RLC Talks - Maximizing Restaurant Revenue Through Connectivity and Customer Retention with Hamed Mazrouei

In this episode, Hamed Mazrouei, founder of Vivant and Milagro, discusses his dual-focus approach to helping restaurants achieve consistent internet connectivity and exceptional customer retention. He explains the critical importance of preventing network outages to maintain seamless online operations and increase revenue. Hamed also shares his insights on why customer retention is vital for the restaurant industry and outlines practical strategies for encouraging repeat visits. Through his companies, Hamed aims to drive top-line revenue growth and ensure restaurant success by solving connectivity and retention challenges.

00:00 Introduction to Hammed Ri

00:14 The Importance of Internet Connectivity

02:40 Cost and Benefits of Reliable Internet

05:48 Customer Retention in the Restaurant Industry

07:55 Strategies for Enhancing Customer Retention

14:39 Conclusion and Contact Information

Transcript

Jeremy Julian: 0:00

So Hammed, why don't you introduce yourself to our audience Who is Hammed? a lot of people have seen you'cause you're, you've got the, you've got the look, but, and a lot of people are like, who is that guy? But I'd love for you to introduce yourself to our audience. Absolutely.

Hamed Mazrouei: 0:11

So my name is Hamed Mazrouei i'm the founder of, Vivant and Milagro. So I run two different companies, focused one side on, connectivity, eliminating internet outages, providing a hundred percent uptime guarantee through what we call a half platform, highly available, fault tolerant. All that means is we just eliminate internet network outages in order to ensure that your online orders, your third party orders, payment processors wait list, reservation, none of that goes offline, so you don't have to deal with the complexities that comes with outages. So that's on one side. And then on the other side, we focus on retention. Like restaurant industry hasn't really fully, got that under control, I think and I strongly believe that by end of the decade, I've said this several times, that there's gonna be some billionaires that make their billions in the restaurant industry, and they're gonna do it through customer retention. So those who master that are going to increase revenues, which then who cares if food cost is 35% and labor is 35%, it doesn't matter. Even though you took a 10%, increase in, in cost of goods sold and labor, it's not gonna impact you much and you're never gonna have that thin margin issue.

Jeremy Julian: 1:19

Yeah, no, and I've listened to you talk, for a while about the whole idea of gas retention, but. Let's dig in. So I was actually just on the phone this weekend with a customer talking about exactly what you had shared with them. They're now at 70% of their orders are coming in digitally. So internet has played such a critical role. And the reason I was talking to them is they had did a reference call and the customer had said, what happens when the internet goes down? I say, ostensibly we have a problem. It's not'cause the point of sale that we sell is the problem. It's ultimately because. Third party delivery kiosk, all of these other things are operating on the internet and if the internet's not stable. So what have you seen as you've been in this connectivity space?'cause you've been doing this for a while.

Hamed Mazrouei: 1:57

Oh yeah. We've been doing that for about 15, 16 years now. So

Jeremy Julian: 2:01

early days it didn't matter as much. it was critical, but it wasn't as

Hamed Mazrouei: 2:04

critical as it is now. I agree, nowadays, everything's online, like everything and by the way, 2019 okay maybe you lose 10, 15, 20% of online orders'cause the, you just couldn't. But today it's probably 30, 40% of your revenue and it's so inexpensive to do that, to just keep the network up and running at a hundred percent with no outages, that it's just, it doesn't make any financial sense why you should not be doing something like this and again, it's anything that takes away from that top line revenue puts you in that thin margin situation, you can't afford to do that.

Jeremy Julian: 2:40

and the one thing that people underestimate,'cause oftentimes, and I'm sure you run into this, so for those listeners that are out there that are like, oh, but it costs too much to have a, have an internet connection, I. a secondary internet connection. An SD-WAN a highly available, it's too expensive. But when we talk about what they lose for an hour of sales, even if they're only making 20% on those hour of sales, one hour of downtime can pay for it. So talk us through how inexpensive it and how affordable it's gotten'cause it's not even inexpensive, it's affordable, especially when you look at the opposite side of it. Agreed.

