About the Guest

Jared Cohen is the Chief Operating Officer at Protein Bar and Kitchen. He joined Protein Bar in 2017 and drives development of enterprise growth strategy, leads key strategic platforms (including third party delivery and analytical marketing), and heads Finance, IT, HR, and Supply Chain functions. Prior to joining Protein Bar, Jared served as the Senior Director of Global Strategy with McDonald’s, where he championed the partnership with Uber Eats. He was previously a Principal with the consumer and retail practice of Booz & Company, a strategy consulting firm.

Episode Summary

Jared Cohen, COO of Protein Bar and Kitchen, on how offering an omnichannel guest experience that delivers customers what they want, when they want it strengthens customer relationships and drives the business during the pandemic and beyond.

Episode Transcript

Zach Goldstein

(00:01):

From fake meat and robot chefs to ghost kitchens and delivery drones. The restaurant industry is rapidly evolving. Welcome to Food Fighters, bringing you interviews with the leading industry trailblazers. I’m your host, Zach Goldstein.

Zach Goldstein

(00:20):

Welcome back to Food Fighters. I’m Zach Goldstein. I’m here with Jared Cohen. Jared is the Chief Operating Officer at Protein Bar and Kitchen. He joined Protein Bar in 2017 and leads strategic planning, finance, and business support functions. Previously Jared served as the Senior Director of Global Strategy with McDonald’s, where he championed the partnership with Uber Eats. Jared, welcome to Food Fighters. Thanks for joining us.

Jared Cohen

(00:45):

Thanks Zach. First time. Long time avid listener and happy to be here.

Zach Goldstein

(00:49):

Awesome. Well, first off, give us an introduction to Protein Bar. I know many of the listeners are probably quite familiar with the brand, but for some who aren’t, tell us about what makes you unique.

Jared Cohen

(01:02):

Absolutely. At Protein Bar and Kitchen, we provide delicious, nutritious, and protein-packed food and beverages. Our philosophy is that every diet requires protein and we provide protein for every body. Whether a customer is vegan, vegetarian, keto, or omnivore. We focus on breakfast, lunch, and rest of day through our shake program and through our breakfast program, through our lunch program, and making sure every entree has got at least 15 grams of protein, and for a busy, active, on-the-go lifestyle customer, we can get you what you need as part of your diet. We’ve got 19 restaurants from DC to Colorado with most of them located in our hometown of Chicago.

Zach Goldstein

(01:44):

One of the things that I heard from you in the preparation for today’s episode is that you have a great piece of career advice that you like to give people to have a bias towards action, and with so much uncertainty in the world right now – in the restaurant industry specifically – how have you taken decisive action to help Protein Bar weather the storm amid all the craziness that is COVID?

Jared Cohen

(02:10):

Yeah, I would say that the pandemic has presented us with some unbelievable challenges, challenges we could never have anticipated. I think we’ve done as best we can to take action as quickly as we can to help us react and thrive in the climate that we have with obviously so much uncertainty still around. I think we were in a position where, by the nature of our locations, our stores tend to be concentrated in downtown central business districts. And as the pandemic began to unfold, starting on the East Coast and in Washington and moved inland, we weren’t sure exactly what was gonna happen, but we knew it was going to be bad for society at large, not necessarily for the restaurant industry, but we knew we had to take evasive action to make sure we could sustain through the pandemic emerge on the other side. I think we started with a holistic look at our business and our complete operating model; everything that we could adjust, we needed to. And that started with our labor model and all our inputs on the food and menu side. We had to rebuild our labor model from scratch for a business and a customer base that shifted from primarily analog to entirely digital. So that labor model application on how we staffed the restaurants, on how many people we needed at the front counter, we had to think through what the world was going to look like shifting that mix dramatically. We had to simplify our menu. We took some actions to make sure that we could sustainably keep our food costs at a reasonable level. So that meant pruning some of the things that may have been more expensive and more complicated to execute because the labor model was changing. And I would say the other piece that we did in April timeframe was really accelerated some of what we had on the technology side. We’ve always been a technology forward concept just by nature of our customer, who tends to be very demanding and also very technology oriented, but whether it was pushing aggressively forward with white label delivery, updating our delivery packaging, shifting our outpost program or delivery drop program to focus on residential high-rises versus offices. We took a lot of steps in that regard in March, April, May to make sure that we could get as much business as we could in an environment where everybody was trapped in their homes.

