S2:EP15 - Alex Canter, Restaurant Technology Genius
S2:EP15 - Alex Canter, Restaurant Technology Genius
In this episode, I interview, Alex Canter, CEO of Ordermark.
A platform that allows restaurants to use multiple third-party delivery apps but receive orders on one tablet or printer, as well as manage one universal menu that can synchronize with every third-party marketplace.
Alex was raised in the world famous Canter's Deli, right here, in Los Angeles, where he and his team first invented Ordermark.
He is a fourth generation restauranteur and the restaurant business has been in his blood for 85 years.
Alex was a 2019 recipient of Forbes 30 under 30, and Fast Casual's executive Top 25.
He's continuously innovating in the restaurant space and he has some exciting new concepts that he shares on this episode.
Alex CanterCEO of Ordermark & Forbes 30 under 30
Brett Linkletter: In this episode, I interview a restaurant technology genius, who's completely innovating the delivery game for restaurants today. His name is Alex Canter, and he's the CEO of Ordermark, a tool that allows restaurants to use multiple third- party delivery apps, but receive orders on one tablet or printer as well as manage one universal menu that can synchronize with every third- party marketplace. Alex was raised in the kitchen of the world- famous Canter's Deli here in Los Angeles, where he and his team first invented Ordermark. He's a fourth generation restaurateur, and the restaurant business has been in Alex's blood for over 85 years. He is a 2019 recipient of the Forbes 30 Under 30 and Fast Casual Executive's Top 25. He's also started another virtual restaurant venture called Nextbite that works alongside with Ordermark. And as of most recently, Ordermark announced the close of its$ 120 million Series C funding round led by Softbank. This guy is incredible. His team is incredible, and I can't wait for you to listen. So let's get into it. Hi, my name is Brett Linkletter, CEO and founder of Misfit Media, the best damn restaurant marketing agency on the planet. Here at Misfit, we help restaurant owners grow and scale their business through strategic online marketing practices. Right now, you're listening to our podcast, Restaurant Misfits, where we'll discuss all things related to restaurant marketing, management, and everything else in between growing a restaurant business. This podcast is also brought to you in collaboration with Total Food Service. For over 30 years, Total Food Service has provided the restaurant and food service industry with exclusive interviews to the latest news on products, trends, associations, and events. You can sign up for a free monthly subscription by visiting totalfood. com today. And from all of the misfits over here, we hope you enjoy the show. Cheers. Alex Canter. How are you doing?
Alex Canter: Hey, I'm doing well. Thanks for having me.
Brett Linkletter: Absolutely, man. Thanks for coming on the show. You're an incredible person, man. You're doing so many cool things. You've helped so many damn restaurants, have such an amazing story overall. Can you just tell all of our listeners a little bit about yourself and how you got into the space that you're in?
Alex Canter: Yeah, yeah, for sure. Just to set some context here. So I am a fourth generation of Cantor's Deli, which is an old school famous Jewish restaurant in Los Angeles that's been in my family for about 90 years. And just like my dad and my grandfather, I grew up working in the family business, and was really responsible for adapting it for the next generation, keeping it relevant, bringing in all the new technology. And I really enjoyed proving to my family that technology was a great thing that we can embrace change, even though we're an old school family restaurant. And I would run around to restaurant conferences as a kid, signing up for all this crazy new technology and was obsessed with bringing in new initiatives and particularly reaching customers outside of our four walls. I felt like there was so much opportunity with that. And in 2008, when the recession hit, our foot traffic at the restaurant was down about 15%. We were forced to find new ways to reach customers outside of our four walls. Not just because it was fun, but because it was necessary. And we started experimenting with all the different delivery platforms and catering and frozen shipping and all this stuff, and really found a ton of success through third- party marketplaces, like Eat24, Grubhub, eventually what became DoorDash, Postmates, Uber Eats, all these services. And we signed up for all of them, and each platform brought incremental revenue. We realized that if Canter's as a brand wasn't listed on each of the services, we just simply didn't exist to the people who use them. And we found a lot of good success from it. 30% of our revenue shifted to this new delivery world. And we had nine tablets, two laptops, and a fax machine just to manage all those incoming orders, which was a disaster for the restaurant from an operational perspective. And it really felt like the online ordering companies hadn't spent enough time in restaurants to know how difficult that would be. Sending orders to a digital screen in the front of the restaurant is not even how restaurants operate. That you need orders printed out in the kitchen and that whole thing. So we wanted to take a step back and re- imagine the whole online ordering experience from scratch in a restaurant. And in 2017, a team of co- founders, we all got together and wanted to really make it easy for restaurants to be able to plug into all of these awesome revenue streams through a single device that can go directly in the kitchen, like an Epson thermal printer that would just print out standardized tickets, one dashboard that had all of your reports, one menu that you can control for all of your online ordering business. And we got to work and started building the product in the family restaurant right behind the Deli counter, spent a year just building the MDP and taking it out to work with other restaurants. And eventually, found a lot of immediate adoption with the problem that we were solving. There's not a lot of products and services and tools to help restaurants adapt from physical brick and mortar business to this new e- commerce phase of the restaurant industry that we're seeing. And we inaudible a lot of great timing with what we were doing and a lot of quick adoption. So that's the founding story and just my own personal background with the restaurant world.
