SMB OS Operators, Part I: Upserve

“SMB OS” is local’s latest paradigm. As I wrote recently, it expands the “local” opportunity beyond its traditional focus on advertising and marketing. Instead, a larger addressable market lies in the broader range of SMB functions that fall outside of, but dovetail with, marketing (e.g.: POS systems).

Given the importance of this concept, we’re spending time with the practitioners of SMB OS. The first in our series of interviews is Upserve founder and CEO Angus Davis. Formerly Swipely, UpServe had been living out the principles of SMB OS long before we started calling it that. See our interview with Davis below and stay tuned for more interviews and analysis on this topic.

Street Fight: Starting at a high level, what is the company’s overall philosophy that drives the suite of functionality for restaurants?

Angus Davis: Upserve’s overall philosophy is to create tools that empower restaurateurs, most of whom are independent small business owners. We help restaurants provide better service, run smoother shifts, and make more money.

How does this empower small businesses to have the functionality that was once reserved for deeper-pocketed rivals such as national companies that compete with them? Does this “democratize” high-end functionality (analogous to the way Amazon Web Services or Salesforce have done this in other contexts through enterprise SaaS offerings)? What are a few examples of Upserve’s offerings to restaurants that help them compete with larger rivals in these ways?

Most restaurant owners don’t have the capital, training, or time to become technology gurus. The big companies have huge IT teams with big technology budgets. Starbucks spends over $300 million per year on tech, while Domino’s Pizza built its own home-grown point of sale system and deployed it to thousands of stores to replace antique vendors like Micros, Aloha, and POSiTouch.

Upserve’s Breadcrumb point of sale for restaurants brings this level of technology to any neighborhood restaurant or regional restaurant group. Unlike traditional systems with huge upfront costs, Upserve has an affordable subscription model. One example of how we help the local businesses compete with the big guys is our market-leading online ordering module. Another example is our server performance module that shows full-service restaurateurs how to make more money by training front-of-house staff.

In the age of big data, what are some of the ways you’re analyzing data on behalf of restaurants to help inform their decisions (everything from staffing to menu optimization to inventory and ordering)? On a larger scale, are you utilizing your size (operating with many restaurants) to benefit the operations of individual shops (for example, uncovering regional trends that are useful)?

Upserve helps restaurants make better decisions. More than half of every dollar in revenue at a restaurant goes to pay for labor or inventory. A few ways we help restaurants turn data into insights to take action include:

– See which waitress drives the most wine sales and which others need coaching help.

– Learn which menu item brings customers back (retention), and which is a one-hit wonder needing a revamped recipe.

– See labor cost in real-time, from our dedicated mobile app, to make smarter staffing decisions on the fly.

– Take orders from our own native online ordering site or third-party apps like Grubhub in real-time, with zero errors and immediate printing to the kitchen.

– Use reservations data to provide a better guest experience by predicting guest demands.

One debate in the local media and advertising ecosystem is whether it’s better to cast a wide net across local verticals (i.e. restaurants, bars, movie theaters), or whether it’s better to specialize in one or a few verticals. Upserve is obviously taking the latter approach with a restaurant focus. What are the advantages you see? Are there nuances in your vertical where your domain expertise, data collection, and other functions benefit from that unique focus?

Upserve is 100% focused on restaurants. Within the restaurant market, we’re particularly focused on full-service restaurants. One out of every 10 Americans works at a restaurant, and consumers spend nearly $1 trillion per year eating out, more than they spend on eating at home. It’s a huge market, and we’re happy to stay focused on it. The advantage of a laser focus on restaurants is that our product suite is totally optimized for their needs. Most of our customer-facing support and sales staff has prior restaurant experience, which means we can better understand our customers when they need our help.

What functionality do you believe is still missing that you’d like to develop (to the extent that you can talk about your road map at a high level)? Are there economies of scale, efficiencies, one-stop-shop appeal and other benefits that increase as you develop more services (i.e. payroll, HR, or other business functions)?

Over time we will continue to invest in broadening our product suite both for back-of-house (labor, inventory, etc.) and front-of-house (ordering, reservations, etc.) functionality. We’ll do this through a combination of building enhancements to our own product and partnering with others in the Upserve Marketplace.