How Hosty AI Turns Missed Calls Into Revenue with Randall Hom

Speaker A: I was always on edge, and even during the days where we're closed, I had calls forwarded to my cell phone. I was a restaurant operator. You know, uh, people always say, you're always on. Right? There's no day off. Right. As you alluded to Sebastian earlier in the call, it's. It's a grind. Right? I was looking at, uh, all these little ways where I can automate and make my life a little more easier. So with the advancements in generative AI, I looked at the phone answering and I thought, hey, why wouldn't generative AI be able to have an impact in the customer experience at restaurants?

Speaker B: Welcome to the Restaurant Leaders Unplugged podcast, where real talks with restaurant leaders take center stage. Discover the challenges and victories that define success in the culinary world. Dive into essential strategies, from marketing to operations, and gain insights that will transform your approach to your restaurant business. Don't just keep up. Lead the way. Join me, your host, Sebastian Stahl, on this journey to excellence. Randall, welcome to the Restaurant Leaders Unplugged podcast. It's really a pleasure to have you here. I think it's going to be a really interesting conversation here that we're going to have. I'm, uh, very interested to learn more about what you're doing. So, anyways, let's get into it and welcome.

Speaker A: Thanks. Thanks for having me. And super excited.

Speaker B: All right, Randall, so let's start at the beginning, man. This is how we start the shows. Learning a little bit about your background. What got you into the crazy world of restaurants that we all love and hate at the same time. And now you've kind of dived into a whole different realm, which is technology and especially AI and of course. But always working with restaurants. Yeah, Take us back.

Speaker A: Totally. For sure. So, yeah. Where it started for restaurants for me is my parents actually started a restaurant in San Francisco, and they called it Gaytanos. And it was in this building in, uh, Nob Hill, really old building. And my grandma, she actually owned the building, and she used to have her laundromat. And she basically worked up, sold up the. Sold the laundromat and got into real estate. Um, so she built her real estate empire from the ground up. And then my parents, they decided to start a restaurant in one of her buildings. And what they realized is running restaurants is really tough. Um, um, my dad was a dentist, and then my mom, she was in. In finance, but they tried to do it on the side. And then fast forward, I would say, probably 40 years later, my sister and I, we got this urge to start a restaurant actually in the same space. There was an old traditional Italian restaurant that bought the space from my parents and they ran it for 30 years or over 30 years. And in that restaurant they installed this wood fired pizza oven and they unfortunately shut down during the pandemic. But actually it's pretty fortunate from our ends, right? So my sister and I, we decided to take our pause from our tech and she was in art, so both of those careers, and we decided to start a restaurant in that same space. And the goal there was to bring a lot of our interests together. We have a huge interest in food, a huge interest in winemaking, as my parents were winemakers actually. And then the third thing is actually music. A showing called Back Back and it incorporates so it's wood fired pizzas, natural wine, and then, uh, we do all of our music on vinyl.

Speaker B: That's very cool, man. You don't see that much anymore.

Speaker A: Yeah, exactly. Not at all. Especially in San Francisco. Yeah.

Speaker B: Yeah. So what was the moment? Cause listen, running a restaurant, like you just said, it's very complex. It seems like a good idea for most people that get into. It happened to me, right? I was like, I'm going to get into restaurant business. And I truly didn't know what I was getting myself into. Even if I, I was. I, uh, would say people would try to talk me out of it. And I was like, nah, you don't know what you're talking about.

Speaker A: I'm going to.

Speaker B: That's going to be different, whatever it is. And it wasn't. It's the same story over and over again. So how did you go from the idea of, okay, we're running a restaurant now, we're doing this deal and requires, uh, full attention, by the way, to, hey, there's some opportunities here with tech and how can we tie in these two? Or the things that you were seeing in your experience in the restaurant business that led you to explore the tech side of things and how to make things better in the industry. Because of course, I know we've come a long way, but we're this industry in particular, we're still quite behind.