Brett Linkletter: So cool. And Alex, I know even for us at our agency, Misfit Media, a lot of our clients know exactly what Ordermark is, but for anyone who's not super familiar with Ordermark, can you just give us, what is the major pain point that watermark helps solve for the restaurant space?
Alex Canter: So basically, our core focus and mission as a business is to help restaurants adapt to the changes in consumer behavior and giving them the product, services, tools, technology that they need to transform. And that means giving restaurants a single device that can go into their kitchen, like I mentioned, that automatically will receive orders from all these different channels and reach customers where they're at, whatever channel they're using. And taking it one step further, we actually have always focused on, how do we get more orders into these kitchens? And initially, the way that we did that was by getting each restaurant on as many platforms as they can be on, but we've now taken that even one step further with our new product offering that we launched called Nextbite, which is basically a suite of virtual restaurant brands. These are menus that are designed specifically for delivery that only exist online. And we are able to layer these brands on top of the existing restaurants' infrastructure, on top of their existing business, so that one restaurant can now fulfill online orders. Not only for their own brand, but for an additional three or five brands out of their same kitchen using the same staff, the same overhead. And so as a business, we've changed our strategy to focus on driving this incremental orders volume into these underutilized kitchens. And right now, in a post- pandemic world, there's nothing more impactful we could be doing for our restaurants, driving those incremental orders into these kitchens. And so Nextbite has emerged as a very exciting opportunity for restaurants to really supercharge their kitchen and be able to handle an extra 10, 20, 30 orders a day without any incremental cost.
Brett Linkletter: That is so amazing. You guys are killing it, man. I love it. This is so cool. No, but I think that the thing that's cool about you, Alex, is in so many entrepreneurs I speak, who are looking to start a business or grow a business or scale a business, they forget the one thing you want to do in a business is solve a pain point for someone, if you want to do something big. And the bigger the pain point you solve, the more money you can make, and the more you can grow, I believe, right? You're solving major pain points here. You're helping restaurants move and adapt towards this new era of technology, which as you know in the restaurant space, so many restaurateurs are so resistant to it. Have you seen that by the way, with a lot of restaurateurs? They're somewhat resistant. We see it at our agency all the time. Our whole thing is, we're trying to help restaurants move to towards the digital marketing era. " Hey, by the way, now with your marketing, with the restaurant, you can actually track an ROI."" I can see exactly what you spend and exactly what you made, just like e- commerce." But that's a totally foreign concept for most people, right?
Alex Canter: Absolutely. Yeah. We're in an old school industry. The restaurant world, there's 800,000 restaurants just in the US, and 65% of those are independent and mom and pops, they're not the large chains. And many of those mom and pop businesses don't have digital marketing teams or IT people. They're really simple in function where it's like, treat customers well, make good food, and people keep coming back. That's been this old school mentality for the restaurant industry for ages. But now there's so much opportunity to take advantage of technology, and to really go out and attract new business. And most of these smaller businesses don't have that young generation kid coming into the business to update it and make all those changes that have to happen. And so we find a lot of joy in being that for these restaurants. We're the outsourced digital marketing arm. I like to think about some of the locations that we work with. And we have this mom and pop restaurant in the suburbs of Indianapolis that it's a one- location pizza shop that wasn't doing very well post- COVID. And we came in and introduced five incremental brands, five virtual restaurant concepts. One was a grilled cheese brand. One was a chicken sandwich concept. And we basically train this operator to say, " Carry these ingredients from whoever your provider is, Sysco or US Foods. Every time an order turns out, make the food this way." And we turned on an extra 60, $70,000 a month in incremental gross sales in the first month that we turned these brands on for them.
Brett Linkletter: Oh my God.
Alex Canter: And for them, they don't have the means to launch all these menus and virtual brands. There's a huge learning curve to even know how to do that properly and optimize the promotions on these platforms. And they basically just put their heads down and make food and get paid for it. And that's what they do best. So we really are trying to simplify this, create this turnkey process for restaurants, which would light them up with more orders. And it's been really exciting to watch. To your point, like a lot of these old school businesses just don't even have the bandwidth to conceptualize doing something like that.
Brett Linkletter: Totally. It's almost like... You're right. They don't have the bandwidth, but also they're also just resistant. People, sometimes they don't like the change. And I think what you're doing though is you're not just showing them that, " Hey, this is the right thing," but you're making massive impacts on their lives and their businesses, which is crazy. I saw one of your brands, it's called HotBox by Wiz. That is so cool. So you're doing a concept with Wiz Khalifa?
Alex Canter: Yeah. Yeah. We built a really fun menu with the whole Taylor gang team and Wiz and his whole team are just super business- minded. And they realize it's the opportunity to go out and help restaurants. And we're thinking about what sorts of items are performing really well on delivery and takeout. And there's this gap in the market for stoner food, for a whole menu design around munchies. And we came up with this really fun brand called HotBox by Wiz. And it's basically everything from mac and cheese bites to hot wings and stuff that you'd probably want to eat.
Brett Linkletter: College kids will love this.
