Episode 14: Nadav Solomon
The tech problems of a formal dining restaurant are very different from a QSR. Tabit founder and President Nadav Solomon talks about keeping human interaction in hospitality, especially formal dining. He also talks about the need for restaurant tech not to be centered around the point of the transaction but how to improve the dining experience.
Episode 14: Nadav Solomon
James: Welcome to the show today, Nadav.
Nadav: Thank you, James. Pleasure being here.
James: Talk a little bit about your background in hospitality and your early work in restaurant technology.
Nadav: So in my previous life, I ran a restaurant in Israel, was a full-service restaurant with about a capacity of about 200 seats and cover about 300 per day, started as a server, as a dishwasher. And I ran the business as a shift manager. Later on, I joined the Israeli Navy. Then some good seven years over there made it to become a lieutenant commander, a fighter in the Israeli Navy. And it was my last job where I charge of all command and control systems. That’s basically what Tabit is today, just for restaurant and not for military stuff. So I started biotechnology in food engineering. I have a lot of passion for food and creating food innovation for a couple of years for Ernst and Young as a consultant for large enterprise businesses. So I dealt a lot with the business plan and due diligence and actually understood what makes a business profitable and sustainable. In 2014, I decided to establish Tabit and Tabit basically is a place where all of my passions emerge into one great solution and environment, which is hospitality, hospitality, business.
James: Now, what is it about restaurants in hospitality that you like so much?
Nadav: I think it’s the human interaction. You know, even today when you look at our the company vision, we say that we elevate human interaction. That’s what we do. We don’t even mention technology in it. I think that that unique thing about restaurant going to a restaurant or to hotel is to get that experience which you comprised of food and music and people and talking to people. And that’s what’s really fascinating in this in this business.
James: Yeah, I think that’s so true. Even as much as we try and implement technology in hospitality, that in the end we’re still in the people business, right?
Nadav: Exactly. I mean, you can cook at home, you can get delivery, which is fine. But you want to meet friends, you want to hang out and listen to music and talk and laugh. Those restaurant operators, they’re passion is about hosting people and giving them good time. And that’s what is so, so cool in this business.
James: Now, your co-founder started a point of sale company in the grocery space. How did your two backgrounds really help out when you’re building to be.
Nadav: So very, very Barry founded in 1982 and ran it for 28 years. It became the largest POS company in the world. They dealt with grocery and retail. Some of their largest clients were Publix, Whole Food Markets, Tesco, Carrefour, Albertsons, if you count them. So Barry built mission critical solution to grocery stores. That’s a very hectic, very complicated business. And we shared a lot of in common because also in that in that in the Navy, you need to do mission critical and you need to have a sense of urgency. And now when both of us decided to tackle the hospitality business, so we’re bringing a lot of stability, redundancy, resiliency, solutions to this environment.
James: So what problems is it that you try and solve in the restaurant and hospitality business?
Nadav: So restaurant running for years based on basically a system that was never designed for them. Most of the systems out there are either replications or the same user flow of what you have in a retail and grocery stores. So you see the UI, but also the architecture and the design of the database itself is itemized. And in restaurant of world, when you compare it to retail store, there are multiple point of sales, not not a technology. The point of sale, what we call point of sale is that specific point of interaction between staff members and guests, and it’s quite different than retail and grocery stores. In a retail store, you don’t have no one interaction point between staff members and the patrons. What you do have is aisles and, you know, items and shopping lists. And you get to engage in an item through whether it’s your shopping lists or ads on Facebook, on the TV or just items for sale when you walk the aisles, then again you put everything in your cart and 20 minutes later you get to the point of sell, which is not actual point of sale. It’s the cashier, it’s the point of payment. The payment process is a leaner payment process. I deal with James, then with that lady after you and. Etc.. I cannot and I don’t need to modify items because every item has its own barcode, so I just need to scan these barcodes. As a cashier, I cannot obsolete on things you already bought 20 minutes ago in the aisle, right? You already engaged with something 20 minutes ago. I cannot upsell you on something like that. I can offer you some gums and sodas at the cashier, but that is probably. And one last thing. I don’t need to split check between you and these people. Right, because every check is on chip. When you sum it up, everything together, the cashier doesn’t really need to touch the screen. So you have 50, 70 pages, hundreds of buttons in front of the cashier. So they don’t touch the screen, they scan everything, and that’s it. And you and you can go, where in a restaurant on the other side, everything is