Restaurant Tech Talk: Setting The Stage For Your Restaurant's Success With Savneet Singh (Ep 156)

 

Great episode with Savneet Singh of PAR Tech about how restaurants can best use technology today. We packed quite a bit into our 20-minute conversation, including:

• What's the biggest hurdle in making tech work better for restaurants. 
• What are the important things that POS systems bring to restaurants today. 
• How restaurants can take better advantage of the data from their POS systems. 
• Key learnings around COVID as it relates to a new emphasis and focus on technology.
• Trends and tips related to 3rd party ordering and delivery. 
• What some of the best practices around loyalty are to drive additional business successfully. 
• Why it's important to understand how the 80/20 rule applies to your restaurant customers. 

 

Lots of good stuff. Check it out!

 

Find out more at https://www.partech.com.

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Restaurant Tech Talk: Setting The Stage For Your Restaurant's Success With Savneet Singh

We've got a great episode featuring Savneet Singh, President and CEO of PAR Tech. Savneet, welcome. How are you?

I'm well. Thanks for having me.

 

The PAR Tech Story

Before we started recording, I asked a quick question about how Partech got started. It was interesting. Let's start there. You're in Central New York. How did it all begin for you?

I think part of the most interesting founding story of any restaurant tech company is that it was founded over 50 years ago, off of a U.S. Air Force base, selling intelligence services to the DoD, nothing to do with restaurants. I think of it as a bunch of PhDs in a room. PAR stands for Pattern Analysis Recognition. I like to joke that it was Palantir before Palantir. By complete luck, one of the founder's mothers owned a licensed McDonald's store in upstate New York. She went to her son and said, "You're smart, and your partner's really smart. You can make a better cash register."

The system we had to run at McDonald's was like writing orders on the back of a bag, basically just a cash register. Kids didn't know how to do math anymore. We were losing money, so we needed a better system. They went to Radio Shack, bought a wood box and some circuits, and invented the first point of sale terminal. It's an amazing entrepreneurial story in that four years after inventing the terminal, McDonald's mandated that every store in the world switch to a PAR terminal. On that news, in 1982, PAR went public on the New York Stock Exchange, and it was a massive success for the next 5 or 10 years.

Most large restaurants adopted PAR. However, over the next 20 to 25 years, PAR stalled and, you could argue, went the wrong way, primarily because it didn't develop the DNA to build and ship software. It got stuck as the hardware guy and the services guy. To rectify that many years later, at the end of 2014, PAR bought Brink, which was an enterprise point of sale product focused on that fast-casual QSR market where PAR had strong DNA from the hardware side. That acquisition exploded under PAR's stewardship. Brink went from being in a few hundred stores to 15,000, 6 or 7 years later, and started to begin this transformation of PAR.

PAR took a big step forward a couple of years ago when new management came in and accelerated that focus on software, with the acquisition of Punch, a large loyalty product in restaurants. Our vision is to create a platform for restaurants to own their future because our view is that while the restaurant technology companies have boomed in the last few years, restaurants haven't. In many ways, restaurant technology companies have won at the expense of the restaurant. 

I think if we were to talk to your readers who actually run and manage restaurants, I don't think many of them would say, "My life's a lot better with all this technology." I don't think they'd say, "It's a lot easier or less stressful." Candidly, some of them might not even be as profitable. Our belief is that technology should be there to serve the customer. We're looking to build a platform so that we can help operators take back control of their success.

 

Technology should be there to serve the customer.

 

Good, that is quite a story, first of all. A lot of stuff there to go back to. One, you mentioned the Punch folks. I had met them years ago. Good folks. I hadn't realized you had acquired them. We'll definitely talk about loyalty here towards the middle part, perhaps. Total gigantic changes have obviously occurred over 50 years, of course. Even in the last, I would say, 5 or 10 years, POS has changed dramatically in restaurants in terms of new entries into the market versus some of the traditional big players. It is very different when you think about what the technology can do for restaurants. How do you see some of those changes? What are the most important things that POS brings?