Speaker A: Yeah, for sure, for sure. No, it's definitely pretty interesting how, yeah, that, that sort of idea came about. I think overall I'm like uh, a. I look at workflows and I think a lot of efficiency mechanisms and think through like, how can things be done more efficiently.

Speaker B: Right.

Speaker A: And that's like the way that I approach a lot of problems. Um, I think a lot of this comes from My previous, like, education and probably prior career in tech too. Prior to starting a restaurant, I was a product designer at Instacart and Flexport. This idea of, like, design thinking where looking at problems, how can they be solved, uh, using different sort of methodologies and applying them to a business. There are many different scenarios that I was or like, problems I was looking at in the restaurant industry. It just so happened that phone answering was the one that stood out to me as one that I was very passionate about, was whenever someone was calling out sick in the kitchen, I would actually have the phone in the back pocket. In my back pocket. I would be so afraid to miss out on a business opportunity, whether it's a, uh, missed reservation, a takeout order or private event. Uh, so I was always on edge. And even during the days where we're closed, I had calls forwarded to my cell phone. As a restaurant operator, you know, uh, people always say you're always on. Right. There's no day off. Right. As you alluded to Sebastian earlier in the call, it's. It's a grind. Right. I was looking at, uh, all these little ways where I can automate and make my life a little m. Easier. So with the advancements in generative AI, I looked at the phone answering and I thought, hey, why wouldn't generative AI be able to have an impact in the customer experience at restaurants? Yeah, yeah, yeah.

Speaker B: So that's how. So that's how hosty. Now it was former Nick for D. You guys went into the change name. But. So that's how Hostie was born, basically.

Speaker A: That is how Hostie was born. Yeah.

Speaker B: And yeah, no, yeah, I. It's. It's fascinating. Randall, walk us through a little bit of how the system works and what it solves for restaurant. Because we're talking about here. That worth answering calls. That is a big issue. I also remember doing the same thing, like getting my. At that time having the phone in my pocket because I could answer the phone calls, or you would have somebody basically taking the calls, but he was actually taking an online order. And that guy was like running around the restaurant, like, to get the phone. And it's like I got the phone and then it would just ring. Or somebody. Somebody that didn't even care because whatever, uh, let it ring because we were busy and didn't have a designated person. You can't afford to have somebody sitting there just answering the phone. Yes, some restaurants do. They can have a hostess or whatever it is, but many don't, Right?

Speaker A: Definitely. Yeah. And I think what you mentioned is really interesting, right. Because this problem, it has a direct correlation in the way that we think about labor. Right. And the, the idea behind Hosty is we don't want to take anyone's job at all. And I think that's the way that we look at AI as a whole. Right. Don't think, yeah, maybe call centers are the area where AI is like gunning after the most. Right. But I think AI is more, more seen as an assistance to humans.

Speaker B: Right.

Speaker A: So that's where what we look at Hosty as being.

Speaker B: Right.

Speaker A: A sort of assistant to your restaurant. And yeah, I think an interesting case study that, that we have is Flour and Water. They're one of our early design partners in San Francisco and it was like a really upscale but not like fine dining restaurant.

Speaker B: Right.

Speaker A: And what's really interesting about them is they actually had this team of admins and reservationists that said about the restaurant and they would answer the phones all the time. Right. Covid had a huge impact on the way that they thought about labor and whatnot. Right. This shifted roles around, tried to push all communication down to email, which kind of works, but it also doesn't because your customer who needs immediate assistance, hey, I'm running late for my APM reservation or hey, I need to add one more person.

Speaker B: Right.

Speaker A: A lot of those requests drop off via email, right. And they were, they had this call recording that walked uh, through the hours of operation. The location, suggested guests to send an email. But what you would end up getting is a lot of pissed off customers. So um, they looked at us as this interesting solution that could assist their team. Right. A lot of these requests right? Now in place of the recording that they have is Hosty. They actually call their voice assistant Arena. So that's uh, that's flower in, in Spanish. And so it's arena that, that picks up and it can answer any basic question. We can even adjust the reservation for people so it is like an assistant to, to their team.

