Angelo Esposito [00:00:02]:

Welcome to Wisking It All with your host, Angelo Esposito, co-founder of WISK.ai, a food and beverage intelligence platform. We're going to be interviewing hospitality professionals around the world to really understand how they do what they do. All right, welcome to another episode of Wisking It All. We're here today with the CEO and co founder of Ritual, Ray Reddy. Ray, thank you for being here.

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Raymond Reddy [00:00:30]:

Thanks for having me on.

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Angelo Esposito [00:00:31]:

Of course. So the way I typically like to start these shows is maybe a little brief history. So before maybe going back in time, can you just tell our audience? I'm sure most of them know, but for those who don't, what is Ritual?

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Raymond Reddy [00:00:45]:

Ritual is an order head app that works primarily in a whole bunch of downtown cores. It was originally started for busy office workers who didn't have time to wait in line and queue up for food. Just let them place the order at their desk or wherever they were and they could, you know, the order would be waiting for them when they got there. And it extended, you know, beyond offices. A lot of people use it all in one evenings and weekends. There's a great loyalty program, you know, lots of. Lots of benefits to using the app. And it. We started in Toronto, still home, but we're in a bunch of cities and countries around the world.

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Angelo Esposito [00:01:29]:

That's awesome. And, yeah, I know, I know Ritual is quite big, and like you said, definitely, definitely more than a couple cities, but to just maybe walk through your journey, you know, briefly, what led you to Ritual? So what were you doing before the Ritual?

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Raymond Reddy [00:01:45]:

Yeah, so I'd. I previously built a company in the commerce space that Google acquired. And I spent a long time, I spent all my time at Google, actually on mobile commerce and shopping. So that was kind of when I first kind of got just exposure to what was happening in local. Just thinking about various POS systems. I think the overarching theme was that in the same way that retailers and the travel space had gone online in like, the previous decade, the consensus was that local businesses were going to go online in a very big way this decade, the last decade and into this one. And that was just a plethora of opportunity. It means that restaurants, but not just restaurants, all local businesses would start to adopt all kinds of digital tools and just embrace the Internet in much bigger way.

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Raymond Reddy [00:02:48]:

Not just to. Not just to get in front of their customers and provide more communities, but all the types of things that restaurants do today with digital, including using platforms like Lisk's solution to help automate, just solve difficult problems, gain efficiency, start to think about the world in a digital first way. So I think that was really the overarching theme. And one of the other things I realized was that, at least at the time when this was evolving, it was very difficult to solve problems in local at scale, meaning it was hard to go deep enough and work with enough restaurants, but also be wide enough that it would be compelling for very large companies to want to invest in. And so I think at the time, the reason I left Google was it just didn't seem like a very large company was going to be able to tackle this problem neighborhood by neighborhood, city by city. You know, that was in the early days of local, you know, not just us, but even the food delivery companies. Like, no company was ever successful. Launching an entire country all at once, or in fact, an entire, you know, state or even a very large city all at once, tended to be very, like, painstakingly, you know, restaurant by restaurant building, that kind of base of restaurants.

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Raymond Reddy [00:04:11]:

And it tended to be very slow because you had to go very deep. And it took smaller companies that had the patience to do that and to invest that eventually got to a level of scale, but it never started in that way.

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Angelo Esposito [00:04:23]:

That's awesome. And I think, just out of curiosity, you sold your company, push life to Google, as you mentioned, and then worked there for a bit. It sounded like a of, maybe some people would have stopped there.

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Raymond Reddy [00:04:37]:

Right?

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Angelo Esposito [00:04:37]:

Like, life is good, had a little exit. What got you that itch to say, all right, I solved the problem. I had an exit, but I want to solve, you know, an even bigger problem. What got you back onto that, you know, horse, I guess.

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Raymond Reddy [00:04:51]:

Yeah. I've always been very, like, mission driven in the sense that, like, for me, I've never, I've never started a company for the sake of starting a company. I'm just not one of those people that's like, well, you know, I want to be an entrepreneur, and I'll figure out what I want to do along the way. I think for me, it's always been in reverse. I think starting businesses is really hard, and it requires, like, extreme conviction in something. And I think often from a, you know, from a financial perspective, I don't even know that it makes sense, you know, when you, when you, when you factor in, you know, the failure rate and all, you know, the opportunity cost and all sorts of stuff. So for me, it's never been, it's always been like, I get excited enough about an idea, I get excited enough about a product that I feel should exist, but it doesn't exist. And I imagine, you know, how nice it would be if a product like that existed, how I usually.

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Raymond Reddy [00:05:50]:

How I would enjoy using a product like that myself as a user and hope that many more people feel like me and that ten, you know, you're not always right on those things when you are, it can be, you know, it's very rewarding. You know, to me, it's like a form of, there's no greater. To me, there's no greater reward than then seeing something you imagined in your head take shape in the real world and see users enjoy, you know, something that was like, literally like fiction in your head at one point. Yeah. And I just get a lot. I just get a lot of. Yeah, just that, to me, is why I do it. And so, yeah, I think that's kind of how I felt at the time, is, like, there has to be a better way of allowing users to digitally discover and transact with restaurants versus having to walk in and do it sort of the analog way.

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Raymond Reddy [00:06:55]:

And so we built a product that we thought should exist, and the rest is history, in a way, I guess.

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Angelo Esposito [00:07:02]:

That's awesome. And this was, I'm not mistaken, this was, what, 20. 1420?

