What Designing an 'OS for Restaurants' Really Requires | Street Fight

What Designing an ‘OS for Restaurants’ Really Requires

What Designing an ‘OS for Restaurants’ Really Requires

Paolas

This article is in response to Chris Caliz’s recent TechCrunch piece, which distills and demystifies the general landscape of restaurant tech. It’s a dizzying ecosystem that deserves more analysis and attention, and I appreciate that Chris took the time and effort to address it.

Before jumping in with my thoughts to Chris’s post, it’s worth spending a few words on my background: a bizarre combination of restauranteur-by-blood and tech entrepreneur. My family has owned and operated Avatar’s, a small chain of healthy Indian fusion joints in Marin County for nearly 30 years (they are consistently the highest rated places on Yelp in their respective towns); I am also am a Director at Dabba, a soon-to-launch Indian fast casual chain and food truck. Now for the tech side: I founded the Yelp of India, burrp!, which became as ubiquitous in its 4 year run before being acquired by the country’s largest publicly traded media company, Network 18. Soon after, I joined FreeCharge as their COO early on, and helped navigate the company through early growth pangs, and ultimately to India’s largest ever domestic technology exit to SnapDeal.

I was delighted to see that Chris has included TableHero in his matrix of products, but it also inspired me to pen down my thoughts on how I see the landscape of restaurant and local business tech evolving, and why I believe in the inevitability of a large, multi-billion-dollar business being built in the space.

Innovator’s Dilemma for Established Players
One of the things that immediately stands out from Chris’s post is the sheer number of players that are in business, each attacking a piece of the restaurant tech stack. Chris has done a beautiful job of segmenting the stack into key operational areas, but looking at it, one has to be surprised at the lack of a few mature players that have figured out how to play up and down the stack. Sure OpenTable may be listed in Diner CRM/Loyalty and Diner Analytics as well, but we all know that their key line of business is reservations. Yelp is similar — it rules the roost as a discovery platform, but its other lines of business are, thus far, footnotes.

I mention this because its important to understand that as these mature players evolved, they grew the line of business they knew best, and established relative dominance in those areas; like OpenTable for reservations, and Micros and Aloha for POS.  But with near-monopolies, these established players suffered (and continue to suffer) from a classic case of innovator’s dilemma. Why rock the boat when you are already a clear market-share leader?

These established players have attempted to fill the innovation deficit with acquisitions (as established players tend to do), and the jury is still out; OpenTable acquired my friend Kashyap’s company JustChalo, which has now become their mobile payment solution for diners. Meanwhile, Yelp acquired SeatMe to go after the reservations space.

The Multi-Billion-Dollar Opportunity
Logically, when you look at the restaurant tech stack, there are clearly solutions, software, applications that should play nicely with each other, but the larger players have purposefully walled off their gardens to protect their revenue stream. Imagine this: Chris whips out his smartphone and opens the website of his favorite restaurant (hallelujah! it’s mobile optimized!). He taps the reservation widget and makes a reservation for him and three of his friends for that night. The restaurant owner gets the reservation on their tablet at the restaurant, and the application not only recognizes Chris as a loyal customer, it pulls data from the POS of the last 3 meals he ordered; it notices a certain proclivity towards New World robust reds, and owner puts a note on your reservation (which then shares it back with the POS) to inform the eventual server to let Chris know about a new Russian River Cab Franc. The server is now armed with valuable intel, will have something contextual to offer, and Chris gets a fantastic, personalized experience. Minority Report-esque, yes, but completely within our grasp!

The next multi-billion-dollar company in this space will identify the mission-critical pieces of technology in the stack, and own them. Our bet is on digital presence and presence management (websites, mobile, social media), reservations/bookings/appointments, and payments — all under one roof, but all working seamlessly with each other, with dumb-proof onboarding, sharing data back and forth and helping empower the business owner via automation. Meanwhile, giving the end customer a more personalized experience. But this company will also take a completely open approach to third party software, with robust APIs and application hooks, so that other pieces of the stack can seamlessly “bolt on” to the core OS. In a way, it is analogous to Amazon Web Services. You have the core pieces which act as the foundation, upon which a set of specialized, value-added components can be bolted on.

A Restaurant Owner’s Priorities
Restaurant owners are the scrappiest entrepreneurs I’ve ever come across, and they are deeply passionate about their business and their customers. Understand that to a restaurant owner, only few mission-critical components of their business necessitate a technological solution. Put another way, if you look at Chris’s “Low Tech Options” column the the TechCrunch piece, understand that most restaurants are okay going that route for a long time to come, except for in a few areas.

I believe most restaurant owners know they need technology when it comes to digital presence. They know they’ll need to pay some web developer, or learn how to fumble around with a CMS like SquareSpace or WordPress to build some kind of a web presence. They also know they need to adopt technology when it comes to payments, thus the ubiquity of the POS. One could argue that for table-service restaurants, a reservations system could be deemed mission critical, but most mom-and-pop restaurants can forego the exorbitant, customer-unfriendly pricing structure of OpenTable for a pad of paper and a pen.