Alex Canter: It's actually doing really well on college campuses. But the beauty of this brand is that attaching a celebrity to the concept really helps on the promotional side. Not only is Wiz leveraging his region and social influence to drive traffic to this virtual- only restaurant chain that is now being fulfilled out of, I want to say 30 or 35 different states across the country. But also when people open up their Uber Eats app or their DoorDash app, they're browsing and scrolling to see what they're going to order. And there's this really fun stoner concept powered by Wiz Khalifa that is exciting and people love it and want to try it. And we have a lot of people who are now ordering it regularly, just like you would through a restaurant regularly, especially as consumer behaviors change. The way that people interact with the restaurants is now digital. And so it opens up this whole opportunity for these virtual- only brands to exist and be successful. But it still comes down to having amazing quality food, delivering a great experience that when the food arrives, it's still hot, it tastes good. And part of that comes down to choosing the right menu, making sure that we're putting executable items on these concepts that are actually going to hold up. French fries, for example, are not an item that holds up well in delivery. So we avoided French fries on that menu, for example.
Brett Linkletter: Got it. So Alex, question for you, because a lot of our clients now, since COVID right, have the adapted somewhat or the best they can with us pushing a lot for online. Online, takeout, delivery. A lot of them are frustrated with these third- party apps, because of the high margins they're taking, 30, sometimes 40%. Do you see this just being the new norm? Do you see this getting fixed? What do you think about also third- party deliveries versus just direct online ordering for the restaurant?
Alex Canter: There was a lot of data that we were looking at that suggested that this huge digital shift was inevitably going to happen over the next 10 years. And what happened with COVID really just accelerated that 10- year shift to happen in a couple months instead. And obviously, right now when restaurants don't have any dine- in capacity, many businesses have shifted to all off- premise, which is not how the future state's going to look. There will be dining rooms and people going out for experiences, going out to a restaurant on a date or to celebrate, or to hang out with friends. But off- premise will be a large percentage of every business moving forward in this industry. And third- party, the challenge for restaurants is that the third- party ordering platforms have spent hundreds of millions of dollars to change consumer behavior, so that when somebody is hungry, they now open up the DoorDash app. So if you're a restaurant that's trying to resist being on DoorDash and giving them their 20, 30% that they're taking you just are not going to exist to all those people who are ordering on DoorDash. So you have to be on these channels, but also it's super important for you to have your own direct strategy as well. Many restaurants have a direct ordering button on their website, or they have their own mobile app. It's a little bit unrealistic to expect that consumers are going to have every restaurant's app on their phone. Think about how many restaurants you've ordered from, if you're a user of delivery. You're not going to download every mom and pop restaurant's app and order from them directly, because that's just not the reality of the situation. As a restaurant, you have to have an omni- channel to this. You have to be where everyone is looking. And also you have to have a strategy to try to drive your own traffic through your own platform where you're not giving up those huge fees. But keep in mind, it's not just that you're giving DoorDash 30%. They're spending a ton of money on marketing and promotion. And most importantly, they're delivering the food for you. To have your own driver costs a lot of money. Many restaurants have tried to experiment with hiring their own drivers or using third- party drivers that aren't from these apps. And they're not as reliable oftentimes. And because there's already an Uber driver on every block, the beauty of this is if you're a restaurant and you get 30 orders in five minutes for lunch rush, Uber is going to send 30 drivers to come pick up your food, and you'll still make sure that everyone's getting their food on time. These are amazing powerful channels and services for restaurants to be able to reach audiences that are outside of those four walls. So it's really important to embrace them and to make those margins work. If you're a restaurant that has a very complicated menu and maybe certain items have higher food costs or take longer to make, you have to rethink your menu for delivery model. And sometimes that means removing certain items, increasing prices on your delivery menu. That's something that many of these platforms are now allowing for to make up that difference, which-
Brett Linkletter: Got it.
Alex Canter: ...at first, a lot of the online ordering companies wouldn't allow any of that. You had to match the price to your in- store menu, but now most of them are open- minded to allowing you to add 10, 15, 20% to your delivery menu pricing to make up for that-
Brett Linkletter: Got it.
Alex Canter: ...increase.
Brett Linkletter: Got it. It sounds like you're pretty savvy about both channels though. You've got to be on these channels of third- party, but also you should have your own. For you guys at Ordermark, you guys mostly are partnering with these third- party apps, but also, have you integrated with any specific online ordering platforms? Do you guys have your own system of that, or is that something you guys are also excited about and pushing to your clients or no?
Alex Canter: So Ordermark is not an online ordering platform itself. It's not a consumer- facing app or anything like that. Ordermark is basically aggregating all of the different channels that are out there. So we partner with over 50 different online ordering services from the big ones that most people know, like Grubhub, Postmates, Uber Eats, et cetera, down to some of the much smaller, localized, or genre specific ordering services too.
Brett Linkletter: Yes. But what I'm wondering too is if you... So you partner with them, but also any direct ordering services that you also partner with or... So all the above.
Alex Canter: Yeah. We partner with all the white label ordering channels as well. That's the category that we describe as the ChowNows of the world. So ChowNow, Mindful, FreshBytes, Quarter. There's all these companies that are basically the restaurant's own ordering button on their website.
Brett Linkletter: Got it.
Alex Canter: And that's just another partner integration channel for the restaurant.
Brett Linkletter: Got it.
Alex Canter: Those types of companies, we also are promoting and recommending to our restaurants that they should have at least one of them for their website.
