John Collison: evaluation

Transcript context

…Yeah, it's slightly different. Perhaps we can look at two types of examples. You can have one type of example, which is perhaps my mom's Chinese restaurant. It's an SMB where the name value outside of literally its locale isn't that well known. It's very difficult for that restaurant to acquire enough customers to make that math work because they still have to… Remember, I mentioned that staffing was the number one challenge that restaurants face. They still have to staff these kitchens. That's one of the challenges. You go all the way to the other side. Pretend you are a large QSR with a big brand presence. You certainly can attract lots of customers, but you're going to have to think for yourself, "What's my opportunity cost?" My opportunity cost might be to open up another restaurant. Why not do that and take my economies of scale and actually apply it to more orders, in-store orders as well as to-go orders? Because I can do that with a restaurant. Hard to do that with a delivery-only kitchen. I think because of that, it's a tricky model to scale to every type of restaurant brand. I think people maybe thought that big chains were going to do it more, where you're right, the billboard effect for an actual retail presence is hard to compete with, where you get this very cheap customer acquisition from the fact that people know your name from the high street or maybe have been to you, and as a ghost kitchen, you need to make up for that awareness gap. But if you're Chipotle, maybe people thought that the orders get fulfilled out of a dedicated Chipotle central factory, and then the retail space are separate. But also that hasn't really happened that much. That happens occasionally. I think these are not decisions where we're accounting for all of the variables. One variable we're not accounting for is "What else could I do with the space?" You have to remember for businesses like Chipotle who tend to identify real estate in fairly expensive areas, there's high opportunity cost of what you do with that space. Yes, you're right. One choice is to turn it into a kitchen or a delivery-only kitchen, and sometimes that happens, but there's also a massive opportunity to recoup the expense. If you start introducing, for example, franchises. Chipotle is not really franchised, but if you look at other types of brands where it is franchised, I think the economics become even trickier.…

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