Clover Dining Is A More Robust POS. But It Will Still Struggle to Move Upmarket

Anyone who has ever used, sold, or read Clover articles on this site knows that Clover was very limited. More often than not Clover’s sales success came from eager ISOs overselling Clover’s potential by pointing to the app store as a stop gap, and merchants were left with a piss poor POS experience and a multi-year processing contract to boot.

Payments bros win again.

Yet over the past year First Data has been working to mature its Clover POS product, now called Clover Dining, with a target towards larger restaurants. Why focus on restaurants you ask? Well, because Amazon is throttling retail, and restaurants do a lot of transactions. Restaurant operators are also too dumb/lazy to check their statements monthly. That’s the polite way of saying that payments processors can make way more money targeting restaurants than they can retailers.

We have heard positive whispers about Dining but were super skeptical. That’s when our friends at the Hadfield Group offered to give us some unfiltered feedback.

Paul Hadfield, founder of the Hadfield Group, is a great example of a modern VAR. While he makes most of his money on payments processing as an ISO, he invests a lot of time and money into providing novel solutions of value to his clients. In fairness he has the benefit of not starting with the older VAR model of hocking overpriced hardware, but he’s engineered his business to be a stellar example of what today’s VARs must do to find commercial value in the market.

One of Paul’s first forays into POS was with Upserve, where Paul was Upserve’s top reseller. After several years of Upserve exclusivity Paul decided to give other POS solutions a look. People recommended Clover Dining. Like us, Paul was really skeptical.

People told me I should look at the new version of Clover, but I didn’t think it would properly support restaurants as large as we are accustomed to working with. So, when I saw the product enhancements to Clover Dining I was pretty surprised.

Paul Hadfield, CEO Hadfield Group

Clover Dining has made some impressive upgrades and is very simple to use. Paul commented that he can get users up and running in a half-day since the UI is so intuitive. Features have also come a long, long way from Clover and are obviously tailored to higher end restaurants. “I’ve replaced a lot of Aloha, Micros, PosiTouch, and Toast solutions with Clover Dining and customers have been happy with the feature parity. Right now my average Clover Dining customer does North of $1.5M in AUV per location which is a much larger merchant than I ever expected a Clover solution to support properly,” attests Paul.

Ironically Clover Dining is an app in the Clover app store; the hardware for Clover Dining is all the same Clover hardware merchants are used to, but it’s the software itself that gets an upgrade.

Clover also changed the transparency and collaboration around feature updates and roadmaps, which we can get behind. According to Paul, Clover now has merchant and partner-facing help sites where anyone can search for answers to questions in a very intuitive interface (which sounds a bit like a lightweight Boomtown rip off, sans AI of course). From this interface anyone can request features, and Clover publicly updates which features are in-development, and when they’re expected to be released. A massive 180 from legacy POS companies if we say so.

Support has always been a nagging issue for Clover, which is justifiable given the price point of the solution. Seriously, if you’re getting a low-priced POS how good can you expect support to be? It always cracks us up that merchants demand the world of their POS companies then expect it to all be free. Even enterprise merchants. With this attitude it’s no wonder something like ghost kitchen will run roughshod over the industry. Reminds us of a classic scene from Jurassic Park:

With Clover Dining users get advanced support if they have more than six devices or three locations. “These larger merchants get a totally different support number with tier 2 support direct from First Data.”

If you want to sell Clover Dining you’d get a software and hardware buy rate, much like you do today, and you’d set your own price with the merchant. Unfortunately there’s not much organic SaaS as First Data takes most of the revenues from any app store add-ons: resellers get 3% of the revenue from third party apps and 30% of the revenue if it’s a First Data app. Of course, as we all know, merchants do zero self-discovery and someone has to actively push any solution a merchant might use. First Data’s economic model makes it borderline unworkable for all parties: if you sell a merchant a solution that requires POS data access, First Data gets 30% for providing the API key; if you partner with the First Data channel and they sell the solution to the merchant, First Data still gets 30%, the channel surely earns something (usually 20-30%), and you’ll lose money unless you substantially increase the price of your solution.

Loser, loser, chicken… boozer?

Clover also does very little to proactively help channel partners or sales reps to sell Clover Dining. In this regard the channel is on its own – a polar opposite from what Upserve offered, according to Paul. “Clover Dining was built to be self-installed, but realistically no merchant with more than one terminal will be able to self-install.”

So while Clover Dining appears to be a much better product we think it will fail to move upmarket to the merchants it was intending to serve. Here’s some of our reasoning:

1. Larger merchants will pay for (the right kinds of modern) resellers and First Data has none. First Data instead has ISOs, and finding ISOs like Paul, who are actually VARs, is like finding a unicorn
2. First Data’s partner platform is not robust enough to support real VARs. Without tools and development a good VAR will just leave for a company like Revel who’s investing heavily in channel efforts
3. Larger merchants need solutions that the POS can’t offer (though that’s not stopping POS companies from trying to change the narrative). A 30% cut for First Data, who’s doing none of the work, just greatly inflates the price of a solution and makes owning an open POS alternative much cheaper. Of course merchants won’t realize that until it’s too late but at least we’re trying, right?

Kudos to First Data for recognizing Clover’s limitations, although it comes at the 11th hour. If they’re serious about making Clover Dining a viable competitor, however, they’ve got some work left to do.