Speaker B: That's very cool. That's very cool. And so tell me about. So you guys have full integrations with certain systems in the industry, I'm assuming, because to be able to do those type of things. How does that work?

Speaker A: Yeah. With the big players in the restaurant world, Right?

Speaker B: Yeah.

Speaker A: It's actually a lot tougher than it actually is on, um, as it actually seems on paper. Right. When we started this company, we thought we could just knock on Resi's door or open table's door and say, hey, you guys want a partner? I'm a restaurateur. But it's not that easy. What we've had to do is build up enough traction right. Of sign on enough strategic accounts. Right. Like a flower and water to gain the attention of a resi or opentable and slowly build up these partnerships.

Speaker B: Yeah.

Speaker A: I think one guest that you actually brought on that we've recently announced a partnership with is Luke from Perfect Venue. Yeah, that's one that has been top of mind for us. And what we do there is whenever a customer calls in about a uh, private event or a large party booking, depending on how the restaurant has set up their, their large party rules. Right. Some require 13 people, 16 people. Right. All that stuff is really configurable. But our hostie attendant, our hostie assistant will actually collect the necessary information over the phone or over a text message and then link with the Perfect Venue system and then the lead will just appear in Perfect Venue. So we do the same thing with preservation systems and POS systems as well.

Speaker B: Yeah, that's very cool, Randall. So what do you find that because there's many restaurateurs, as you may have experienced, are hesitant sometimes to adopt these new technologies because they think oh, uh,

Speaker A: this is too complex.

Speaker B: How am I going to do this? And onboarding, they're always saying, ah, it's going to take too much of my time. And it's like Toast was like the first one that came with this stuff uh, for restaurant owners because we were one of the first adopters. I remember in Miami when we, when they got, they came out and like the whole support was like here are your videos, here are your stuff to figure out like a text company. And it's like restaurateurs are not used to that. I think they're better now. What have you found? What's your been your experience when presenting these new technology, this new technology to restaurant tours? And of course I see the tremendous value in this but sometimes it might be a little hard. What's your take on that?

Speaker A: Yeah, yeah, no, that's a huge challenge that we address every single day. And we like to pride ourselves on being really quick setup wise. It's almost like training an employee. Right. So the first step is actually generating this playbook. So our team does this for restaurants. We generate this playbook of uh, responses. So if someone asks about hours of operation or if someone asks for large party booking. Right. We'll actually build up these pre built responses based on the restaurant, what the restaurant has published on their website. Right. Anywhere online. And then we'll use that as like a baseline response for the AI. We'll toss that, uh, playbook over to the restaurant and ask them to just tweak every response and into their own voice and tone and then they'll give it back to us. We'll use that to train the AI and then we'll connect the necessary systems on our end. All in all, it takes 40 minutes to an hour, but man. Yeah, I can't imagine being like uh, an open table like back in the early 2000s. Right. And they're trying to get reservationists and maitre d's to move off of, uh, the reservation books.

Speaker B: Right.

Speaker A: And I hear, I heard stories of OpenTable doing really interesting things of buying Internet for restaurants. Right. No one had the Internet back then. Right. Um, yeah, I can imagine being them and like changing the behavior. I think we're in a similar space, right. Where it's trying to change the behavior of how restaurants answer their phones and respond to customers. Yeah, yeah.

Speaker B: Randa, you were just talking about a case study of this high end restaurant. So do you have any, anything in particular that you can share with your audience? Like of how. Of course, Hostis not only just solving these problems, but in terms of stats or KPIs. Anything that you can share, uh, just to give us a better understanding and idea of what's possible?