Hamed Mazrouei: 3:10

It's a thousand percent affordable. You don't have to go for the restaurant space itself, you don't have to do the complexities of SD-WAN and go through all that expenses. You just need somebody who's done this before, who knows what they're doing, and who can create an infrastructure that just keeps that business essential services online. That's what we say, and it's so good and it's so real it's so good it works so well that our customers don't even know. So the fir, so we get obviously proactive notifications. we call the customer first and say, Hey, by the way, FYI, you on backup. Don't worry, we've got it covered. We're calling the ISP. We're trying to sort that out. And they're like, no, Internet's working. It's no, it's not working. no, they're arguing, it's working. It's trust me, it's not working. You're on backup. in terms of cost, you are looking at probably sub 400 bucks a month per location, per month for a primary internet connection, a backup, a firewall, the wifi, the, PCI compliance, the intrusion detection, all the security stuff, the content filtering. Like right now, most restaurants are probably paying around 500 bucks a month without the backup and without all, and without the proactive

Jeremy Julian: 4:18

services, without all of those kind of things.

Hamed Mazrouei: 4:21

So and so for you lose that sale. It's,

Jeremy Julian: 4:23

it,

Hamed Mazrouei: 4:24

yeah. It's gone. Yeah. Look, you're, you are more likely to save money by combining it and putting it in a bundle and getting that a hundred percent off time and eliminate all your outages than it is not doing it again. It's just mind boggling how some people are like, oh, it's gonna cost me 50 bucks a month to do this, and I'm just not willing to do that. It's it's$600 a year. You lose a one, you lose internet during lunch or,

Jeremy Julian: 4:51

dinner. You're done. and you get the argument, oh, but at my house it never goes down, and I laugh'cause I'm like, yes, you're number one. Oh, so you can't watch your Netflix, so you're upset about it at your house. Like you can't process credit card, you can't process a loyalty transaction. You can't process an online order or a third party delivery order when you have no internet. Yeah. So people don't think through that. So is that a common thing that you guys continue to run into?

Hamed Mazrouei: 5:13

not really anymore. I think people are waking up to it and they're saying, okay, like I, I actually need to make a change. And that's becoming, it's slowly becoming a norm. so I think people are realizing the pain point and they're starting to, take a stance of, Hey, how do I just ensure it never goes down? And how do I keep it, affordable so that I'm not spending a thousand bucks a month? love that. And by the way, there are restaurants, like we've got some customers that are spending, 13, 1400 bucks a month, but your AUVs are five, 6 million bucks. And it's Hey, I don't care. I just don't want to lose that revenue.

Jeremy Julian: 5:46

Yeah, I love that. let's flip the script real quick. you talk about retention and why do you think that retention is such a critical piece of the restaurant equation? again, you've been in the restaurant space for close to 20 years now and Yep. I think, and you and I both kinda live in a similar part of the country where. The restaurants are abundant, but it feels like less people think about that. But why do you have such a passion to ensure that people retain their customers and get them coming back?

Hamed Mazrouei: 6:12

Yeah, so the story begins from when I, story begins in like 2010 and actually there was a news article or some, one of these magazines, I think fast casual QSR online published a thing that I had said in 2013. And I went back and read it myself. I'm like, whoa, who said that? And it's oh, it's by me. So it started back then and it started with the guys at Gena Squirrel, and I was sitting, I need the sea levels. I was in their meetings every Monday, 7:00 PM until whenever it ended. And I saw the problems at the high level and I started asking my questions why? Like, why is I. You, you are selling a margarita for 12, 13, 14 bucks. It cost you a dollar. That's a hell of a margin. Like what other industry do you go to where it costs you a dollar? You sell it for$10, right? 10 x.

Jeremy Julian: 7:04

Yeah.