 

The Evolution Of The POS

I think the major change is foundational. Historically, people thought of the point of sale as just something that processed transactions and worked fast. The speed of the transaction was really important. Having it connected to a couple of systems was important. The point of sale system is the crux of your in-store operations, out-of-store operations, and above-the-store activities. Think about this. A few years ago, there really wasn't any push for mobile. There was no push for online ordering. There was no push for DoorDash. There was no push for any of these things.

All of a sudden, the restaurant has to support them. All of that is run off the point of sale system. You've seen this incredible demand and change in the system, going from just processing transactions to processing those transactions while also helping power Uber Eats, DoorDash, online ordering, mobile ordering, and loyalty programs. By the way, there are going to be ten other software products that I need to add in the next couple of years. Can you help support that, too?

The point of sale system has become foundational, almost like an ERP system, where before, it was just a system of truth. It was the most important system, but now it's required to power so much more. The fundamental change has been how much your point of sale system is connected to all the other products that change your restaurant.

You already mentioned it has technology made it easier for a restaurant operator? In many ways, it has. It's changed the cost structures and so forth. In many ways, it's like you get another email, another phone call. It's like, let me integrate this system into that system, into that. It all sounds great, but all of a sudden, you have ten different systems, and maybe they don't all talk to each other. Is that one of the biggest hurdles you see, making sure they all work together?

Yeah, I'll tell you a funny story. We surveyed our clients less than a year ago, served a dozen or two dozen of our top clients, and asked, "What's your number one or two digital requests? What's the number one thing you wish we were better at or was out there?" I would have no exaggeration when I say that almost every single one, I'm talking like 90% or 95%, maybe all but 1 or 2, said their number 1 or 2 requests was better integration between the point of sale system and the online ordering system or the loyalty system. I laughed and said, "Your dream is to have better integration between existing products, not to reinvent the future, not to have robots or anything like that. It's better integration." That screamed to us that it's not working as well as it should. Otherwise, we would have a lot more expectations from our vendors.

I think about it like the perfect world where maybe you were starting from scratch. A lot of times, that's not the case. People are using systems that they've already had in place. If you started from scratch, you would love a system where you just grab the new client as they walk in, and they get their text and email. It would put them in a database and track what they liked and bought. 

 

Maximizing System Capabilities

You could market to them, and they would come back in, earn points, and be incentivized. It's like all these things that everybody would love to do. Some systems do that. How much are people taking advantage when they have a system like yours or others? I feel like they're only taking advantage of a fraction of what it can do.

The way we can look at it specifically, most people take advantage of the point of sale product because they're pounding on it 24/7 in that store. Where I don't think people are taking advantage of it is all the stuff that comes off of it. Let's talk about loyalty as an example. When you've got a loyalty product, ours is called Punch. You can run offers and campaigns. 

What you really should be doing is thinking about, "I've got all this data on the people who care about my brand more than anybody else. How do I engender them to me? How do I win back that customer from maybe third-party delivery? How do I win back that customer from a competitor? How do I look at all that data and change the way I look at my business? How do I stop saying, ‘I'm going to look at every store and focus on the unit level profitability or AUV per store,’ and instead say, ‘I want to look at AUV per customer cohort, or I want to look at AUV per person?’" I think that's where there's just a lot of inability to use these systems to their fullest. It's not the restaurant's fault.

In fact, I'd argue that part of the reason people aren't getting the most out of systems is that these systems aren't really doing the foundational work that the customer needs. You, as the operator, don't have the freedom to say, "That was an easy day. Let me think about running an amazing campaign or doing some data science on my work." I don't know if we've allowed you to get to that yet. In a foundational sense, I think we're just at the tipping point of what all these systems can do and all the value that they can bring. The systems have to get a little bit better and connect better before we can expect anyone to actually use all of those systems.