If you’re selling anything else that is on the fringes of being mission critical from a technology standpoint, you are going to have to prove one of three things: you help increase revenues, you help decrease costs, or you do both. You cannot get through a pitch to a restauranteur without directly addressing how your software does one of those three things. If you are selling technology to a restaurant, you must, at your inner-most core, understand that the restaurant owner is your customer. It’s a big part of why I believe small local business owners tend to have such a complicated relationship with Yelp: local businesses, by and large, do not realistically believe that they are as important to Yelp as the end-user is.

Lastly, don’t believe the “tech-unsavvy local business owner” trope. It is condescending to small local business owners. Local business owners aren’t necessarily technocrats, but they aren’t unaware of their options. They simply understand their priorities better than most; what they do and do not have time for. Make sure you understand those priorities as you educate the customer on how you can help their business.

It is a very exciting time to be building technology and product in this space. As Chris mentioned, there is a lot of room for continuous innovation by disrupting old memes. In summary, here’s what I think it will come down to:

  • Blowing up and completely rethinking what it means to onboard a customer (think in minutes, not days or weeks)
  • Consolidating two or three pieces of mission critical technology under one roof; allow for seamless flow of intelligence and data between those pieces
  • Make the stack “invisible” for the business owner; i.e. let automation do its thing
  • Taking a completely open approach to third-party software integrations

Deap-Ubhi1Deap Ubhi is the founder and CEO of TableHero, an intelligent OS for restaurants and local businesses. Prior to this, he was with AWS for two years as an early stage startup mentor. He started the Yelp of India (burrp!), which was acquired by Network 18; after which he was the COO at FreeCharge, and guided the company to India’s largest ever technology exit.

2 thoughts on “What Designing an ‘OS for Restaurants’ Really Requires

  1. Hi Deap:

    I appreciated your response to Chris Caliz’s article. As you pointed out for the restaurant owner there are a dizzying array of choices.

    We’ve been working with restaurants on digital marketing solutions since 2007. Owners are in large part confused. The smart ones understand focusing on great food and a great experience will make their business thrive. At a core technology plays a minor role in the restaurant – employee – customer relationship. And in many respects technology has detracted from a great experience when systems don’t work or when systems are designed to benefit the restaurant more than the customer.

    All successful business breaks down to simply getting a customer to give you chance and deliver an amazing experience once given the chance. All technology needs to support that simple premise. Too often technology is being sold as a substitute for face to face customer interaction or “moments of truth”.

    To pick on one particular technology solution – Loyalty Systems – I will make the blanket statement that loyalty systems do NOT create loyal customers. Too often Starbucks and Panera are shown as shining examples of why loyalty clubs work. Frankly customers are loyal to both brands regardless of any loyalty club. For a loyal customer it is a no-brainer joining to save money at a place you are already loyal to.

    So what has happened is many restaurants have implemented loyalty clubs requiring cards, apps, hardware which now become points of failure and dissatisfaction when they don’t work. And who is getting more benefit from auto-notifications to keep your name in front of the customer. The restaurant? Sure I get your example of the fine dining experience. But fast casual, pizza, sandwich shop, etc. – I just want the employee to greet me and make me feel like a customer.

    Things can be simpler. It’s just tough to cut through all of the noise restaurant owners hear from the dizzying array of choices.

    My recommendation for any restaurant owner is keep it simple. Number one, focus on the customer experience in the restaurant. Number two, focus on your “online location” – your website and top listing sites. Keep it simple and give the customer the basics that they want to know when they find you online. Number three, capture anyone that looks at your website or visits your restaurant by some means digitally so you can market to them in the future and keep your name in front of them.

    The bottom line is if you spend more time on the technology solution than you are with the customer there’s a problem with the technology.

    Dave Gonynor
    CEO – That’s Biz

    1. Dave, first of all, thank you so much for your well thought out comment and for lending your extensive experience to this dialogue. I couldn’t agree with you more. Like I mentioned, my family has been in the business for nearly three decades, and I know well the opacity that plagues this space when it comes to making technology decision.

      It’s why I loved Chris Caliz’s matrix column labeled “Low Tech Options” – for those not familiar with the restaurant business, it’s an eye opener as to what restaurant entrepreneurs have gotten comfortable with. But the technologist in me fervently believes that the core reason we haven’t seen more technology adoption in this space is directly correlated with the lack of compelling tools. Just because we see a dizzying array of technology and software for restaurants does not mean that those tools are solving a fundamental pain point. In areas where technology is solving a fundamental pain point, yet does so poorly (POS, reservations, digital presence), restaurants are forced to work sub-optimal technology and services – Micros, Aloha, POSitouch, OpenTable are all examples of such products; products that restaurants know they need (i.e. mission critical), but hate using. And therein lie some massive opportunities for startups – in what other spaces does one see technology being used so widely, yet being hated so uniformly amongst its core constituent?

