Tips For Maximizing Profits At Your Restaurant (Ep 167)

Jaime Oikle of RunningRestaurants.com visits with Ben Pryor, Head of Innovation at SpotOn, to discuss their recently released report, "Maximizing Profits." They walk through several screen grabs from the report, talking about the business and opportunities to enhance profits. Lots of good insights. Check out the episode!

Find out more at SpotOn Report: Maximizing Profits and Running Restaurants.

---

Watch the episode here

Listen to the podcast here

Tips For Maximizing Profits At Your Restaurant With Ben Pryor

We've got a great episode for you with Ben Pryor, who is the Head of Innovation at SpotOn. Welcome, Ben. Thanks for joining.

Thanks for having me, Jaime. I appreciate it.

We're going to dig into what you guys put out, which is a great report. It's called Maximizing Profits. Everybody should absolutely download it. We'll talk about it. We're going to go to screenshots for it. It’s a great document. Before we go there, tell us a little bit about what you guys have seen in the marketplace. What about SpotOn? What about your background? What have you got?

Challenges In The Restaurant Industry

I appreciate it. We set out late last year, understanding that, especially with labor and supply chain issues, a lot of larger enterprise restaurants had teams and tools to be able to combat some of those pressures. We primarily service just small business restaurants. We were trying to figure out a way, “How can we democratize those tools and intelligence with restaurants of larger scale down to small business?”

That was really the impetus for this Points of Profit campaign and the calculators that we built because we realized that many restaurateurs that we service don't have the luxury of that level of intelligence. They, in many times, are running their business with QuickBooks online and the spreadsheet. They have done it pretty well for many years and now have the opportunity to lean into some technology, but don't really understand which pieces of tech to lean into and how that could potentially impact their bottom line.

A question for you, we just met five minutes ago, so I didn't realize you have a long operating history as well. You said, most recently, it was a pizza place. Talk about your experience going through COVID as a pizza place, because I think that's one of the sectors that did quite well with all the takeout, delivery, and so forth. Then we'll get into some of the report stuff.

Many years ago, I had experience scaling a chain with Noodles & Company. I grew up in the fast-casual segment during that hyper-growth period. Left and joined a beloved regional chain called Dewey's Pizza here in the Midwest. At that point, I really realized that Dewey's at 25 locations versus Noodles & Company at 400, operated significantly differently especially around some margins, etc. I was really excited to join the company more in an ops role but then moved into this innovation and Head of Technology role that I held for the last few.

I was actually a SpotOn client through their POS system and ended up taking advantage of a lot of the technologies that SpotOn offered. Then realized that many small businesses, even at one or two units, didn't even really have the tools or the knowledge that I'd brought from a larger enterprise brand to a mid-market brand in the Midwest here. I really joined SpotOn to bring that passion to a tech company, to be able to really help out the mom-and-pop restaurants across America.

Talk about SpotOn for a second, because you talked about POS, and there have been a lot of changes in the POS marketplace over the last five years, for sure. It used to be a big player, $50,000 just to get started. All that's gone away or changed for the most part. You guys are in that space. You obviously do more than POS. What are some of the keys? What are some of the important things that you saw as an operator that you guys bring to the market?

Point of sale is only one piece of the equation. The one thing that I really think SpotOn has done a nice job of is creating this ecosystem that's available for small businesses. We also service retail, which you may not know, in addition to restaurants, we have sports and entertainment. We cover a wide variety of small and medium-sized businesses and have a nice ecosystem that a client can pick and choose from.

If I'm a merchant and I just want a really simple point-of-sale system, and I'm running a single cash register at a taco stand, we've got a really inexpensive, really easy-to-use solution for that, that's more a traditional point-of-sale. If you're running more of a full-service restaurant business, a chef-driven restaurant concept, we've got handheld devices. We have some best-in-class reservation software. If you take reservations or wait lists if you don't. We also have an organization called Dolce under our umbrella that's a really complex tip distribution, scheduling, etc.

