Food Lockers: The Next Big Trend for Off-Premise?

Mike Wills: It’s my honor to have the responsibility of leading Apex. I bring almost 35 years of tech leadership background and every capitalization structure – private, public, divisions of public, private equity-backed startups and different variants of technology in both the B-to-B and B-to-C space.

Apex is a 12-year-old company and it’s really a story of two acts. The First Act was an organization that was focused chiefly in the industrial and manufacturing and distribution/logistics space. If you could put a larger macro title to it, anything with a concrete floor and the movement of goods. We came alongside the industrial and manufacturing efforts to practice and implement lean technologies. We became the subject matter experts in helping get the right things to the right people at the right place and time throughout their organizations. We help them walk that balance beam of managing critical things of value, whether they were consumables to be used on a manufacturing line or things that were multi-use, but you needed to really track them and make sure the right people got them at the right time to get their jobs done correctly.

In a lean effort, you focus on making sure that everybody has the right things, but you don’t oversupply it and put piles of cash unnecessarily to keep your enterprise moving forward. We became experts in that space and several years ago we started to look beyond that. We realized that with a macro trend driven by digital ordering in the B-to-C space, specifically retail and food, that many of the same challenges that we spent years perfecting and working out in the industrial and manufacturing space were also taking place in food service and retail.

So, Act Two was to take all of that competency and put it to work developing a set of solutions from a cloud-based hosting software infrastructure out to point-of-use solutions in restaurants and retail stores. That is our second act of subject matter expertise and that’s where we’re at today with our contactless food service delivery and pickup solutions.

So obviously, we’re living in a post-Covid world today. Many of the same challenges that you just outlined were in place pre-Covid. Now they accentuated themselves… they’ve become more pronounced and bigger, even operationally threatening to the brand’s existence if they aren’t addressed. Those issues really come down to the quality of the food itself, the safety of the workers in a post-Covid environment, and the safety of the clientele, the guests and the third-party delivery drivers coming in the door.

The real core of it all is the efficiency. How efficient is my operation in the movement of the volume of those orders as a significant portion of them shift from on-site dining to off-premise orders? Driven by the growth of the DSP (delivery service partner) network, the third-party delivery networks and concerns about the safety of walking in and eating at an establishment versus taking it home to a known, safe environment such as your house or your office.

The issues of safety, issues of efficiency and addressing this very large shift in volume of orders as well as the quality of the food and maintaining the experience continue to be top of mind. Because those three issues exist, that creates a huge opportunity for us with our contactless foodservice delivery and pickup solution.

When we’re dealing with a new prospect who is contemplating a contactless food delivery solution such as Apex, we asked them a whole myriad of questions. We try and get a baseline on what their packaging techniques and offerings are today, what experience do they want their clients and customers to have. Because the reality is whether the customer picking up the order or they’ve got a third-party delivery driver picking up their order, that timeframe from exiting with their order in hand, to their vehicle, to back home, plated and beginning the experience of consuming that order is roughly two-and a-half to potentially four times as much time as it would take in the restaurant itself.

Packaging plays a huge role in the customer experience. That was one of those pillar items –quality of the food and the overall experience. Packaging to make sure that hot things remain hot, cold things remain cold and they don’t influence each other in the travel time period is critically important.

The chain of custody of the order is also important. Now it’s a step function more important than what it was prior to February. But customers want to know that once the order was done it has not gone through the typical mosh pit scenario where you’ve got 15 people touching the order before you show up to get yours. They’re critically concerned about making sure that not only my experience out of the bag or out of the packaging has kept it a high-quality food experience, but also that I’ve eliminated all the unnecessary and potentially unsanitary touches in that chain of custody.

I agree. I do think there is room for an economical solution. If you know a portion of your clients’ travel time is limited to, say, two minutes or less, value-based packaging might be the solution. But most of the time the travel times in an off-prem order is significant and you need to do everything you can to make sure that the experience is the best that they could possibly have.

Dwell time is one of the process questions that we map out with a prospect and a practicing client. We’re a data-driven and a metrics-driven organization so we have dashboards that measure and monitor the health, productivity, capacity and availability of our solutions throughout the entire operating calendar and shift time of a brand. After the food order is complete and loaded into our solution, your store associate presses “complete order” on the touchscreen display, and at that point the clock starts on dwell time.