Speaker A: Yeah, definitely. I think Flour and Water again is a really interesting case study for us. They're fairly small restaurant but wildly popular. It's actually really hard to get a reservation there. They only have 13 seats that they open up on resi. Right. What people don't know is they save half of their restaurant available for walk ins. Right. So we decided to tell people that when they were uh, calling about a reservation. Right. Because it was almost for sure, certain to know. Right. No reservations available. Instead of saying no, we actually say, hey, we save half of your restaurants available for walk in. We recommend coming in. We saw their walk ins skyrocket to 13% within the first month of Easter month. So this is a huge anomaly compared to other months. But yeah, I would say other KPIs. So we, for certain restaurant groups, we've been answering over 1000 calls per month and the average call duration is around one minute. So 60 seconds to 70 seconds, I would say that 80% of these are reservations. And then, yeah, I think that's the highlight. That's.

Speaker B: Those are m incredible numbers when you look at it. It's so many missed opportunities from very simple steps that it won't be taken because there's not a system or people in place. Especially now with labor costs being so high, uh, everybody's looking at how to be more efficient with everything that they're doing. So I think definitely this solves a big problem. Randall, when you guys, when you go and talk to a restaurant owner about AI, uh, what do you think are the most common misconceptions about it, especially in restaurants? And how do you guys address them?

Speaker A: Yeah, that's an interesting question. I would say the first one is, hey, is this headed, is this going to take someone's job? Going back to the earlier point, right? We actually want to be an assistant for the restaurant. There is still component of our software where there is uh, some hand holding, right? Um, we actually notify the restaurant of any important conversation that's coming their way. So if it's a reservation that's over 6, 7 people depends on what the restaurant deems as most important.

Speaker B: Right?

Speaker A: So we'll actually notify them. So there is some manual effort that needs to be, needs to happen, right? Or maybe it's an important takeout order, right. I would say we're not taking over anyone's job. So these peace of mind, greeting the guests. Let's see. I think another one is. Yeah, I think that was, that's probably the main one. Actually they don't because uh, what I

Speaker B: found is now of course people are way more bought into the AI technology because they see how it works and it sees, okay, some resistance that we see is still, it's like it's still not there. We're just going to give out the wrong information or whatever it is because they still think it's going to be robotic. And I don't want to, I don't want to talk to a bot because this is hospitality. How could the hell are you going to tell me that you're going to replace a human being with a bot?

Speaker A: Yeah, that's totally right, Sebastian. And I was going to ask you what you've been saying, but yeah, I would say yeah, are we going to lose out on the, the delivering excellent hospitality?

Speaker B: Right.

Speaker A: And I would say like we've fine tuned. This is like what we're prioritizing first and foremost, right? Just the conversation quality and having that human element to the conversation, right? So yeah, we've done really interesting things like with certain responses there needs to be a certain processing that the AI goes through, right? So we do have these thinking phrases that we fill in like got it right. Or one moment while I think about that, we try to make it as. As human as possible.

Speaker B: Yeah. I think, listen, it's. I am just blown away and I'm a huge proponent of this and we actually employ it as well in different things, but especially the. The voice AI it's incredible how far it's come. It's. It sounds like, like a human being. Like a human's talking to you almost. You know, I mean, it's like, even the pauses, the tone, like the. The.

Speaker A: Right.

Speaker B: The language, like everything.

Speaker A: Yeah. And it's like, it's so important as a restaurant operator, so it almost like train on that too. Right. Where it's, hey, like you really want to be extremely hospitable over the phone because you can't really see the person. Voice and tone really matters.

Speaker B: Yeah, a hundred percent, Randall. In terms of customer data. Because that's another thing that it's like, uh, I don't know if it's a buzz part, but it's been going around a lot. Of course, in the restaurant, it's all customer data. It's got to be personal experience, all these things and analyzing, having access to your data and doing things with the data. And I think just unless there are larger groups which they do things, they do leverage the data. Many of the smaller operators, they just don't have the time or the knowledge to actually leverage that. Do you guys in some way leverage customer data for hosting in some way?

