What Would Steve Jobs Do?

The AI Future the Restaurant Industry Deserves

Audio by Eleven Labs- can be a little wonky

A couple quick things before we start:

First: I want to acknowledge the cringe-worthy clickbait title; I’ll at least try to deliver on it.

Second: Kristen Hawley wrote a very important piece in Expedite this week about the next administration and the restaurant industry. Regardless of your politics it touches on critical topics around immigration, antitrust regulation, tipping, taxes and more. The piece is paywalled, as it should be. I have been following Kristen’s work for 10+ years and this type of writing is the culmination of all that effort, time, and experience. Real journalism (my newsletter is not that though I appreciate paid sub as much as anyone) cannot be free, especially for those who can afford to pay. Please check it out- it’s worth it.

Ok- let’s get into it

TL;DR

• There have been 5 major technological platform shifts in my lifetime: personal computing, web, mobile, cloud, and now AI

• Steve Jobs led Apple in creating society-changing innovation at a couple of these shifts by recognizing the role of technology to amplify human potential

• AI has the potential to be the most amplifying shift ever as it makes the tools to build and create more accessible

• But the current path looks too familiar, too much like optimization theater that often yields incremental improvement at best, useless complexity at worst

• There is an alternative future where the AI unlocks entirely new lines of business for restaurants that improve the entire business model forever

• Technology providers should aspire to the latter and restaurants should demand it

• It’s time to build the bicycle for the restaurant mind

I encourage you to watch the video to start.

And that’s what a computer is to me. What a computer is to me is it’s the most remarkable tool that we’ve ever come up with, and it’s the equivalent of a bicycle for our minds.” ~ Steve Jobs

In the early 2000’s a lot of people had Blackberry phones. People swore by their Blackberry. It had that satisfying little keyboard that I imagine I’d miss if I’d ever had one. In 2010 the company had 43% of the smartphone marketshare. In 2013 they had 5.9% marketshare. In 2022 Blackberry shutdown its entire phone infrastructure.

Blackberry essentially saw the mobile phone as a business tool that facilitated email on the go. Jobs and Apple saw the mobile phone as a revolutionary tool for unlocking human ingenuity. Blackberry’s current market cap is $1.37B, less than .04% of Apple’s $3.34T.

Mobile was 1 of 5 major technology platform shifts of my lifetime. Each one has impacted the restaurant industry but not to the degree needed or often promised. Personal computing made accounting easier and gave us companies like Micros and Aloha. The web brought convenience to restaurant reservations, discovery, and ordering but also unleashed a world of intermediaries who profit by inserting themselves between a restaurant and its guests. Mobile’s greatest impact thus far has been on restaurant discovery and marketing. A great camera plus social media has fundamentally changed how guests relate to restaurants but has not had meaningful positive impact on many restaurants. Cloud computing eliminated the Micros server in the the restaurant and gave us infinite SaaS products whose impacts are often eclipsed by their subscription fees.

I see many parallels to the Blackberry/Apple story in the current state of restaurant tech as it pertains to AI. Rather than building tools to amplify human ability, companies are engaged in optimization theater. Every week I get multiple cold email pitches from companies using AI to "optimize" some aspect of restaurant operations. They all sound the same:

• "Our AI-powered platform reduces food waste by 5%"

• "Machine learning forecasting improves labor efficiency"

• "Smart inventory management saves thousands a year"

These solutions feel a lot like the previous waves of restaurant technology that promised optimization but delivered complexity. They're built by people who see restaurants as a problem to be solved rather than an industry to be empowered. At best, they provide marginal improvements that barely cover their subscription costs. At worst, they're another mouth to feed at the razor-thin margin table.

From a VERY recent email

There's another possible future, one that Steve Jobs might approve of. One that takes advantage of AI’s democratizing power to unlock the potential of restaurant operators create opportunity rather than just solve a problem. One that allows restaurants to connect and deepen their relationships with guests. And perhaps even a future where the majority of the value created goes to the restaurant themselves. Imagine a world where:

• A restaurant builds an ESL language chatbot to help their team develop and grow and then can offer that same tool to another restaurant.

• A Chef and GM team up to use natural language questions to analyze and impact food cost and payroll reports in ways customized to their business.

• A successful restaurant entrepreneur creates an agent to assist first time entrepreneurs in everything from licenses and permits to financials.

This video is an example of using Anthropic Claude to analyze standard Toast reports. This is analyzing week-over-week sales data from 2024 and 2023. I do this weekly now, ask follow-up questions and share the insights with our management teams.

This isn't purely hopeful or science fiction. Over the past couple of months I have been using Anthropic Claude and ChatGPT along with tools likes Replit, Github Co-Pilot, NotebookLM, and Zapier to build things for our restaurants. Replit and Github, specifically in conjunction with Claude, allowed me to actually build thing from scratch with natural language prompts. I upload weekly sales summary and payroll reporting from Toast into Claude and ask questions about scheduling efficiency, product mix, and per person averages. We created an educational podcast about our wine list with NotebookLM. It was too bland to use without significant edits but was a good starting point and an indication of what's possible.

This is the AI generated podcast for the Shy Bird wine list. It’s quite bland but still a great way to understand what is possible. You can get the gist of it in 2-3 minutes.

None of the things I’ve built are ready for primetime but it’s only been a couple months and the tools are only getting better. Also, nothing is purpose built for restaurants, with the standard technologies like POS and reservations in mind. It’s often a frustrating process of sharing screenshots from Replit or Github with Claude to fix something I’ve done wrong. I was a robust enough early user of the Replit Agent that a member of their product team reached out for an hour long call to understand how a restaurant operator was using their product. Clumsily, for sure.

So What Would Steve Jobs Do?

The major restaurant tech players should be asking themselves this question. Apple didn't try to optimize email (or typewriting in the late 70s & 80s with personal computing) - they created tools that transformed how we think, create, and communicate. More importantly, they built platforms that let others innovate and capture value.

And they became more valuable than any company in the world in the process. The App Store generates over $85 billion in annual revenue with software margins approaching 80%. I’m not going to get into the 15-30% duopoly toll they take from app makers and creators but there’s a valid fight to have there. I will say that as a restaurant operator, I’d be pretty ok with Toast or Square, for example, taking 20% of any new, high margin revenue we generate on top of infrastructure they build.

The big players in restaurant tech and are uniquely positioned to be the platform companies for restaurant innovation. They have the distribution, the relationships, and the technical foundation. As they inevitably move to AI-first thinking, they should shift from selling solutions to providing tools. From optimization to amplification. The restaurant industry has always been powered by human ingenuity - operators solving unique problems in creative ways. AI should amplify this strength.

Build us bicycles for the restaurant mind, not more optimization treadmills.

And as restaurant operators, we have a real role in this too. In working with these tools I've learned that Toast's default report downloads are not conducive to AI analysis. They should change that and we as operators need to put the pressure on them to do that. We have to be curious and play with the tools available to us. I understand how hard this is in the context of running a restaurant but for this platform shift, one that might allow us to create and actually derive the value, it’s truly that important.

I am putting most of the stuff we build into the EO Test Kitchen. If you're an operator reading this and want to check it out, send me an email and I'll send you free subscription to play around...eli@shybird.com.