Brett Linkletter: A hundred percent. Okay. That's cool, man. Yeah, because the scenario that we always play in our minds is let's just say you're a restaurant, and you're doing easy numbers, $ 10,000 a month in delivery sales. Right? And let's just say$10, 000 in delivery sales is going specifically through Uber Eats and you're giving away 30%. So you're giving away three grand a month to them. Right? Well, in another situation, let's just say you're doing 10,000 a month in delivery, but you had your own direct ordering service. And you could spend, let's just say, 1, 500 bucks on Facebook and Instagram ads to promote your business. Well, now you're keeping large majority of the margin, and you're spending maybe half on the marketing, if you're doing it yourselves. Do-
Alex Canter: What about the driver cost?
Brett Linkletter: Well, like these apps now have... Let's just say DoorDash Drive, DoorDash Drive, you can get the driver for I think it's five bucks or something. You can also offset that to the customer to pay for that too.
Alex Canter: So using a service like a DoorDash Drive or Last Mile Delivery API is usually in the seven to$ 8 range per order. You can choose to pass all of that onto the customer, but you're not going to get nearly as many orders if you do that. The sweet spot range, ideally, if you can offer free delivery, that's the best. But even if you're at two, three, $ 4 delivery and the restaurant's eating half that, that would very well make up that remaining 15% that you're saying might be beneficial. And the hardest part about it is that you would have to generate the same amount of volume on your own platform that you would on DoorDash, which means driving a lot... You have to be very efficient in your Facebook spend to get that conversion-
Brett Linkletter: You've got to be damn good.
Alex Canter: Most mom and pop restaurants don't even have the ability to think about how they would be able to convert that. Obviously, there are a lot of companies out there and resources that will help them, but we've seen a lot of mom and pop restaurants try to resist the third- party marketplaces and just say, " Order from our own channel." And more often than not, it's unsuccessful.
Brett Linkletter: Got it. You're just saying, there's so many pieces of this puzzle for this thing to work. And so, hey, if you can make it work, more power to you. But just the chances that they are going to figure it out on their own is pretty slim, essentially. It's-
Alex Canter: It's a volume game too. You have to be driving enough volume that you can sustain a delivery- only format. And most of these restaurants right now, they have a lot of fixed costs. The rent is fixed, whether their dining room's open or not. And so if you are still paying 10, $15, 000 a month for rent, you need to hit a certain amount of orders, just to even break even on that. And so just by being on all these platforms, even if you're not making as much per order, you still need that volume to sustain your crosstalk.
Brett Linkletter: I see what you're saying. I see what you're saying. Yeah, no. It's crazy times we're going through, isn't it? Like you said, we saw the same thing. Our business model, our catch phrase just before COVID was, " Hey, we turn web traffic into foot traffic." Then COVID hit. So things had to change. We had to adapt. And so now we are pushing a lot of online ordering for our clients, but I agree with you, man. I'll be honest, a lot of these platforms, you said the ChowNows of the world, they're pretty weak in the technology they offer, in my opinion. Like you said, the Uber Eats and the DoorDashes, they've invested millions and millions of dollars into this stuff. They've figured out the right flow to get that customer to convert at the highest range. They've done it. Some of these direct ordering services that I see a lot of our clients sign up for, I hate to say names, but it's ugly. It's not clean. There's bugs here and there. You can't even make an order once in a while. It's hard. It's hard to support it.
Alex Canter: Just to give you some perspective, at one point, I think back in 2016, I want to say, end of 2015, Canter's was... Canter's is a very high volume takeout and delivery business. It's one of the top performing delivery locations in all of LA, according to a lot of the online ordering platforms, but at one point we were on 14 different services. 13 of those were third- party marketplaces like the DoorDashes of the world. And we also had ChowNow, which was powering our direct ordering on our website. And if you look at our entire off- premise business, which was a couple million dollars a year just on these platforms, only 4% of that volume was happening through ChowNow. 96% was on Uber Eats, Postmates, crosstalk. This shows how you should absolutely consider your own channel and platform. And Canter's didn't have a big digital marketing spend. We weren't trying to push a bunch of order volume through the platform through a budget format.
Brett Linkletter: Wow.
Alex Canter: Naturally, I'm sure if we had some sort of marketing spend, maybe we would be able to shift that from 4% to, on a good day, 10 or 15%, if we're really investing in it. But it's still such a small percentage compared to the volume that we were getting on Postmates and all these other services.
Brett Linkletter: That's insane. And then to push that a step further, you made a great point of apps. So many restaurants, they want their own apps today. And for what reason? Nobody wants to download a restaurant app. That's incredibly annoying. I personally hate it.
Alex Canter: I think the apps are really more for the super fan customers, the really loyal one, two are probably going to use it frequently and maybe order once a week or once a month. And that's a really important segment of your customer base, because there's a lot of data that shows that customer lifetime value of your restaurant customers is really interesting. I've seen upwards of 60 to 70% of people who place an order from a restaurant will never order from that restaurant again. About 20 to 30% will order frequently, but not often. And then there's this four to 5% range of your super users that drive a lot of order value over their lifetime. If a regular customer is ordering once or twice a week for several years, that's a very loyal person who maybe they'll have your app and maybe it'll make it easier for them to click reorder and all that stuff. And that's a lot of money saved over time if that person was going to regularly order from you on Uber Eats, for example.