Speaker A: Yeah, definitely. That's a really good point, Sebastian. Data is so important, especially in our industry. Right. Understanding who your regulars are. I think what makes a really great deal is actually goes back to Danny Meyer setting the table. Right. It's a really good matri d is we'll actually record information about the customer and log it into our system of record and they'll maintain the relationship. But which is actually like, very unfortunate about our industry is, uh, there's a ton of turnover. Right. And you lose that, HR d lose the relationship. So we always look at the intricacies of really good maitre d. What are the things that they're doing that can be replicated or automated technology? Right. The way that we see ourselves is, hey, can we actually be the lifelong, um, maitre d for a restaurant? Right. The things that we like to do is surface how many times, like a, uh, large party reservation or reservation has been mentioned. So we surface that in a dashboard. Right. You drill into those things and we're starting to collect customer profiles.

Speaker B: Right.

Speaker A: We're starting to form customer profiles. And we have a very unique set of data. Right. Because we know, you know, how Often your customers are calling what time of day, what they're calling about and what their first names are. Right. I think, uh, eventually we'll be addressing people by their first names, recognizing if they're regulars in our system and so on and so forth.

Speaker B: Because you. Because you guys are integrating fully with open systems like OpenTable. So you have access to all that data. If the host is. If the host is actually entering all that information into the system, then the system can pull that info, and then when the customer comes, then it can refer back to any of that data that it has.

Speaker A: And what's also unique about our system is whenever someone calls.

Speaker B: Right.

Speaker A: We're automatically collecting that information about what they're calling about and you know, who the names are.

Speaker B: So very cool. Fun question. Can you choose the voice that you want for the, uh, voice agent?

Speaker A: Oh, yeah. Oh, yes. So, yeah, I don't know if you've heard of, uh. Yeah, and we've had some really interesting requests too. So I don't know if you've heard of the Stinking Rose in San Francisco, but they're an older group and they had this request to. They actually have this auto attendant.

Speaker B: Right.

Speaker A: It's this recording. Right. And it's interacting. So press one, speak to the host, and it's a vampire that picks up. So they wanted to maintain that. Right. We actually generated a, uh, vampire voice for them. Yeah. And then out. Out in New York, there's this restaurant, it's a wine bar called Sauced. We provided them with this New York accent. We call it New York. It's great. Sort of. Yep, yep. Hey, it's Nick. What's going on? Yeah, we have that for them.

Speaker B: So that's very cool, man.

Speaker A: That's very cool.

Speaker B: And so what's in two things, Randall. There's so many things going on in the industry right now. What are the trends that you're seeing in restaurant tech and AI evolving? What are you guys looking at that's coming and where are you guys heading?

Speaker A: Yeah, Sebastian, you're probably more of an expert here than I am because you're chatting with so many of these professionals. But basically what I'm saying is there's a lot invested into loyalty. Right. I think restaurants are realizing that, hey, like, the most important customers are the customers that, uh, come twice, three times, four times. So it's. How can I actually understand who those customers are and what their habits are as well? And then it's like the sort of efficiency piece that we spoke about as well. Right. How can I maintain or lower my labor costs. Right. And drive efficiency, but also maintain a high bar of delivering excellent hospitality. So yeah, I think AI has this really interesting. Yeah. Opportunity. Right. Attacking both of those areas. So yeah, I think it's those two pieces.

Speaker B: Yeah, no, definitely. Listen, I think that right now there's just a boom of people exploring like what to do with it because there's just so much. Right. And all the possibilities, which is really cool. And I think many are doing it right. Many are just dressing up the system and okay, I'll make it too distinct or whatever it is. But. But I think we're just going to. It's just going to become mainstream, I think in 100% with everywhere because it's just making our lives easier in many ways. I was listening to this other podcast. I think it was Diary of a CEO, something like that. This guy talking about, you know, how it's just going to be becoming smarter and smarter. Like AI will. Like right now it's a 120 IQ. It'll go to 400, like a million, basically, something like that. So it'll become like it was the industrial revolution at some point and this time it'll be like the tech AI revolution and it will change the complete landscape of how we work and how we do things. So I think it is going to be very interesting for our industry and how to. How we can leverage technology while still maintaining hospitality, which is the personal touch, because I don't think we want to stray away from that because that's what makes people also want to go out. Because connecting with other people, it's just seeing how we can leverage this into making a better experience, providing a better experience for guests. But again, without losing that personal touch that we all crave for as human beings. I think.

