should check out Ordermark? Where can they find you and what would you like them to know most about your platform and your services that you have available to them, that can help them do what they do better?

 

Alex Canter (16:52):

Yeah. Well, first of all, you can find us at ordermark.com. There's all sorts of information on there, but basically if you are a restaurant that is looking to turbocharge your kitchen, we've got a whole suite of products and services that will help you do that. Some restaurants are already slammed and very busy and don't need extra orders. So, if you're operating and they're happy with revenues and how busy your restaurant is, maybe there's a line out the door, we might not be the best fit, but if you're a restaurant that is looking for ways to handle more out of your same kitchen, that's what we are experts at. That's what we're in the business of. And that's what we focus on when we work with restaurants.

 

Rin Oliver (17:38):

Alex, thank you so much for taking the time to join us today. We really appreciate it.

 

Shiv Sundar (17:43):

Pleasure to talk to you as well. Really nice having you here and...

 

Alex Canter (17:45):

Thank you so much. Yeah, great conversation today, and if you'd like to learn more, again you can go to ordermark.com.

 

Rin Oliver (17:54):

Thank you so much for joining us on this episode of the DroidDevCast. We'll be back next week with another exciting show for you. Please remember to like, subscribe and share this episode on social media. You can also follow us on Twitter at @Esperdev and subscribe to our YouTube channel to keep up with all the latest happenings for Esper. If you'd like to learn more about how to get started with Ordermark and Esper, please visit ordermark.com and esper.io/signup. You can listen to the DroidDevCast on Apple Podcasts, Spotify, Simplefast or wherever you get your podcasts from. Thank you again for listening.