I can imagine an overwhelming interface. I get it with some of the tech that I use. You're just like, "Shoot, I know there are features on there, but then I've got to learn how to use them." It spits it out, and I get stuck, and I go back to what works. If tech folks like you can ping-pong back and forth with the customers, asking, "How can we make it easier? How can we make it work? How can we be more effective?" There are efficiencies in there to grab that are just so important. We're still dealing with COVID. We're eighteen months into that. I'm sure you have seen a lot of changes in operations. I'll ask you the question specifically. Have you had to change to do more takeout stuff to make that easier? There's been a lot of learning around that. What has changed on the operation side as it relates to all the regulations that have changed and so forth?

 

Impact Of Technology On Restaurant Operations

It was a new world order for a long period of time. What it did, in our eyes, was bring an incredible amount of focus to technology. I used to say to a lot of people before the pandemic, there were still many restaurant CIOs or restaurant owners who believed, who were in 1999, arguing that nobody's ever going to buy shoes online. We were fighting that uphill battle of convincing them that they needed this. I think what the pandemic did is it made the demand for technology acute. If you didn't have technology, you probably didn't survive or had a really hard time getting through.

 

The pandemic made the demand for technology acute. If you didn't have technology, you probably didn't survive or you had a really hard time getting through.

 

What it allowed was for our conversations to become more relevant. It allowed us to say, "This is the value we've got during the pandemic, and this is where it's going to go." I think what you're seeing as a result of that is this amazing thought that as some of the pandemic impact has subsided, things aren't going back to normal. The demand for delivery, QR codes, curbside and online ordering hasn't fallen off a cliff.

In fact, for many places, it's still growing or at least stable. Once the cat's out of the bag and your customers have tasted what a beautiful digital experience can look like, they keep demanding it. They don't just stop and say, "Great, life's back to normal." We've seen this continued impact of our customers saying, "That was step one. How do I take this forward?" For us, it changed the dynamic with our customers from saying, "Buy this,” to asking, "What should our digital future look like, and how can you help us map out how to get there?" That was the really big push.

In a very specific answer to your question, we saw the same thing everybody else did, a massive push to online ordering, a massive push to mobile, a massive push to loyalty, and a massive push to curbside and QR codes. We're seeing the impacts of the labor side of that. Where I think restaurants have a completely unfair proposition is that they've got to have this incredible in-store experience that you've lived with, grown up with, and provided for years, but they also have to deliver you the Amazon.com experience outside the restaurant. They've got to do fast delivery, on time, friendly, and cost-efficient. That's an unfair proposition for a business that never had to do that before. The only way for them to solve that is going to be through more technology.

I think it's been fascinating to see the changes that have taken place and that are considered normal. You pull up to almost any quick service location, and you can get curbside. They've changed the parking lot to accommodate you. They've changed the apps to accommodate that aspect of it. People are doing it far more frequently. I know we chose not to dine out for about a year, I think, personally. We did lots and lots of takeout at that time and so forth. That was a dramatic change.

Restaurants that didn't do delivery and takeout before, let's say two years ago, thought, "We don't need to. We're so busy inside." They learned, "Shoot, we need to do that." They did so much, I think, to your point, they realized, "We don't want to let that go, that big chunk of money that we've learned how to do and do well." We can fill up our dining room, that's great. Fill up the dining room, but also continue to do that. 

I think there have been some beneficial silver linings as part of the process. There are very few silver linings, but that has been one of them: learning how to do delivery, takeout, and all that better. What are some of the things you've seen in that takeout world, the third-party world change, or really where the trends might go more for that? I know there's sometimes a love-hate relationship between the fees restaurants pay to get involved in those. What do you see in that whole realm?

Certainly, I think it was the drug that got people through the pandemic, but it's the thing that's saying, "How do I make this a long-term part of my business while not giving away all my margin and still building my own native delivery, my own native online presence?" It is a really challenging experience for most customers we talk to.

The way that I think that's going to play out is twofold. One is third-party delivery is not going away. Uber Eats and DoorDash are enormous companies, successful companies with balance sheets that one could only dream of. As a result, they're going to find ways to keep acquiring the customer. They have bigger budgets than restaurant companies do, so they can do their best to own that customer. Point one for me here is that you, as a restaurateur, have to find a way to make that profitable.