We've got this cadre of tools that any size business and any type of business can pull from and pick the ones that are right for them. As you know, from traditional POS, that was a huge upfront expense for a restaurant. That dynamic has changed over the last few years. We're in that bucket of more modern POS companies where it's more of a SaaS model. If you want to offset some of the equipment costs upfront, we've got those options as well. It's not a huge barrier to entry to get into some modern cloud technology.

Thank you. I appreciate that. Let's go out to the report and hit a couple of buttons here and get us going. What I think we're going to see right away is the cover of the report. I'm probably going to go to another page that has just some screenshots pulled out because this loads slowly, but talk about where they can find this.

Interactive Profit Calculator

If you just go to SpotOn.com, that is our homepage. You'll see the calculator along with quite a few tools as well. It directs you to what type of business you are on SpotOn.com. While this is built specifically for restaurants and has the ability to scale into full-service restaurants, it can also be used for more of a retail. If you're even just a simple bakery that's selling ready-to-eat foods in more of a retail environment, this can work for you as well.

It's actually a fully interactive calculator, while the white paper you've got pulled up is a great resource for those who, like myself, are more somatic learners who love the restaurant business because we're active. It may be a struggle to sit down and read a huge PDF. There's actually an interactive calculator there on our site at SpotOn.com as well. You can enter your real numbers from your own business. We don't capture that information or sell it or anything. That's just a calculator for you to use personally for your business and put in some estimates of how much you're spending currently on labor, how much you're spending currently on food, how many servers you typically have on a shift, and what your average revenue looks like for a week. You can pick and choose some flexible options like handhelds, which are a great example of that. If you have a patio as an example, and you lean into a couple of handheld devices for your servers, with that calculator, it'll show you that you may be able to operate with one less server on a shift and increase their tips. We found that tip percentages on handheld devices tend to go up about 5% or 6% based on just signing a sheet of paper because of the interactive nature of it. Also, the service can be quite a bit better because the customer sitting out on the patio isn't waiting for a server to come back outside, pick up their credit card, and take it back inside. Swipe it, print a receipt to come back out, and leave free to sign. That interaction can actually help turn tables faster. Many of our clients have seen up to a 20% increase in table turns as well using some of those more flexible mobile devices to use out at tables.

Importance Of Online Presence

That's one of the things that really gets me when it's time to go, and we have three kids, and they're older now, but when they were younger and they wanted to go, and the bill, that extra 5 or 10 minutes, you're like, “Why can't we leave?” I'm like, “We have to actually pay.” That can be frustrating. This report is great, by the way, it is 41 pages. It is a lot. You may not digest it all at one point, but it is a great resource. Definitely go check that out. A couple of things I called out. This one, everybody knows. You have 77% of diners visit a restaurant's website before visiting or ordering from them. I think we know this, but what did you learn about that aspect of it?

Especially during the pandemic, with the proliferation of digital and consumers leaning more into digital interactions with restaurants and less calling the restaurant. We found that, unfortunately, many small businesses are not taking advantage of owning their brand online. They opted into things that they didn't even realize. Maybe their Google page, the Google My Business section, when somebody just searches for that restaurant name, the first three or four results could be Yelp, DoorDash, Grubhub, or something else. All those companies also are looking to take advantage of the SEO intelligence they have that they know a small business doesn't. That first interaction and touchpoint with a restaurant is really important.

We found that most of our small businesses didn't understand that they didn't have to pay any money. They just need to spend a couple of minutes, claim their pages, and own their brand online, because ultimately direct relationship with consumers is the name of the game because everybody wants consumer ownership, consumer data, wants to be able to retarget and market to those customers, and the restaurants don't even realize that's happening behind their back. It's not necessarily nefarious on the part of these other companies. They just are good at it and realize that small businesses probably don't even know that exists. We actually found most of our restaurants rely heavily, with a mom-and-pop restaurant, on Facebook as their “website.” Again, there are some really inexpensive or, even in some cases, free website tools that can pop up a really simple website, at least lead people to their address and phone number at a very minimum.

There are so many directories out there that you pointed to. When you type something in, and really what you want to do is find their restaurant.com because that's where I want to land, and I get bombarded with a lot of other options and you have to go. A lot of them are free like you said, but you just have to go and do it. I pulled out this Google business one because it's probably one of the most important. I'm sure you guys echo that. Any other Google My Business tips you guys would share?