Zach Goldstein

(04:31):

In many ways that digital transformation – I like your phrase analog to digital because that is undoubtedly what everyone across the industry is facing – some were more prepared than others. You’ve in some ways been preparing since 2017 when you joined Protein Bar and have really led quite a significant transformation, not only a rebrand, but actually this investment in digital that seems to be a key element of your response. Let’s go back a couple of years. What were some of the things that you saw that led to this investment in digital and your focus there?

Jared Cohen

(05:08):

For sure. I think when we took over the business in 2017, Jeff Drake, our CEO, and I really understood that that Protein Bar was founded in 2009, but in the intervening years, the better-for-you fast casual market got increasingly competitive. And we saw a brand that had not kept with the times from a culinary perspective, from a brand feel perspective. And certainly from a technology infrastructure perspective and sequentially over 2017 and 18, we embarked on revitalizing and re-energized in each of those dimensions. So in terms of the brand, we went from Protein Bar to Protein Bar and Kitchen. We completely reformatted the physical experience of the restaurants to emphasize what we felt: the brand needed to be differentiated in space. That’s one, that’s much more assertive, much more high energy, one that’s a much more enthusiastic feel when you walk into a restaurant. So that’s physical refreshes across all our Chicago locations. The second piece was on the culinary side, really differentiating the menu and making sure we had differentiating credentials to be a thought leader in the better-for-you space. That means migrating from quinoa, which we were the first to introduce to market in 2009, but bringing in things like rice cauliflower as a base alternative for our bowls. It meant doing things with proteins, whether it was sous vide salmon, whether it was sous vide egg, whether it was organic tofu, but really reestablishing that our food was delicious as well as nutritious to reinforce Protein Bar and Kitchen as a culinary destination, where you would get great tasting breakfast, lunch, and shakes. And the last piece, a lot of this stems from my experience, on the consulting side, before I got into restaurants and then with McDonald’s, recognizing that consumers are increasingly using omnichannel formats: a variety of ways to get what they want when they want it, whether it’s mobile ordering for pickup, whether that’s delivery through a third party, whether that’s having the food brought to their office through our catering program, or through outpost, customers are increasingly familiar with brands that are oriented to how they want to experience it. And Protein Bar really needed to get back to table stakes and ahead of the curve, ultimately, in terms of enabling that experience, that meant really transforming the infrastructure we had. When I joined Protein Bar and Kitchen, we had a mobile app with a loyalty program on it, but you couldn’t order on the app, and so the app really just served the “pay in restaurant,” which, knowing where the customer was headed, we knew we needed to be better. And so that meant facilitating mobile ordering, that meant engaging with all the third party marketplaces in the right way and the way that was optimized for our operations, in a way that’s sustainable financially and operationally. But really getting us up to speed where we – pre-pandemic, we grew our digital transaction mix from single digits, low single digits, to about 25%. And obviously since the pandemic, it’s now probably a majority of our transactions.

Zach Goldstein

(08:21):

And do you expect that to stick? I mean, even when people can, across all the different cities where you are, go back to enjoying Protein Bar, the “quote unquote” analog way: walking up and deciding, for their dining occasion. A lot of those people are still likely to order through one of your digital channels, right?

Jared Cohen

(08:40):

Oh, 100%. I think the pandemic is forcing people to use new technology, which, you know, we were trying to get people to try our app, with discounts as early as 2018, but now that’s one of the only ways you can interact with the brand. And then I think once people experience it, and I’m sure you’ve encountered this personally, and I have too, here, the first time you use a service where the food magically appears, or you walk in and out of a restaurant just grabbing a bowl and getting back to your office. It’s really hard to walk back from that because it’s so much more convenient. So I think we recognize that people are going to continue to use us that way. We retrofitted and remodeled the restaurants to enable that experience. So we’re excited about the prospect for those channels to continue to be critical elements of our success. We think we’re well positioned. We need to make sure customers feel safe coming back to their offices generally before they start coming back to our restaurants, which are located nearby. But I think we’ve built the technology and the operational memory for our teams in the restaurants to really out execute on those types of order flows. And so we’re just getting ready and eager for the customers to come back.