Hamed Mazrouei: 7:04

That's crazy. Margins. But then everybody's complaining. So I start asking, why does it do that? And then it's they're not really marketing. Or if they're marketing like they were back in the day, those guys crushed it. they, the guys at Genis like that, I remember they had 2.2 million people in their email subscriber list back in 2010. Oh my

Jeremy Julian: 7:23

goodness. Okay. In 2010,

Hamed Mazrouei: 7:24

right. And it was antiquated. You write your name, email on a piece of paper, it gets scanned, it gets sent overseas, and then they manually type it, put it in a spreadsheet, send it back over to the, it just, it was complicated, but that's what they did to crush it. But everybody, first Tuesday of every month got kids eat free. And I always used to make fun of v not make fun of him, but get in a conversation and be like, Hey, I don't have kids. Why do you send me kids? Eat free offers. And he would just shrug it off. We like, that's all we could do. I'm like, no, you can actually personalize it. So closing the loop on that 70% of people that go in the restaurant never go back. Uhhuh. There's a reason they don't go back because I've heard you sell the statistic and it blows me away.

Jeremy Julian: 8:04

Sorry, I

Hamed Mazrouei: 8:05

didn't mean to interrupt you, but it's absolutely, it's insane. It is insane across the whole industry. 70% of your customers do not come back. Now the question to you is, what are you doing to give them back?

Jeremy Julian: 8:15

Yeah. And so tell me how you guys are solving that problem.'cause at the end of the day, I've heard that whole adage, 50% of marketing works, we just don't know what 50%. But I think that's such an old adage because nowadays we know who they are. They're carrying around a tracking device in their pocket, they're engaging with your brand on social, they're engaging, they're coming by the stores. So there's so many pieces of data to know who's there, how often did they come in, what did they spend? So I guess, how are you guys helping restaurant brands from that retention perspective to get them coming back?

Hamed Mazrouei: 8:44

Sure. So the conversation actually happened here as well, that, the CEO of Chili's was like, Hey, just make it simple. Meet them where they are. Don't force'em to download an app. I'm not going to download your app, period. I don't need it. If I'm gonna eat there once every six months, good luck. Why? Why would I need your app? Meet me where I am. Just do the basics. Just the real basics, meaning just communicate out. So for example, this is how we do it. You come into the restaurant, we have your phone number on file, either through reservation or at the point of entry. they put it in your POS and it gets fed to us. And then we immediately send a text message to the customer an hour after the check was closed. And it's like, how was your experience? We opened that line of communication immediately. I know if it's your first time, chances are you're probably not gonna come back. How do I increase my odds of getting 15% of those customers to come right back into the restaurant within a. 60 day window. So the first thing is customer feedback.'cause if they hated your brand, they're not coming back. At least you know where you screwed up. If that's the reason they're not coming back. Now, if you blew it out of the water, great. Can you gimme a five star review? That reduces your acquisition cost.'cause the first thing I'm looking at, if you're a sub four, if it's a 3.9. Yeah, you're not going. I'm not going. Yeah. I have other options that are four, four and a half, 4.7, 4.9. Now there are so many restaurants within 4.9. I'd rather go there'cause it's a safer bet. Then some number of days later, based on the, frequency of customers, we proactively send out a marketing message, a super strong offer. Buy one, get one. And by the way, the, we, I didn't come up with this strategy. It's John Taffer from Bar Rescue. He said that seven, eight years ago. And there isn't anyone in the restaurant industry who's executing on that, even though the information is there. Yeah. I'm just simply enabling that option to make it to the, to be able to execute that. So you gotta buy one, get one free. When you come back, then it knows that it's your second time. Then we send out a. Lower, offer a free appetizer or dessert, and then we send out on a fourth visit, we send, we give'em a free drink and then we taper it off and we're done. And everybody says, oh, you're doing that to build loyalty? No, my friend, we're not doing that to build loyalty, we're doing that to build behavior.

