Restaurants ‘turning towards technology’ amid hiring challenges, Lightspeed CEO says

Lightspeed CEO JP Chauvet joins Yahoo Finance Live to discuss the January jobs report, the state of the hospitality industry, trends to watch for, hiring, and the outlook for AI.

Video Transcript

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JULIE HYMAN: Let's get back to the jobs report now, and in particular, one of the areas where we saw pretty big growth that we've seen consistently in the jobs report. That is in hospitality, restaurants as well. Let's talk more about some of the challenges within that industry as they hire a lot of people, but they'd probably like to hire more. JP Chauvet is joining us now, Lightspeed CEO. Lightspeed a vendor for many of those restaurants. And you guys just came out with your state of hospitality report. In it, you said, "After inflation, the largest issues are hiring new staff and staff retention." So it being jobs day, JP, I want to start you there. Talk me through what restaurants are currently seeing on that front and whether anything is changing.

JP CHAUVET: Yes, good morning, Julie. Thanks for having me. Nothing has changed from the last time we spoke. In this industry, what you see is that restaurateurs, and retailers also, are having a really hard time hiring people. And here, you're faced with the reality of the return from COVID, where the businesses are more complex than they've been. They need to serve online and serve now, of course, everybody back in the restaurant. And so that means a lot of needs for more people, which they're having a hard time finding. And so that's why companies like Lightspeed, what we do is we help them implement technology to do more with less.

BRAD SMITH: And so what we did see within this data from the employment situation was food services, drinking places, they added 99,000 jobs. That really made up the brunt of that leisure and hospitality uptick there. And of course, this has been the recovery story that's needed to happen. Is it happening quickly enough, from your perspective? And what further kind of incentives perhaps need to be put out there for employees to start making their way back into this sector particularly, JP?

JP CHAUVET: Yeah, I think really what happened is, during COVID, everybody realized that there is a life outside of hospitality, and they were let go. And now they're really having a hard time bringing people back. I know that it looks good. I mean, we've hired quite a few. But there's still a long way to go. And really, the majority of our customers, we have-- we have about, you know, 167,000 customers. The majority of our customers around the world are still lacking staff everywhere, in the kitchen, in front of house. And so it's really been very difficult for them.

And so here what we're seeing is they know that they need to automate mundane tasks. They need to have fewer servers or fewer waiters do more and serve more tables. And so they are-- they're turning towards technology right now to try and kind of compensate for this lack of people. But there's still a long way to-- a long way to go.

JULIE HYMAN: Of course, that's where your sales pitch comes in, right, that you guys sell some of that technology. For your clients, is part of the argument that they won't need to hire as many people, if indeed they're using your technology? I mean, this is sort part of what is a big debate right now. Whether we're talking about the kind of technology you sell, whether we're talking about AI, which is a hot topic right now, there's this debate over whether it's replacement or augmentation. How do you talk to your clients about that?

JP CHAUVET: Yeah, I think it's really doing more with less. And I think-- so I'll give you an example. A customer, a large customer of ours in Europe, they went with new technology for tableside. So with people with iPads serving at the table. And they told us that they increased productivity per waiter by 30% just by implementing a tableside POS. So I think there's a real runway here and there's an opportunity for the industry to really reinvent itself and to use technology to just provide, I think, two things-- a better experience for your customers and also, at the same time, just augment productivity.

And so 30% just by implementing a table device platform instead of having your old Point of Sale on the counter. So I think there's a lot of room. We're hearing also that all of the new payments technologies, you know, with QR codes and Tap a Table, and all of these are also just there to augment productivity. So I think the big thing we're hearing from all of our customers is, we need technology to do more because we can't hire, and the cost of labor is actually going through the roof. So the only way they can bridge the gap to profitability is by adopting technology.

JULIE HYMAN: Let me just pick up on the last thing you said-- the cost of labor is going through the roof. We've had so much debate today over-- and we've been listening to company conference calls about whether wages or costs of any kind are going up at the same rate. Within hospitality, are wages going up? Is the increase in wages slowing down?

JP CHAUVET: Well, it-- for sure, the wages are not going up at the same rate as the cost of the goods. So I think-- you know, and I think, Julie, when we were together in New York, we had a restaurateur say, do I need to put a burger at 30 bucks to be able to strike a profit? So I think really what you're seeing is the cost of goods has gone up quite drastically. The cost to serve has gone up. But this doesn't translate in the consumer accepting the increase in the good or in the sale price of the good.

So I think there's a real challenge there. And I think the only way out is to really have fewer employees or fewer waiters or fewer staff that can automate as much as possible. And I think here when you look at what happened with COVID, you really had-- you really have what we call omnichannel or multichannel. You have all these delivery networks that you have to manage.

And so there's-- and there's a lot of silos. There's a lot of room to just do more in terms of, how do I adopt technology, how do I synchronize all these channels and drive a simpler business? And I don't think the wages going up or I don't think they'll be able to cover for all of that if they don't adopt technology. And technology hasn't evolved for, arguably, 100 years inside of restaurants.

BRAD SMITH: Sure. And for a technology-prioritized business like your own that I imagine has some very favorable margins that come along with that, have you had to reevaluate your own cost structure right now?

JP CHAUVET: Well, we are like everybody else in this industry. Our cost to serve has gone up because we have a very large staff of support people, even cost of infrastructure or Amazon. So we are facing exactly the same challenges as everybody on the planet, which is, our cost of service going up, and how do we continue to serve customers in a profitable way? And so I think for us, we're looking at different ways to try and adapt to that world. And one of them, of course, is scale. And so we're trying to scale as quickly as possible so that we can lower the cost to serve.

BRAD SMITH: JP Chauvet, who is the Lightspeed CEO, joining us here today. JP, that's all we have time for here today. We'd love to check back in, in the future. Appreciate the conversation.

JP CHAUVET: Thank you very much. Thanks for having me.