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Raymond Reddy [00:07:06]:

1514? Yeah.

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Angelo Esposito [00:07:07]:

2014.

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Raymond Reddy [00:07:08]:

There you go.

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Angelo Esposito [00:07:09]:

Wow. Okay. So at that time, and I was definitely really ahead of the curve, and so. Yeah, really, which is. Which is awesome. And so the pain you felt, was it, you know, definitely, like, the problem is, you know, super clear now, but. But I think you were definitely a visionary to see it that far ahead. But what pain did you feel? Was it that you were personally kind of like.

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Angelo Esposito [00:07:31]:

You know what I mean? Like, were there any anecdotes that you had that you kind of hit the wall, or was it more just of.

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Raymond Reddy [00:07:35]:

A high level call? It was clear this is the way that technology adoption tends to work out, which is big chains tend to invest in technology because they can. And even before technology was software know, for a while, technology was just operations and KDSS and things like that. That was what technology in a restaurant meant. And again, who adopted that? Well, big chains, they used it to get massive efficiency gains, get their margins in a good place, streamline the experience. You know, they invested early. Most small businesses can really do that or don't really do that, I would say, for many reasons. And it felt like, you know, and that that was like one level of problem solution ROI, but an entirely different level is thinking about, well, what is the Internet? What is the Internet going to mean when you intersect that with local? What does it mean when the primary way that a consumer discovers your restaurant is not by walking down the street and looking at a sign, which is the way that certainly even ten years ago, that was the primary way that you would be discovered. And it's crazy to think that in such a short period of time, even faster than I expected, to be honest, that's flipped on its head.

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Raymond Reddy [00:08:48]:

And if you don't exist online, you kind of don't exist. Right. And so I think that that, like, it's very profound. And as usual, you know. Who had the head start here? Well, all of the big chains, you know, Starbucks. There was only one large restaurant brand that was investing in mobile order ahead at the time that we started. And, you know, I don't know, maybe there were two or three, but the one that, you know, the only one that took it as seriously and actually reported on it and, you know, had an entire division of people working on it was Starbucks. Right.

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Raymond Reddy [00:09:23]:

So they were, they were way ahead of everyone. They were one of the first order head apps had a loyalty program built in, you know, so they took it very seriously. And it is a core, you know, some very meaningful portion of their sales, even back in the day, came from digital. So they were like, you know, the early investor in it, and I think they've seen huge, huge dividends as a result. And we just knew. To answer your question of the problem, Sadez, not only was this something that we felt was going to be inevitable consumer behavior, but we thought that the second part of this was that if someone didn't make this available to small businesses, well, that's just another way that the large chains have an advantage that they're going to use against small guys. For me, personally, I'm a big fan. I wouldn't call myself a foodie, but I think that I really value local businesses in the community.

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Raymond Reddy [00:10:23]:

I still live downtown, and for me, one of my favorite things to do is just explore new neighborhoods and check out new businesses. I look at small businesses almost as artisans whose goods or product happens to be food, right. But they're, in a way, artists, especially the good ones, right? Yeah. And I think. I think it'd be a real shame if the world was dominated by large chain restaurants. And, you know, like, my only, my only options in a lot of these neighborhoods were, you know, the big, the big chain options. Like, to me, that's a sad. That's a sad world.

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Raymond Reddy [00:11:03]:

And, you know, so part of it is that I like to see small businesses win. Yeah. I like to see, you know, local, like, businesses who really have, like, a passion for what they do and the products that they build. You know, can we do a small part to help them level the playing field and compete and, you know, do their thing? Yeah. They don't have to be experts in software and digital. They just have to do their thing. You know, make great coffee, make good croissants, whatever is your thing. So do that.

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Raymond Reddy [00:11:31]:

Do your thing really well. Like, can we, can we help with, you know, with the technology? That's awesome.

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Angelo Esposito [00:11:37]:

And it's funny. It's funny what you mentioned about, like, you know, the, what, you know, the local vibe, because I've always thought of that, too, about, like, what makes a city and a big part of that, you know, in terms of, like, tourism or wanting to visit a city is all the local things. Right. It's the difference between, let's say, going to Montreal and why Montreal is so popular, let's say, in the restaurants versus, you know, going to maybe a random town in the US.

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Raymond Reddy [00:11:59]:

It's the fabric. It's the fabric of a community. Right, right. Literally the fabric of the community. So. Right.

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Angelo Esposito [00:12:06]:

And it's funny because in the early, early days, I remember Ritual, and obviously I was in Toronto as well at the time. And at first it's funny and I want to just share this because maybe people listening, they can. That don't know that can imagine it, but I used to always be like, yeah, but why would people want to pick up, like, I didn't really get it. Like, it, like it said, but you were clearly the visionary and on something, but I was like, I don't get it. And then I remember the first time I tried it, and then I was like, oh, I get it now. And it was funny because it was very different to hear about it and then to try it and hearing about it was interesting. I was like, okay, cool. Instead of delivering, you pick it up.

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Angelo Esposito [00:12:37]:

Cool. But then working downtown, downtown core, not wanting to spend 30 minutes of my lunch in line and being able to order, pick up, I started seeing that, you know, especially you guys, launching in Toronto, how, how really quickly it adopted, and it was everywhere and all these, you know, QSRs and other restaurants and cafes, too. And it was a really, really cool concept. So I guess I'd love to know, like, how did you kind of create that, you know, initial growth. Right. So you go from problem, clear problem. You start maybe testing it out. How do you then start growing? Because it's a local kind of play.

