AI: Disrupting the restaurant business

This article first appeared in Digital Edge, The Edge Malaysia Weekly, on September 27, 2021 - October 03, 2021.

"Restaurants haven’t been able to build a direct connection with customers because 90% of that data is lost.” - Wassem (Photo by Mohamad Shahril Basri/The Edge)

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In the late 1990s and early 2000s, the lifestyle of Malaysians went through a major shift. For one, more than 60% of people living in urban areas were eating out or ordering in more than one meal a day.

Considering the variety of Malaysian cuisine available, this should come as no surprise. But to Easy Eat Pte Ltd founder Wassem Mohd — who visited the country for the first time in 2014 — the experience left a lasting impression.

Easy Eat has developed an operating system for dine-in establishments that digitalises their business, from inventory and customer orders to delivery. It also helps them to generate more revenue by using data analytics based on artificial intelligence (AI).

“I was so surprised by the culture of eating out in Malaysia. I’m from India and I don’t think anyone in India can imagine themselves eating out three times a day. In India, the entire family has breakfast together. In the afternoon, someone packs lunch for you. And your family members wait for you at the dinner table,” says Wassem.

“Eating out mostly happens once a week, usually during the weekend, or at a family outing, or for an anniversary celebration. But here in Malaysia, and just as it is in most of developing Southeast Asia, people are always dining out or ordering takeaway.

“And yet, restaurants are still taking orders the traditional way. Just as it was 20 years ago, if I go to a restaurant, I choose a table, the waiter comes, gives me the menu, I look at the menu, I proceed to order, the order is manually keyed into the machine and the machine will push the order to the kitchen.”

While almost every other industry has changed significantly, there has been no technology involved in transforming the dine-in experience, he points out.

After exiting his first start-up — Bobble AI, a conversation media platform that integrates AI-powered keyboards to enhance the smartphone conversation experience for its users — in 2018, Wassem began exploring the idea for Easy Eat.

“We no longer wait for the newspaper for the news, it comes instantly through my phone. We don’t even need to go to the cinema. Movies come through Netflix, Amazon and YouTube. Even social interaction has changed so much that we stay in touch with friends through Instagram and Facebook,” he says.

“But when it comes to restaurants, we don’t think of a technology solution that can help. So, we are doing the same thing even though more and more actions are [being automated] through technology, through which we can understand the customer much better. With better data, we can understand their food preferences, we can reduce the time they take for things like ordering food, settling the bill and much more.

“We are trying to do what Amazon has done to commerce, what Facebook has done to social interaction, what Google has done to search, what Netflix has done to movie theatres. We are trying to do the same thing for restaurants.”

In 2019, Wassem, together with Rhythm Gupta and Abdul Khalid, founded Easy Eat AI — which is headquartered in Singapore — and chose to start operations in Malaysia, before expanding to other markets in the region.

“I have spent some time in India and the US and realised that one needs to have enough use cases to justify establishing a company such as Easy Eat. In India, eating out is not a culture. Second, the average order value in India is very low, which is US$1.50,” says Wassem.

“In Malaysia, the average order value is US$10. So, my chances of making a successful business in this industry and in Southeast Asia is much higher than in India. In India, we have the volume, but the frequency of eating out is low.”

In July, the company raised US$5 million in funding, which included the participation of Aroa Ventures, the family office of OYO founder Ritesh Agarwal, Reddy Futures Family Office, Prophetic Ventures, OYO global chief strategy officer Maninder Gulati, Alarko Ventures managing partner Cem Garih and Esas Ventures founder and managing partner Fethi Sabanc Kaml.

Restaurants haven’t been able to build a direct connection with customers because 90% of that data is lost, says Wassem. Easy Eat’s operating system involves an integrated QR-based table ordering system, an easily accessible loyalty programme, payment solutions, social media integration, inventory and integrated delivery services.

With the technology, restaurants can move their entire operations online, just like any other technology company, he says. “Restaurants are able to capture each data point in the value chain, which leads to a better understanding of customers’ choices, higher revenue and reduced cost.

“Right now, restaurants operate with a profit margin of between 20% and 30%. So, if restaurants have to dedicate a 30% commission to Grab or Foodpanda, they are no longer running at a profit. There needs to be a slight mark-up in prices just to maintain their profit margin.

“But with Easy Eat, we are servicing them at 4%. They don’t need to mark up their prices because 4% still falls within the margin of profitability. The delivery costs are borne by the customers themselves.”

In addition to the service fee, Easy Eat also charges a 2% technology fee on each transaction. The start-up, which operates on a subscription model, is able to keep its fees low as, unlike the delivery platforms, it doesn’t have customer acquisition costs, Wassem stresses.

Over the past year, Easy Eat has been able to increase the revenue of restaurants by 30% and reduce their operational costs by 15%, he says. Chain outlets such as Richiamo Coffee, Mr Fish Fishhead Noodles, WTF Group and Hailam Toast have since implemented the system.

Easy Eat’s operating system prevents communication mishaps, even in terms of the details of orders, from allergies to condiment preferences, so waiters can focus entirely on customers. It includes a column where the customer can add cooking instructions to customise their orders.

“We are not talking just about taste preferences, we are talking about all the interaction that happens between the merchant and the customer. With the dataset, I can certainly influence you to order certain items,” says Wassem.

“For example, if I’m running a fine dining restaurant, I can understand your preferences and convince you to try certain things in the restaurant. I can also encourage you to order more by giving you an instant special offer.

“Or, I can encourage you to come back for lunch with your family or colleagues because there is a special menu or special offer for lunch. I can convert your visits from weekends to off-peak hours during weekdays, because usually restaurants see high traffic on weekends, but they don’t have much traffic on weekdays. I can also run targeted promotions.”

The system makes it easier to track and claim loyalty points and rewards, if any, he adds. In most establishments, these records are maintained separately or managed using physical cards.

“Let’s say I have been to a restaurant or café nine times and on my 10th visit, I am supposed to get a cup of coffee or cake for free. I don’t need to embarrass myself or hold up a long queue to get the item that is due to me. The system will automatically prompt the person serving me that I have a reward,” says Wassem.

“With all this data and machine learning, restaurants can improve their inventory, better manage staff and offer better choices and services to customers.”

Since the Covid-19 pandemic struck, more and more restaurants and customers are demanding contactless service.

“Our partner restaurants have been able to withstand the impact of Covid-19 better than others. Even during the worst of the lockdown period, our merchants were generating 50% of their usual revenue,” he says.

“The most affected restaurants are those with no clear digital strategy, and they will continue to struggle even post-Covid-19 with limited revenue-generating opportunities and escalating cost of operations. They will continue to rely on third-party platforms for deliveries, paying 30% to 35% in commissions.”

But the challenge right now is convincing restaurants, which barely have been able to stay afloat following numerous Covid-19-related restrictions, to come on board.

“Because of Covid, we cannot physically meet new people, and restaurant owners are not so tech savvy. Second, the industry is in survival mode. We are trying to show them the future but they are asking, what will happen to them in the present? Most of them understand this is going to help them, but they are fighting for survival right now,” says Wassem.

“Instead of expanding, the market is contracting. Some restaurants are closing while others have put their expansion plans on hold. 

“From the consumer’s perspective, people are losing jobs. They’re trying to hold on to their savings, so the frequency of ordering and eating out has dropped significantly. But we have also seen that when things improve, people start dining out because it is going to take a while before we can travel again.”