      Players like Square were uniquely positioned to make a big dent in this space, but in my opinion, they focused on putting prettier lipstick on the same pig; i.e. their intense focus on design, while a welcome breath of fresh air, did not solve the fundamental issues that restaurants and small local businesses have with onboarding, training, support, cross-functionality b/w systems.

      Dave, I also agree with your prioritization for restaurants – when it comes to technology, restaurants need to focus first on really elevating their digital presence before anything else. There’s no reason in the 21st century that small local businesses can’t be empowered to really leverage their websites to become agents for their business – to tell their story, to capture leads, to drive customers! That is where their journey must begin. Once they’ve retrofitted their digital presence, there is so much more that becomes possible with that as their foundation. That is why we’re so excited to be building TableHero!

      Thanks again Dave. Great comments.

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2 thoughts on “What Designing an ‘OS for Restaurants’ Really Requires

  1. Hi Deap:

    I appreciated your response to Chris Caliz’s article. As you pointed out for the restaurant owner there are a dizzying array of choices.

    We’ve been working with restaurants on digital marketing solutions since 2007. Owners are in large part confused. The smart ones understand focusing on great food and a great experience will make their business thrive. At a core technology plays a minor role in the restaurant – employee – customer relationship. And in many respects technology has detracted from a great experience when systems don’t work or when systems are designed to benefit the restaurant more than the customer.

    All successful business breaks down to simply getting a customer to give you chance and deliver an amazing experience once given the chance. All technology needs to support that simple premise. Too often technology is being sold as a substitute for face to face customer interaction or “moments of truth”.

    To pick on one particular technology solution – Loyalty Systems – I will make the blanket statement that loyalty systems do NOT create loyal customers. Too often Starbucks and Panera are shown as shining examples of why loyalty clubs work. Frankly customers are loyal to both brands regardless of any loyalty club. For a loyal customer it is a no-brainer joining to save money at a place you are already loyal to.

    So what has happened is many restaurants have implemented loyalty clubs requiring cards, apps, hardware which now become points of failure and dissatisfaction when they don’t work. And who is getting more benefit from auto-notifications to keep your name in front of the customer. The restaurant? Sure I get your example of the fine dining experience. But fast casual, pizza, sandwich shop, etc. – I just want the employee to greet me and make me feel like a customer.

    Things can be simpler. It’s just tough to cut through all of the noise restaurant owners hear from the dizzying array of choices.

    My recommendation for any restaurant owner is keep it simple. Number one, focus on the customer experience in the restaurant. Number two, focus on your “online location” – your website and top listing sites. Keep it simple and give the customer the basics that they want to know when they find you online. Number three, capture anyone that looks at your website or visits your restaurant by some means digitally so you can market to them in the future and keep your name in front of them.

    The bottom line is if you spend more time on the technology solution than you are with the customer there’s a problem with the technology.

    Dave Gonynor
    CEO – That’s Biz

    1. Dave, first of all, thank you so much for your well thought out comment and for lending your extensive experience to this dialogue. I couldn’t agree with you more. Like I mentioned, my family has been in the business for nearly three decades, and I know well the opacity that plagues this space when it comes to making technology decision.

      It’s why I loved Chris Caliz’s matrix column labeled “Low Tech Options” – for those not familiar with the restaurant business, it’s an eye opener as to what restaurant entrepreneurs have gotten comfortable with. But the technologist in me fervently believes that the core reason we haven’t seen more technology adoption in this space is directly correlated with the lack of compelling tools. Just because we see a dizzying array of technology and software for restaurants does not mean that those tools are solving a fundamental pain point. In areas where technology is solving a fundamental pain point, yet does so poorly (POS, reservations, digital presence), restaurants are forced to work sub-optimal technology and services – Micros, Aloha, POSitouch, OpenTable are all examples of such products; products that restaurants know they need (i.e. mission critical), but hate using. And therein lie some massive opportunities for startups – in what other spaces does one see technology being used so widely, yet being hated so uniformly amongst its core constituent?

      Players like Square were uniquely positioned to make a big dent in this space, but in my opinion, they focused on putting prettier lipstick on the same pig; i.e. their intense focus on design, while a welcome breath of fresh air, did not solve the fundamental issues that restaurants and small local businesses have with onboarding, training, support, cross-functionality b/w systems.

      Dave, I also agree with your prioritization for restaurants – when it comes to technology, restaurants need to focus first on really elevating their digital presence before anything else. There’s no reason in the 21st century that small local businesses can’t be empowered to really leverage their websites to become agents for their business – to tell their story, to capture leads, to drive customers! That is where their journey must begin. Once they’ve retrofitted their digital presence, there is so much more that becomes possible with that as their foundation. That is why we’re so excited to be building TableHero!

      Thanks again Dave. Great comments.

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