about human interaction. It’s about the server talking to the guests, offering stuff and experience. And the chef is trying to communicate his vision on food through all his salespeople, which are the servers on the floor, the bartenders. And for years for, I would say 20, 30 years, the technologies stay the same. So of course, some restaurants went mobile and some technology company took the mobile approach. But most of the technology companies there are looking at mobile as a technology, meaning, yeah, now we have terminal Wi-Fi base or RFI based or sort of in a Palm Pilot, you know, 20 years ago so now we can replicate the same point of sale experience, not just the UI, all the architecture and the modeling into a smaller form factor. So look at the poor server instead of having 50-70 pages with multiple buttons, now he has 150 pages that he needs to scroll and navigate between while talking to the customer. It doesn’t work and we see that. We see the adoption rate of mobility solutions out there and we’ve decided to build a Tabit around going mobile. That’s our main, main approach. The focus there is not just about going mobile, it’s about the fact that these days where 2022 technology should work for that server instead of the server working for the technology and a typical point of sale, the server takes order and pen and paper and then it goes and ring it up whether it is on a small mobile device or in a station. So use the system as a system of record. Grab all information for the customers and then there is a point of failure that he has to go and record this information and bring it up to the kitchen. With Tabit it is different. The device itself helps the server to upsell. So instead of having 50, 70, hundreds of pages in Tabit, we have one screen that can holds up to 15,000 items. It’s a very cool and sleek UI experience, but we started with the server, but then again we decided to tackle the command and control solution because if the server is happy and the server is making more money and the ship is running faster and seamless, so as the owner and of course the bar and the kitchen, everything is more relaxed. So our command and control approach to running a restaurant, I think that’s what’s unique about us.
James: Yeah. And I think that with, you know, ordering with tablets and servers, I think some restaurants have gone to completely no servers and you just order on your phone. But I think with your approach, right, you could pay with your phone, but you still have the human interaction with the server, correct?
Nadav: Exactly. James, if you want to run a restaurant and create hospitality experience, you need to use people. That’s the way it is now, of course, that you can give the guest the ability to pay the check just so can have a quicker checkout. The check part is that time, but people already want to leave. They don’t want to be there. The restaurant is losing money and there will always be another party next to the greater station pointing fingers at that table. These ready to be almost ready, right to be seated. And what we want to extract from the experience is put the server, put those hosting team around those critical point where you want to create interaction between people and enable that through technology.
James: Now, when you talk to restaurants, where do you tell them that the role of technology should be in a restaurant operation?
Nadav: I think today people you know, we see that with a lot of restaurants that we are converting from third gen solution cloud solutions, but also legacy solution. I think most of the restauranteur that used to work based on gut feeling about the business, just because they can see the real data in real time from the restaurant. I’m not talking about reporting and I’m not talking about information. Or a spreadsheet. I’m talking about real time insights about things going on in the restaurant. And what we see is the most of decisions made based on gut feeling. Most of them are wrong, right? Because you have gut feeling and you have emotions. And when you run a business, of course, you need to have emotion when you talk to customers, but know what you talk about, you know, items and voids and compensations and how many services do I need to run the floor in order to maintain the right labor costs? These numbers should be based on specific real time data and what we feel the use of technology in the future should be around the use of the real time data of the overall experience, not just a specific point when you talk about inventory or guest management or serving or kitchen stuff, we’re talking about everything in one spot. That one entity talks to the other one through real time data, using a lot of artificial intelligence A.I. solutions to enable the restaurant operators to double its profit. I mean, we have tons of restaurants that started with us, double and even triple the bottom line. Why? Because, you know, the increasing sales, about 15%, 1% moving to our solution but also lower the costs tremendously, whether it’s 80% less in voids, in comps and, you know, kitchen error or ringing or typing error or whatever, it’s working the same floor with 20, 25% less servers that will still use the servers for those, you know, important interaction point. But they don’t need to run the floor with 15 servers where they can run it with 11. 12.
James: Yeah, to be more efficient. How challenging is it to build this type of technology for everything from a small little mom and pop restaurant all the way to large brands? I mean, they have such different problems. How do you approach that?