Zach Goldstein

(09:56):

Chipotle has talked about having a second make line in every restaurant. When you talk about retrofitting the operations in-restaurant at Protein Bar, are there other changes that you’ve made in order to respond to a significant increase in digital demand?

Jared Cohen

(10:12):

Oh, for sure. And so we actually were, whether by luck or design, a bit ahead of the game in that respect. All of our restaurants were built originally and in 2009 through through 2014, 15 with two make lines, a double-sided prep line. And so as we saw digital was going to be increasingly a large portion of our vole, and we wanted to enable that shift and enable us to treat those orders differently. We started doing more with kitchen routing, with printers, with different color tickets, making sure we were treating them differently in restaurants starting in about early 2018, because that allowed us to treat an in-store customer, someone at the register, and service them right away versus an order that’s been placed for a pickup with a ready time of 10 minutes from now. Segregating those orders and treating them differently, which obviously Chipotle and others have recognized and done similar actions on – but we’ve positioned ourselves well for that. And then taking other steps, whether it’s full POS integration of our third party relationships, whether it’s facilitating digital signage to make sure we’re accenting the right parts of our menu, building on those next layers of technology, such that we can operationally support whatever volume from whatever source we’re going to see it.

Zach Goldstein

(11:32):

A lot of what you’re talking about there is convenience and the convenience game changed when you could just click a button, and sometimes it really is just a button. If you’re reordering something you’ve previously ordered, you can click a button on one of the delivery apps and food shows up. I mean, that is the epitome of convenience and it changes consumer expectations. And the challenge is it feels like we haven’t always set the expectation to the consumer that that convenience has a real cost, got to make the food. Someone’s going to pick it up and bring it to you. They expect that often to be free. That’s probably a very different dynamic for you when you’re thinking about enabling delivery at McDonald’s with Uber Eats, where there was speculation that Uber Eats didn’t even make any money on that deal. And when you’re doing it at a 19 location brand, that doesn’t quite have the same, no matter what you do, you can’t have the same negotiating power McDonald’s has. So how have you thought about working through those third party relationships to make them work for you? Not just in the short term, but longterm sustainable.

Jared Cohen

(12:37):

Yeah, absolutely. It’s an extremely relevant question for every restaurant brand out there, whether you were partnered with third parties before the pandemic environment, just about everybody is partnering with them now. I think you raise a pretty good point. The customer, through large venture capital subsidies, has been conditioned to expect free delivery, or discounted delivery from just about any restaurant partner possible, whether it’s a large operator, whether it’s an independent operator. And clearly that’s not a sustainable model for, for the third parties. It’s not a sustainable model for the operators. I think what we’ve done over the last three plus years that I’ve been with the brand is be really thoughtful about how we orient and optimize our presence with these partners, making sure that that we have a clear understanding of exactly what the economics are for one of our orders across any of our partners, understanding how they make money, understanding how we make money, and understanding that it has to be a net positive for both of us in the long term. That’s likely gonna mean the customer is going to pay more for what you pointed out earlier is such a miraculous service. You push a button and the food arrives and you barely have to do anything. I think what we’ve seen, whether it’s anecdotally, whether it’s through surveys, just talking to customers, customers are willing to pay that; customers are willing to pay a premium for that type of convenience. And so, as we think about working with third parties, it’s us taking action to make sure it’s an economically sustainable model for us. So whether that be the negotiations on the commission side, whether that be the menu pricing side, the menu mix side, doing whatever we have to do to make sure that it’s going to work. But then I think moreover it’s incumbent upon every brand, and we’re not unique in this regard to figure out what the branded channel looks like for you. So, you know, we are one of the first restaurant companies to go live with Grubhub’s delivery as a service model to leverage their backend delivery through our own brand, that experience. I think any brand that aspires to continue growing and scaling their system needs to have their own channel where they can retain that customer relationship and make sure you’re – not to use the word delivery – but delivering on that level of customer expectation because the third party marketplaces have conditioned folks for it. And we want to own that relationship with the consumer, so while we want to continue working with third party marketplaces, and there’s a clear role for them, whether you’re looking at it as a user acquisition, as a marketing vehicle, or just making sure you’re being ubiquitous for as many customers as possible, they have a clear role to play; but if you don’t have a branded channel that you’re also developing, I think long-term, you’re creating a systemic risk to your business as the mix shifts more to digital, you’re just not going to own those relationships and be intermediated.