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Angelo Esposito [00:13:12]:

Like, like, what's, what's the plan?

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Raymond Reddy [00:13:13]:

You know, our growth from, from, I would say, very early on was very. Was a big departure from the way that I think most companies approach growth. Um, we, you know, our belief was, well, two things. One was, if you didn't, if we weren't, if you couldn't become the app for your neighborhood, it was not about. It was not about having one restaurant or two restaurants. It was, could we actually become an app for your neighbor? And I remember, you know, at the time, it was not about how quickly you can get to a thousand restaurants or 100 restaurants, because it's very easy. If you said, you know what? Can I get 100 restaurants across Canada to do anything? Yeah, you can make that happen. Well, but getting 100 restaurants in one part of the city, in a small part of the city that represent, you know, 50% of all restaurants in that.

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Raymond Reddy [00:14:06]:

In that area, getting to a coverage number where, you know, can you get 50% of all restaurants to do something in an area? Well, that's really, really tough, right? Way harder. Getting 20 restaurants that make up 50% of a neighborhood is way harder than getting 500 restaurants across the country. Because, again, what it means is that you need to have an extremely high opt in rate to get 50% of restaurants. It means that 80% of the restaurants that you actually talk to say yes. Well, there's very few things that 80% of people you talk to say yes to. And this was kind of the early challenge where my sense was, I don't even want to start this business if that wasn't true, because what I knew was like, look, if that isn't true, if we can get a meaningful number of restaurants to come together and be accessible to users, well, then that was the bound. That was the problem we were solving, was the all in one place. Consistency of experience, no mental load of having to switch between your login and this person's login and all sort of stuff.

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Raymond Reddy [00:15:14]:

So I think we knew that, like, that was the value. And so no one cared about whether we had or. We didn't care whether the number was 50 or 100. What we measured ourselves up was coverage. What percentage of places can a user access, you know, where they live or where they work? And we had, very early on, we had very good success. Right. Which is why we built. We started the company.

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Raymond Reddy [00:15:39]:

In fact, before we even named the company, I said, I don't want to name the company unless we prove this is true. Because, by the way, if this isn't true, there isn't. It's not a problem that we're going to you know, it's just barking up the wrong tree. So we were a numbered company until we rolled out the experiment, simulated what we wanted to in not even a neighborhood, but for a single office building. Okay? And we said, let's go get all of the restaurants around this office building that we think these people would want to order from. It was less than 20. We got the vast majority of them. And what we.

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Raymond Reddy [00:16:18]:

It was, you know, when we. When we look at that cohort and how that cohort did of users, it was great. And. And we were like, we proved in a. In a very quick and dirty way, we proved the hypothesis of why this company should exist or why this product should exist. And, you know, then from that point on, I think that the second thing we did was, in terms of growth, was very early on, we said, you know, look, we don't want to be competing against restaurants, okay? We don't want to be. We don't want to be something that restaurants feel like, you know, ordering on Ritual is a problem.

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Raymond Reddy [00:17:03]:

And I want to. I would rather have my customer come in store. In fact, we wanted to flip the switch and say, what would it take for restaurants to join us in trying? We want them to see the benefit of having their customers transact with them digitally, be able to reach them through marketing, be able to measure the lifetime value of a user for the first time and understand how to increase that. All of the things that e commerce retailers figured out as they transition from being primarily stored primarily online, we thought that the same transition would have to happen. And we wanted to be partners, not competitors with the restaurant. And so one of the things that we did very uniquely was we told the restaurant, look, if you onboard your customers onto our platform, you don't have to pay commissions on it at all, forever in perpetuity. Those are, we want you to help us accelerate this thing and accelerate adoption. So that's kind of the short answer, was we figured out that, and this is one of my big beliefs in general, going forward, is, like, if you are aligned with your customers, things just tend to work.

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Raymond Reddy [00:18:11]:

And if you're misaligned with your customers, then you have to get. You have to get every little thing right, because you're just fighting a very difficult war where your customers are just trying to get rid of you. And so you have to do everything else perfectly. What I found was, like, when you're aligned with your customers, you can actually get a few things wrong. It's okay because they're rooting for you. They want you to win. Right. And I just think that that makes a really big difference.

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Angelo Esposito [00:18:40]:

Yeah, that's awesome. Really well said. And it's, it's super interesting to hear because, you know, for a lot of people listening, including myself, it's. We usually do the opposite.

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Raymond Reddy [00:18:48]:

Right.

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Angelo Esposito [00:18:48]:

It's like when you're building a business, you. You set everything else up, and you kind of then start experimenting, and it's a hard lesson to learn, but the faster you can kind of, like, get in touch with the customer and just see, see if what you're doing is worth it, the better. And I guess one thing that kind of popped in my mind when you're talking is, since you didn't have the name by then, how'd you come up with the name Ritual? I just got to know.

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Raymond Reddy [00:19:10]:

You know, it just came to me one day. Yeah, I think that. I think that we batted around a lot of other options. You know, the one weird thing about a name you learn as you go through a naming process, I think it's, you know, whether you're naming a company or a human or, or anything else, it's the same thing where, like. No, I think that things grow into their name and, you know, there's no known. Every name feels awkward at the start, you know, when you're not used to it. And just, like, I think, you know, people probably also grow into names. I think, you know, babies do, and I think in the same way, like, companies do, too.

