Inspire Brands: Anatomy of a technology transformation| Self-Service Innovation Summit 2021

Raghu Sagi of Inspire Brands shared the learnings the organization has uncovered over the last…

Raghu Sagi of Inspire Brands shared the learnings the organization has uncovered over the last two years and the highlights of its companywide digital transformation during a keynote at the Self-Service Innovation Summit.

Raghu Sagi of Inspire Brands responds to a question from Mark Smith of Bitcoin Depot, sponsor of the keynote presentation, at the Self-Service Innovation Summit. Photo by Willie Lawless.

It wouldn’t be a stretch to say that the last two years have been traumatic for the restaurant industry, but setbacks, such as the pandemic, also sow the seeds of innovation.

Leaders such as Inspire Brands Inc., which owns Arby’s, Baskin Robbins, Buffalo Wild Wings, Sonic Drive-In, Rusty Taco and Jimmy John’s restaurants, have devoted themselves to learning how customer needs have changed and transforming their businesses to meet those needs.

Raghu Sagi, chief information officer at Inspire Brands, shared last week during a keynote at the Self-Service Innovation Summit in Hollywood, Florida, what he’s learned as well as highlights from Inspire’s digital transformation

Consumers’ expectations change

“As a consumer, our expectations have changed greatly,” Sagi told his listeners. “As service providers, our responsibilities have increased immensely.”

This has been no small order for the restaurant industry, which Sagi said has lagged retail and hospitality in using technology to improve productivity. As a result, these more proactive industries have grown rapidly in recent years while the restaurant industry has remained flat.

“We (the restaurant industry) have barely scratched the surface,” he said.

Restaurants play catchup

Sagi framed the current challenge as follows: “Getting people to migrate on how they interface with restaurants, and… moving on automation in restaurants.” He said restaurants are “just starting to use data and analytics to do smart decisions not only on how we sell, but for procurement.”

Sagi joined Inspired Brands at a critical time in its technology journey. He joined the company shortly before the pandemic struck — when the need for digital transformation became imperative. He brought more than a decade of retail experience at Walmart, Best Buy and Sephora, which put him in a good position to oversee digital transformation in an industry that desperately needed it.

“I saw transformation there,” he said, reflecting on his time in the retail space. “I saw how technology can improve the productivity.”

Which isn’t to say that his task has been easy.

A formidable challenge

“The technology transformation is difficult and expensive,” he said, echoing the keynote presentation the previous day by Ruth Crowley of the Hudson Group.

Inspire Brands was fortunate in that by the time the pandemic hit, the company had ample resources, having grown from 3,400 restaurants to more than 32,000, encompassing six well established brands.

“We have achieved the scale to leverage the benefits of a unique operating model,” Sagi said. The model includes a unifying digital platform that will enable the company to continue to scale.

At the time, the company focused on greeting guests through personalization through new engagement technologies, including marketing technologies and digital technologies. The company also focused on operations support to decrease waste and costs.

A key goal is to drive the guest experience at every touch point, putting control into the consumer’s hands. This includes self-serve kiosks, third party delivery, curbside pickup and in-store pickup solutions.

“You want the control in the hands of the consumer and their choices,” Sagi said. “Many consumers no longer want to hand you their credit card. They expect a contactless experience.”

All the brands in the company’s portfolio have broad customer appeal, offering different but complementary guest occasions that are already scaled or quickly scalable.

Brands’ journeys vary

“It doesn’t necessarily mean the customer experience will be identical from one brand to the other,” Sagi said. However, the underlying foundation extends across all the brands.

The different brands in the company’s portfolio are all on “different journeys,” he said in response to a question from the audience.

Where Dunkin’ is about 25{1ecc11bb1501b786f489293ac2ac25fb54683d686574816a94d14a51901cfb17} digital sales, Arby’s is presently laying the foundation for digital sales while Buffalo Wild Wings leads in loyalty driven sales.

Building the team

Another strategic priority is improving the team member experience. This is happening through standardization of tools and processes.

Inspire Brands gives its team members the ability to take risks and test concepts. “We do this because we believe in the long term approach to the business,” he said.

Inspire Brands’ culture encourages innovation and allows for failure. The company’s size allows for experimentation.

“When you do innovation, you’re likely to see some failures,” he said.

The company also makes it a point to test new concepts with its own capital before asking franchisees to invest.

One reason the costs associated with technology innovation are so high is the caliber of management needed. The human resources required impact cost more than the hardware.

Asked what skills the company is looking for among team members, the company wants people that are willing to learn, since the purpose of all team members is to support the team’s goals, Sagi said.

Humility and the ability to collaborate are also an important traits.

Results encouraging

“We are encouraged by the technology innovation that we are seeing today,” he said, such as contactless interaction and video analytics. “Technology innovation became a key aspect of how we reach the guest and how we engage them to drive traffic and sales.”

Inspire Brands has seen “tremendous” growth in digital sales, witnessing over $4.5 billion in digital sales in 2021, a 43{1ecc11bb1501b786f489293ac2ac25fb54683d686574816a94d14a51901cfb17} year-over-year increase.

Between February and March of 2020, contactless transactions grew twice as fast as non-contactless in supermarket and drug store chains.

The company also now has 45 million loyalty members.

In response to consumer demand for convenience, Inspire Brands is leveraging technology to increase guest frequency through personalized one-to-one offers. In the process, the company is capturing more consumer data.

“You have to be able to change quickly,” he said, as consumer demands change. “You should be able to have the ability to ‘test learn’ and having the mentality mindset from top to bottom.

“You may or may not be able to scale, depending on what the learnings are.”

The company has spent more than $100 million in the transformation using its “test learn” methodology.

Buffalo Wild Wings ‘choice model’

Buffalo Wild Wings “choice model” provides the guest the ability to be able to take out, get third party delivery or place an order on their phone while in the restaurant. The customer can scan a QR code in the lobby or at a table.

“It (the order) goes directly to the kitchen,” Sagi said. “You don’t have to interact with any team member. This allows a greater convenience for the guest.”
The guest can, if they wish, interact with a team member.

Sonic Drive-In, which offers mobile ordering and drive-in orders, went from no digital sales to 10{1ecc11bb1501b786f489293ac2ac25fb54683d686574816a94d14a51901cfb17} digital sales in two and a half years, he said.

The technology innovations have been well embraced by the franchisees, Sagi said, mainly because the corporate team tests new concepts prior to offering them to franchisees.

In 2022, the company plans to continue to bring more innovation to improve the guest experience.

“Companies that act quickly and decisively will have a fundamental advantage over everyone else,” he said.

Sagi’s keynote presentation was sponsored by Bitcoin Depot.