From the onset of the pandemic to today, restaurants have been facing a wide range of unprecedented challenges, with both consumers’ habits and external circumstances changing the industry landscape month to month, sometimes even week to week. Given the abundance of problems, there has been plenty of opportunity for providers to acquire new partners and release innovative new tools and technologies.
Restaurant commerce platform GoTab, for instance, has grown its suite of digital menu, contactless ordering, payment and kitchen management features. Of course, for a restaurant to survive long enough to take advantage of GoTab’s features, it needs to have financing. As such, the company has partnered with restaurant financier inKind, building inKind’s food and beverage credits into the system. For the financier, the partnership comes from a genuine belief in the efficacy of GoTab’s solutions.
“That’s why the partnership works really well, because we’re actually able to finance more money to a restaurant if they’re using GoTab, because it already has the built-in systems that we need to better market the restaurant,” inKind CEO Johann Moonesinghe said in a recent conversation with PYMNTS. “…GoTab naturally does a lot of the things that are best practice for the restaurants, and so we piggyback on those things.”
For GoTab, the benefit is that the company’s operators get a chance to succeed. As GoTab CEO Tim McLaughlin told PYMNTS in the same interview, “A lot of our operators are really, really savvy … They are not all going to disclose it, but many of them are more profitable now than they’ve ever been … We have smart people who are able to assess risk, and unfortunately everybody looks at restaurants and sees so much risk, but you have to have someone like Johann … who can say that now’s the time to jump in, not pull back.”
How It Works
inKind provides financing in the form of purchasing high-dollar “food and beverage credits,” which the company sells to consumers, who can then redeem those credits gift card-style at the restaurant. As such, the restaurant pays back the financing in food and beverages rather than in traditional repayments.
“Our average credit purchase today is [around] $3 million,” said Moonesinghe. “Pre-pandemic, that was $100,000, so we’re doing it at a huge scale today.”
Before COVID-19, the average food and beverage credit purchase was around $700 (no word on the current average), and inKind adds a 20-30 percent “bonus,” so a $1,000 purchase would get a customer $1,200-$1,300 in restaurant credit, which inKind calls a house account.
For consumers, purchasing these credits gives them a chance to back restaurants that they believe in while enjoying their offerings. McLaughlin weighed in: “One way I think of inKind … is almost like a Kickstarter for restaurants … so it’s a little bit investing, it’s a little bit of, ‘I’d like to have that in my own backyard,’ and then a little bit of a deal.”
Integrating these house accounts into GoTab’s platform, customers get a more seamless experience, while restaurants that choose to take advantage of the partnership can benefit from each company’s solutions.
“It’s such a perfect partnership from our perspective, because [Moonesinghe] gives [restaurants] the fuel to start the fire, and we help make sure that we grow it,” said McLaughlin, with Moonesinghe adding that GoTab “is throwing the wood on” this proverbial fire.
inKind as a Loyalty Platform
While inKind was not designed as a loyalty program in the traditional sense, with rewards and deals offered to frequent customers, it nonetheless ends up driving loyalty. While the credits are something of a deal, customers end up spending significantly more both per purchase and overall than they would have without their house accounts.
“What’s really interesting is, we have set data now … [if] you buy a house account, you actually spend 400 percent more per year at that restaurant,” explained McLaughlin. “You go in 2.5 times as often, and you spend 80 percent more every time you go. The idea is that you’ve already prepaid for it, so you’re not worrying about money when you’re there, so you might get an extra bottle of wine or more cocktails.’”
Moonesinghe added that, given the effectiveness of the system, restaurants consistently come back to work with inKind multiple times, citing a James Beard award-winning restaurant that has worked with the company nine times as an example.
Their system also benefits restaurant servers. After all, house account holders typically receive better service because they are recognized as loyal and high-spending customers, and in exchange, they tip, on average, 28 percent — which in turn leads to even better service down the line, driving even more loyalty. Moonesinghe reflected: “It’s a virtuous cycle that happens.”
Challenges Ahead for Restaurant Operators
McLaughlin and Moonesinghe work closely with their restaurant operators, giving each of them unique insight into the challenges facing restaurants today, though the former’s expertise primarily relates to operations and the latter to finances. Still, they both agree on the key issue facing restaurateurs right now.
“Efficiency is going to be a big problem for a couple of reasons,” said McLaughlin. “One is cost, but also the availability of staff. People stepped out of the industry … So you have high demand, which is wonderful, but that can also result in a bunch of angry guests … because whenever you have high demand and you can’t fulfill the expectation, you end up with quality issues and service problems … and we expect that to continue to ratchet up throughout the summer.”
Moonesinghe agrees: “…We have this significant labor problem that we couldn’t solve on a more macro level … And if you can’t hire people, how else do you do it? Either you’re literally leaving money on the table or you have unhappy guests …That’s why the partnership is perfect: We can help them to expand, and then Tim can help them work efficiently.”
As risk-averse landlords look for tried-and-true models, Moonesinghe predicts an industry-wide “shift from the chef-driven concept to the operator-driven concept.”
“They’re really going to look at people who know how to operate their businesses,” said Moonesinghe. “And naturally, those operators are more inclined to go toward more sophisticated, next-generation restaurant systems, and I think that’s what we’re seeing today … It’ll be a fun few years, I think.”
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