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Raymond Reddy [00:19:47]:

And I would say Ritual was an awkward name probably at the start for many people. Right. It was a little divisive. I think, you know, consumers loved it. I think internally, it was. It's always awkward. Right. And there's.

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Raymond Reddy [00:20:03]:

It's just a tough thing because it's very subjective. There's no, there's no such thing as, like, an objective good name. Right. I'm not sure what it means. You can read a lot about it, but at the end of the day, it's like, what feels right, and, yeah, I think, you know, the thing that we really honed in on was that we wanted this to be part of someone's everyday life. We wanted this to be an app used daily, not once a month. Yeah, we wanted to be, we wanted to be ingrained in how you thought about, you know, your morning coffee. Purchase your morning coffee.

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Raymond Reddy [00:20:35]:

That's kind of where the word came from. It's like, you know, for a lot of people, you know, they start their work day with the coffee. It's a bit of a Ritual. It's something that they do every day. You know, most people have a routine, but scale your weekly on how they do things. And I think that's kind of where.

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Angelo Esposito [00:20:47]:

The work that makes sense. I mean, I think one thing you guys did differently, and, you know, correct me if I'm wrong, but, but I. At least I remember at the time, it's, the prices were the same as, you know, I'd buy coffee and I'd go in and I'd see it was the same price as that. So that was one thing that I remember was pretty neat. Is that, is that still. Is still a thing?

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Raymond Reddy [00:21:05]:

Is that a year you're. You're gonna. This is. I'd say this is, like, one of the most important, important topics in the system today that you're touching on. So very happy to talk about it. If I were to do so. The short answer is, yes, it is, but there's a big asterisk, because the ecosystem has changed in a big way, and it is now very complicated. I think that a few things.

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Raymond Reddy [00:21:34]:

If you go back to 2014, in some ways, the world was simple then in that most restaurants and coffee shops didn't have the notion of online ordering. Order had. Didn't really exist. Delivery was nascent at that time. And so they were like omnichannel. They were single channel, and they had to become omnichannel and figure out how to balance digital orders with in store orders. You know, in the same way, by the way, retailers went through the same journey. That's where the name comes from.

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Raymond Reddy [00:22:08]:

And, you know, most restaurants have to. Have to now go, you know, have gone through that journey at this point. Right. You know, but the world changed as they went through that. You know, that journey. Back in the day, every platform had a lot of control, because the. The good side of that was platforms had control. The bad side of it was restaurants had to deal with tablet.

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Raymond Reddy [00:22:31]:

Hell, yeah. Okay. They had seven different things beeping at them, which was just havoc. But platforms retained a lot of control. The change in the world is that, which is very positive, I think, for restaurant operations, is that everything has now gotten consolidated into the Pos. Yes, but the, but the, but the challenge with that is you are now limited to integration types that certain poss support. And there's a few implications in that. The biggest one is most pos only support the notion of a third party price, of a single third party price.

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Raymond Reddy [00:23:19]:

And unfortunately, third party today is synonymous with delivery. And going one level deeper on that delivery, prices are almost always inflated. It's actually sometimes still surprising to me, how unaware consumers are about this. You know, we all have this general feeling that delivery is expensive. We know it's like, how did that end up costing $100 when it gets to the door? And I think what most consumers are aware of is that there are service charges and delivery fees and tips. That's the stuff that people are aware of. What they're not aware of is you are paying a different menu price for the same dish. Okay, this is the dirty secret in the industry right now.

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Raymond Reddy [00:24:15]:

And the reason for it, by the way, no one's actually the villain in this story. This is just, to some degree, reality. In first world developed countries, labor is expensive. So for a long time, even though the delivery companies charged extremely high commissions, 25, 30%, you can be outraged about it. But the point is that in a developed country where the cost of labor is very high, it just is very expensive. To move a product from one neighborhood to another in real time, it costs dollars, not cents. It's expensive. So how does a restaurant that operates in general on a 10% profit margin pay a 25% commission for delivery? Well, in the early days, there was the argument that it was incremental, and there was, like, fancy math that people would do to make it sound like, well, if you look at it, you know, there's a classic account tricks, right? So if you look at it in this way, it all makes sense.

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Raymond Reddy [00:25:17]:

But obviously, over time, as these things become more and more popular, it's clearly not incremental. It is a, you know, people choose to buy one way instead of another, and so you're left with, well, how can I pay a 25% commission if I. Profit margin's 10%, you know, 30% in some cases? Well, the answer is pass it on to the consumer. And so what restaurants are doing? So the strange thing that the sentiment right now is actually wrong. It's like consumers being like, oh, you know, poor restaurants who are being taken advantage of with all these high commissions. Well, that's actually not true. The vast majority of restaurants have decided to pass on these commissions to consumers, okay? In the form of inflating the menu prices by segment. And so the challenge.

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Raymond Reddy [00:26:09]:

So bringing this back to, like, Ritual and where we are, one of the challenges now is, in some cases, I wouldn't say that it's the majority of the time, it's definitely the minority, but it's, you know, it's more than one in 100 times. It's more than. We'd like to see where you actually have restaurants who don't even necessarily want to inflate their prices for pickup. They want to do it for delivery because obviously, because ritualist pickup, everything about our business is more restaurant friendly. So our commission rates are significantly lower than delivery, et cetera, et cetera. The challenge is that in many cases they can't. It's almost, it's getting to a point where for certain pos, it's almost like technically not possible to have different pricing, et cetera, et cetera. So this is a, you know, I think it's a really complicated issue on how this is gonna play out.