We've actually created a simple tool within our POS ecosystem. If you're a customer of SpotOn, we surface this right on your dashboard where you're going to look at your sales and customer reviews, etc. That comes with our base package. It's not an add-on you have to go get. We want to help small businesses support them in owning their own customers and their brand. This is something that we want to make as easy as possible.

Taking advantage of tools and intelligence can help small business restaurateurs run more efficiently and profitably, even without the luxury of large teams.

Instead of you having to figure out how to log into Google and claim your page, we create that option for you right inside your homepage, your dashboard, that you're in every day as a SpotOn customer. It's not really difficult, especially for a single location. It gets a little more complex if you're a multi-location business. It's the easiest way to drive direct revenue or even, at a minimum, have somebody call the right restaurant. Unfortunately, some companies over the last two or three years have even taken out ads with a different phone number, but a consumer thinks they're calling the restaurant directly and it's actually getting routed through a third party who’s then charging back the restaurant for that lead basically.

This is extremely important for small businesses to understand that it's inexpensive or free most of the time. Understand what the buzz is about your restaurant digitally. Same deal. You don't have to go pay Google, Yelp, Travelocity or any of these companies in order to manage your online reputation. You should be able to do that for free as the business owner.

Understand the digital buzz about your restaurant. Manage your online reputation for free and stay ahead of the competition in the digital age.

Impact Of Customer Reviews

This one I thought was interesting from the report. There's another screenshot, I think somewhere else on the page, it’s something like a big number. At 94%, people are relying on reviews to make their decisions. I would echo that as a consumer. I would agree. This is interesting though, that four-star thing, that's a weird threshold where if I see something below four stars, I’ll be like, “Let's move on to the next thing,” if I'm in a new market and I don't know restaurants. What did you see here?

Again, this is the new digital reputation of a restaurant. There are many ways that a restaurant can affect this. The easiest way is to operate well and run a great business, and it will organically probably land you around that four-star mark. The real difference between high threes or low fours from a star rating is some interaction with that system. An example would be a manager should reply to both positive and negative reviews because it allows the customers to be able to come back in, even after they left a review, and they can edit it. I've seen that quite a bit. That's actually a great story.

The real difference between high threes and low fours from a star rating is some sort of interaction with that system. Managers should reply to both positive and negative reviews, as it allows customers to come back and edit their review.

Similar to the old days when we were in restaurants, you want to go make the guest happy while they're in the dining room, you can buy their meal. As a manager, I could go talk to the guests at the table and then they hopefully turn into a raving fan. This is fast-forward to the 2022 digital version of that. Can I interact digitally with that customer, and maybe get them to come back again? They leave a five-star review. Then that is really my digital reputation that I'm managing as the manager, the owner of that business.

I've seen some success stories with saving customer interaction. There's another stat somewhere that says the X percentage of people will say, “Great job,” but more people will complain. You'll see in reviews, it'll be the negative more so than the positive. It's a great opportunity to capture and save a bad experience. When you do that, and then people see that chain of communication and that it was ultimately resolved, all that can be a very positive experience. You guys do something on the reservation side, and this has been, from day one, knowing it's not the right word because it's both beneficial, but when a four-top hits my reservation platform, the typical thing sometimes is a dollar ahead, it costs $4. You would love to see that go directly to the restaurant and so forth. Of course, the platforms want it to go through them. I don’t know, because I don’t know your platform that well. I think you guys get around that system. How do you handle reservations?

This goes back to our earlier conversation about the merchant and the business owner really owning their own brand. There are other platforms out there that are lead-gen platforms. Resy, OpenTable, a number of these that are really trying to create this funnel of, “We're bringing new customers into you that you would not have normally got on your own as a business owner.” What we're encouraging our restaurant owners to do is if you want to use those platforms, if it's right for you in a specific city, great, but also have a way on your own website, on your Facebook page, etc., to have a link directly into your own digital presence.