Speaker A: Yeah, that's right. You're absolutely right. And yeah, I think it is like for those smaller restaurants who are being stretched really thin, I think for them especially it's how can we up level our hospitality. Right. And meet the standards that are set by the larger restaurant groups. And I think AI has really interesting opportunity in doing that.

Speaker B: Yeah, no, a hundred percent to Randall. What's next for Hostie? What are you guys working on? What's coming down the pipeline?

Speaker A: Yeah, I don't want to.

Speaker B: If you don't mind sharing.

Speaker A: I don't want to reveal all of our secret secrets here.

Speaker B: I just think people excited about it. What can. What you can. Yeah.

Speaker A: Uh, no, I think what's awesome is we actually just raised a seed round the. So it's led by Google's AI fund, which is really awesome. And then um, also we're backed by Burst, so that's, you know, former founders of Yelp essentially. And then Thomas Layton, who's the former CEO of OpenTable, is on there as well. So we're going to have some more capital to do some really interesting things like grow the team and.

Speaker B: Wow.

Speaker A: Yeah, all that neat stuff. I think what you'll see from us is like more partnerships. Right. I think that's like first and foremost what we're investing a lot into. Um, but then more of the personalization stuff as well.

Speaker B: Yeah.

Speaker A: I shouldn't. You mentioned critical part is maintaining that high bar of hospitality.

Speaker B: Right.

Speaker A: So I think a lot of that is going to be in the way that we can personalize AI and open the doors to restaurants to actually configure that. Yeah.

Speaker B: Oh man, that's exciting, man. That's so awesome, man. I'm actually excited for you because with those resources and everything that's going on, like, oh, uh, it's everything that you can do with this, it's incredible.

Speaker A: So it's scary also. Yeah.

Speaker B: All right, I hear you, man. You're getting with those guys. If you're rounding up money.

Speaker A: Yes.

Speaker B: It gets pretty stressful because you got to keep them happy. Random last question. So if you could fast forward 10 years, what is the impact that you hope that Hosti will have on the hospitality industry?

Speaker A: Yeah, I think it is. My, my heart is definitely in the independent operators and smaller uh, groups. Right. I like to think about back to back and the amount of effort that is required to, on uh, every single day and night to deliver excellent hospitality using our very small and nimble team. I think up leveling those types of restaurants and enabling them to actually understand who their customers are better. And there's no reason why a small little restaurant can't compete with a really great restaurant and deliver on the same level of hospitality that a really great restaurant can't. I think it is the 10 year vision is like um, giving the tools that the smaller restaurants need to upload their businesses.

Speaker B: That's fantastic, Randall. I think you guys are already making a huge impact and I think you will create even more of an impact with every. I uh, I think in general with every operator. But yes, like you said, the independence and the small ones. This is a game changer. So anyways, Randall, fantastic. If people want to find you, Randall, of course. Where can they find information on Hosty? Of course, assuming of course your website, but anywhere else they can go see some case studies, check it out, schedule demos.

Speaker A: Yeah, I think the place is hostie. AI. We have this awesome interactive demo, so it's pretty fun. It's modeled after. After Good Burger. Yeah, Home of the Good Burger. So, yeah, I'd recommend giving that a call, checking it out. And we have a blog, too, as well.

Speaker B: Yeah. Okay. Perfect. Rhino, thank you so much for being here. This has been a great conversation, and I can't wait to see where you guys are going to be in a very short time, because it's just very exciting. So thank you.

Speaker A: Thanks so much for, uh, having me on Sebastian and M. This is great.

Speaker B: You're welcome. All right, see you soon.

Speaker A: All right, see you soon. All right, bye.