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The Impact of Consolidation on IT

The conversation was definitely lively for the third meeting of the Restaurant Leadership & Insights Council. Hosted by Hospitality Technology (HT) and with sponsorship by HotSchedules, council members came together on October 25, 2018 to discuss the impact consolidation and private equity investments have on a restaurant’s ability to innovate and be effective.  

Even with some members that have not experienced first-hand too much in the way of consolidation or acquisitions, overall the operators agreed that often the difficulties outweigh intended or purported benefits.

  1. Diminished Service, Transparency & Support

One member admitted that based on personal experience, the goal of consolidation was to downsize with the purported benefits of bundling services together promises of improving a core product. Unfortunately the result was zero support while going through an audit process and “we couldn’t get the service we needed,” the member reveals. “The problem with bundling was that some of the best, specific features we couldn’t get access to and it was harder to get integrations.”  

Four years post the acquisition of Micros by Oracle, operators are still feeling some pain points of that merging. One operator deemed it “the single most disruptive acquisition in 20+ years.” The council member admitted that it could be great when solutions consolidate because of the basic benefit of having one solution provider rather than three. However, a common pain point voiced by the council is when platforms are then made of many bolt-on solutions, which becomes complicated and can result in cases where “the right hand doesn’t know what the left is doing.”

  1. Diminished Integrations

The conversation got into the hot topic of delivery as one member mentioned the recently completed acquisition of LevelUp by Grubhub. This particular executive, who admitted that they had been using LevelUp, had initially viewed the merger favorably and believed Grubhub had even better coverage. Ultimately, the merged entity resulted in one fewer integration than the brand had previously.   

 

  1. Increased Costs for ala carte IT

Most concerning for another council member is the financial strain of restaurants being charged for services as larger platforms start requiring certain services. “That was never the pricing model,” one executive muses. “Everyone is trying to take applications to a service and charging for services that used to be free and restaurants are getting squeezed.”

Another executive agreed saying, “In a perfect world, a larger vendor would be acquiring the smaller vendor and restaurants would receive honor pricing from the smaller vendor.”

The council reflected that solution providers used to fall into specific verticals with very clear services that they performed. With increased mergers and acquisitions, as companies vie to be “all things to all people,” that is starting to blur. The problem point is when operators are receiving poorer service than they used to receive.

The conversation continued… Stay tuned for a recap of what council members value in vendor partnerships to weather industry consolidation and make a merger successful for all parties involved. Coming in HT’s December issue.

 

Restaurant Leadership & Insight Council Members:

Steve Barrow, Vice President of IT, Murphy Adams Restaurant Group

Austin Brinson, Vice President of Analytics, B.Good

Maryann Byrdak, CIO, Potbelly Sandwiches

Dave Conger, Director of IT, Costa Vida

Tamy Duplantis, Former Vice President of IT, Le Duff America

Anthony Lomelino, Chief Technology Officer, Caliburger

James Park, CEO, Garbanzo Mediterranean

Zerrick Pearson, Vice President of IT, Five Guys Burgers & Fries

Zwayne Sealy, IT Director, Mellow Mushroom

Mark Uffer, Senior Technology Advisor, Burgerfi

David Cantu, Co-Founder & Chief Customer Officer, HotSchedules

Dorothy Creamer, Editor, Hospitality Technology magazine

Mary Hamill, VP of Sales, Engineering, HotSchedules

Abigail Lorden, Vice President/Group Brand Director, Hospitality Technology magazine

 

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