What frustrates me is I see somebody that owns their own website and then the links to making a reservation or ordering online go off to third parties. They've already gotten to you and interacted with you personally as a brand, and now you're sending them away to somebody else and paying another company for lead gen that they didn't really generate. With our SpotOn reserve platform, it's a waitlist and reservation platform, and that is completely owned by the business owner. There's no per transaction, per cover fee, per click. That's a really low monthly fee as a SaaS product that you own. You can put it on your website. We have a relationship with Google, so it's embedded in your Google My Business side panel. Somebody clicks Make A Reservation, that goes directly into you as a restaurant, and then it's got the fancy tablet that the host can use to manage and seat tables. It does all those things. It also does a digital waitlist with SMS notifications. If you're not a fine dining restaurant that doesn't take reservations, it's still a platform that you can take advantage of.

Question for you. I think it was The Wall Street Journal. It talked about reservations being off the chart, and I think it was a lot about New York City, pent-up demand, people seeing more so than ever, some platforms doing a lot of the traffic. Anyway, the point was it was hard to get reservations. As an aggregator, have you seen the numbers in that up direction?

Yes. Definitely, pent-up demand. Unfortunately, because we service restaurants from San Francisco to New York, South Dakota, Texas, we're completely nationwide, all 50 states. We service really small towns. We service major metros. There's a huge disparity in some of those communities. We've got a large presence in San Francisco. As an example, a lot of those restaurants using our platform are actually charging a $100 deposit to make a reservation just because they're crediting that back toward the menu price, but it's basically to incentivize somebody for not canceling a couple of hours in advance and them losing that revenue because of that pent-up demand.

Many restaurants we find in Middle America are not doing that at all. Some of those are having supply chain issues and staffing issues to the point that their sales are actually decreasing a little bit because they're just not open as many hours per week. It's this uncomfortable spot. A lot of those Mid-America restaurants also are not leaning into digital channels. They may not have third-party delivery or even first-party delivery where they've got their own drivers in a smaller town. It's really interesting looking at a macro level across every market that we serve.

Leveraging Technology For Efficiency

It's significantly different. I would say generally in larger metro areas and especially on the two coasts because some COVID restrictions were in place a little bit longer than in Middle America. We're seeing a huge boom in a lot of those major metro areas, which is great. With the labor crunch, it's a double-edged sword at this point. Restaurant operators are trying to figure out, “How do I do more with less?” That's really the point of that calculator on our website is maybe you can lean into tech to help supplement some of those people.

Personally, I'm definitely not a replace-people-with-robots kind of person. It's not how I grew up in the industry., but I do believe there's a lot of tech out there that can enable and maximize the people that you already have and let them do the things that are great about hospitality and take away some of the things, AKA walking 700 steps extra every night to go to a POS terminal in the back of the house to run a credit card. Eliminating a couple of those things really improves the quality of life for the team, and therefore, the hospitality service, everything inside the four walls can get significantly better with tech.

I will echo the most uncomfortable feeling for both the customer and the operator. I am sure when you have a bunch of people in line and you have open tables in the restaurant and you can't serve them just because you don't have staff. I know that's the most uncomfortable. The business is sitting there. The cash is sitting there. The wallets are ready to go and you just don't have the people. That's one of the labor challenges that is frustrating for everybody right now.

It's very interesting that you mentioned that $100 deposit to hold a reservation. No-shows are a big deal, and they are a pain in the ass. That's a good way to hold their feet to the fire and so forth. Let's do a couple more of these and we'll start to wrap up. This one obviously is a little bit. This one’s on the advertising side of what you guys do. I like the screenshot. This is the handheld stuff. You already talked about it. I assume this is for payment and order-taking maybe. What's going on here?

It's a handheld mini version of a point-of-sale terminal. The thing I want to stress is this may not be the right device for every single service type. We have found especially bars, nightclubs, and restaurants, as I mentioned, with large dining rooms and patios, this is a game-changer for them. It may not make sense for somebody with ten tables in a really small high-end restaurant. We do business with some well-known celebrity chef restaurant concepts and ultra-high fine dining. They're not huge fans of these devices because it doesn't fit within their vibe, their service model.

