Enliven Beverage Deal Podcast Episode #3
In the wake of COVID-19, restaurant and foodservice operators are looking for ways to make fountain drinks safer and more sanitary. Jose Hevia, CEO and Founder of Draftserv, shares about the software platform his company has developed which allows for touchless soft drink dispensing.
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Related Resources:
Creating Opportunities: A Response to COVID-19
Coke Freestyle vs. Pepsi Spire. The Cola Wars Re-ignite!
Transcript:
Tim Harms:
Welcome to the Enliven Beverage Deal podcast. Where we’re all about saving and making you money by taking both the guesswork and the legwork out of your beverage partnership and by leveling the playing field when it comes to negotiating your beverage contracts. I’m your host, Tim Harms. We’ve got a great show for you today. Stay tuned.
Tim Harms:
Hello, everyone. I’m really excited about our show today. I am here with Jose Hevia. He’s the CEO and founder of DraftServ, an incredible technology that we’ve learned about. We were actually looking internally at our shop and discussing what the future of dispensing fountain beverages, dispensing soft drink beverages will be in a post COVID-19 world, and we learned about an incredible technology that’s been developed by DraftServ. And Jose has been gracious enough to come on and tell us a little bit about his company, his journey, and where he sees this industry going. Jose, great to have you with us.
Jose Hevia:
Hey, thank you so much for having me on. I really appreciate it.
Tim Harms:
Excellent. Well, you developed an incredible product, a technology. I first saw it on a video that you had posted to LinkedIn, or someone on your team had posted to LinkedIn, just demoing this technology. But can you tell us a little bit about DraftServ and the technology you’ve developed?
Jose Hevia:
Yeah, sure, absolutely. So DraftServ Technologies has been a company that I started a little over 10 years ago, and we are a beverage technology company. We got our roots in and founded the company around self-serve draft beer dispensers in restaurants and bars, where we had to meter and manage the product in the self-serve environment. But it’s evolved quite a bit, and now we’re deploying a software platform strategy across the beverage industry. Where we fundamentally take any beverage dispenser out there, any tap, fountain, or draft dispenser, and we make it a smart and connected device that can also be integrated into POS and payment systems.
Jose Hevia:
So, once we do that, these what were once isolated and dummy dispensers can now think, capture data, communicate with other dispensers on property and multi-properties and then can be tied into cashless payment and POS systems. And the net of that is, is that our clients, whether it be C stores, cruise ships, hotel groups, QSRs, can basically take the same dispensers they have with the same beverages they’re selling, only do it in either a faster and more frictionless environment and/or more profitably.
Tim Harms:
Wow, so just to give our listeners a visual of how this works, is it a QR code placed on the disposable cup? Is it a sensor under the dispenser? How does it actually work?
Jose Hevia:
Yeah. Right now, we have what we just introduced this year is what we call a BevBot, and it’s a side-standing reader that sits next to any beverage dispenser, so any hot coffee dispenser, frozen drink dispenser, fountain, soda dispenser, et cetera. And on the front end will read anything, meaning we can read a student ID, a room key, a cabin key, a mobile wallet. We can read an RFID tag, a QR printed cup, a QR printed POS receipt, for example. We can read any of those things, and that is what we call our authentication method so we can authenticate the user, and once we establish who the user is, we then can control the dispenser.
Jose Hevia:
So, on the back end, that same BevBot plugs into any dispenser, and it allows us to create that network of dispensers if you will. And from there, we can manage and control what’s dispensed, when it’s dispensed, to whom it’s dispense, how frequently, et cetera. And then on the back end, we capture all that information, all the beverage transaction user data that we help our clients, the retailers, use in order to become more profitable, and to solve they have moving forward.
Tim Harms:
That’s amazing. I mean, I think about our clients particularly in the restaurant, but really across the board. I mean, you know how much gallonage of fountain syrup you go through, but in terms of transactional data, really unless you’re using that really expensive new touchscreen technology and you get the feedback from the beverage provider, you don’t have that [cup by cup 00:04:51] technology. I mean, I can see just how all that data is incredibly useful. You mentioned you have a background in restaurant operations. You actually started and worked and owned a few restaurants I believe. How did this idea get started, and really how has your background as an operator really helped inform the way that you all go to market today?
Jose Hevia:
Yeah, so I’m a career restaurateur entrepreneur. I opened my first restaurant when I was 29 years old, and continued to do that for many years. And the way I got started with DraftServ and this technology, is I started building beverage technology in my own restaurants. And that’s really what got this started. I mean, at the end of the day, tap, fountain, and draft dispenses any beverage typically is the most profitable way for us to sell any of these beverages. It’s not in a package. The problem is most of us are terribly inefficient at it, and have huge waste and loss rates, and that’s because we don’t have any visibility into what we’re pouring, when we’re pouring, how we’re pouring. We don’t have any control over it. And those two fundamental, let’s say, business leverage, visibility and control that really exist behind almost every system we have in our operations, we just simply don’t have behind beverage dispensers, so I saw a big hole there that needed to be filled as far as opportunity is concerned and learning is concerned.