At that same time a message is sent to either the DSP driver or the customer that their order is ready for pickup. Embedded in that they have a specific pickup code that is unique to their order. Remember back to our mantra:  the right things to the right people, in the right place, at the right time. The right customer is now in the store to pick up their order… they scan that code, the door pops open automatically and dwell time ends right there.

Dwell time is a function that serves a lot of important data feeds. It tells an operator how long my orders are waiting inside the compartments for pickup and it might allow me to deal with time of day, the type of orders, the size of orders, etcetera. I might have to deal with some packaging items because the dwell times might be a little longer than what I’d like for certain orders. They also help in terms of scheduling and balancing orders that are still upstream yet so I’m constantly managing my availability. I don’t want to fill up my lobby with a bunch of people who are anticipating their order being done before it is.

We’ve seen dwell times in arena settings and in some university settings as low as 3 to 4 minutes. We’ve seen other dwell times averaging anywhere from 8 to 10 minutes – that’s the mean average that we see from the time that a customer gets their code to the time they actually scan and retrieve the order. Dwell time is critically important for brands to watch because it traces right back to capacity or availability of the system itself. It traces back to food quality and different ways to manage that with packaging.

First of all, I want to tip my hat to Panera and other pioneering brands for testing alternative methods to serve their clients. I think they’ve always been cutting edge and whoever heard of cubbies before Panera? If we can step back and look at different attempts to solve the problem, it really falls into four scenarios. Four is always do nothing which is, “I’m not going to change my processes.” If you’ve got a takeout order you’re going to stand in line and walk up to the counter an ask me for it and I’ll hand it to you. While it may be efficient for the food service operator, it’s a total downer in terms of a customer experience.

The scenarios that we’ve seen is a cubby, an unattended shelf system, where once an order is complete, I bag it up and I write on it or I print off a receipt with Skip’s name or Mike’s name on it. And I set it on the counter. During any kind of peak rush time there are multiple bags out there in those environments.

What ends up happening in a typical single operating day is they’ll lose several orders a day on the low end – two to three orders a day that they have to remake. On the high end I’ve heard as many as six or more but let’s just use two to three orders a day. That’s two to three orders a day that are mistakenly taken — one or more Skips, one or more Mikes and I just don’t take the time and I see a Mike on a label and I grab it. Then I’m four blocks away driving home or to the office, I opened it up and realize it’s the wrong order. It’s very unlikely I’m going to turn around and bring it back. The real Mike isn’t going to want the order I just opened up in my car so regardless, you still have to remake it. The issue with that is you’ve got a gross margin hit because you’ve got a raw material hit. All of that’s gone and you have to remake it so it’s a margin hit to your operations.

Secondly, it’s a negative customer experience multiplied by five or six. I ended up with a food order but it wasn’t the right Mike and so I didn’t get what I wanted, and the real Mike didn’t get anything, so it’s a multiplier of negative customer experiences and a hit to your profitability.

To change categories on how people have tried to solve this, I’ve also seen people throw labor at it. This is a very expensive scenario as well, Skip. You could potentially have a great experience with somebody standing there handing you the order. You walk in and you walk up to that person whose full-time job for that day is just make sure that Skip gets his right order. But if you’re a large chain and you have hundreds of locations you have hundreds of opportunities for that to be a great experience – or a bad experience, based on how that individual does his or her job that day.

Not to mention the productivity issue. You’re paying that person labor rates plus benefits to stand there even during peak rush. If they’re really effective 50 percent of the time that’s a very busy type of setting. So, throwing labor at it is not the most appropriate ways to use your staff and your team members nor if you have a broad base of brands, probably the most appropriate way to give a consistent brand experience as well.

The third solution is automation through a food service pickup solution like Apex provides.

Our most popular food locker, the Flow-Thru, derived the name because it looks from an infrastructure or architectural design standpoint looks like a locker resemblance. It’s scalable and modular so a customer can build it out in their operating environment horizontally so they can literally take out a POS station and build it across the counter. They can build them out vertically and they can also cut them into exterior walls.

They are a flow-through design which means they’re back-fed. Your store associates are loading orders from the rear, using our user interface on the back to load and deliver the orders. Once they’ve been delivered, then either the drivers or the customers would pick them up from the front of the unit which has the doors on them. One example that we’ve seen is brands cut them into exterior walls to manage traffic flow so that their off-premise customers are going to an exterior wall and picking up orders and then once that brand shuts down their operating hours, they pull down one of those metal, secure hurricane doors and lock it up for the night.

