Former CEO of Taco Bell & Yum! Brands on how social media and technology will change the fast food industry

Greg Creed, former CEO of Taco Bell & Yum! Brands, joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss social media and technology’s role in the fast food chain industry. He also weighs in on the road to recovery and the growth of delivery in the industry.

Video Transcript

BRIAN SOZZI: Our next guest is the fast food industry veteran who says he has the secret ingredient in the recipe for success. That secret, using technology and social media to understand consumer demand. Greg Creed is the former CEO of Yum Brands, and he joins us now. Greg, good to see you. It still feels weird for me not to hear you on the earnings call, but good to see you, nonetheless. Sort of want to touch upon the technology and other things you're working on right now, but just what's your state of the restaurant industry? We had indoor dining is back open in some parts of California now. New York City back open and California. What does this mean for the fast food industry?

GREG CREED: Well, Brian, I think some things have changed forever. So delivery, obviously, has become a huge part of the industry. I think those that had drive-thru are obviously benefiting from the drive-thrus. I think it's tough if, obviously, you're a small operator or if you're a dine-in only restaurants been particularly tough, but you know, I think people have moved to mobile, people have moved to digital, people have moved to delivery, and that's probably, like a lot of industries, accelerated the trends that probably would have taken years to happen have happened, you know, pretty much overnight, and those trends will stay. The great thing about consumers is they like things to be easier. The easier you make it, the more they're going to stay with that new habit.

ALEXIS CHRISTOFOROUS: You know, Greg, we're also seeing these ghost kitchens pop up, right? So you've got companies like Grubhub and Uber Eats sort of changing the way we all eat. What do you think the long term impact is going to be on the restaurant industry?

GREG CREED: Well, I think ghost kitchens have a role to play. They're probably not for everybody. I mean, if you think about Yum, they've got 50,000 restaurants around the world, you know, McDonald's with, what, 35, 36,000. I think if you're a small player and you can share a kitchen, you don't need the visibility, you largely want to do delivery, I think they have a role. I still think that the most important thing about a ghost kitchen is do you have a brand that people want? It's one thing to have a facility to cook food, the question is, is there going to be demand for your brand? And I think just having a ghost kitchen and not having a well-known brand isn't a long term sort of successful solution.

BRIAN SOZZI: Greg, how is the pandemic going to change how restaurant industries invest in technology? I don't know about you, but I'm seeing profound changes in how restaurants are laid out. [INAUDIBLE] starting to see robots coming into the restaurants flipping burgers. It's going to be a different time.

GREG CREED: Oh, yeah. You will see a massive investment in technology, and you are seeing a massive investment in technology. You know, you look at Taco Bell, they've just announced a new drive-thru solution, a small box kitchen drive-thru. In Australia, when I was running Yum, we were testing a five lane drive-thru for KFC in a couple of locations. So you will see a dramatic investment. Restaurants, the cooking area could get smaller, you probably need less dining room. Maybe you need now walk-up windows for pick-up. Obviously in the old days, that didn't happen. And then obviously, everyone's working really hard to improve the speed of service in the drive-thru and things like that. Yeah.

ALEXIS CHRISTOFOROUS: To your mind, as you look at the fast food industry landscape, who is doing it right now? Who is navigating through this pandemic in a successful way?

GREG CREED: Well, it's not a surprise for me to say that Yum's doing it really well. Obviously, I think in two ways. I think David Gibbs has really demonstrated exceptional leadership in the sense of not just how do we make the brands more relevant, more easy and more distinctive, but also the $100 million that they're giving back to fight racism, to give opportunities for people of color to come into the business, to build greater diversity and inclusion. I think you have to look at both of those things. So I think they're doing it well.

Obviously, the pizza chains are enjoying the delivery business, and I think, you know, as you've probably seen, I think the big guys will get better. The smaller guys, I think, will probably do OK if you're a niche player. I think the problem is if you're a brand that's stuck in the middle. But I mean, what I want to talk about is, you know, what I think what I'd like to talk about is like the technology that really helped I guess get Taco Bell to be successful, because that's a technology that Taco Bell's been using for 10 years NetBase. And it allowed what I think people want today is how do you get quicker information that's better, more accurate, faster in order to make better decisions.

And that, to me, was what NetBase was for Taco Bell probably 10 years ago. It had this amazingly big and still has this amazingly big database on one analytical platform. It was a lot faster in terms of us getting information, and it was also more accurate. And if you can get bigger, faster and more accurate, that enables you to make much better decisions, much more timely decisions, and I think that's the key to success going forward.

BRIAN SOZZI: What's the next iteration of that technology?

GREG CREED: Well, I think it's a lot of it's obviously augmented reality. I mean, it's about things that will help you make better decisions. So it's not just using-- I think people have used things like NetBase technology really as a listening device. So it's sort of like, you know, people describe it as a social listening platform. I think you have to think about it as a sort of social intelligent platform, and listening is passive, and intelligence is proactive, and I think that makes a huge difference. And I think the early days were all about, well, how do I use it to make sort of decisions that are going on?

But I think you can look at things like NetBase, and I think Taco Bell has used NetBase sort of for inspiration. So things like, how can I understand? How can I uncover what the next opportunity is? A great example would be, you know all this discussion that's going on about peppers and how hot should sauces be, right? There's this whole dialogue about who can make the hottest sauce.

Well, Taco Bell was able to tap into that very early on, understand that there was this emerging sort of need and desire for people to want to put hotter sauce on their food, and so they were able to introduce the Diablo sauce in addition to Mild, Fire and Hot much earlier, I think, in the time. So using it to help you be proactive, positive, invent new things as distinct from just a way to sort of track what's going on and how do you adjust in the short term. So to me, NetBase was an incredible tool and remains an incredible tool that really enabled Taco Bell to be this sort of cultural icon in the QSR space.

ALEXIS CHRISTOFOROUS: Before we let you go, Greg, what are you excited about in the fast food industry in terms of innovation? I mean, we've seen more restaurants now are putting these plant based protein items on their menu. What's exciting you?

GREG CREED: Yeah, look, I think it's plant based. I think it's delivery. I think it's robotics that will eventually end up in the back of a restaurant. But at the end of the day, it comes down to building great brands that are culturally relevant, and you cannot afford not to be a culturally relevant brand. And then equally, you have to be distinctive. And then the third thing that's becoming important today is, how do you make it easy? How do you make it easier for the customer?

So I think the critical things about branding is, how do you make the brand culturally relevant, how do you make it distinctive, and how do you make it easier for your customer? And I got to be honest, that's why NetBase, that's why we loved it at Taco Bell. That's why I expanded it when I took over Yum, so I added it to KFC, to Pizza Hut and Yum, because the person who has the best insights and the best knowledge in the quickest amount of time will make the best decisions right now on whatever the issue is, and that will help drive revenue growth for their business.