You have to find a way to make a margin on that third-party delivery organization. That might involve you using artificial intelligence to figure out the best way to deliver the orders yourselves, or it might involve a delivery tool that figures out how to bid them against each other to make more margin there. Or it might require you to figure out your menu for those organizations or how you run your kitchen for those organizations. You've got to find a way to make it work because I don't think they're going to go away. That's point one. Point two here is you can win back the customer.

You can pull people back to your brand by doing all the stuff that you did in your store but through a mobile and online presence. One of the things that I think is silly in the industry is that most of the online ordering websites, most of the websites of most restaurants, are not actually nearly as connected to their brand and their identity in-store as they are out-of-store. Creating an amazing loyalty experience and an amazing online ordering experience that is unique to your brand is a way for you to win back that trust and win back that work.

I think the average customer gets that. You, the restaurant, actually prefer to have them order with you directly. I think that you're going to see a continued investment in, particularly, loyalty to say, "If you're a loyal customer, you should buy from us directly and then tell your friends to." I think those are the two streams that you have to go on. It starts with the foundational premise, which is it's never going to be 100% one way or the other way.

I think it'd be a curious survey to ask the general user out there if they get the fact that if they use a third-party service, the restaurant might be getting less money. Would you prefer to order directly so the restaurant gets more benefits? I know I try to look for any opportunity to order directly, but it's a curious question. Sometimes, like you said, the Uber folks or DoorDash do such a good job of blanketing the interface that the customer is like, "Whatever, this is easy. I'll just order from these different people." It is not going away, to your point.

I want to come back to loyalty. You've touched on it a couple of times. Let's go there for a few minutes. What are some best practices that you recommend restaurants use in loyalty, whether it's stuff that your system does or stuff you've seen successful elsewhere? I've seen folks do loyalty where, I don't know, I just don't get into it and I don't follow it. There are others where I'm like, "Bang, bang, bang," to get my benefits. What do you think?

I'll speak about a category, but I won't talk about our products. There's no plug here. I'd say you've got to look at loyalty not as discounting. I think people often convert their loyalty programs to these products where you end up discounting, so it offers promotions, as opposed to actually building loyalty and trust. The foundational mistake I think everyone makes is they start sending spam. It's like, "Here's a coupon, here's an offer, here's a promotion," as opposed to using it as a way to build connectivity with that customer.

The biggest mistake, I think, is thinking about it as a tool just to spike volume when you need volume, as opposed to a long-term relationship. I think the ultimate key is converting it from a transactional relationship to one that's truly loyal. The second thing I would say is that most people don't use the data well. You should understand if you're running a campaign that if you put out a campaign every day that says, "Get your coffee at 2:00. It's 50% off," are you actually cannibalizing the coffee that they would have bought already? Figure out what cohorts you should be doing that to.

 

The ultimate key is converting from a transactional relationship to one that's truly loyal.

 

Being able to actually use the data from your loyalty solution to come up with what makes sense for your business is wildly important. There are amazing artificial intelligence tools that the loyalty product should be offering you to help figure that out. In reality, you might get that spike, but you might actually be cannibalizing a ton of revenue. It might not really be worth it for you.

The last thing I would say is that loyalty on its own is one part of the solution, but combining loyalty with payment data, point of sale data, and back-office data, you should be able over time to figure out, "If I run this type of loyalty program, it leads to this type of margin impact for my business, which means this, this, and this for labor, food supplies, and so on." Looking at it holistically is important.

I think that there are lots of specific problems you could go into, but from a macro perspective, it's really about using it, but not just using it to discount food and create spikes in volume. Use it as a tool to actually build trust with the guest. That's often done a lot better by not sending a cheap coupon and cheapening your brand but actually giving them something of value that doesn't cannibalize another transaction for you and makes them feel like they got something special.

I have a question for you, and you can think about it for a second, like segmenting. If you were to make a suggestion for a restaurant, and you could use a fictional example or a real example from a client, what's a potentially good idea to send out a segmented message? Like you said, that wouldn't cannibalize. Maybe it's for users who haven't been in the last 30 days and like a certain item. What are some ways they can really think about it?