Brett Linkletter: A hundred percent. There was a conference we went to before COVID hit... We all used to do conferences, the good old days, but we're at this conference, and there were... I'm not going to name which restaurant names. They're really, really big brands, speaking so highly about their native apps that they had built and all the users they had gotten on their apps. And so I raised my hand and asked the question at the end of their session. I said, " Hey, by the way, what percent of your sales are coming through this app?" And the whole room went silent, and then they laughed, and still didn't answer. I said, " Well, what's the answer?" They said 1%. Even for these massive brands, 500,000 plus locations, 1%. So it's brutal. When I heard that, that was the nail in the coffin for me. I was like... You have a lot of mom and pops restaurants I speak to, one, two, maybe three locations, they're pushing their own apps. And oftentimes... I don't want to say it's the wrong idea every time. Sometimes it can be great, like you mentioned, but oh God, the amount of stress levels I've seen it produce for some of these people and the amount of volume they're able to create from it, it doesn't make sense. So you guys just raised a Series C, I saw. You guys raised$ 120 million, right?
Alex Canter: Yeah. Yeah. We had a really just emotional rollercoaster year last year with the devastation of the industry and thinking that upwards of 25 to even 40 or 50% of restaurants were probably going to go out of business because of this whole situation. There's this moment of heartbreak for our industry. And then to see what happened from an impact perspective, the way that our products and services helped a lot of these restaurants, be the difference of keeping their doors open or not. I think that really showed that this was our moment to come in and really help thousands of restaurants sustain a delivery model and give them the capabilities to really survive and get through this. And that really was a big inflection point for us as a company and attracted a ton of big investor attention. And to bring Softbank to the table was just such a amazing experience for us, as a business, to bring on not only the world's largest investment fund, but a group that really has gone so deep into our industry. Being larger holders in Uber and DoorDash and Reef and all these companies that are really changing the whole game of the restaurant world to really have that perspective and to be able to go out and make a really big impact on a much bigger scale. What we're doing is very exciting. We're very grateful for it. And it's allowed us to already, just in the last couple of months, we've doubled up our team from a employee head count standpoint to-
Brett Linkletter: How big's the team now?
Alex Canter: I think we're at 160 or 170. I can't keep track these days.
Brett Linkletter: 160 or 170. Wow. Amazing man. That is so cool. Wow. $ 120 million. I'm sure a lot of people listening to this are thinking, " What the hell is he going to do with $ 120 million?" So what are your plans? What is the vision of Ordermark? What is the vision of Nextbite? Where are you see this all going? Because I completely agree with you as far as, hey, the modernization of restaurants means turning to tech. Means expanding your business outside your four walls. But$ 120 million, where is this going? What are your plans? What do you see coming next? What's that look like for you?
Alex Canter: We are continuing to double down on building product offerings that are helping drive incremental orders into these restaurants that we're working with. We look at all of the restaurants in the US as... We believe that over 90% of restaurants have underutilized kitchens and have extra capacity to handle more orders. And that is where we are focused is, how do we drive more orders into these underutilized kitchens and empower these restaurants to do more with their same overhead, with their same labor, with everything that they're already paying for?
Brett Linkletter: Got it.
Alex Canter: And there are all of these new ghost kitchen companies that are building new delivery- only kitchen spaces and commissary kitchens. And we don't understand why there's so much of that happening, because there's already so much underutilized capacity in these kitchens that we're laser focused on helping these restaurants just maximize that. And so what we're doing with Nextbite is we're really turning every restaurant into a ghost kitchen. We're enabling a location to run five different virtual brands out of a single unit. And we're finding a lot of success with that. And we want to do that on a much bigger scale. And we believe that the next McDonald's, the next Domino's Pizza could very well be a virtual restaurant chain that only exists online that is being run out of the back of existing restaurants and that's-
Brett Linkletter: I completely agree.
Alex Canter: That's what we're building.
Brett Linkletter: So this is mostly... So it sounds like Ordermark got you on the map and Nextbite is basically world domination. Is that what's looking like for you?
Alex Canter: Yeah. We still realize that there are many restaurants that need aggregation technology, and it's step one. It's an obvious thing to us. But the way that we design this technology is so much more powerful than just aggregating the orders. It's also enabling multiple brands, multiple menus to come in one device to be managed from a single dashboard. And it's the underlying infrastructure that allows us to go out and really turn on this incremental volume. So-
Brett Linkletter: A hundred percent.
Alex Canter: One doesn't work without the other. And we believe that Ordermark is really what's enabling us to go out and make this impact for Nextbite. So it's a one- two punch. And there's still many restaurants that are just signing up for Ordermark's aggregation service. And we're continuing to ramp up that side of the business as well.
Brett Linkletter: Got it. I love it, man. This is really cool. So it sounds like... And I think this is my 20th episode now. We're in the end of our second season of this podcast. And a lot of people have been really excited about this whole like cloud kitchens type concepts or the commissary kitchens and this and that. But it sounds like for yourself, you're saying, " Hey there's not a whole lot of need for that. There's already all these kitchens underutilized. Do you think people pursuing that is the wrong idea? Do you think you're still a place for it?
