Flame Broiler, a 130-unit Korean rice bowl restaurant concept, was founded in 1995 by Young Lee. Starting with a single location, the restaurant was born out of Mr. Lee's need for healthier eating options on the road. With a simple yet novel concept for the time, the brand experienced organic growth, primarily through guests and family members of owners turning into franchisees, especially in the early 2000s. By 2020, the chain was facing the same challenges as the rest of the industry due to the COVID-19 pandemic.
The Challenge of Going Digital
Daniel Lee, along with his sibling Christian, joined the family business full-time in 2014 and 2017, respectively, taking on roles encompassing technology, marketing, and operations. Prior to the pandemic, digital sales were negligible but saw a substantial increase amidst the COVID-19 crisis. Flame Broiler was faced with the challenge of integrating an effective online ordering and delivery system that could maintain profitability and uphold the brand’s standards. The restaurant industry's shift towards online marketplaces posed a new challenge: navigating third-party platforms while maintaining direct customer relationships and managing data and pricing effectively.
Under Daniel Lee’s leadership, the brand undertook its first major technological project by updating their point of sale systems. Recognizing the potential in technology and marketing integration, Daniel steered the brand's focus toward understanding and leveraging these tools for growth. The pandemic further accelerated their push towards digital, resulting in Flame Broiler embracing third-party delivery platforms and online ordering. However, balancing third-party relationships with direct customer interactions and profitability became a complex task, particularly with the delivery services' high commission fees and lack of control over the delivery process.
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When Daniel Lee reflected on the partnership with Sauce to implement dynamic pricing at Flame Broiler, he emphasized the simplicity of the process, which was a crucial factor for them given the current industry climate. He pointed out that in the past five years, restaurants, including theirs, have been inundated with various point solutions addressing multiple issues. This influx has led to a significant increase in SaaS fees, up to four or five times higher than pre-COVID rates.
Flame Broiler turned to dynamic pricing as a solution, partnering with Sauce to implement it, especially within third-party marketplaces. Dynamic pricing enabled Flame Broiler to adjust prices in real-time based on various factors, including demand and costs. The partnership with Sauce was strategic due to its minimal operational disruption and integration with existing systems.
Integrating Sauce dynamic pricing at Flame Broiler was straightforward, a crucial factor for Flame Broiler’s leadership given the restaurant industry's current focus on essential, no-frills solutions. With the SaaS fees significantly higher post-COVID, Flame Broiler prioritized software that required minimal human resources to deploy. Sauce's compatibility with their existing systems like Olo ensured a smooth and simple rollout. With Sauce, the setup was essentially plug-and-play, allowing them to activate the connection and immediately benefit from Sauce's capabilities without additional effort.
Sauce dynamic pricing allowed Flame Broiler to
- Improve Margins: Addressing the margin squeeze from third-party delivery fees by strategically adjusting prices without cannibalizing in-store sales.
- Enhance Customer Experience: Dynamic pricing allowed Flame Broiler to offer competitive prices, satisfying customer expectations while managing profitability.
- Maintain Brand Integrity: Through dynamic pricing, Flame Broiler could adjust to cost fluctuations without undermining customer trust.
Flame Broiler's journey underscores the importance of agility in business strategy and the adoption of technology in the restaurant industry. The transition to dynamic pricing and the partnership with Sauce reveal that
- Technological adaptability is key to maintaining competitive advantage.
- Understanding customer behavior and preferences is vital in a data-driven digital marketplace.
- The right partnerships can streamline the transition to new business models and technologies.
Flame Broiler plans to continue refining its approach to dynamic pricing and online ordering, with an eye on industry trends and customer behavior. Learning from larger brands and industry experiences, Flame Broiler aims to maintain its value proposition and enhance its profitability while navigating the evolving landscape of the food service industry.