Alan Philips, Chief Creative Officer at Reef Technology
About the Guest
Alan Philips, REEF Technology’s Chief Creative Officer, is a creative executive, entrepreneur, writer, & speaker specializing in guiding & inspiring individuals and organizations on the path to discovering their purpose & unlocking their creative potential. Prior to Reef, Alan has over two decades of experience in hospitality, food & beverage, real estate, and entrepreneurship, including time at Wolfgang Puck’s Spago, Myriad Restaurant Group, Morgans Hotel Group, Turnberry, and The We Company (formerly WeWork).
In this episode, we chat with Alan Philips, Chief Creative Officer of REEF Technology. Tune in to hear Alan share how REEF is transforming urban areas into neighborhood hubs that connect people to locally curated goods, services, and experiences. Zach and Alan discuss the impact of emerging technology such as ghost kitchens and virtual brands on the restaurant industry – from expanding delivery perimeters to introducing new revenue streams.
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.
Welcome back to Food Fighters. I’m your host, Zach Goldstein, excited to be joined by Alan Phillips today. Chief creative officer at reef technology. Prior to Reef, Alan has over two decades of experience in hospitality, food and beverage, real estate, and entrepreneurship, including time at Wolfgang Puck’s Spago, Myriad Restaurant Group, Morgans Hotel Group, Turnberry, and The We Company. Alan, welcome to food fighters. Thanks for joining us.
It’s great to be here. Thanks for having me.
Well, let’s Start right now with what you’re doing because Reef Technology is really has a vision to change not just the restaurant landscape, but frankly, urban spaces, neighborhoods broadly. Tell us about Reef and what you’re doing.
So Reef was founded about eight years ago under the name of Park Jockey by a Turkish entrepreneur named Ari Ojlavo along with his two partners, Aziz and Philippe Saint-Just basically they had set out to bring technology to the parking business, but Ari had an extensive background in hospitality and consulting, and he had done consulting projects for companies like Walmart and through those experiences, he realized that there was going to be a need for what he called a proximity network. Basically a way to get as close to the consumer as humanly possible and enable brands to do that efficiently. And so he pitched investors in this case, it was a SoftBank, on acquiring two of the largest parking operators in north America and in doing so, that gave us what we thought was the most capital efficient route to get 5,000 locations all across north America and every major urban market.
So we bought those companies, we brought them together and then three years ago we formed Reef. The intent of reef is to transform these pieces of what we call underutilized urban real estate into last block, neighborhood hubs and parks, providing locally curated goods, services, services, and experiences to the customer. So what does that mean in English? It means if you put the 300 most delivered items on Amazon or target or Walmart into a parking lot on the upper east side of Manhattan, you can deliver them in under 30 minutes to that entire radius. And if you own a parking lot or a piece of underutilized real estate, and maybe you have one use case for that real estate, for that parking space, for instance, and then you have instead 10 use cases like ghost kitchens, retail, urban farms, healthcare, et cetera, and in modular setup, you can obviously make that real estate much more valuable and much more efficient. So when you combine that all together, that’s a proximity network and that proximity network is good for both the property owner for the management company. And most importantly for the neighborhood, because the neighborhood is getting all the things they want in a much more efficient and expedient manner, which allows people to spend less time doing the things they need to do and more time doing the things they want to do.
Let’s talk first about the impact that Reef is having on these local communities with regard to restaurants, ghost kitchens, virtual restaurant brands. In that category, there are a number of cloud kitchen or other type models, including cloud kitchens, kitchen United. What makes reef technology unique in the virtual concept, ghost kitchen world?
Well, first off our, why is like what is the reason we do this is to make the place you live, the place you love to be. And so everything we do, we look through the lens of is this better for the neighborhood? How are we improving the neighborhoods? So, so that’s, that’s the first and foremost, I think a major difference between us and other people in that business. And then we have four main what I would call competitive advantages, right? And things that make us different. So first off, as opposed to every other operator in the ghost kitchen or neighborhood kitchen space, as we call it, we have the real estate already, right? So if your cloud kitchens, you have to acquire the real estate and license your kitchens and then get tenants to operate those kitchens. In our case, we already have the real estate.
And that real estate that we have is closer to the consumer than anyone else’s. And if you listened to like Jeff Bezos talk about the constant dissatisfaction of the customer. Basically he says, if you tell someone you’re going to get it to them in a week, they want it in five days. If you get it in five days, they wanted one day. If you give it to them in one day, they want it in 12 hours. It’s 12 hours, it’s six hours and it keeps going and going, going until, you know, you’re at the point of wanting something right, when you ask for it. And that’s really what we’re enabling these kitchens and these brands to do through our platform and very much so we are the enabler. We are not the person in the front seat.