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Raymond Reddy [00:27:08]:

You know, it's, I would say more than half of the restaurants have decided that the only way they can make delivery economics work is by passing on the cost to consumers in the form of inflated menu prices. And it's actually unclear to me how all of this will end. You know, if you look at e commerce, by the way, just as a parallel, that is actually what many retailers tried to do in the early days. They said, we are going to have the idea of a store price, and because it's actually going to cost us more to deliver to you, we're going to make our items on e commerce more expensive. Which obviously was a foolish idea in the end. It was smart in that it reflected the cost of the approach that they were taking. It was foolish in the sense that they hamstrung their future growth and in fact, let Amazon get an even larger lead by getting it wrong in the early days and giving it Amazon not just a five year head start, but a ten year head start by the time many of them got their act together. And the conclusion in retail was, you have to have consistent pricing.

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Raymond Reddy [00:28:21]:

You can't have users be wondering whether or not a digital channel is going to be worse off or better off. So in the end, I would say that if you take the lessons from other, from other industries and other sort of consumer verticals, the current approach should not and likely will not work. It just breeds too much distrust in consumers. And I think, you know, in the end, I would say that again, even though we've made a big, even though it feels like delivery is everything in terms of third party takeout today, the reality is it's still very, it's still the minority sales, like, like significantly minority, like under 20% of restaurant sales right now are delivered well under. So I think what people don't realize is, you know, 80%, 80% of restaurants still, whether that's drive through or curbside pickup or people walking into stores and using an order head, using orderhead functionality. The vast majority is still people going to restaurants picking it up. And it's a simple reason. It's not because it's more convenient, it's because it's cheaper.

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Raymond Reddy [00:29:39]:

That makes sense. And I think when you think about the future growth of, I think that the big challenge ahead of us is not, does it work today for the group of people who happen to be using these apps? It's where does the next decade of growth come from? And the big difference between e commerce and this is, would Amazon and e commerce have gotten the traction it did if it was literally 100% more expensive, literally twice the price to get a product brought to your home instead of you picking up from the store? Well, I would argue that would have been a niche product for rich people. Right. The magic of e commerce was you had the convenience of having it brought to you for the price of you going into the store, because the entire system was engineered differently to be able to make that true. Right. And the reason why a lot of in store retailers got this wrong was they were trying to build e commerce infrastructure on top of their store infrastructure, and that just the economics could work. So many of them realize that they have to actually look at e commerce as an entirely separate business, et cetera, et cetera, entirely different ways of doing distribution. And I'm not suggesting that that's the answer here.

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Raymond Reddy [00:30:57]:

I don't know what the answer is, but I think what is clear is you're not just magically going to get 80% of people to just suddenly decide that it's okay to pay twice the price for takeout for the convenience of delivery. I think, in fact, what we're seeing right now is that delivery is shrinking. We actually hit peak delivery about twelve months. It was like, at some point in late 2021, early 2022. And since then, it's not shrunk. Not in a big way, but in a small way. Yeah. Certain delivery companies are taking market share from others, so some are growing, but overall, the pie is shrinking.

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Raymond Reddy [00:31:38]:

And, you know, the reason for that is just obvious. It's expensive.

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Angelo Esposito [00:31:43]:

Mm. That's super interesting. And, like, it's. It's funny you mentioned that because I was thinking about, like, the. I guess that the person that does delivery the best. You know, you mentioned Starbucks in terms of the pickup side, but I was thinking about, you know, Domino's and what they built on the delivery side is probably the best example. Maybe someone that built their own tag.

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Raymond Reddy [00:32:04]:

Pizza. Pizza is a good example because the pizza category makes up. Actually, I can't remember the stat off the top of my head, but it is a shockingly large portion of delivery, not 10%, way more than that. And it's really just three or four brands that single handedly make up some very meaningful portion of all food delivered. And it's a good point. It's actually a good example that people. Pizza was designed ground up for delivery. Right, right.

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Raymond Reddy [00:32:39]:

It was engineered for that, where I would actually say that their primary customer is getting it delivered, and store pickup is the secondary, is the secondary thing. And so their economics are designed for that. And again, they don't have. There's a big difference between having in store specials versus having fundamentally, you know, having every menu item be marked up 30% for delivery. Like, I think, you know, they're. They're probably. It's a good example that, like, they. If they got the model right, well, then everyone else is doing it wrong.

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Angelo Esposito [00:33:14]:

That makes sense. That's super interesting. And so, like, just to kind of walk through that journey, like, you know, you start getting that, you know, to go back to, let's say, the early days, Toronto, you start growing, you. You decide to finally name it. You come up with the name Ritual, because you're like, okay, we got something here. How you. How, first of all, how are you growing in these cities? Can you share any of that knowledge with. With maybe some fellow entrepreneurs? Like, what did you guys do to figure out how to maybe, like, grow in these local cities? And I'd love to maybe just hear a tidbit of that journey of, how do you replicate that across other cities?

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Raymond Reddy [00:33:46]:

Yeah, you know, very much what I. What I sort of said earlier, which was, we really, rather than competing with restaurants, we just try to figure out how to further align with them. And I would say that our primary. Our primary mechanism of growth was actually thousands of restaurants suggesting to their own customers that there is a more convenient way to order from their store using Richard. And we just made it very easy for restaurants to do that with in store signage, digital signage, things like that. But that was a big part of it. Customer referral was a big part of it. We actually did, weirdly, never did paid acquisition.