Jose Hevia:
To give you a real example behind that, for example, the National Restaurants Association will publish a number these days it’s 25 or 26%, meaning that’s the amount of draft beer that’s lost every year to spillage, wast, and theft. That’s a published and accepted number. We would never accept that number in any other facet of our business, but we do in draft beer, unfortunately. But if you were to ask the same thing for a fountain soda, for example, there is not a published number because no one knows. We literally don’t know. My convenience store clients that I talk to today, they use their cups as their inventory control device. That’s where they set pricing, and it’s a 99 cent cup, or a $1.29 cup, and the problem they’re having today is people are filling the cups with all types of beverages, but they don’t really know what’s in the cup. They just know how many of the cups they’ve sold, they don’t know how much of the beverage they necessarily sold. So, we help them with that.
Tim Harms:
That’s fantastic. I love hearing people’s story of innovation coming out of the industry. I mean there’s so much innovation right now in the food service industry. So a question I have, really could you … I mean I know you had started focusing more on the alcoholic side of the equation, and do I have it right that you’re more recently now exploring the non-alcoholic fountain soda. Is that a more recent development for your company?
Jose Hevia:
That’s correct. We only started with non-alcoholic about two-and-a-half years ago. We started doing fountain soda, and our first client was actually an NFL stadium where we converted the whole club level to self served controlled fountain dispense. So, every fountain dispenser was self serve, like you would see in a lot of QSRs today, only you had to scan a cup, and those codes we used were used to control whether you had a small, medium, or large pour, or an unlimited refill pour. So, we basically leveraged software to make something faster, and more profitable at the same time. And it was viewed as a value add obviously for the guests coming through.
Jose Hevia:
So yeah, non-alcoholic is newer to us, however with that said we as this evolves we think we’ll be doing far more non-alcoholic than alcohol as unintended solutions around non-alcoholic beverages can be fully unattended. With alcohol there’s always the liability and control piece that has to exist with a human being. So, when you think about let’s call it scalability from an unattended standpoint, non-alcoholic is the obvious mover.
Tim Harms:
Wow. So, I mean if I’m hearing you correctly, there’s a cost savings here, I mean potentially lower labor. There is lower theft, or spillage, or just loss of inventory. And you’re actually saying there’s a customer loyalty piece, a perk to implementing this program, so potentially higher sales. I mean from the initial I don’t want to say test, but the initial launch of these programs with your early customers on the non-alcoholic side, are you seeing all of that come out in the real data, less cost and actually increased revenue from the beverage sales?
Jose Hevia:
Yes, absolutely. I’ll give you a great example. We did an installation in the new New Orleans airport with hot coffee. And today passengers simply go to a counter, they choose one of I believe 18 different coffee choices, and the attendant rings them up and then hands them a QR coded receipt and they just take that over to the coffee dispensers, scan it on the coffee dispense, and the dispenser will only pour what they paid for at the POS system. Because we’ve connected the coffee dispenser to the POS system. So now our client, a concessionaire, their coffee shop is merely one person who takes orders, and the rest is done on self fulfillment.
Jose Hevia:
So, for the passenger it’s a whole lot faster, and for the retailer themselves obviously with only one employee running a whole coffee shop, it makes a lot of sense. And what we’re developing with them now that you will see probably take another six to 12 months, is this will all be app driven. So, the passenger while you’re in the security line, you’ll order your coffee for let’s say Concourse D, and we’ll shoot you a QR code. And when you get there, you just simply scan that code off your phone on the coffee dispenser and it will pour what you ordered. So, it’ll be very seamless and a frictionless experience that’s far more faster, that’s faster, and is customized for the user so that he can streamline his experience.
Tim Harms:
Excellent. So, help me get my mind around how this works actually in practicality. I mean do you use your own equipment, do you retrofit old equipment, do you work with the equipment manufacturers, Cornelius, Lancer, do you work with Coke and Pepsi as they’re installing new accounts? How does it actually go to market?
Jose Hevia:
So, yeah the answer is yes to all that. We have our own proprietary software that’s patented. We have the vast majority of my payroll goes to really smart folks writing code. We’re a software company, and we have a software platform, and that’s what we focus on. And we do, we partner with dispenser companies to create these solutions. We don’t create new beverages, or new beverage dispensers or anything like that. We just partner with the players that are already out there, they’re the experts in those fields. We just try to take what we call the beverage technology ecosystem. That crossroads between payment, POS systems, beverage dispensers, and beverage brands. We just try to take that intersection and bring value to it so that all players in there can win.