We’ve also seen some brands take a freestanding vertical unit and set it in a different location and do a front-load version and use that to just load all third-party DSP driver orders. Because what we have seen is, your lobby can be a congestion point. Even before COVID, that was a concern, because a lot of people make immediate snap judgements based on the number of people standing in the lobby about what the wait time is. And if there’s a lot of people standing in your lobby, you could inadvertently chase away a lot of business.

Today, post COVID, it’s also a concern because of social distancing. So, a lot of drivers will jump the order delivery notification time by arriving early and basically just stand in the lobby waiting for that message to say the order is ready. So by routing them to a different location in your restaurant you can create that vacancy inside your lobby and be more inviting to other guests who are coming in.

Our Flow-Thru has a number of variants that can help you manage your on-premise order flows, such as for exterior walls, interior walls, countertops as well as front-loads for dislocated setups where you want to manage the foot traffic and the footfall inside your brand.

We have another design which is specifically designed for hot holding, probably most noteworthy for the Pizza Portal®, through a great relationship with our customer-partner Little Caesars. That was very famous across their television advertisements and a huge integral part of their push into the digital order format. Aside from pizza, it’s also found a home in other environments where you have hot plated, cafeteria-style offerings in universities, hospitals and other areas like that, and then ambient temperature with our entire Flow-Thru series I described earlier.

Let’s just talk from the software out to the actual device, and then we’ll segue from there to what the typical customer experience looks like and feels like. For the technologists, it’s a cloud-hosted software. The device, as cool as it looks and as purpose-built designed as it was, it’s a dumb box without the enablement of our software. So the two go hand in hand. Because some of our brands – a lot of our brands – their network stability can be flaky at times and that’s just a behavioral scenario associated with networks over operational time periods. We do offer a high availability option in case of a network loss. We basically roll over to a cellular network for a period of time to keep your delivery system up.

We try to at least be in parity with the operational uptime that you expect from your POS system all the way into your entire digital order intake platform. If everything else is down, you can still allow your customers to pick up orders and keep your business moving forward. We talked about touch screens and we have a scanning platform both on the store associates’ side as well as the customer order pickup side. We do have compartment sensing – we’ve moved through a couple iterations of that and focus now on camera sensing to basically ensure that it’s validation that there is in fact something in the compartment.

It’s really critically important at all times when an operator is sweating the asset, that they know at all times what compartments are occupied and waiting for a customer to pick up an order and what compartments are available. Why that’s important is a mistake or somebody pulling an order out of a component and just handing it to somebody could play havoc with your database…your real-time database, so this allows a reconciliation process to take place and and tell you at all times what is available for loading and what is available for pickup.

We also offer BLE (Bluetooth Low Energy) as far as Bluetooth. We’re seeing a lot of customers start their experience with us and move from there into different forms of being digitally sticky with their consumers. Finally, we haven’t talked about it, but we recently put out a press release about a signed agreement a licensing agreement that we constructed with Brightloom, previously known as Eatsa, where we have secured exclusive rights to their technology stack to basically extend our foodservice automated delivery and pickup offerings. Eatsa was best known for their digital screens and the ability for brands to extend their messaging to the point of pickup with their consumers. That fits perfectly into our product lifecycle strategy and continuum of what we want to continue to offer our food service brands.

From the customer experience standpoint, it’s important for customers to know that they’re not dealing with anybody but you, the brand. They’re not dealing with Apex. They’re not getting messages that they would be confused by some third party or some unknown entity. It’s always the brand out front. We’re simply enabling all of this to take place behind the scenes.

At that point they would simply see the store associate, give them their name. Their name’s going to be in the order registry and the store associate can pop the door for them or literally just reach in and pull the order and hand it to them and just cancel it out. There’s always a workaround. You know, the number one item here is give the customer the best experience they could possibly get, even if they forgot their phone or they forgot their code or they left it at home, they’re going to be given the best experience possible.

So that is a brand-specific series of questions that we would work through. We have integrated solutions, we have no- integrated solutions, we have semi-integrated solutions. Typically, the most common method that we have implemented when it comes to DSPs is offering some database on our UI that allows them to basically select “I’m with this brand,” let’s say I’m DoorDash or I’m Uber Eats or I’m Grubhub, whomever. I’m given the last four digits of the order number, so I match that with mine and that’s what I press and the door pops open. That’s a very simple and straightforward way.