Zach Goldstein

(15:55):

How does a consumer of Protein Bar experience that dynamic? And what I mean by that is it’s clearly in your interest as you point out to have a branded channel where you can have that direct relationship with the customer. And yet a lot of customers still default to directly to a third party delivery marketplace. What are the things that you’re putting in place that start telling that narrative that, “Hey, we really want you to come direct to us?”

Jared Cohen

(16:30):

Sure. I think it starts with making sure you have that infrastructure in place to provide that level of experience to provide a similar level of convenience. Right? So getting white label delivery in our mobile app and on our web ordering platform is the table stakes to enable us to have that conversation. I think the next piece of it is really leveraging your data infrastructure to begin to communicate with customers in the right way. So you have to make them aware of it, and then you have to convince them why it’s better to use your platform than a third party marketplace. And that’s not to say it’s easy to get people to transition because: one, it’s super, it’s super easy to just use whatever marketplace you’ve used before. To your point, you can click a reorder button to these marketplaces, which are still subsidizing like crazy and offering discounts like crazy to keep customers active and drive frequency on their platform. And, you know, last time I checked our 19-unit restaurant company has less money than Uber, Grubhub, Doordash, to be able to market. So we kind of have to play smarter and more precise. That means leveraging the data infrastructure we’ve been gathering on who our customers are and how we communicate with them, whether it’s through email, whether it’s through text, and how we engage with them and let them know who we are and that they’re valued members of our community. I think the other piece of it is how do you target that second up-for-grabs people who may have used you on a third party marketplace or may never have used you at all, or any delivery format. And you have to be the first ones to own that experience rather than them encountering your brand through a marketplace first. I think that’s where you start getting into: okay, let’s create lookalike sets of customers based off of who we know is in our known universe today, and then start targeting them with relevant content, with relevant discounts, relevant to the way they can use the brand and the way our branded channel, whether it’s specific offers, menu exclusives, particular discounts, or more experiential offerings, whatever you can do to differentiate yourself in that regard. That’s something that every brand is going to have to figure out a way to do to combat the marketplaces that have much larger war chests.

Zach Goldstein

(18:44):

Yeah. What I’m hearing is a fascinating dynamic because on the one hand you’re describing a partner: you cannot fulfill delivery without those marketplaces, without those services or at least not in the same way. And on the other hand, I’m hearing you describe what really sounds like a competitor. And quite frankly, you’re talking about owning the customer, but Matt Maloney at Grubhub says that he owns the customer, and Grubhub’s a close partner of yours. So that’s a challenging dynamic to walk. How do you think about partner versus competitor, and guerrilla tactics, if you will, versus the huge budgets that the third parties have?

Jared Cohen

(19:30):