Jeremy Julian: 10:59

Yeah.'cause I say this all the time. There's a certain circulation of restaurants that you go to all the time, and if they get out the rotation, if they get out of the rotation, you miss it. The other one that I would say. That I'd love for your thoughts on it. Actually, it happened last night at dinner, we gave a poor review and had no interaction, no email. No table touch, no having to be a casual dining chain. Nobody came to the table and said, you had a, you put a one star review on their mechanism. Oftentimes, I think guests just want to be heard. They want to know that you care. They wanna know you're asking, but if you don't follow up, it's just as bad as not asking all together, in my opinion.

Hamed Mazrouei: 11:35

Yeah. Don't bother. Yeah. Yeah. If it's not, I'm a big believer of actionable data. I don't believe in data. I believe in actionable data. Yep. In fact, I was just having that conversation with the CEO and he said the same thing. He is how do you know that they're gonna do that? I'm like, listen, when I leave a one store review for anyone, it's because you made it so difficult that I can't get ahold of you. I can vent out and say, Hey, you screwed up. Please fix it. Then I have to leave you a one star review. Yeah. So when that response comes in, you gotta respond. And by the way, like in 2011, we built a customer feedback tool back then. We don't do this today, right now yet because we haven't had the need for it. But if you left, if we, if our system detected it, you had a negative experience, would give you a bogo. But if you had a positive experience, would give you a free appetite. Personalization down to DOT scan. This is in 2011, like this is 14 years ago.

Jeremy Julian: 12:29

But I think all, and the funny thing you say that is, is when I go onto my Amazon login, it's very different than my wife's Amazon login. What she shops for is different. we're personalized everywhere else in our world, but it's not personalized for whatever reason. Restaurants, all retailers are doing it, but it feels like restaurants are just spray and pray and hope that somebody comes back in and yeah, it's not the way that the world works in 2025 and beyond. And

Hamed Mazrouei: 12:52

Actually let me, so like we technology companies, we have the opposite problem. We have an acquisition problem. Yeah. It's hard for us to get a customer, but our average customer 10 years is right around eight years right now. Eight years. Yeah. They are on our platform for eight years. They pay month in, month out. So the reason we're able to crush it is because of retention. Now, obviously acquisition is just as important, but in a restaurant industry, just retention doesn't seem to exist. So I'm very passionate. I wanna solve one problem and one problem only. I want to drive increased revenue, and the only way I know how to is through retention

Jeremy Julian: 13:30

is to get the people that, that 70% that don't

Hamed Mazrouei: 13:32

come back. how do I get them to come back? I just want 15% of them to come back in and I want to bump everyone to the next visit. Because if I get a guy that visits three times to come in, four, the guy that comes in two to come in three times a year, I've meet, I've met my goal, and I only need 15% of'em to do that. And by doing that, I'm already increasing revenues by about 150 to 200k a year, which then puts you on a million dollar mark or above. And by the way, like average restaurant in 2019 was making 600 grand. A year in top line revenue. Okay. My first company, one of us, sub 1 million. Guess what? I had thin margins. Yeah. I had high labor cost. I had high cost of good sold. Yeah. Driving that top line, the sales cures a lot of problems. Once I passed the million dollar mark, I'm like, oh, interesting. My labor cost is the same, but it's not that bad anymore. Like profit starts coming in again. Your first million bucks is simply to pay overheads, right? It's to pay the fixed cost. Stuff. And then, once you pass that, everything else becomes

Jeremy Julian: 14:36

very much easier. You can invest and do all of that stuff. So Ed, how do people get in touch? How do people learn more about how you can help them on the infrastructure side, on the technology side, and I know how to get ahold of EBIT for our listeners that are out there. Yeah.

Hamed Mazrouei: 14:47

Website is the best way. Just learn about that stuff on the website and then feel free to send us an email or find me on LinkedIn and. let's get in touch. I'm, again, laser focused on retention, laser focused on this connectivity stuff. If I can solve those two problems for the industry, I think I've made my mark for the entire industry, love it. thank you for taking the time. Absolutely. Thanks for having me.