The restaurant industry is known as one of the toughest sectors in our economy to succeed. The margins are thin. The hours are long.
Many want to cook. But few can. Colin Webb and Nenye Anagbogu dare to don chef aprons and whip up something nice in the kitchen for the restaurant industry. While they aren’t Chef Curry cooking with the pot, the two deliver Sauce to restaurants to help spice up their menus with data. Sauce provides analytics and dynamic pricing for restaurants. When it comes to the Future of the restaurant industry, there’s no such thing as Too Much Sauce. The startup claims that one of their customers, Rachel’s Kitchen, saw “a 64% increase in sales in just four months” after using their software.
The Los Angeles-based startup has raised $3 million from Harlem Capital, Red Sea Ventures, and Global Founders Capital; leading hospitality experts such as Nicolas Jammet, founder of Sweetgreen, Sam Nazarian, founder of SBE and Umami Burger, Saul Cooperstein, CDO of C3 by SBE, Pieter-Jan van Depitte, COO of Delivery Hero, Daniel Wolfson, manager of Oldslip Ferry and investor in Toast, Chopt/Dos Toros, and Mendocino farms; and the leading data experts, former heads of data science from Uber (Kevin Novak with Rackhouse Ventures) and Airbnb (Riley Newman with Wave Capital).
Kevin Novak, former Uber Head of Data Science and investor in Sauce, "Right now, static prices at restaurants create a lot of inefficiencies that hurt both customers and restaurant owners. Similar to how Uber & Lyft innovated in transportation, products like Sauce that introduce a more efficient market have the potential to not just improve the present-day experience, but grow the overall market and create new opportunities in the future."
Frederick Daso: What have been the main constraints on restaurants in adapting to having an online component to their food operations?
Colin Webb and Nenye Anagbogu: Since restaurants are dependent on so many channels to be successful online (multiple delivery aggregators, white-label ordering platforms, QR code systems, reservation systems, pos and inventory systems), operating efficiently across all of them is an enormous task. Restaurants already fill their workload responding to the flows and ebbs of consumer hungriness at the storefront, but managing online stores adds significantly more workload, which isn’t feasible given small margins and labor shortages.
Daso: How has data made the difference between successful restaurants and those that are not? What are the central bottlenecks or obstacles for restaurants to operationalize their data?
Webb and Anagbogu: Restaurants that use their data effectively can more easily improve their business, capitalizing on their strengths while evolving the aspects of their business that need more work. Restaurants who take advantage of their data can gain more customers, set more accurate price points, create products that people love, discontinue ineffective products and initiatives, manage their staff, and procure supplies in a way that makes their businesses more effectively profitable. When restaurant owners forgo making the most of their data, they often leave money on the table. They’re either underpriced or overpriced, undersupplied or oversupplied, understaffed or overstaffed; each can significantly impact their margins.
The bottleneck: Since restaurant data is spread out across many channels, it becomes difficult for business owners to bring it all together and act on it without spending a significant amount of time doing so. Imagine updating prices across 50 menu items on six different online sales channels multiple times a day… it’s virtually impossible.
Daso: What led you to focus on small restaurant businesses as your ideal customer persona?
Webb and Anagbogu: Typically, small business operators don’t have any data or pricing team and are left entirely in the dark when making pricing decisions and deciding how to operate their online sales channels. As they added more delivery platforms over the years, their owners and managers had to spend much more time managing the online aspects of their business themselves. Small businesses have a large need; we both understood the small business perspective very well, having seen our family members start them. Since creating Sauce, we’ve learned that even the larger restaurant chains have tremendous opportunities to be more profitable through robust dynamic pricing.
Daso: Among these small businesses, where have you found the greatest opportunities in servicing some subsegment of the overall market?
Webb and Anagbogu: We see the greatest opportunity with businesses with a history of delivery platforms, which typically trend toward quick-service restaurants rather than fine dining. Those restaurants traditionally have higher order volumes, which allows us more sales data to model and optimize against demand. Plus, we can study their history of online sales to understand their customer base better. As we improve, we hope to help a broader range of restaurants, including those just getting started in their online selling journey.
Daso: What was the core realization during or after your experience building a solution in the real estate industry that dynamic pricing could help restaurants increase their margins?
Webb and Anagbogu: Right before we started Sauce, we were exploring a way to help restaurants expand to new spaces at a low cost (like Airbnb for kitchen spaces). While many restaurateurs were interested, there were plenty of hoops to jump through in order for them to access this revenue opportunity. When dealing with new real estate as a restaurateur, you have to answer questions like: How will I staff this place? How do my operations and supply chain change? Are my ideal customers in this location? Does this kitchen buildout have the right equipment, grease, and electrical installations? What modifications do I need to make to the space to fit my needs? Overall, these questions take time to work out, which got us thinking. Is there any way we can provide tremendous value and revenue to restaurants without them having to do any additional work at all? It turns out that there is a way through dynamic pricing, and that’s how we started Sauce.
Daso: What other areas of a restaurant’s business could Sauce plug into to provide more value to the customer?
Webb and Anagbogu: There are many areas where Sauce can expand and provide even more value to restaurateurs. Some of our favorites revolve around automated marketing, cost optimization, and customer relationship management (CRM). On the marketing front, Sauce can solve the age-old challenge of finding new customers by managing a restaurant’s online ad channels to target the right personas and grow their business. In-house, Sauce can grow to make restaurants more profitable by handling labor, inventory, and other operations to reduce inefficiencies and costs. And of course, as Sauce amasses deeper information on how customers buy food on menus that update in real-time, Sauce in the future can take one step further to be a comprehensive CRM—providing restaurants a dynamic way to individually manage their customers from ad click to first meal to champion across multiple channels.
Daso: What’s the secret Sauce that makes you two the right individuals to succeed in this industry?
Webb and Anagbogu: We’re the perfect combination of restaurant, data and product. Our families started small businesses, and we worked in restaurants, so we know what our customers are going through. We’re also both technical. We’ve worked on data and tech solutions from fintech to self-driving cars to Apple products. We both know how to solve the complex engineering and data challenge while developing a simple and easy solution for busy restaurateurs to use.
"Sauce" - Google News
November 02, 2021 at 11:48PM
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Two MIT Founders Dish Their Secret Sauce For Restaurants To Cook Up Success - Forbes
"Sauce" - Google News
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