Tech Check is a regular column on restaurant technology by Senior Editor Joe Guszkowski. It's also a newsletter.
More than four years after the pandemic gave rise to roughly a billion restaurant technology startups, the universe of providers is starting to contract. Smaller firms are selling to larger players, which are stacking features and marketing themselves as the only tech partner a restaurant will ever need.
One result of all that consolidation is a tech landscape that is increasingly dominated by generalists—so-called all-in-one platforms with product lists long enough to fill a computer screen.
That is not necessarily a bad thing. Restaurants have complained for years that there is simply too much tech to sift through; consolidation is helping to declutter the market. And for smaller operators, all-in-one systems can be an easy and affordable point of entry.
At the same time, there is real value in the ingenuity and energy of specialists. You’d hate to see them all swallowed up by bigger fish.
“I look at technology as your starting lineup,” said Zack Oates, the founder and CEO of Ovation, a company that helps restaurants gather and respond to customer feedback. (Oates is allowed to make sports analogies because his dad, Bart, played center for the New York Giants and San Francisco 49ers—and won three Super Bowls.) Like a successful football team, Oates said, a restaurant’s tech stack can’t rely on just one star player.
“If you try to have one person playing all those roles, especially when they’re a startup, you will not succeed almost 100% of the time,” he said.
Oates didn't need his dad to teach him that—he learned it first-hand. When Ovation started in 2017, it did much more than just guest feedback. It had tools for marketing, online review management and loyalty programs. It was even filing patents for a receipt scanning system. It also had clients in industries besides hospitality, including lawyers and dentists.
The broad focus spread the company thin and tended to lead it down rabbit holes. “There were just so many things that we were doing,” Oates said.
When the pandemic hit, Ovation decided to scale back. It would focus on one thing for one industry. Today, that narrow/deep approach is perhaps its greatest asset.
“When you partner with someone who is a point solution, you get brain power,” Oates said. “Every day, all day, I am focused, and I am thinking about, ‘How do I improve guest experience?’ And then all of our clients get those updates and get those improvements.”
That is a message that tends to resonate with large chains. Last year, Ovation went head-to-head with an all-in-one provider for a contract with fried chicken brand PDQ. Ovation won, even though it cost more.
“PDQ went with a more expensive solution because they knew that, one, we understand this problem intimately, and two, we were gonna give them a much higher ROI than this other company could,” Oates said.
“Larger brands are more inclined to buy best of breed,” agreed Abhinav Kapur, co-founder and CEO of Bikky, which helps restaurants analyze customer data. “They don’t want someone who is focused on payments or reservations or online ordering to be their data provider—they want a data company to be their data provider.”
Oates used the example of a Swiss army knife. It can be helpful in a pinch, “but is it ever the answer for a specific project?”
At the same time, Kapur said, point solutions need to have a project big enough to justify their existence. When the pandemic shut down dining rooms, it also handed Bikky its raison d'etre: Almost overnight, data became far more meaningful for restaurants.
“The reason I feel like we can build a big, stand-alone company is because the problem we’re going after is big, hasn’t been tackled previously, and the restaurant industry is thinking about it now,” he said.
Though Ovation and Bikky stand alone in the sense that they’re specialists and aren’t owned by someone else, they’re still deeply connected to the rest of the tech ecosystem. (These days, you have to be.) Ovation integrates with more than 50 other tech providers and at one point had a full-time employee devoted to building integrations, Oates said. Bikky, meanwhile, has to play nice with POS and payment platforms by default because they filter much of the data it needs to do its job.
Neither founder appeared to be in a hurry to sell his company. Oates said Ovation has received half a dozen offers in recent years, but “it’s not where we’re at right now.” It would consider going to the right buyer with the right offer, he said, but under the condition that the Ovation team remain intact and “laser-focused” on innovation.
Kapur said he tries not to think about Bikky being acquired, and instead focuses on the product and keeping customers happy. “The score takes care of itself,” he said, referencing the title of a book written by legendary NFL coach Bill Walsh, who was, coincidentally, a contemporary of Oates’ father. “If we focus on that, we do the basics right, the rest will fall into place.”