As I mentioned, we also deal with food trucks, etc. We've got every type of business along the way and try to create this environment where if this works for you, great. We don't want you to automatically write it off. Some of those high-end restaurants we mentioned actually will use handheld devices in their waiting areas or their little cocktail lounge, or if they have a patio, they'll only use it on the patio and keep it in the server apron so it's not coming out at a table in the dining room.

It really depends on what's right for your service style, but don't be scared. There are potential uses for all of these. They’re Wi-Fi and LTE-enabled, so they will work out on a patio as well. You don't have to spend hundreds of thousands of dollars building this massive IT infrastructure to be able to use some of these devices. They're a real game changer, I think, for a lot of different types of restaurants.

Let's do at least this one more because I find this interesting too. Tips seem to increase via the digital platform. You've already hinted at it, and I find it the same way too. It happened the other day, I don't know what kind of tablet it was, but they flipped the tablet around, and the percentages are there. The math is already done for you on the screen. You can do it. I find I gravitate towards bigger tips when I do this. My daughter, who's just in high school, started helping out at concessions and so forth. Same thing, she says, “You turn the thing around,” and I don't believe it, but they hit tip. If you don't say a thing, they don't do it. If you ask, people will do it. Is that what you find? What do you think?

I think it's removing friction. In general, most diners who have a great experience are really happy to leave a tip. We've made it difficult in many cases over the years for somebody to do that. Especially now without cash, because typically in the old days, it was really easy just to round up and leave a couple of large bills on the table, and there was the tip. Then we moved into more credit cards where, to your point, we're having to try to do the math on the fly in a dark dining room, and it can be a real challenge. Counter service, as well, is interesting. That dynamic definitely is different in larger cities versus smaller cities.

In larger cities, counter-service tipping is fairly common. What you just described where somebody's on the spot, they buy a cup of coffee from a barista, and they want to leave a little bit of a tip. Just hitting a flat percent typically is the easiest because there's this expectation of like, “As a business owner, if I want to have those default tips be 20%, 30%, and 40%, I've got that flexibility if that's right for my business or 5%, 10%, 15%.”

For business owners, allowing flexible default tip percentages can boost overall tips and enhance customer satisfaction.

We even have auto dealerships and car repair shops that use this platform. They're actually asking for tips. It's the Wild West right now, but definitely the reduction of friction and just having it be a single tap, really simple, get in and out within a few seconds, that tends to lead to higher tips. Most people won't hit the custom tip, again, because it's more math and time for them. They're like, “I'm fine with 15%, 20%, 25%, whatever that is.”

They like hitting one button and heading out. Math is hard. That's what they say. These are significant numbers, 19% to 24%, 8.5% to 15%. For your servers, they would appreciate those increases for sure. There's a lot more in the report. There was a whole bunch of stuff that I wanted to get through, but let's leave them wanting more. We're at 25-plus minutes here. Let me jump out here and we'll share some parting thoughts. For folks, you definitely can go to that full report. That's all there plus more, all the stuff we talked about. Dig into it. I think we only got to less than half of the pages and stuff that we called out. There's a lot more there. Any additional parting thoughts, send them to your websites, any social stuff, please let them know.

The URL for the calculator is SpotOn.com/pointsofprofit. That's where the calculator lives. If you want to go directly there on our website or just go to SpotOn.com and then you can find it from the homepage. We are very active on social media. What I didn't mention is we also have a SpotOn enterprise division that we service a lot of professional sports venues. You may see the SpotOn logo at your favorite NFL game this fall. We've got multiple divisions, and that's one, and again, trying to democratize that really high-level enterprise professional sports venue tech and bring it down to small business is a pretty satisfying deal for us. Really excited to be on your show, Jaime. I appreciate it.

We covered a lot. I appreciate you, Ben. Folks, Ben Pryor of SpotOn, make sure to check them out at SpotOn.com. For more great restaurant marketing and service and operations and tech tips, stay tuned to us here at RunningRestaurants.com. We’ll see you next time.

Thanks, Ben.

Thank you, Jaime.