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BFD Expert Voices - Retail Deals

BFD Expert Voices

Artificial intelligence is often viewed as a threat to human workforces — but it could bring customer service staff to the forefront, says Union Square Hospitality Group founder and restaurateur Danny Meyer.

Why it matters: Restaurants are trying to figure out ways to enhance the customer experience while keeping their employees happy, even with limited resources, Kimberly writes.

"A great tech should advance touch," Meyer said to a filled room at the Manhatta restaurant for New York Tech Week.

Context: Meyer co-founded Enlightened Hospitality Investments, a growth equity firm that has made investments in guest experience platform SevenRooms, AI-powered ordering assistant ConverseNow, vision AI kitchen operations platform PreciTaste, and labor management platform 7shifts.

What they're saying: AI has the ability to "provide all kinds of tools so that we can customize the experience," he says.

"What if we could know each and every one when you come to one of our restaurants? What do you like to eat? How long do you want to spend? What your favorite wines are? Do you even drink wine?"

AI can help restaurants know their customers, their spending habits, and what to market to them —  which should help increase revenue and save money, he says.

AI can also help with mundane tasks that can be error-ridden, like taking someone's order, IBM chief commercial officer Rob Thomas said, speaking at the same event.

Catch up fast: In 2021, IBM acquired McD Tech Labs, formerly known as Apprente, before McDonald's bought it in 2019.

The technology helps automate food ordering at drive-thrus using AI.

Under IBM, McD Tech has added natural-language processing features, which were launched in partnership with the fast-food chain's drive-thrus.

The latest: The technology is taking the friction out of ordering because now people can just say their order, and they can see it on the screen and make corrections if they need to in real time, Thomas says.

"We got automation from 40% to 85% in a period of months," he says.

"We believe in this early testing that you can actually get an increase in consumption," he says, by surfacing more precise recommendations as opposed to just, "you want a large size."

Between the lines: "The biggest problem it solves for McDonald's is labor," Thomas says. "It's not eliminating it, but you augment it."

The bottom line: Gesturing to Manhatta, Meyer says, "I've never met one person who would spend the kind of money it takes to eat at this restaurant, just because they're hungry."

"They come for the experience, and that experience is hospitality."

1 big thing: AI should bring humans to the fore

Illustration of a robotic hand dipping a chicken nugget in sauce.

J.M. Smucker's latest ax to its portfolio is of its Canadian fermented condiment brands, which will be sold to private-label food and beverage manufacturer TreeHouse Foods for $20 million, Kimberly writes.

Why it's the BFD: This is part of a broader restructuring of Orrville, Ohio-based Smucker's portfolio to focus on core assets, which include coffee, spreads, frozen items and pet categories.

Details: The unit includes Bick's pickles, Habitant pickled beets, Woodman's horseradish, and McLarens pickled onions.

Together, they've generated around $60 million in sales for the fiscal year ended April 30, 2023, the company says.

J.M. Smucker still retains Folgers, Smucker's, Jif, Meow Mix and Mlk-Bone.

Flashback: Smucker has held its fermented condiments division since 2004 when the company acquired International Multifoods in a transaction valued at $840 million.

Catch up fast: Last month, Smucker sold its better-for-you snack brand Sahale at the steep discount of $34 million.

Earlier this year, the company sold several of its pet food brands, including 9Lives and Kibbles 'n Bits, to Post Holdings for around $1.2 billion.

Meanwhile, the company agreed to buy Twinkies maker Hostess Brands for about $5.6 billion last month.

The big picture: Large strategics in the packaged food industry have revisited their portfolios, paring where they need to and snatching up brands that fit well with its core categories.

In August, Campbell Soup agreed to acquire Rao's sauce parent Sovos Brands for $2.7 billion.

Unilever inked a deal to buy premium frozen yogurt brand Yasso in North America.

Mars, the Snickers parent, completed its acquisition of Kevin's Natural Foods over the summer.

2. The BFD: J.M. Smucker divests 

Illustration of an open tin can with a hundred dollar bill on it

🤝 Klarna is teaming up with Rokt to leverage the e-commerce solutions providers' AI to deliver more relevant marketing solutions for retailers.

For Klarna, this is part of its expansion of AI-driven initiatives that are meant to augment its consumer-facing offerings, such as its search and personal shopping assistant, as well as deliver a better customer experience; for Rokt, this is another big player under its belt, as it paves a path for an IPO at the end of the year.

💸 Americans continue to spend the fruits of their labor: Retail sales crushed expectations in September, Axios' Matt Phillips writes.

💭 Matt's thought bubble: Maybe this whole economics thing ain't rocket science.

By all accounts, the U.S. labor market is incredibly strong, with an unemployment rate that's been under 4% for almost two years, he writes.

Wage growth is solid — hourly earnings were up 4.4% compared to last year — and with inflation easing, real disposable income is up. That means that on the whole, people are better off than they were last year when inflation crushed real earnings.

3. Retail therapy

an illustration of a hand in a meditative pose holding four orange shopping bags

Want more retail deals? Search the Axios Pro Deals Tracker beta.

• Gridiron Capital, a New Canaan, Conn.-based PR firm, raised $2.1b for its fifth fund. www.gridironcapital.com

• Salted, an LA-based developer of quick-serve restaurant brands, raised $14m in Series B finding. Creadev led, and was joined by Proof Ventures and B. Riley Financial. https://axios.link/48UDbW9

• Society Brands, a Canton, Ohio-based tech-enabled consumer products company, raised $25m from Callais Capital, North Coast Ventures and Gullane Capital. https://axios.link/3PYZpOe

• Hydrow, a connected rowing company that's raised over $300m from firms like L Catterton, is in talks to buy smaller rival Cityrow, which has raised $16m from firms like Everywhere Ventures, per Bloomberg. https://axios.link/48VBVlH

4. Retail transactions

• JPMorgan named Carsten Woehrn as co-head of EMEA M&A. https://axios.link/3S3uOBE

• Justin Fowler and Anthony Meidenbauer joined hospitality group SBE as COO of Disruptive Restaurant Group and VP of development, respectively. https://axios.link/3Q4icYi  

• Larry Strain was named chief development officer of Retro Fitness. https://axios.link/402gGKW 

• Eva Vidal Dans was named chief product officer at Calvin Klein, succeeding Jacob Jordan. https://axios.link/48VulHH 

• Magnus Håkansson was named acting CEO at textile-to-textile recycling company Renewcell. https://axios.link/46VJ9EC

5. It's Personnel

📺 What we're watching: Kim started watching "Our Flag Means Death" on Max (formerly HBO) and who doesn't love a pirate parody that makes life on the seas seem all that it's cracked up to be, fancy wigs, swashbuckling and all.

✏️ Many thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece for today's edits.

October 18, 2023

1 big thing: AI should bring humans to the fore