Questions restaurants should consider before investing in tech

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The number of pitches operators get for new technology products, programs and solutions can be overwhelming. So how should they cut through the inbox clutter to identify potential business boons to invest in? Anand Gala, managing partner of Gala Capital Partners and longtime operator, suggests operators identify the top three problems for their business. “If [the product] doesn’t meet those problems, just hit archive or delete,” he said at the Restaurant Directions conference, hosted by Restaurant Business parent Winsight.

“As an operator, what is most critical is to understand your business and understand where your pain points are,” said Gala. Then, operators can judge the technology by asking the prime question: What issue is it solving?

There are other, softer questions operators should consider when deciding whether to invest in technology, said Rob Wilder, co-founder of ThinkFoodGroup and CEO of WineGame: How will this help me do a better job taking care of guests? Is this going to inspire my team to take better care of guests? “It’s OK to think like an investor, even if you’re just a harried restaurateur,” he said at the conference. “It’s OK to think about it as, ‘If I like this idea so much, would I invest in it?’”

Investing early

There are pros and cons to getting in with tech companies in the startup stage. Advantages include better pricing, more hands-on customer service and fixes to cater to specific business needs. But, “You have to realize the risks when you’re taking a chance on an early-stage company,” Wilder said. And that means understanding that with young, emerging companies, things don’t always go well. There’s no solid customer base, so operators need to ask a lot of questions to understand how stable the business is.

Even with small tech companies, operators should ask the vendor for three companies that have already implemented the technology, Gala said. “I need to know what went right and what went wrong.” It’s also OK to ask about the company’s capital structure, Wilder said. Operators want to make sure, to the best of their ability, that the business will be around two years from now.

As part of the product pitch and fact-finding process, tech companies will bring up potential ROI. Operators should dig into that promise, remaining critical as they examine the technology. “If somebody’s promising you pie-in-the-sky ROI, that’s unrealistic. … If it sounds too good to be true, it is,” Wilder said.

One critical element both Gala and Wilder agree on: Operators need to know who the people are that they are investing with. “How flexible are they in their thinking?” Gala said. And, adds Wilder, “Make sure to meet and know the people who will be there if you need help.” Often, he said, operators only meet with the sales or marketing teams, while an entirely different set of staff will serve as the point of communication once contracts are signed.

Exit strategy

Even if those questions are answered and an operator opts to invest, Gala suggests operators be “very disciplined” when implementing the technology. There will always be problems and issues, so test it in one store, he said. “It’s better to have a problem in one store than all stores.” Gala also said that operators can put a test period into the contract so they can test small before making a big commitment.

“Make sure you have a prenup,” adds Wilder. Operators who invest need to be able to walk away with their data without a long-term commitment. “Data is king,” he said. “Make sure it’s under your control and not someone else’s.”


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