Tim Harms:
Excellent. So, we have a lot of different people from a lot of different industries listening in, but we’ve got a big hospital client base. And so if a hospital executive is listening in, and they’re responsible for 100 hospitals across the US, different cafeterias, fountain machines in their doctors lounges, and even the EMS lounges, and they want to provide beverages after hours. So, unattended fountain machines makes a lot of sense. I mean they want to give their employees maybe have a discount on beverages, and they can just pay for it through their employee ID. There’s a lot of things that you’re saying that would maybe be attractive to them. And they’re in the middle of a long-term agreement with either Coke or Pepsi right now for system wide, and they called you. Would you be able to work with them in the middle of an agreement, and would you go retrofit all of their equipment right now? How would you approach a situation in real life like that?
Jose Hevia:
Yeah, so we would retrofit their existing equipment, that’s exactly right. We’re very familiar with Cornelius, Lancer, and other players out there, have worked with them extensively in the past. And we had to, in other words we had to make sure that our software and our technology was compliant under their warranty support, so that we weren’t compromising the integrity of their dispensers for example. So, we’re familiar and work hand-in-hand with them. We can retrofit existing equipment. And your example’s spot on. For a hospital system for example, we would take those dispensers, we’d retrofit them, we’d make them so they’re now smart connected devices, they’d all be communicating with each other. And then we could tie them into two ways of reading. For example, we could read employee IDs for all the employees to simply scan and pour. And at the same time, also do say a QR coded receipt that came out of their POS systems out of their cafeterias. So that their guests that visit the hospital would pay, and scan and pour, and the employees could also scan and pour with their ID. So really from one platform we can create several solutions in those environments.
Tim Harms:
Wow, that just seems like a super flexible program. Really, really interesting. I want to return back to where I started this conversation, and how we really got connected, which was trying to envision the fountain business evolving in a post COVID-19 world. Just from your vantage point, I know no one has a crystal ball here, but what are you seeing, what are you hearing in the industry, and where do you think the soda fountain business is going to go in the wake of what we’re currently living in?
Jose Hevia:
Yeah. Well, I think two things. Number one is touchless or contactless dispensing. Without a doubt we literally just came up with our capability set in that about a month ago, where we can eliminate all the buttons and levers that go on any fountain equipment, get rid of the handles on tap dispense, or cold brew coffees, draft beer, et cetera. We just use what we call cup sensing technology. We can scan, we know where the cup is, and we’ll only dispense the beverage under the value or the tap that the cup’s sitting under. So, we can now just by sensing that cup, turn the dispense on and off and control it with cup sensing. So, we think contactless and touchless without a doubt will be a long-term safety measure that I think retailers will put in place. If you look at most fountain dispensers, people will fill a cup, they’ll take a sip, and they’ll put it back under the lever again. And while that may have been okay in the past, I don’t think moving forward that will ever be again. So, we’ve got a solution for that. We can retrofit existing dispensers. That’s number one.
Jose Hevia:
Number two, just like cash registers, 20 years ago cash registers turned into POS systems. We turned the corner, and we made cash registers smart connected devices that can process payment, they can think, capture data, and communicate with other technologies. So too will beverage dispensers. Today it really doesn’t exist, and I think that’s primarily because most of the beverage dispenser innovation has been behind either hardware manufacturers or beverage brands, big beverage brands. And it hasn’t really been software companies that have gone out there to innovate in this world. So, I think smart connected dispense is the future. I don’t think in 10 years if you’re draft beer system, your fountain soda system, your coffee system, if it can’t be smart and connected on your property and give you real-time visibility and control over all your products, I don’t think it’ll be of much value to you.
Tim Harms:
Well, this has been a really enlightening conversation for me. And once again, I am just … when I hear people like you are out there just innovating, bringing new things to the industry, it just inspires me. So, I’ve enjoyed this conversation, thank you Jose. Last question-
Jose Hevia:
Thank you.
Tim Harms:
… if someone wants to engage with you or your team, how can they find you and learn more?
Jose Hevia:
Yeah, absolutely. So, they can just come to www.draftserv.com, that’s DraftServ without an E at the end. That’s our website. And certainly you can find us on LinkedIn is what we use the most. And we have a bunch of videos out there we put out recently that demo our technology, and also a lot of our new touchless innovations is there to see. So, that’s where folks can find us.
Tim Harms:
Excellent. Well Jose, it’s been a pleasure. Thank you so much for coming on.
Jose Hevia:
Likewise, thank you so much for having me. I appreciate it, thanks.
Tim Harms:
All right. Thanks everyone for listening in, hope you found that informative. If you have a burning question about your beverage negotiation or partnership, we’d love to hear from you, and answer it on this podcast. Reach out to us by emailing podcast@enlivenpartnership.com. And hey, before we sign off, I want to remind you that you can take both the guess work and the leg work out of your beverage partnership. You can level the playing field in your beverage negotations, and you can save or make your company millions through a new or an improved beverage agreement. The first step is a free beverage opportunity analysis, which will tell you just how much you can save or you can make. Sign up for your free beverage opportunity analysis at enlivenpartnership.com, and by clicking free savings estimate. On behalf of everyone here at Enliven, thanks for listening in.