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Raymond Reddy [00:34:39]:

Not because we didn't want to or try, but paid acquisition works really well when you're trying to do things at, like, countrywide scale or even citywide scale. The challenge we always had was we function typically in the office districts of the city, so we'd be in, typically, the financial district and other, like, the densest parts of the city. And so paid acquisition was always very challenging for us because, well, it's really hard to just target the financial district. Just most online advertising doesn't work like that. You can target Toronto, you can target New York. It's pretty hard to target, you know, midtown New York. So I think as a result, we were almost. It was not that we didn't want to make a child paid acquisition, it was that it wouldn't work for us.

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Raymond Reddy [00:35:30]:

So we were forced into figuring out other ways of growing, which I think, in the end, was a bit of a blessing in disguise. We were able to focus all of our effort and resources on our customers and aligning better with them and having them. Rather than handing money over to the ad networks, we rather hand over incentives and discounts and rebates and cash back to our own customers, which I much prefer to do. So that was a big part of it. The other part of it was we worked with office buildings very closely because we tended to be something that made working in an office better. We spent too much time on it. But weirdly, our biggest probably Ritual’s core insight, and I'll call it a hack, was that we were able, by addressing two or 3% of the geographic area of a metro, meaning the downtown core, we were able to reach maybe, I don't know, 40, 50% of the population. It was an incredibly efficient way of, you know, addressing a metro, because.

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Raymond Reddy [00:36:48]:

Because at least up until 2020, March of 2020, we had a meaningful portion of the population of a metro would. It was almost like the pulse of a city. Everyone would come in five days a week, and it was such habitual routine for people that it was just an incredibly efficient, um, go to market strategy. So, you know, with. With working with just, you know, hundreds, maybe a couple thousand restaurants in the densest part of the city, we were able to capture an incredible share of wallet, like, basically the Monday to Friday, 09:00 to 05:00 spend of a meaningful portion of the population of dense. Right. And that was really, that was really the insight. And, you know, this is the.

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Raymond Reddy [00:37:34]:

See where this is going. The obvious conclusion here was that what was our greatest strength up until COVID, just. We ended up just getting, I don't even know, use many different. Many words to be used from the dictionary here. Wallops, maybe. But I think that, like, it was. It was just so unprecedented that I think in a million years, I could not have imagined in 2014 that there would somehow. It may somehow be the end of offices, right? Or I don't know if it's the end, but, like, such a meaningful change in people spending time in offices.

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Raymond Reddy [00:38:13]:

And by the way, for the last couple of years, it was the end. Like, there were. There were periods of time where, like, they were literally closed down. Less than 5%. Yeah, they were closed down. They were to the point where most of the restaurants had to close down, you know, for. For a period of time because you couldn't. You couldn't sustain being open for, you know, when you have some 1% of people spending time there.

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Raymond Reddy [00:38:35]:

So, you know, I think that that's. It's weirdly our. Our greatest insight and our greatest sort of the thing that propelled us to have amazing economics. Yeah. Amazing unit economics at a time where none of our other competition competitors did. You know, we. The one thing was, and this may sound crazy in today's world, but back in the day, most delivery companies had what was called negative unit economics, which means for every order that they delivered, they lost money on average, which is an insane idea that you can pay to acquire a customer and then literally lose money on every single order, you know, and that was. I mean, they obviously had an end game plan.

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Raymond Reddy [00:39:24]:

And, you know, I don't know if COVID was the sole reason why it ended up working out, but I would say that it was a material reason that it worked out where, you know, when basically all forms of going to a restaurant become, like, literally illegal. And the only way for you to access a restaurant is to get it deliverable. I mean, that was obviously a very huge boon, you know, for delivery. That was the only thing that started to make those economics work was that surge. But up until then, we just had. We were probably one of the only companies in the space that had positive unit economics at every order. We actually earned revenue in every order because we didn't have all of the insane cost of logistics. But again, I think that the last few years has been challenging.

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Raymond Reddy [00:40:11]:

I think the most challenging part about navigating the last few years is if we conclusively knew that this was the end of offices, well, then it actually be kind of easy just move on to other things. I think what is very clear was that we took a. We're going to end up taking about a four year hiatus from offices. But I think it's, like, pretty clear in my mind, and from what I see, you know, pretty much every major tech company has required people to be back in office. And these tend to be the most liberal, lenient, forward thinking companies that exist. And so when Zoom is ordering their employees back to an office three or four days a week, I think that tells you pretty conclusively. It's not to say that ten or 15 years from now that technology may get good enough that we can truly simulate an in person exchange over Internet. It's not, it's not that we will never get there.

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Raymond Reddy [00:41:12]:

We are just clearly not there today. And I think that for many companies, this was an interesting experiment. And we're not going to get back to 90% of people being in an office five days a week. But I think we will get to a point where it's materially more than we see today. I think this is the tough part, that we have a lot of office building partners who are similarly struggling and trying to hang in there, and we're doing our best to support and also figure out how to be. We have to. The hack that worked for us of like, oh, just be in this small area to be able to address a big portion of the population, well, that just doesn't work anymore. So we both on one hand began just, you know, sit around waiting for offices.

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Raymond Reddy [00:42:04]:

So what we have to do is try to meet users where they are and be more relevant to our customers when, when they're at home, not just at work. But, you know, that's a, it's a pretty fundamental change. It goes from you need to address 5% of a metro to 50% of a metro. So, yeah, it's a, you know, it's a pretty big deal. Yeah.