Alex Canter: Yeah, there is. I've always said that kitchens are going to get bigger and dining rooms are going to get smaller over time. And that the emergence of these ghost kitchen facilities is basically an evolution of that theory that if you're a new business that is going to be starting out in 2022, and you're thinking about launching a Cuban sandwich shop, one option is to go open a physical brick and mortar restaurant and have seating capacity and higher rent. But another option would be to just optimize a delivery- only version of a menu where there's no front of house. There's no dining. There's no dishes to wash, and you want to really just specialize in this off- premise delivery capacity. These facilities are a great option for you, but you still need to have a significant amount of volume to break even in these businesses. Because you would think that if you're chopping up a bunch of real estate into these small kitchens, that the rent would be significantly lower. But even in these cloud kitchen facilities and Kitchen United, the rent is not as cheap as you'd think. And so in order to break even, you still need to be doing over a half a million dollars a year in gross sales in the delivery- only format, which for a new brand, it's very difficult to make that work. I think they're most-
Brett Linkletter: I mean-
Alex Canter: Go ahead.
Brett Linkletter: No, you go ahead. I was going to say, that sounds really damn difficult for somebody who's looking to start, just get going on that. Wow.
Alex Canter: Yeah. Well, I think the most successful brands in the ghost kitchen world are actually not mom and pops or newer brands. It's the Chick- fil- A's of the world. The Wendy's, the brands that already have this huge recognition, and the people ordering on these platforms have no idea that it's coming out of a ghost kitchen facility. They just see Chick- fil- A pop up on Uber Eats, they order, and it's just being made in this separate site and kitchen.
Brett Linkletter: Totally.
Alex Canter: So it's those types of brands that are very powerful, that they're already going to come in and do over a million a year annualized sales, if not even more than that. But I don't think that that model works for most restaurants, especially today. And I think that you need to have... What's more interesting to me is, and I can tell you from experience, we put a Canter's Deli in cloud kitchens, in Kitchen United, in Colony kitchens with some of the earlier ghost kitchen facilities in the LA area. And even a brand as powerful as Canter's that has very good delivery volume, it was still hard to break even. But looking at underutilized kitchens that already have fixed costs, there's no incremental labor. And so just layering on top of your existing business, virtual brands, that's the model to me that's the most exciting, because each incremental order is profitable. There is no break even when you're taking an existing business and layering on top of the existing brands. And that's why I think our model with Nextbite is really successful is because we're going into these restaurants and turning on virtual brands without adding any additional cost besides the food cost, which you're making well over that.
Brett Linkletter: No, I think you're totally on the right track, man. It sounds like it just makes way more sense. We have... Man, I don't know the exact number, but probably close to two dozen brands we work with right now that have turned on some virtual concepts already. And so we're also in the stage of adapting to this with our model, because the way our price point model works is we charge per location and we work with. And so we've had to adapt our price point as a marketing agency for restaurants, because we're like, " Okay, so it's under this location, but now we have three different brands there. How do we adapt our marketing strategy for that?" And so it's been interesting. And I've been seeing it more and more and more. It seems like, honestly, every week now we've got a client asking, " Hey, by the way, I just out of this chicken fingers concept." " All right, where's the location?" " No, no, no. It's already in my kitchen." So it's moving quick.
Alex Canter: There's a lot of people catching on to the idea that they could be doing this, and there's a lot of experimentation happening. And overall, these platforms, the third- party marketplaces will get very, very crowded, very fast. Because everyone's trying different things out, but ultimately it's still going to come down to branding and marketing and digital real estate and having great reviews. You think about the way that people make decisions of where they're going to go out to eat. Sometimes they look at Yelp and they see what has the most ratings? What has the best reviews? They look at lists of, what are the best places to dine out in my city? And if you're just spinning up menus and putting them online, that is a very short- sighted mentality to driving incremental orders. You really have to be thinking about building big brand recognition and digital marketing strategies. And everything that you have to think about for a regular restaurant applies to a virtual restaurant crosstalk.
Brett Linkletter: A hundred percent, man. No, I couldn't agree more with you. Literally, for us as an agency, as a marketing agency for restaurants is a lot of people ... Like you said before, early in this conversation, you said so many restaurateurs just think, " Oh, great food and service is going to get you there. We've got word of mouth." But that's a slow way to grow your business. Hey, word of mouth is great. But if we can accelerate that more, and get more people to know about you, talk about you and try you on a daily basis, well, you can scale the business quicker. I think, to your point also, people forget all the time that, hey, you've got to have that brand recognition. Your food has to look good in the pictures too now. Don't forget that. That, honestly for us, man, is a huge pain point is we'll work with a client, and they'll send us all their food photos that we're going to promote then on their channels and whatnot. And just the stuff they're giving us, they forget that, " Hey, this is your product. It has to look good." If you're shopping for Nike's online-
Alex Canter: It's not even that they forget. They just have no idea. There's such a learning gap to get this right.
Brett Linkletter: Totally, a hundred percent. So again, this is the trend we're going down. This is not a guessing game anymore. I think it's pretty damn obvious to most of the world that, " Hey, restaurants are going more tech. We're moving more towards this e- commerce model." What else is new and surprising that's coming up in this space that you think most people just aren't really talking about yet? Or maybe something you guys have noticed that you've seen that other people aren't thinking about quite yet?