Yeah. Fortunately and unfortunately there is a national attention and I think the third parties recognized that that’s there. I think in frank discussions with them, we each recognize that that, okay, we want to have more Protein Bar and Kitchen orders. Generally. They want it to be on their marketplace and we want it to be on ours. But at the end of the day, if we’re attracting customers to both of those channels, I think we both want in on that experience. I think the natural tension is why you have to go back to, okay, what are the economics of my relationship with this company for the lifetime value of a customer for someone on the branded channel versus on the marketplace channel and make sure that, you’re comfortable with there being customers who you can’t win over. I think long-term, we want them to be Protein Bar and Kitchen customers first. But if someone’s going to go on Grubhub or go on Uber Eats or go on Doordash, and they use Protein Bar for 25% of their occasions on that marketplace, we still want that to be a net positive to Protein Bar and Kitchen’s bottom line. And so I think any third party in the world is going to recognize that it’s in our incentive to pull customers off. But the third parties also recognized that without brands that resonate like ours, their marketplaces are not going to be successful in attracting and retaining customers period. So there’s a natural tension between those two. I think we’re going to do what we can to win and earn our customers’ loyalty and they’re doing the same, but at the end of the day, since we’ve partnered with them going back to three years, the rising tide is up for both of our boats. Now, we see it much more directly, because we’re only 19 restaurants. Then, Grubhub probably sees the Protein Bar and Kitchens hydrolyzing their boat. But I think it’s win-win them between us and between the customer, who, again, getting back to what I was saying earlier, is accessing Protein Bar and Kitchen food and beverages the way they prefer to engage with it.

Zach Goldstein

(21:44):

Owning the customer gives you direct access to not only market to them, but to personalize the interactions when they’re not, at that moment, thinking about ordering from your restaurant. And so one of the magical things that happens in this shift from analog to digital is that restaurants go from businesses which have very little customer data and are stuck with very generic forms of customer marketing, to businesses that have an abundance of customer data and can completely change the way they talk to their customers. Except most restaurants are not using that data. How have you started to think about the disruption that digital brings, the more direct relationships you have with your customers, and this true thought of personalization to deliver that type of experience when they’re not at the restaurant?

Jared Cohen

(22:42):

Oh my God, it’s, it’s super exciting, and I’m showing my bias. I’m a University of Chicago guy, so I’m a heavy quant-oriented, data-oriented person. And I think where the restaurant landscape is headed is to a much more data rich environment. Just like you said, I think our industry as a whole is significantly behind where others, whether it’s retail, grocery, specialty retail, how others are leveraging data. And we like to think that Protein Bar and Kitchen, again, for a 19 unit restaurant company is advantaged in that because we’ve been doing a lot of work to get us ahead of the game. And I’ll give you an example. When I started, I asked about our loyalty program, which we’d had implemented since 2014, and asked about, “Hey, the data, where is it? What are we doing with it?” And the answer was like, “Well, not, not very much, it’s all there. We have it. We haven’t really leveraged it. We give you a free shake on your birthday.” And I was like, “Okay, well, let’s start to dig deeper on ways we can leverage this,” because the unique thing about Protein Bar and Kitchen is we are an all day concept. We have breakfast and we have our rest of day menu, which is anywhere from lunch to dinner. We have shake-led occasions. So you can get a shake with 15 grams of protein as almost a meal replacement. Or it’s a beverage or a food-led occasion where you’re getting an entree, a wrap, a salad, a quinoa or rice cauliflower bowl. And so if you think about that as a two by two matrix, we’ve got people who use us for breakfast and rest of day, we’ve got people who use us for shake-driven occasions and for food-driven occasions. The people that populate those cells of that matrix use the brand in very, very different ways for very, very different occasions. And historically we treated them all the same. We marketed generally to anyone who would use Protein Bar and Kitchen, but what becomes much more powerful is starting to think about those groups as separate segments. So someone who uses this for a shake on their way to work in the morning versus someone who’s picking up a salad on the way home from the gym, we can look at customers and whether it’s segmenting them by that use occasion, whether it’s doing clustering analysis to understand deeper behavioral drivers, we can set our specific marketing strategies and specific messaging, specific promotions to drive those folks to use us in the ways we want them to use us, whether that be, increasing someone’s frequency at breakfast for our new, skinny chorizo breakfast burrito, or whether that be getting someone who uses us for bowls to try our new summer protein bowl the next time they’re in for lunch. I think we’re only scratching the surface in ways. We can leverage that data and further personalize it, and leverage tools and players in the restaurant industry like you guys to help us understand that and help us act on it, but there’s so much, so much white space there. One of the things that really excites us at Protein Bar and Kitchen is the ability to leverage that information in actionable ways and insightful ways to materially benefit our business.

