Presto Raises $30M Growth Financing led by Recruit Holdings and Romulus Capital
March 15, 2019

For quite a while now, off-premise sales growth has been getting the majority of the attention for restaurant enterprise management teams. Yet there is a stronger case for investment in FOH innovation vs an exclusive focus on off-premise.

There are only a few levers outside food quality / menu that really move the needle for restaurants to drive EBITDA growth:

  1. Improve dine-in guest service, which drives up Guest Satisfaction / Net Promoter Score, and increases return visits (speed of service / personalization)
  2. Improve off-premise service to drive more delivery
  3. Spend money on marketing to drive guest visits
  4. Cut costs on labor, food or overhead

In most restaurants, off-premise revenue is the fastest growing component of revenue, so a large proportion of bandwidth and effort goes into this. This has become an industry-wide trend, as restaurants battle to improve their delivery efforts. However, this is a siren song that often leads brands down the wrong path.

Optimizing the dine-in experience with technology can also breed EBITDA benefits in unexpected areas:

Labor Cost and Overhead Reduction  

With 35% labor costs and growing, and turnover rates well over 100% a year, there is ample room to improve labor productivity and reduce management overhead.  Technology can help cut 300 basis points or more on costs, and help managers focus on higher value initiatives than constantly hiring and training new staff members.

Improved Marketing ROI by Capturing Guest Identity

Restaurant enterprises spend a significant portion of their revenue (over 10%) on marketing. Yet this is a blunt instrument at best – casting an overly broad net with a cookie-cutter message has a mediocre conversion rate. If restaurants actually captured guest identity and preferences, they could significantly improve the ROI on their marketing spend and drive higher guest traffic.

Driving Average Check Without Sticker Shock

Restaurant companies would love to have higher Per-Person Averages but get concerned that it can be a short term strategy at best, due to sticker shock reducing repeat visits. FOH technology can help drive check average without turning off guests by (1) promoting upsells in unintrusive ways that are value-add to the guest, and (2) also helping guests discover new items they may not have tried before.

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