Alex Canter: I think a lot of people have this misconception that things are going to return to normal. And I think that's a really dangerous mentality right now. I think that there's a new reality that we live in where business travel is forever changed. Catering may never returned to what it was before. There's just fundamental changes to the way that consumers are interacting with restaurants. And you have to be thinking about ways to adapt your business and make the hard decisions to go get the business and go make it work rather than just waiting around and hoping that things are going to return to normal. And I've seen way too many restaurants say, " We're just going to wait this out, and in a year from now, things will be fine, and return." But the ordering demographic that used to be 18 to 34 year olds has now drastically expanded to families, to older generations. My grandfather's now a power user of DoorDash. He's got the DashPass, because he can't go anywhere. And he is obsessed with this way of ordering from his favorite restaurants now. He's not ever going to stop using this app now that he's discovered it, and learned how to use it, and it has his credit card information stored, and all of his favorite restaurants are easy to reorder from. And so because this has changed, even when dining rooms open up again, it's not just going to be this magic, " Let's go back to the way that things were before." It's undoubtedly just a different restaurant industry that we live in. And you have to go out and experiment and be ambitious and make the changes that have to happen to adapt the business for this new reality that we live in. And you can't just sit around and wait for it. I don't know if that directly answered your question, but I don't think it's been talked about enough. And I think there's still too many restaurants that are sitting around waiting for things to get better.
Brett Linkletter: I think you are a hundred percent right, and I completely agree, man. All the time, I hear people saying, " When we open up again, we'll start working with you guys. When this happens, if we can just get there, then we'll do this." But you're right. This thing could be a lot longer than we're hoping it is. And like you said before, it may never go back to the way it was. Who knows? But resisting the technology is-
Alex Canter: Office culture will never... The idea of having massive quarters for businesses, it's not a thing anymore. And that will very, very much impact lunch rush. A lot of the business that restaurants get for lunches, people taking a break at work and going to grab lunch. And I think as more and more people work from home, that that's going to now shift to eating more at home, which could mean through delivery, or it could mean cooking more. But there's so many restaurants that make most of their money during those peak rush hours. And if those are forever going to change, they have to start thinking differently.
Brett Linkletter: Yeah, got it. It just seems like we're moving towards a world where everything's on demand. Everything is digitized and everyone just is at home by themselves. Obviously, you mentioned that this last year has been an emotional roller coaster for you guys. You went up and down, and then obviously you got that amazing funding from Softbank, which is fantastic. How have you been handling this whole pandemic? Has it been stressful for you? Have you been getting through it? Are you thriving on through it? What's been your mental space during this whole time?
Alex Canter: When it first hit, and we had to move to this remote world, I was so eager to get back to the office. And there are so many parts of the culture that... Grabbing everyone for the Monday morning standup, and... Just, it's hard to manage remotely in general. It's just a weird feeling. Even just being able to recognize when certain people in the company are not having a great day or not being able to go up to them and say, " Hey, let's go on a walk and talk about what's going on," it's hard to pick up on those same social cues. So that part, I think, has been the hardest for me just to make sure that everyone is in good spirits, but overall people have been handling it really well. And then just on a personal level, I'm such a foodie. I love dining at a restaurant. I love going out and experiencing travel. And I miss all the conferences that we go to. I'm excited for some of that to return, but also I've learned how to make this environment work. And I've found myself very productive when there's not a ton of distractions happening around me too. Learning to make it work and making improvements to the work from home office situation to be able to start my day a little earlier, end my day a little later. I feel like I've been able to put in more hours without having to drive to work, stuff like that. So it's been good.
Brett Linkletter: Got it. Nice, man. That's really cool. And I have to agree with you, it is tough to do the same morning standups for us too. It's hard to pick up on social cues over a Zoom call, right? You're not seeing everyone. You don't have the pass- by's you might have during lunch. You don't have the small talks around the corner or whatever the case during work things you're doing. So it's different. We had to adapt. Alex, your background specifically, are you a tech guy? How did you get into this whole software world in general? Did you build the initial product with a small team or what's your background?
Alex Canter: Yeah. I've always been interested and passionate about entrepreneurship, and it's what I studied in college. I studied economics and entrepreneurship, but I had started a couple of businesses in college. I'd always been interested in restaurant tech in general, but I'm not an engineer. I don't build code. Part of the co- founding team brought on very early on three engineers that helped build the first version of the product, and obviously evolved a lot since then. But I've always been more on the restaurant operation side of things, thinking about how to market and sell into restaurants, because I've been on the other end of it for so long. I was the one being sold to. There are so many different restaurant companies that I feel like I had a very deep understanding of what works and what doesn't work. When you can go into a restaurant and offer something that has a direct ROI that you can show very quickly, I think it's a very promising way to be able to go out and turn it on in a lot of locations. And I think from day one, that's been something that we've been very good at as a business. And we offer month to month contracts with restaurants. There's no long- term commitment and many restaurants love trying it, and then they very quickly see that it's making a big impact for them. And I think that's been a big key to our success.
