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AI ‘never gets tired of upselling,’ Presto CEO says

Presto Founder and CEO Rajat Suri joins Yahoo Finance Live to discuss the outlook for automated service at restaurants and drive throughs and the startup's SPAC performance.

Video Transcript

[AUDIO LOGO]

JULIE HYMAN: We were just talking about labor shortages in the auto industry. Of course, it's not the only one. The food industry has been grappling with labor shortages around the country as well, restaurants battling longer wait times, low employee retention.

Presto Founder and CEO Raj Suri joins us now to discuss how his company is looking to help that, change that, with technology. And in your case, Raj, it's about bringing in some AI to the equation. So just quickly give us a description, run us through the product offering of what Presto does.

RAJAT SURI: Yeah. So Presto uses AI to help restaurants do more with less, helps restaurants, for example, convert their drive-throughs to fully autonomous drive-throughs where all orders and payments can be taken by AI versus having to rely on labor.

JULIE HYMAN: Like you talk to a box. And the box talks back to you, but it's not a person. It's not a-- it's not a live person.

RAJAT SURI: Yeah, it's like-- it's like you're talking to Siri or Google Home or something, but it works really well. Over 95% of all orders are taken without any human intervention required. And the restaurants are able to save 5 to 10 hours of labor a day, which is huge for them and allows them to have shorter shifts. And if someone calls out sick, they can-- they can still operate their business and serve customers, which is a big challenge.

BRAD SMITH: Are customers ordering more or less? Are ticket sizes increasing as a result of a kind of more streamlined interaction that a customer might be having?

RAJAT SURI: Absolutely. I mean, we see ticket size increase about 10% to 20% because the-- AI never gets tired of upselling. You know, AI won't get tired of saying would you like an ice cold drink versus would you like a drink. That seems weird to a human, but it doesn't sound weird to an AI.

And so just small things like that, the AI can do better. And they can provide more consistent experience as well. They're never going to say please wait a moment. The AI is always going to be ready to take that order.

BRIAN SOZZI: What's the cost-- if I'm a franchisee and I like this technology, how much does it cost to outfit my entire restaurant with your system?

RAJAT SURI: So we charge a monthly fee. It can be anywhere in the hundreds to just over $1,000 per restaurant per month for our system. And it depends on what modules they use. And the value attribute to the system is several thousand dollars per restaurant per month. And it can be transformative for a business. There's very low margin. You know, you're talking about potentially a 50% to 100% increase in restaurant margin with this type of system.

BRIAN SOZZI: Does this take the job-- the drive-though, let's just zone in the drive-through technology. Does that take the job of two workers? Is it one worker?

RAJAT SURI: It's five to 10 hours of labor a day. You know, I think that's the way it works. And so it's mostly on the shoulder shift, so not the peak hours, but mostly on the off-peak hours where it really saves the labor. And, again, most drive-throughs, most restaurants right now are struggling to even stay fully staffed.

So, you know, this helps them also serve more-- more people faster because in the drive-through, if your line piles up, people are turning away. They're not coming to your drive-through if you're five to six cars deep in your drive-through. So this helps also increase revenues.

JULIE HYMAN: So you guys just came public through a de-SPAC, I guess. You merged with a SPAC. That happened, I believe, last week. The stock hasn't done well. Let's-- I guess it's the elephant in the room, if you will. I mean, what message do you want to give to investors here who have been selling the stock since the SPAC closed?

RAJAT SURI: Yeah, look, I mean, if you believe the physical world will only get more automated in the face of a crippling labor shortage, you believe in Presto. And I think--

JULIE HYMAN: But you have to make money doing it too.

RAJAT SURI: Yes.

JULIE HYMAN: Right? I mean, the concept makes sense, right? But you have to make money at some point doing it.

RAJAT SURI: Yes. Look, I mean, you know, Presto is having a great year, and there's tremendous demand for our products. We're going to continue to implement this product-- these products. And we believe every drive-through in the country will become automated in the next couple of years.

And we believe we're going to make a lot of money doing it. You know, I think that's the whole story. And we've been doing this for 14 years. I dropped out of my PhD at MIT in 2008, in the last financial crisis, to start this company. So a bit of macroeconomic headwinds don't bother us, and we're going to build this company for the long term.

BRAD SMITH: What does that expansion strategy look like for businesses who might have a drive-through lane but they've already invested in their own technology, or, in Chipotle's case, they might have a Chipotlane but they've already invested heavily in their own tech, either homegrown or through a partnership with a company like a Toast?

Or a company even, like, on the payment side, we're seeing more merchants who have a Square point of sale. They're going to be able to just kind of tap a phone or tap a card against the phone instead of having to have another device that's enabled through the phone as well. You know, what does that expansion look like in the face of that competition?

RAJAT SURI: Yeah, so Presto only works with large chains. So big brands, you know, like Chili's, Red Lobster, Rally, Checkers are some of our customers. And we-- in those-- like Toast and Square don't work with those large brands. So we're the market leader in that space. We're the largest player. We have the best platform.

And we're growing rapidly in that space. So we're very confident that we can outpace any competition that arises in that space. I mean, we have the best of both worlds. We're a more well-capitalized company, and we have the most innovative platform, which is very rare to find in big enterprise companies.

BRAD SMITH: Presto Founder and CEO Raj Suri joining us here on set. Thanks so much for the time today, Raj.

RAJAT SURI: Thanks for having me.

BRAD SMITH: Definitely.

RAJAT SURI: Appreciate it.