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Angelo Esposito [00:42:25]:

And I mean, like, if, you know, I speak to a lot of entrepreneurs, and if building a business is not hard enough, which, as you know, is getting a curveball of COVID is definitely puts a wrench into an already uphill battle. And I think one of the things that comes to mind is the idea that a lot of people obviously know that a lot of businesses suffer during COVID. A big chunk of those restaurants, with the exceptions of online ordering or delivery, I should say things like that, that maybe spiked. But what people sometimes forget is a lot of the tech like Ritual, like WISK, that supports restaurants. Those were tough times for us because, like, I'll give you an apparel with WISK. Like, it was like 70% of our client base was like, especially because we generally work better, let's say with full service restaurants closed, so everyone pause their subscription. We're a SaaS business. So it was just like 70% of revenue just kind of on pause, and we're like, all right, you know, now what kind of thing? And so it's a super, super tough position to be in. But what I'd love to kind of maybe hear from you is like, how did.

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Angelo Esposito [00:43:28]:

And I think this can help other kinds of entrepreneurs and restaurateurs who, you know, have maybe been through tough times. How did you kind of go about navigating, you know, those tough times and coming out the other side? Because I can only imagine, you know, WISK got hit hard, and we're a fraction of your size, right?

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Raymond Reddy [00:43:46]:

Yeah, we lost. We lost something like 92% of our revenue in three weeks, and we were processing hundreds of millions of dollars in food sales at that time on an annualized basis. So it was a pretty big deal for us. It just made the entire. Literally, it was like having the rug pulled out from you, like, overnight. Three weeks. But really, I would say in two weeks, that all happened. And I think the really unusual part was we had actually done a pretty big international expansion.

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Raymond Reddy [00:44:24]:

And the most absurd part of it was normally, you would expect, even if there was a crisis, that there would be a crisis in one country, but the idea that it would be in North America, Europe, and Australia simultaneously was pretty inconceivable. And so that was, you know, that was pretty. I don't know what other word to use for it, but, like, insane, impossible to pretend, like. Well. And the second part that made it very challenging was the normal tools you had. Like, what you would normally do is, like, get into a war room and work with people. Well, you couldn't. It was literally illegal to, you know, come into the office.

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Raymond Reddy [00:45:05]:

So you kind of. Not only did you have to solve this crisis, but you had to do it. And, you know, my kids couldn't go to school. Their nanny couldn't come to work. And so it was. It was actually just a totally bananas month where you. I was part time it support for my kids during the day because they were trying to figure out online school. I had a four year old who never used a laptop and had to dial into Google classroom, you know, so I was, like, full time ip support, trying to work with the board on what's the game plan here? So it was, like, truly an insane time.

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Raymond Reddy [00:45:45]:

I don't know that I have a great answer for how you get through it. I think we still have conviction in the problem we were trying to solve. I think what we really did, to be honest, for a couple of years, you know, at least a year there, what we said was like, look, we're in the same boat as our customers. And I actually think that there's. There's something. There's something builds a level of empathy when restaurants know that it was not that, that they got hit hard and we got a win out of it, right? We both got hit hard and there's just a certain level of empathy of like, we know what you're going through and we mean that because we're literally living through it ourselves. Right. So I think that that was having customer empathy I always feel is very important.

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Raymond Reddy [00:46:36]:

And really what we did was we said, look, what can we do? Like there was no, you know, I don't know if this was right or wrong, but we tried not like I didn't really think the world was so uncertain because for example, at that time it was like, look, this could all be over in three months. Could have in fact, in certain countries that managed it differently, it was, and it went back to normal, certain nordic countries, right?

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Angelo Esposito [00:47:02]:

Yeah.

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Raymond Reddy [00:47:03]:

So a lot of it was like unpredictable policy decisions and things like that. So we really weren't sure. Are we dealing with a weird three month problem, a six month problem, a twelve month problem? I never would have predicted that it would be a multi-year problem. And what we said was like, look, how can we be of most service to our customers at this time? And what we decided was what every restaurant needed was online ordering. Because again, in fact, in many cases it was illegal to have people wait around, having multiple people waiting around in your store. It was not allowed. You could only have one or two. So every restaurant sort of needed order ahead so that you didn't have people congregating inside of stores.

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Raymond Reddy [00:47:47]:

And so what we immediately did was kind of broke apart product and didn't make it so that online ordering was built exclusively into our app. We launched a web product where any restaurant that wanted to, could add online ordering to their website. And we started partnering with many cities. We did LA, New York, Toronto, lots of large cities where we went to work with, with them and made the product freely available to restaurants to use. And that was really what we did for the, you know, for the first year. And then I think for a while we just needed to wait for the dust to sell. You know, we, it was, we didn't want to. On one hand we wanted to adapt and on the other hand we didn't want to sort of irrationally jump from one, you know, one like anything that the world changed so many times actually, right.

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Raymond Reddy [00:48:40]:

In that period of time where it was, you know, there were a lot of headaches and like, it's over. Oh, it's not over, you know, oh, people come back to work, oh, they're not coming back to work. So it was actually the hardest thing was the world was so unstable. Yeah. From our perspective in terms of the decisions that we needed to make, that in some ways you were better off just trying to be of service to your customers versus trying to, you know, and I think that's what we tried to do until we felt like we could see more clearly. We couldn't even see two weeks ahead, so it was hard to build a plan. But at some point in 2022, I think things started to really settle down and we believe we could actually finally maybe see six months ahead and start to build and craft a strategy around that. And we're still working through that.