A simple one is a "fallen angel" campaign. Go to your users who used to come in all the time. This is the perfect time to do it. You and I were similar; we hadn't been to a restaurant for a year. We fell off a lot of these campaigns and programs. I'm back, and I assume you are, too. You can run a fallen angel campaign and try to win those users back and then actualize what's next. That's a great example.

Another good example is figuring out the why behind the fluctuations in your traffic. If you're in a downtown metropolis and lunch is coming back, that's a community you probably don't actually need to send offers to. That's probably a community where you need to focus on how to balance that traffic. How do I use my loyalty program to convince you to order earlier? How do I use my loyalty program to maybe say, "If you order after this time, I'll give you a deal"?

You can use the loyalty program to help you run your operations better. That's another good example. I see customers starting to put out into the world, saying, "This is a way for me to actually run the restaurant better." If everybody comes in at 12:00 and they have to wait an hour, that destroys my experience. But if I can send offers to my loyalty customers like "Place your order by X time, and you can pick it up by Y time," it helps with timing.

Using loyalty to help you make a more efficient restaurant is another thing that I think people do really well. The last thing, which is well known, is that loyalty programs can be great for certain products to pump revenue. It's also the greatest downfall of these programs, but your ability to have people come in at 3:30 or 4:00 when there's nobody there to buy coffee, to help offset some cost impact and give a high-margin product at a discount, is clearly something you should be doing if it's something your business needs.

 

Effective Use Of Loyalty Programs

One of the things that I was just thinking about is we talked about loyalty, and you talked about who your best customers are. I was like, I know what's back here somewhere, but this book, I don't know if it'll be backwards or not on the camera, is an old book. It's called Hug Your Customers.

This was written by Jack. He is a good friend of mine.

You're kidding.

We go fishing every year.

Tell him his book is awesome. I don't know how you hooked up with that dude, but I think this book is old school because it talks about Taylor and Company in Connecticut for some reason. Anyway, they knew their customers so well. They knew all the 100 customers. Obviously, I think it was even maybe before technology for the most part. You have the technology to know your customers really well. Ask that question.

I know people say, "Who are your best customers?" They'll think, Jim, Sue, and Danny, and then maybe they can name a tenth. Who are your top 100 customers? I don't know. That data, to your point, is probably buried in your system really, really well. When you think about that aspect of it, like hugging the customer and knowing who they are. Any other last tips to think about?

In every business, it's 80/20. What you'll find in restaurants in particular is that those top 10% to 15% of customers are a vast proportion of their sales. You'd be shocked how often I see that in every single organization we work with. Making sure no one ever falls out of that group is crucial. They're constantly falling out. There are always people who move on. Figuring out why they leave those programs is vital because it's a lot easier to retain a once-loyal customer than it is to find the next one. A lot of what people do is focus on getting the next customer. Often, I say, maybe you should be working on retaining your amazing customers because once you lose one of those, it takes ten regular customers to replace one loyal customer. Working to hug those customers is important.

 

It's a lot easier to retain a loyal customer than it is to find the next one.

 

The data is compelling when it talks about retaining versus finding new customers. It's so dramatic, and getting one more repeat customer, one more repeat visit from a customer makes a dramatic difference to your business and so forth. We're going to wrap up. Please send them to your website, social media, or anything you have out there to point them to.

Our website is PARTech.com. You can follow us or me on Twitter. We've done a couple of other interesting conversations, and I would say once or twice a year, we have a public customer event. I encourage everyone to attend because we've done some really interesting stuff that I think you all are doing, and it's a good way to see our products and some of the innovations that we're seeing.

That would be fun. Perfect. This has been great. We actually covered a lot of stuff. I appreciate you spending the time with me here. This is Savneet Singh of Partech. You can find them at PARTech.com. I appreciate you being here. Catch you soon.

Important Links:

• PARTech
• Hug Your Customers
• Twitter – Savneet Singh
• PARTech - Twitter