On an almost monthly cadence we see software companies in the brick and mortar space broadening their offerings. You could say the trend started with the rollup of Hotschedules by TPG, forcing every other back office provider to offer labor, inventory, reporting, and sometimes accounting.
There is nothing particularly wrong with a land-and-expand strategy, especially considering how expensive it is to acquire brick and mortar merchants due to their unsophsticated nature (ie needlessly long sales cycles driven by an inordinately difficult time making objective decisions based on data).
But when firms claim to be an “all-in-one” solution, how good can that solution be? Is it likely that one provider can offer a number of quality solutions that compete on their own merits… or that they must do things like erect walled gardens to keep better solutions out? TPG’s experiment with HotSchedules would tell us that it’s impossible to build a market-competitive solution in every category, though that certainly hasn’t kept others from trying.
As evidence of these trends, we’re going to examine the efforts of OpenTable and Resy, two reservation systems in the restaurant market that as of late have substantially expanded the “value” they intend to demonstrate to merchants.
Resy has been busy acquiring software companies and integrating their features into their core product (now called ResyFly). Resy CEO Ben Leventhal noted that 75 percent of its product updates over the past six months were directly requested by restaurants – which makes logical sense only when you can trust that the customer knows what they want. But time and time again we’ve observed that restaurants – even the largest chains – cannot be trusted for rational input on product direction.
Resy’s approach is at least one that incorporates best-of-breed, independent thinking through acquisition. But now that these companies are under Resy’s umbrella, will they continue to innovate and update their offerings? Can they be expected to find the same level of entrepreneurial spirit that they had before acquisition? Regardless, Resy is now turning to restauranteurs with a broader set of offerings, including analytics, reputation management, and other tools that are arguably done incredibly well, if not better, by third parties.
OpenTable took a different approach, organically launching GuestCenter.
GuestCenter claims to do three core things, all of which have us a little suspicious. First, this tool allows merchants to “compare current, future, and past performance to month-over-month and year-over-year historical data.” OpenTable never fully integrated to the POS as far as we were aware, so what data are they showing? If they’re only showing the data generated from the reservation system, the merchant could be missing a lot of data. That would make any conclusion drawn from the data incomplete, and prone to causing problems.
Second, OpenTable says the tool can “spot trends, so you can forecast with confidence and make future adjustments to things like staffing, inventory and marketing.” Again, if this is not capturing all the transaction data then this is borderline negligent on OpenTable’s part. It would be like Smith & Wesson selling you a gun marketed as “ready-as-is” only for you to find out you needed to put bullets in the clip. While you’re big-game hunting. 50 meters from a lion.
Lastly, it’s promised that the tool can “clearly see who is referring business and how many guests they are sending your way.” This must be in reference to attributable affiliate links, because how else would OpenTable know that your Aunt Julie referred you to this restaurant 6 months ago, only for you to remember it now? The merchant needs to closely read the fine print to know the limits of attribution; it would be horrible to be sold on an idea that this tool measures all your marketing when it can’t possibly do so.
At any rate, the point of this article is that many brick and mortar software companies are adding non-core features to continue demonstrating progress/value to merchants. It ultimately means that some merchants will undoubtedly suffer as these non-core tools fail to deliver as sold, exacerbating merchant problems by presenting incomplete information. It also means that the bar for entry gets higher, as merchants, unable to truly understand the difference between value and a shiny object, will ask new entrants for at least feature parity, even if the features are never used or tenuous when it comes to proving ROI.
Software is easier and cheaper to make than ever before. But that doesn’t everyone should go crazy with it. Stay in your lane, deliver on your core, or you might feel unexpected repercussions in due time.
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