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Raymond Reddy [00:49:28]:

We're one of those businesses that we had a meaningful recovery because of a number of things we did, including working more closely with companies and office buildings and, you know, doing building useful products for restaurants. All those things have helped, but I think we still have more work to do to fully transition to, you know, the world we left behind in 2019 and what office culture was, was then to the world we're in today. Right.

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Angelo Esposito [00:49:53]:

And so I guess maybe to, you know, slowly wrap things up. What would you say is, like, the, I'm sure a big part of it's still kind of figuring it out, but, like, what, what's next for, what's next for Ritual? Or at least what you can share because you might maybe certain things still in the works, but what's, where do you see kind of Ritual going? Vision, you know, mission. And then. Yeah, and I'd love for you to maybe also just share because we're going to also send this to about 20,000 or so, like, people in our newsletter restaurant tour. So maybe even just talk about, like, where you guys are headed and what's some advantages of using Ritual, you know?

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Raymond Reddy [00:50:25]:

Yeah. You know, I mean, starting with the first part of the question, I think that what I try to focus on are, like, what are the problems in the industry that are still to be solved? Right. And setting, that's one part of it. And agreeing on solutions can be nuanced, but hopefully there's broad agreement on what the problems are. So I think we touched on many of them through this episode. One is there's almost this duplication. You have this weird problem. I would say that the future of digital growth for restaurants today is uncertain because you have this tension, you have this competitive pressure between what restaurants want is good, the control and the economics they have when they have direct customer relationships.

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Raymond Reddy [00:51:25]:

Okay. That's what restaurants they want. They want to own their customer they want the customer to experience their brand and their food and their ordering in the way that they, what they, they designed it. Okay. They, they need to maintain the profitability. And it's very hard to have a middleman that takes more commission than your profit margin. Well, that's difficult. And leaves you with having to pass on a meaningful convenience fee in some way to your customers.

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Raymond Reddy [00:51:57]:

And I don't mean ninety nine cents, I mean inflating everything by 30%. That's a pretty big deal. And the challenge is that what the customer wants is all in one place. Convenience they don't want to deal with. Just like even why is Amazon want any commerce? Well, I just don't want 20 customer. Right. And Shopify helps this with Shopify pay and things like that. So again, you know, the point is, it's not that people don't want the sort of assortment and the choice of lots of different things.

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Raymond Reddy [00:52:29]:

We want a vibrant ecosystem. What I don't want is have to deal with everyone's account creation and, you know, the differences in how all of these things work. And consumers vote with their dollars. And so this is not a question of subjective opinion. It's like, look at where the dollars are being spent today. And even though you could argue that consumers value that convenience even more than inflated prices to some degree because they're still choosing to spend their dollars in those kinds of places. So the point is that they play consumers place a very high value on not having to deal with fragmented, disjointed experiences. So to me, this is like the big problem to solve, which is how do you solve the problem for the customer in a way that still retains control and profitability for a restaurant and gets out of this mess that the food ecosystem is in right now, where you have weird pricing.

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Raymond Reddy [00:53:33]:

And because in the end, the experience, I think the lesson to take from e commerce is that in the end that is going to fail. That I actually have pretty high conviction in that. Like the model we're in is not the long term model that I think is clear. It's a transitionary model in the same way that retailers in e commerce experimented with pricing in that way. So I think that there yet is, there is another very meaningful evolution that has to happen. And, you know, not to say that we're going to be the ones necessarily to solve it, but I think that we can find common ground with many other companies and many other restaurants that like, this is a problem. This is one of the top problems. It might be said differently than the way I said it.

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Raymond Reddy [00:54:20]:

But I think most restaurants would say that this tension between the lack of control and profitability on third parties versus the challenges with what I talked about, it's on their minds, and it's still a big problem that hasn't been solved. So I think that's the kind of thing that's top of mind for us. Things like many companies and office buildings are trying to do more to incentivize, to make the employee experience of coming into an office better. And food is a big part of that. And we built a lot of products to, you know, for companies and office buildings to use to more easily. You know, you never have to go build out a new physical cafeteria because, well, all of the restaurants in your building can be like your cafeteria, and you can have subsidy programs and whatnot, you know, using restaurants around you instead of having to compete with them by building a cafeteria. So that's another thing that we, you know, we believe in. And so I think, again, there's, there's no shortage, shortage of opportunity and problems to solve.

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Raymond Reddy [00:55:18]:

We just have to find, you know, and these are the things we're working on. And so I think, you know, the future for us is hopefully being able to solve a very, a very large problem for, for restaurants and their, and their customers. And, you know, that's, that's kind of what we're looking to do.

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Angelo Esposito [00:55:36]:

I love it. And if there's one guy that could do it, it's Ray.

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Raymond Reddy [00:55:40]:

It's Ray.

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Angelo Esposito [00:55:41]:

Ready? I look back on this video one day and I'll be like, hey, man, you've been through a lot and you're still going. So honestly, inspiration, you know, I do look up to you. I think you're a phenomenal entrepreneur, and I appreciate you taking the time to share part of your journey with us today on the Wisking It All podcast. So thank you, Ray, for being here.

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Raymond Reddy [00:56:01]:

Yeah, feel the same way, Angelo. So, yeah, thanks. Enjoy the chat, and thanks for having me.

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Angelo Esposito [00:56:06]:

Feel free to check out WISK.ai for more resources and schedule a demo with one of our product specialists to see if it's a fit for.

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