The third thing is we operate everything ourselves. So everything that goes on within our kitchens is handled by us. Like if you go to cloud kitchens, for instance, you rent a space and you operate, for David Chang or Wendy’s or whoever else we’re working with, which is a myriad of people at this point. I would venture to say, there is less, very, very few large restaurant groups or well-known local players that we have not spoken to. And so we enable them to grow their business, both within their city and outside of their city at zero cost to them. And that’s because we operate everything ourselves. And then we enter partnerships with these people to help grow their business.
That’s a big change in, in the model. And it’s frankly, you’ve been seeing these types of changes in restaurants. You authored a book,almost 10 years ago. Now the complete idiot’s guide to starting a food truck business. And the reality is at that time, food trucks were new. Then they, they took off and there were whole dining areas with food trucks and people thought it was a fad. And here we are now, food trucks are very much more established than a fad. There’s a question right now about what ghost kitchens and virtual brands, are they a fad or are they here to stay? What do you think about the centrality of virtual brands and delivery and the restaurant landscape of the future?
Well, we need to understand is one food trucks and pop-ups and all these things. They’re part of the hospitality ecosystem now, whether they’re being used for promotion or they’re being used, to grow businesses or experiment with new things, or it’s your primary business, and you run a taco truck in California, which many, many people do, and that’s their entire business. Those are real parts of the ecosystem. And they represent millions, if not billions of dollars in revenue. Which, I don’t think is going anywhere other than up. And so like these things, which I would call a supplement to the core. Reef and our neighborhood kitchens, are the same. So through the, through the pandemic, we were able to be like, what would say a substitute, right? So you can’t open your restaurant. We can run your restaurant for you, and we could bring you that food, and we could make sure you’re making money.
That’s great. But when your restaurant opens up again or achieves the the business it had before, I want you to think about this. There’s one thing. So imagine you have a restaurant and so right in New York, and that’s your one location. And let’s say you make 8% profit. If you’re lucky, right? Because that’s an average profit margin for a restaurant business, which obviously can cost anywhere from a half, a million to $10 million to get into. So you get an 8% profit margin, which is it’s very low for that type of investment and you want to grow, how do you grow? Well, obviously you can promote you configure different things out, but as, as I’ve, I’ve run restaurants before, there’s only so many ways you can get people to come to eat on Monday, right? In our case, we, because we have a platform because we’ve built the tracks, we can take your restaurant and let’s say, put it in a kitchen in Brooklyn, put in a kitchen on long island, put it in the kitchen on the upper west side.
And all of a sudden your delivery radius has gone from three miles to 20 miles and the amount of kitchen, the amount of customers you can reach has gone from let’s call it a hundred thousand to a million. And in doing so, you’ve increased your sales. And because of our partnership, every dollar we pay you is a hundred percent profit to your bottom line. And so now if you achieve success on the Reef platform, you could add five or 10% profit to that restaurant, which means someone who used to make $200,000 a year can make $400,000 a year. This is a life altering thing for a restaurateur. And in doing so we’ve built a model that we think is sustainable and will help people grow in a way that makes the restaurant business better. You know, it just improves it.
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The more traditionalist in the restaurant space, many view, the arrival of virtual brands and ghost kitchens as you just described, a lot of the opportunity that comes with it, many would view that as a threat and the argument would go if we applied it to Reef technologies, here’s a parking lot. It used to be a place potentially where people would put their car and then come dine with me. And now instead it’s incubating 20 direct competitors to my business. Obviously you disagree with that. How do you think about the balance between creating opportunities for the existing restaurant industry and representing a challenge that could be threatening to their way of business?
I think that, as I spoke earlier, our purpose is to make the place you live, the place you love to be. Our, why is to make the place you live, the place you love to be. And our purpose is to connect the world to your block and in doing so, as I mentioned earlier, we put the neighborhood first. So under no circumstances, if there’s a Chinese restaurant on the corner, are we trying to put a Chinese restaurant in the parking lot next to it? We actually care, which is really, I think the most important thing we care about the neighborhoods we operate in, we care about the cities and we care about improving people’s lives. So that’s number one. And we care about the restaurant business. We put thousands of people to work and help thousands of people make enough money to get through the pandemic. And we did that because we really do care. Now, if you look at a parking lot that sits with let’s say half full in Williamsburg, right? Is that the best use of that space? I don’t think so because that space is incredibly valuable and incredibly underutilized for that neighborhood. So what Reef does is we look at that lot and we say, what is, what does this neighborhood not have? Do they not have a farmer’s market? Do they not have a convenience store? Do they not have a dry, cleaner, whatever they don’t have that Reef can provide and improve? The experience of the neighborhood is what we try to put in that location. And really what you’re seeing right now is just the beginning of the activation of our platform. And you know as I said, an enabling platform and what a platform business does because it helps other all the people on the platform grow.