Zach Goldstein

(25:50):

Yeah, absolutely. I think one of the things that people used often, they called it a loyalty program, but it was really a rote rewards program. That’s what it used to be, right? Buy X, get Y, and the customers on a very predictable routine, and true loyalty means recognizing that all those customers are very different and they actually want completely different things for your brand. And if you can talk to them in a way that’s unique to them that resonates in generally marketing, that resonates results in more money, but you have to actually start thinking of customers differently. So that’s exciting and some great examples of what you’re doing exactly around using that data. The last question I have for you, because you mentioned the breadth of day parts; and so the last question is around what kind of change you’re seeing in day parts, what is most affected? And I know a big portion of your business was people nearby their office picking up a shake on their way in, or grabbing lunch and taking it back to the office. And I would imagine that that has fundamentally changed. Where are you seeing changes about day parts and what are you doing to rethink that strategy in a world where offices may be closed in some places for a lot longer than any of us hoped for?

Jared Cohen

(27:05):

Yeah, I know, you’re absolutely right. I think the pandemic is, well, a once in a lifetime event – knock on wood – but I think it’s creating a massive opportunity. We are seeing dramatic scrambling of everybody’s habits, whether that be where you went on your way to work, whether that be where your office is, whether that be what you did when you left the gym on the weekend, every single person’s routine has been completely thrown up for grabs and disrupted and completely changed. And for the last, you know, six plus months or so, I guess this is August; so the last, since mid-March, everyone’s routine has been completely scrambled, we have a unique opportunity as those routines reset – whether it be their work routine, their gym routine, their school routine – we have an opportunity to be a part of that conversation and impress upon them that Protein Bar and Kitchen should be integrated into what that new routine is. I’d say practically speaking, for our existing workloads: yes, we were dealing with a lot of work breakfast and work lunch occasions, and we’ve obviously seen a significant shift in that fewer people are going into offices these days. So that morning occasion has, for lack of a better term, been vaporized for the time being in the central business district from Chicago, DC, and Denver. Our lunch business is still large, but the mix has shifted to more digital. And I’d say we’ve seen an uptick in that dinner business, materially, because there are more people who are home. And I think people still want to leverage restaurants brands. They know brands they like, but are obviously doing it from home, whether it’s delivery or whether it’s takeout. And so we’ve probably seen, you know, if it’s a seesaw and breakfast was on one side, we’ve seen it switch more towards dinner was still a very strong and primary lunch component. But I think as, as we begin to emerge from the pandemic into whatever the new normal looks like, and whether that be offices back to 50% capacity, back to 80% capacity, who knows, I think the jury is still out and every time I talk to other restaurant operators, we’re all just guessing at what it might look like. But as that begins to reset itself, there are going to be ways for us to leverage our omnichannel capabilities, to reset those routines with Protein Bar and Kitchen as a primary player, whether that’s through delivery, whether through a dedicated office catering program that can ensure safety, whether it’s through our Mini Bar program, which is our version of an outpost program, so setting up delivery drops on a daily or weekly basis for major offices. We feel we have the infrastructure in place to take advantage of what those new routines could be and ensure Protein Bar and Kitchen is providing delicious, nutritious protein-packed food as a part of it.

Zach Goldstein

(30:04):

That’s great. And what a good optimistic view of the opportunity that is represented by jumping on these new routines and being a part of those new routines. I really think that that’s the way restaurants should be thinking about it and it’s exciting, the routines are going to change. There’s no way to control that, but being a part of the new ones is just as fulfilling as the role you played in the old ones. Jared, thanks so much for your time. This is a really lively, exciting conversation. It’s neat to see the progress that you’ve made in just a few years at Protein Bar and Kitchen, and we look forward to seeing what the future holds.

Jared Cohen

(30:46):

Great. Thanks a lot, Zach, for having me, this was fun.

Zach Goldstein

(30:50):

You’ve been listening to Food Fighters with me, Zach Goldstein. To subscribe to the podcast or to learn more about our featured guests visit thanx.com/foodfighters. That’s Thanx, spelled T H A N X.com/food fighters. This podcast is a production of Thanx, the leading CRM and digital engagement solution for restaurants. Until next time, keep fighting, Food Fighters.