Kristal ball

Long-time restaurant family exited Embers to build customer loyalty giant

Back when Upsize last visited with David Kristal in 2004, he was helping retool Embers, the restaurant chain his father, Henry, co-founded in 1956.

The family had also gotten into franchising Joey’s Only Seafood and Grill restaurants, a Canadian chain, as its U.S. franchisors, and had started Foodstreet Plus, a St. Paul-based loyalty marketing company started to help provide purchasing power to restaurants and to counter cash flow burn at Embers.

Ultimately, the Kristals moved on from the restaurants, with the last Embers closing in 2021.

But Foodstreet, now Augeo Affinity Marketing … has gone gangbusters.

In the beginning, Foodstreet developed and managed group-buying programs for food and restaurant expenses, such as payroll processing, insurance coverage and office supplies.

“We took all the buying power we had in Embers across our entire expense base, from payroll processing services to trash removal services to credit card processing services,” says David Kristal, CEO. “We brought that set of services to independent restaurants, packaged it up and delivered it out through one of the largest food service distributors in the United States as a loyalty solution for them.”

David Kristal, left in bottom photo, and his father Henry Kristal, co-starred in several ads while trying to revive the Embers restaurants, which Henry co-founded in 1956.

The idea caught on quickly. Businessman Lyle Berman, who financed and led Rainforest Cafe early on, among other ventures, was an original investor and he remains on the board of what really took off when David Kristal had the epiphany that the company did not need to remain solely within the confines of small food service businesses.

“As Foodstreet took form, we started getting inquiries from companies outside of the restaurant industry and that’s ultimately when we changed our name to Augeo,” he says.

Major moment

One of the first meetings was with Kinko’s, which had a significant customer base of small business owners. Kristal was invited to meet with the company but quickly needed to come up with a new name.

“All the names we liked were taken,” he says. “We ended up falling back on Augeo. Augeo is Latin for augment and we augment relationships between distinctive companies and their constituencies, customers, employees.”

Evolution

Augeo ultimately didn’t catch on with Kinko’s because the copy and office supply chain was bought out by FedEx, but the seed was sown and the rest, as they say, is history.

After growing initially through loyalty solutions for several brands and their small business customers, Augeo won its first employee recognition contract with another large food distributor.

“We built a solution around that,” he says. “It was a very data-driven solution around sales force recognition.”

Then, through a relationship with a home improvement retailer, Augeo won a large piece of business around revital- izing a struggling loyalty solution called NASCAR Race Points.

That program, Kristal says, involved an affinity credit card loyalty program. Through that, Augeo gained experience in the bank card loyalty space.

“It gave us footing and understanding to develop what ended up being significant businesses in each of those sectors, the employee recognition sector and the financial services loyalty sector,” Kristal says.

Behind the scenes

While the company has grown significantly, the name isn’t as well known as, say, Embers was in the early days. That’s because its work is done “behind the scenes, behind the mask of the brand that we represent,” Kristal says.

But the company is booming. It has annual revenue now of about $450 million. In 2018, it sold its financial institution loyalty business to Lightyear Capital

Augeo

Description: Provider of loyalty and engagement technologies

Headquarters: St. Paul

Founded: 1999

CEO: David Kristal

Employees: Nearly 500

Website: www.augeomarketing.com

LLC, a New York-based private equity firm that invests in financial services companies.

Then, in 2022, it sold Figg, a subsidiary fintech company that allowed consumers to receive savings at participating merchants after enrolling credit or debit cards, to JP Morgan Chase & Co.

The company has used proceeds of those sales to continue growing and evolving. Today, Augeo has a large workplace engagement practice representing many of the world’s largest companies as they focus on employee community and connection.

“We’re very global in that business,” he says.

Augeo’s membership and consumer loyalty solutions practices constitute another large segment.

“That’s probably the hardest of our businesses right now because consumer loyalty is very broadly defined and it’s a little murky at times,” says Kristal, “meaning we as consumers are a bit finicky and we’re influenced by forces that we’re aware of and, certainly at times, by things we don’t see coming.”

Consumers are unpredictable and have different expectations for how they define value.

“That’s sort of a moving target right now,” he adds. “It’s economic, it’s experiential, it’s emotional, it’s immediate, and that’s very difficult. We love our practice, love our business in that area, but it’s also one of our harder businesses.”

Then Augeo has a couple business segments that are earlier stage but growing quickly. One is in social activation, which includes influencer marketing and the creation of content by employees and fans of a brand voluntarily posting in their social media.

“This is very different than paying an influencer to post,” he says. “This is all organic, volunteer-based. We have an [artificial intelligence] technology that ensures that the content is brand safe before it gets pushed out.”

“What we’ve developed, more broadly stated, is a real specialty in helping brands manage and optimize all of their activities in social media across all platforms,” he says.

Furthering that, the company has also created some AI-based tools that allow for brand optimization, Kristal says, which involves media buying against content that seems to be resonating with an audience.

Finally, a spinoff company, cryptocurrency loyalty company Kigo, recently combined with Thred, an NFT (non-fungible token) engagement platform, to create a new open-loyalty program defined by shared experience, ownable digital assets and cross-brand collaborations.

“We’re leveraging blockchain technologies to either advance or accentuate current loyalty solutions or actually build entirely new ones,” Kristal says. “It includes the idea that rewards can be shareable. We’re creating a whole new category so you can redeem for gift cards and travel and merchandise, all these experiences.”

And, in the digital world, rewards become not only shareable, but trackable, as well.

“The reason, I think, we have the privilege of representing so many extraordinary organizations globally — and leaders in their respective sectors — is because we’ve become so tech-

Contact: : David Kristal is CEO of Augeo: 651.867.6131; info@augeomarketing.com; www.augeomarketing.com; in/david-kristal-47490a enabled, tech-driven,” he says. “Metrics are everything.”

Behind the scenes

While Augeo is getting huge, don’t feel bad if you haven’t heard of the company. The engagement technology platform, as Kristal terms it, has built a customer base of nearly 100 Fortune 500 companies, but its work is largely behind the scenes.

“What we’re trying to do in the world of engagement technology is support, bolster and foster the brands of the client that we represent,” he says. “Our name is not nearly as relevant as that of the clients that we have the privilege of representing.”

And, while the company primarily at this point works with enterprise companies, it’s launching a new product programs to them, as well.

So, in Augeo, Kristal has come a long way from the days when he and his father, Henry Kristal, who passed away in 2007, were cutting expenses to slow a cash flow burn that threatened Embers’ very existence.

The pivot born out of desperation to keep that business alive became the foundation of a mega-business.

“I firmly believe there isn’t a recipe for success for entrepreneurs,” he says. “Those that are most successful have to be the chefs of their own destiny.”

“You have to stay educated, stay knowledgeable about what’s available in the market, whether it’s financing options, marketing options, expense management options, product ideas and innovations,” Kristal says. “The more your cupboard is full with these sorts of

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