And so what I would challenge you is to say, if that Chinese restaurant down the corner was upset that we were opening a ghost kitchen down the block. I would flip that and say, well, we’re probably going to come to that Chinese restaurant. We’re going to say, would you like to specialize like in your dumplings or your Lo Mein, or your hot and sour soup or whatever it is that you’re known for, and we could operate that here, or we can operate that in one of our other hubs and help you grow your business. So it’s like, you know, they say the rising tide raises all boats. It’s kinda like that. Like, as the market grows, everyone, and as the neighborhood succeeds, everyone will succeed at a higher level, not the protectionist view of you know, you’re going to put a restaurant out of business because I would be very interested for anyone to look at our track record to date and see where, where have we put a restaurant out of business.
As we go beyond restaurants. Do you see yourselves as on the leading edge of making cities across the country, less dependent on cars? Uh, I mean, it’s, there’s a conclusion that seems to be that if parking lots are being replaced with neighborhood hubs, as you call them that that’s actually an opportunity to change the environment of a city and make it less tied to cars, but that’s a major effort. That can’t just be done on your own. How do you think about that broader goal and what the life in our cities could look like if you’re successful in creating these neighborhood hubs everywhere?
First and foremost, we just had an ordinance. The first of its kind passed in Miami, which is a one-year pilot project that allows us to operate and do what we are exactly what we’re talking about. So we work very, very closely with governments and cities and, and charities to figure out how the cities can improve. And if you haven’t noticed for better for worse, the pandemic has changed a tremendous amount. And if you walk in the city of New York, there’s restaurants falling into the streets right now, I’m going to be very interested to see how that plays out over the longterm and whether those really ever go away and in full honesty, like, I think a lot of people like that they exist, but that’s actually making the streets smaller. And so, you know, what, what’s better? Is it better to have an idling car or truck on the street from a UPS or FedEx getting tickets, you know, leaving boxes all over the place, or is it better for that FedEx to send one truck instead of 20 trucks through the city go to one of our hubs drop off the goods and those goods to be distributed through bikes that have zero pollution and allow for people to make drop-offs cargo bikes that drop off all around the city.
It’s clearly the option that I’m explaining is clearly much, much better for the long-term health of our society and for the longterm out of our cities. And that story plays out over and over and over again in different ways. And so, you know, as cities evolve, we’re really talking about putting the infrastructure in place to enable that to happen efficiently and effectively so that people can live better lives and that cities are more healthy and comfortable and sustainable. That’s what our founding principles are. Ari saw a tremendous amount of waste happening and he saw, a lot of people being excluded from being able to live out their dreams and let’s say opening a restaurant once again, you’re probably anywhere from half a million to $10 million to open a restaurant in a major city right now. I mean, that’s hard money to come by and you haven’t even proven that people like your empanadas yet. So Imagine if you come on our platform, you could test it and then you can grow. And that applies to both local mom and pops and to large multinational corporations, people don’t need to waste money anymore. They don’t need to waste time. We are here to help, to help make things more efficient and more sustainable, and honestly, more focused on the things we love to do as opposed to the things we need to do.
I do think there’s absolutely a macro trend that was accelerated in COVID as our restaurants and local elements of our community have exactly, as you said, expanded out onto the streets. And I think you are right in flagging that that many consumers and operators hope that that maintains, it’ll define a new definition of what a city looks like and how it feels to local residents. And it sounds like Reef technology shares that vision and is looking to make that a reality. So thank you for your time and your vision, you and your team are quite literally working to change the feel of cities across the country and it’s been great learning about that, Alan.
Thank you so much. I really appreciate your time and I look forward to seeing how all of these discussions we’ve had play out in the future of cities. And maybe one day we get to grab a drink together in one of our outdoor parks.
That would be great. Thanks.
You’ve been listening to Food Fighters with me, Zach Goldstein. To subscribe to the podcast or to learn more about our featured guest visit thanx.com/food-fighters. 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.