And the integrated methodology is the DSP driver gets the same code as you and I would if we just ordered off the brand website. So that’s the integration. It’s a straight API integration. The integration effort takes a little bit more time but not a lot and we’ve seen all three of those variants take place in terms of how a brand enters this solution. And ultimately once they begin their experience they begin to step back after months of operation and say. “OK here’s what I love, here’s what I’d like us to concentrate on as far as let’s tweak that, let’s change this, or let’s add this.” So it becomes a long-term partnership between us and our brands to make sure that we stay in step with how they want their customers to experience that.

We are integrated with Toshiba, we have one that we’re finishing up with NCR Aloha, we have a bunch that are middle stage and lower which that I would consider homegrown. What I want to make clear though is most customers start with a POV, a proof of value. It’s an experience or a discovery trial, where they pick one or two stores that best represent their customer base. They put the solution in, and they put it in at a non-integrated manner, meaning it’s not integrated from a store associate standpoint. So what has to happen is they take the order in digitally, they build it, and then they go to the back of our device and they have to enter in the customer information which can be as simple as name and cell phone number, and hit confirm to complete the order. Then the same thing happens. We white label the message to the customer, the customer gets the confirmation and off they go.

An integrated solution removes that step, so in a high-scale, high-volume kind of atmosphere it makes a ton of sense to follow an integrated path. In a POV atmosphere, not so much, meaning there’s benefit there but why take the step until I verify that my constituents all love this form of service. And typically, the second step is to go down a path of integration with wherever and however they take their digital orders in.

Correct. Yeah, there is no contact whatsoever between the store associate and the customer. And there doesn’t have to be any contact between the customer and the device when they walk in. They can scan the code, the door opens automatically, and they can retrieve their order and walk out without touching anything, including the door, if they chose to.

Even before COVID hit, there was a very significant transition going on with customer preference for digital ordering and off-prem. COVID was the accelerant on all of it. So, the first part of our strategy is to come alongside as a partner with the brands and obviously we’ve already checked the boxes on designing and developing the best of breed solutions to automate all of this contactless delivery and pickup.

But then travel with them as their brand in service to their customers’ changes based on customer preference, based on the type of foods and products that they are offering, and continue to make them as efficient as possible, which is delivery of higher earnings to the bottom line and make their guest experiences the best possible. Because that always translates into repeat revenue for them.

That’s really our long-term strategy – just continue to build out our partnerships with these brands and being there years and years from now, continuing to deliver value in this relationship.

Very. This is all about ROI, but I told you that we ask a myriad of questions with the brand operator. Many of those are to explain upfront how affordable this is and how they truly can’t wait to implement something like this. They see their alternatives that we talked about earlier. They could leave their guest experience up to an unattended cubby. They could throw labor at it and be incredibly inefficient. Or they can put this contactless solution in, and then we show them how it ROIs. So it’s affordable up and down the stack.

We talked about one of our largest brands in the food service industry, Little Caesars. That continues to be a significant partnership for us as they were highly pioneering in their move with that and we’re obviously thrilled and pleased to be their partner. As you know, many brands are reluctant about sharing a lot of what we’re doing with this in this stage. We have some however they are happy to participate.

Beyond the QSR and fast casual space, we are also into hospitals and some of our most rapidly growing segments are in the university space. We talked a little bit offline about Rider University, Rutgers University, University of Louisville, Arizona. We’re in practice down at a network of hospitals in Houston, the Houston Memorial Hospital system, in all of their cafeterias. They’ve got a true 7 by 24 cafeteria situation where they have to keep their staff fed. This automated food service delivery mechanism was a perfect solution to allowing their professional staff to order ahead of time, designate what time they would be there, and allow their kitchens to operate efficiently.

We’re seeing the same thread come from a lot of the universities as well, with the students ordering between classes during designated time periods. So we’re seeing some phenomenal numbers in growth there. We’ve got a lot of great partners in the space with Sodexo, Aramark. Compass, Toshiba and NCR Aloha, and that list continues to grow. It feels weird to say given the time with COVID, but this has been an exciting time to be in this space, rolling up our sleeves to be a part of this transition period with all these brands, and we look forward to what 2021 will bring all of us.

Simple, you could look us up on our website which is ApexSupplyChain.com and there’s plenty of inquiry buttons on there. You could also hit our info box at info@apexsupplychain.com and Ashley McNamara, who is our senior director of marketing, would be happy to assist.

Thank you, Skip, it’s our pleasure. Thanks for having us.