Nicholas Upton
It’s beginning to feel a lot like 2016 in good ways and bad. Among the good ways is another exciting boom-ish cycle for restaurant technology. Where money is flowing, new tools flourish. Of course, there were plenty of crappy tech tools in the last restaurant-tech explosion, but with some wisdom from that bygone era, operators can avoid the wasted time, money and energy in the next one.
Through the second half of 2024, there was an acceleration in restaurant tech acquisitions. That shows a real appetite for new technology by investors and big firms.
One of the largest moves lately was PAR Technology’s acquisition of Delaget for $132 million. It came on the tail end of another $400 million in acquisitions last year. The deal adds the restaurant analytics company to publicly traded PAR’s data platform, and is part of a “major initiative that unites data across a restaurant’s tech stack,” noted Savneet Singh, PAR Technology’s president and CEO, in a statement.
Globally, you can see more similar movement in digital sales solutions company Deliverect’s acquisition of Tabesto, an ordering kiosk provider. Deliverect CEO Zhong Xu indicated more M&A activity to come as his firm works to expand its coverage into other regions.
The same kind of investment can be seen from American Express, which acquired reservation provider Tock last year for a whopping $400 million. American Express also bought Rooam, a payments services firm that caters to the hospitality space.
Just like the last boom cycle, strategic firms like PAR, Deliverect and American Express are buying smaller tech providers to provide “end-to-end” support or a walled-garden approach to a suite of tools for their customers. That, of course, allows the strategic firms to grab the lion’s share of an operator’s tech budget and everyone can waste less time on custom integrations, programming interfaces and the tedious slog of moving bits and bytes from one tool to another. Not to mention, the strategic firms get to gobble up all that tasty data flowing through restaurant marketing and transactions—yum yum.
Private equity and other investment firms also showed renewed interest in restaurant tech, especially in the latter half of 2024. Investment firm Tiger Global pumped $10 million into Checkmate. A group of firms invested in Dinii, a Tokyo-based restaurant management platform. Another group including L Catterton invested in Restaurant 365.
There are many more deals and many more annoyingly spelled names that I won’t list in detail, but the pocketbooks are opening again since the back half of 2024. The potential for lower interest rates from another 2016-era figure is further spiking activity. Also notable among these transactions, a lot of end-to-end players are getting big investments.
One key driver of M&A and investments is the restaurant rebound. According to point-of-sale provider Toast, 63 percent of restaurants increased profits in 2024. But they still face many challenges, such as cost pressures, staffing and numerous day-to-day difficulties. All, according to the end-to-end players, can be solved with growing suites of tools.
The new hot tools
What will be the hot technology of this round? Two words: artificial intelligence. No matter where you look in the startup world, AI is impossible to avoid.
One novel use comes from convenience stores. An AI-powered camera watches shelves and automatically orders more ice cream when stock gets low. The same kind of smart technology is dipping into the restaurant space and could be another place to make operations more efficient by offloading the arduous task of inventory to the bots.
Then there are AI agents, which are already replacing the mobile apps everyone invested in during the last cycle. Marketing consultancy Gartner predicts mobile app usage will decrease by 25 percent by 2027 as people instead use AI agents to order food, explore menus, make reservations and handle all the other restaurant touchpoints we used to rely on websites and apps to navigate.
Regardless of what the next shiny object is, these boom cycles are not the time to get overly excited.
Don’t get busted with crap tech
As this boom continues booming, operators and brands need to be mindful. The industry saw a lot of cool ideas last time, but many of the day-to-day tools were absolute trash. One thing I love to ask operators is where all their junk tech is buried. It might be a corner of the storage closet or whole rooms filled with once-expensive tablets, QR readers, countertop gizmos and the futuristic point-of-sale terminal that was hurled against the back wall in anger. At least you can delete the terrible software and hopefully forget what a mess it made.
Whatever entices you this cycle, remember the old adage: if it sounds too good to be true, it probably is. Whatever this boom cycle’s “Uber of XYZ” is, treat it with intense suspicion. To avoid getting mired in trash tech with a shiny surface, stick to the program that smart operators have used to vet technology forever.
Start small. Don’t sign those big deals. Every slinger is looking for a big check. You’ve probably heard their rationale before–it’s going to transform your brand. Well, it may transform your brand into a toxic asset feasted upon by private equity turnaround artists. Develop a testing process and stick to it.
Go slow. Even if the new tech is working, keep hammering it. Does it work on a busy day, is it cost effective in a slow market? Does that AI camera get confused when the sun hits it just right?
Scale fast. When that technology is proven, waste absolutely no time rolling it out. If your process proves it out, put it everywhere and the related fees suddenly become a little more manageable.
A final piece of wisdom I heard from a well-regarded technology consultant: use what you have. Especially as common systems acquire more tools to become that end-to-end solution, use it. Most businesses have a lot of tools that do the same or similar things. It might not be the hot new AI agent, but if it works and it’s already on the books, try that first.
Nicholas Upton has reported on retail and restaurant technology for more than a decade. His Tech Stack column aims to distill complex ideas into actionable insights. Send interesting tech topics to [email protected].