We're now seeing Olo restaurant customers who are processing 100% of their transaction volume through the Olo platform. This includes takeout orders, delivery orders, marketplace orders and even table-side orders that are typically initiated when the guest sits at a table and scans a unique QR code to identify the table where a server or a runner can deliver the food. Olo's ambition has now grown from digital primacy to digital entirety, from 51% digital to 100% digital. We believe that Olo's destiny is to touch every transaction, add value to every transaction and derive revenue from every transaction in the restaurant industry. - Noah Glass, Olo CEO, Q1 2021 earnings
Noah has made it clear that Olo’s mission is to run every transaction in the restaurant industry. Both online and offline. Olo offers online ordering and is rapidly expanding into QR ordering for table orders. Olo integrates with Brink and 100+ other technology ‘partners’ so restaurants can manage digital orders on one enterprise software solution. Today, Olo is good friends with Brink and other ‘partners’. But if Noah does really want to touch every transaction, the end game is likely direct competition with a cloud-POS like Brink.
We recently interviewed an executive who created the first POS on Windows in the 90’s and has over 30 years experience in restaurant technology. Most recently he ran Xenial, one of Brink’s largest cloud-based competitors in QSR and fast casual. After the recent Punchh and Restaurant Magic acquisitions, he believes it’s inevitable that Olo and Brink compete directly:
I think it’s a matter of time until Brink either acquires or develops their own mobile and online ordering solution. I’d be betting my money that that’s true. There doesn't seem to be a good reason that you wouldn't want to do that. Why wouldn't you compete with Olo? I mean, are you going to win every one of your customers? No, but you have time, you have time to convert them all or at least get a look in for that business as contracts come up in the natural course of events, as contracts come up for renewal.
Brink’s advantage is that the POS is the core mission-critical technology for restaurants today. The POS is the ‘transaction record’. The ‘master data set’ that everything in the restaurant is built on. PAR’s CEO see’s little competition to the POS:
"I don't think any external platform is yet challenging the point of sale. In fact, most of these products run through the point of sale. I expect for almost every enterprise restaurant, every transaction is still running through the point of sale. Very little happens outside the point of sale because it is that transaction record, it is that master data set that every brand builds every data model on top of." - Savneet Singh, PAR CEO
The POS is the only solution that integrates both marketing and operations. On the operational side, the POS takes cash, manages inventory, in-store ordering, and even the accounting and payroll for the restaurant. On the marketing side, the CRM and loyalty system run through the POS. This is also why the Punchh acquisition could be pivotal for PAR. Understanding your customer to build personalised marketing strategies is crucial for retention. Punchh is a prime marketing asset that could’ve sat nicely alongside Olo. Instead, it’s a ‘building block’ offered alongside Brink.
Savneet wants to provide the ‘building blocks’ for customers to build their own digital future. Brink forms the foundational POS layer that restaurants can build on with PAR-owned solutions like Punchh or Restaurant Magic or other 3P-integrated products as they wish. However, is there a restaurant today that isn’t offering delivery and online ordering? After the pandemic, all customers are likely asking their POS provider to integrate with Olo to drive online orders. Olo’s despatch product also gives power back to the restaurant from the delivery players. After the last 18 months, Olo is a restaurant’s best friend.
So if online ordering is so strategic, should PAR build or acquire a solution to bundle with Brink? Could PAR even acquire an Olo competitor that customers want? We haven’t seen an integrated rails and despatch module elsewhere. Our executive suggests that Olo is possibly solving the hardest solution in the industry:
Maybe it's more complex to do what Noah's doing, and the rest of that stuff is relatively simple. Why would you need two different solutions? If a customer is sitting at a table with a cellphone and the server is there with a tablet, why aren't they running the same system? I firmly believe that they should be.
Even if Olo’s technology is hard to reproduce, it’s not a POS. It can’t take cash, manage inventory or any other traditional jobs a POS solves for restaurants. The POS is still very sticky. If Noah wants to power all transactions then it needs to become some kind of POS. But what does a modern-day POS look like? Noah already claimed some restaurants are using Olo for 100% of transactions. Maybe Olo is in the prime position to own the digital interface that powers commerce for a modern-day restaurant:
Maybe Olo has to acquire a POS because otherwise, you're not going to be relevant. I read that Noah has talked about providing self-ordering at the table in the restaurant, which makes perfect sense. Then why do you need a POS? He doesn't have some components like cash management, printing, and the kitchen solution, but those are relatively trivial. I think Noah will become 80% of the in-store solution and have to decide, well, should I build a kitchen? Should I build the things I don't have? And PAR’s going to say, should I build the things I don’t have? And maybe they’ll be going head to head.
If delivery and online ordering is a big part of the future, it seems to us that Olo is the most strategic asset globally for restaurants today. Although the POS remains a sticky operating system for large restaurant chains, it remains to be seen what the future restaurant tech stack actually looks like for unified commerce across all channels. It's also worth mentioning that larger enterprise chains have very different demands to small, digital-first indie restaurants. Maybe Brink and Olo can happily coexist? Brink runs enterprises, Olo focuses on smaller chains. Either way, they are bound to step on each other's toes soon enough and it’s probably worth exploring in detail.