Brett Linkletter: Hundred percent, man. God, it's so cool. Again, I love what you guys are doing it, and again, I think the best part of what you're doing is you're really, really riding this trend of technology moving up. And obviously, I know you said even the beginning of conversation, you felt proud that you could bring your family, Canter's Deli into this tech world. What was your big motivation for that? What was your interest? Just thinking this could be better, was that the main factor?
Alex Canter: I had talked to a lot of restaurants in my network to say, " How are you solving this crazy challenge?" Because the staff in our restaurant hated me for bringing in all this hardware and making their lives so much more difficult with all this other stuff to manage on top of what they were already doing. And this felt like a natural evolution that had to happen. And I think that the founding team felt like we all really understood that this was something that we had a unique opportunity to go out and solve an unfair advantage to be able to build this in a real restaurant, high volume environment and test and iterate. When you start a business, I feel like you have to have so much passion for the problem that you're solving. Because if you don't, inevitably you're going to hit these really hard things that come up. And if you're not super passionate about it, you're going to get burnt out very quickly. I found myself experiencing that with several other companies that I've tried to start in the past. It's like, do I really care about this mission of making it happen? And I think the answer was no, but then with Ordermark, I find so much excitement and joy in what we're doing every day that it's impossible to get burnt out.
Brett Linkletter: I agree, man. You hear people get this burnout all the time, and they say it's natural and it happens to everyone. But I think if you're truly passionate about what you do, I don't think so. I don't think you should get burnout. I think you should be excited about what you do. Alex, just last question for you is, as you've evolved as an entrepreneur, you said you had a few different businesses before this. Now you guys have had a ton of success. You're evolving the business. You're expanding to new services. You're doing all these things. What have you learned about yourself throughout this whole process? What's been some crazy aha moment for you? How have you developed as a person through this, as a CEO?
Alex Canter: I think some of the biggest learnings that I've had is that really caring about the culture and the employee experience makes it so much easier to go out and solve hard problems in the business world. If everyone's having an enjoyable growing experience working for a company, it's a lot easier to go out and find success and really make a big impact. And I think it starts with what's happening internally and making sure that we're defending the culture from becoming something that can ruin what's happening. So it's really focusing on people first and making sure that we're all enjoying what we're building and that we're celebrating wins along the way and really prioritizing company values and living them, breathing them, making decisions against them. And just committing and saying, " This is what we're doing." And that is such an important infrastructure component to be able to build on top of. So that's been a big educational experience for me.
Brett Linkletter: A hundred percent. And that's been honestly a theme of a lot of the podcasts I've done here is that you got to put your team number one. You need your people that are committed, that are focused, that are excited, that are having fun every single day. The thing I tell my team all the time is just have fun. People want to have fun. People want to enjoy what they're doing. And obviously people love working at a growing company. Alex, just one more question for you. What do you do to stay energized? Obviously, you said you've been putting in extra hours. Anything you do specifically? Do you work out? Do you drink a lot of coffee? What's your morning routine to get going right for the day?
Alex Canter: I don't have very good morning routine. Sometimes I wake up and jump right into a Slack and everything, but I think just making sure that I sprinkle in time to have dinner with friends and take some time on the weekends, I think is super important. I have a Peloton that I try to use more than I'm currently doing now. I don't know. Actually, I would say the most important thing that I have is a CEO coach that I work with regularly. Really is more like a meditation, mindfulness guru, if you will. And crosstalk.
Brett Linkletter: Oh, there you go. I was going to ask you if you meditate, but I wasn't sure.
Alex Canter: Yeah. He's really changed a lot for me. He's helped give me all of the mental tricks and tools that I need to overcome really challenging experiences and see everything as a growth opportunity. And just having a growth mindset in everything that I do is super valuable for the sustainability. It allows you to sprint a marathon.
Brett Linkletter: I love that, man. No, I'm huge on meditation. I've talked about this in some other podcast episodes, but I meditate almost daily. I have a journal I write in every single day. And I think as a CEO, we face a lot of stresses, and especially as you grow a business. Things break in the process all the time, and having the right mind space, the right growth mindset to approach these things, to make these hard decisions, is so incredibly important. Well, Alex, thank you so much for today, man. That was absolutely amazing. So many great points you brought up. Congrats again. Just so much success you guys are seeing. And I'm going to be looking out for the HotBox by Wiz for sure, man. I'm going to have to check this out. It sounds delicious.
Alex Canter: Thank you. Yeah. We're just getting started. It feels like we just unlocked our growth potential. And as much as we've been scaling, it feels like there's this real startup energy in everything that we're doing and a hustle. And it's been a lot of fun. So thank you again for having me. It's going to be very interesting next couple of years to see how fast our industry is changing, and-
Brett Linkletter: A hundred percent, man.
Alex Canter: ...congrats to everything you guys are doing as well.
Brett Linkletter: So Alex, just last thing. If anyone's listening to this, any restaurateur and they're thinking to themselves, " Wow, I want to work with Alex and Ordermark or Nextbite," or whatever the case, how do they find you? How do they do so?
Alex Canter: Just go to ordermark. com. Find this on any of the social channels, and we'll get someone on a call with you.
Brett Linkletter: Sounds perfect, man. Again, Alex, thank you for your time today. And we'll be in touch with you soon. Thanks a lot.
Alex Canter: Awesome. Thanks.