Nadav: That’s a very good question. It’s I think every company, every tech company should be focused on a specific market. Of course, Tabit as of today, we serve most of our guests on a full service restaurants but some of our customers are Kentucky Fried Chicken. Right. And on the other hand, we have Novikov and Versace and even Sugar Factory, which is a large chain, but it’s a full service, not like Kentucky Fried Chicken. But when you look at it, at the end of the day, I think that the fact that we’ve decided to be payment agnostic and not mandating any payment processing solution on the restaurant put us in a spot where we can deal with a large restaurant, large operators, because mind you, once a restaurant hits the million dollar threshold, million dollars in annual revenue threshold, they will probably get themselves a CPA, CFO, someone who really understands number and that person, his main goal, is to go and negotiate with the vendors, everything from tomato to ketchup to furniture and of course payment processing. And because of the fact that we are payment agnostic, we don’t need to mandate this on the restaurant. And the restaurant can go and pick and choose and work with their banks where they keep most of the money in their revenues, or they can go and shop around between various processors. And that put a lot of focus on what’s the target market for Tabit. So we focus on $1,000,000 and above restaurants, preferably more than one location because we have a lot of chain and group a technology solution. And I think that restaurant operators that want to grow and move from from one location to two or 3, 15 locations should look at the approach where they’re not going to be close and hooked to only one payment solution. And for us, once we decided to go down this path, everything started from the payment part right in the strategy, why we decided to go down this path. We also created because we have to be close to the customers. Like any technology company out there, we created solutions for those large operation locations. So we have all officials, for example, you know, where they have hundreds of sites and great, great business and great brand recognition. So now when you work with these guys, definitely it’s different than working with a small over the counter moms and pops location, which is by the way, probably the mums and pops have great business, but we have to be very accurate. And the last point is the product, the more interaction points there are between guest and staff, the more value we can bring to the table because we weren’t mobile. I mean, so yeah, we can bring a lot of value for over the counter solutions and you know, food trucks and whatever, which is great. But when you look in at the full service arena in the US market, it’s huge. And it’s so sophisticated and complex and. Fortunately, we have the tools to deal with it.
James: Now, I know that the, you know, full service sit down restaurants have really been impacted heavily by the COVID pandemic. How do you think the restaurant industry or where does it kind of sit right now after two years of COVID.
Nadav: The restaurantors became more sophisticated about how to run their business. We see that the strong restaurants became stronger and the weak became weaker. And you see that those people that are minded to numbers and minded to the bottom line and we will survive and we’re able to even acquire other businesses. We have so many groups that thankfully made it very well through the crisis because they were agile enough to include some online ordering component, or they knew how to run this same operation with less labor, and they were focused on the numbers, not on emotions. So I think that that’s what happened in the market. And it’s it’s sort of their realization process where the strong become becoming stronger. And I think that’s what’s going to happen even if even if we’re going to have recession. I don’t see people not going out and eating restaurants. I mean, it became a part of our life. Right. But I do see that the restaurantors will have to be more and more accurate based on real time data.
James: Yeah, I think inflation and kind of the instability of the world right now, bottom line and cutting costs has to be top of mind.
James: So Tabit recently integrated with a hotel property management system, it seems like the lines between hospitality, restaurant, grocery and C stores are getting a little gray. What do you think that means for the restaurant industry right now?
Nadav: Well, recently we just added another solution, but we’ve for about four years integrated two other property management solution, hotel management solution. A property management solution is like the hotel ERP. That’s what they run everything, right, from cleaning to food to inventory and procurement. And for years the F and B business in hotel was sort of most hotel was lost business and not a lot of hotels knew how to run the business into profitability. And what we did in this space, we integrated big companies like Opera by Oracle, which is the largest and the most respectful PMS out there, sustain that which is up and coming solution, great solution, cloud based solution for hotels and so a lot of room out there and optimized more. And the opportunity that we bring to the table through these collaborations is enhancing the guest experience in those critical F and B points. For example, poolside tiki bar. Right. So how long does it take you usually to place an order and get your drink? Where are you next? Sort of pool, James
James: Yeah, probably 5 minutes, I think. I mean, it’s not it’s not quick.
Nadav: Right after you need to get a server and they need to bring it. But imagine a situation where we now we have hundreds of hotels using Tabit where you always have one server, at least one server next to you in the pool area. The only thing they do is they talk to you. They you spend some time with you and the ring up orders and sell, sell, sell and how they sell, they can charge you card, they can pay with Venmo, Apple Pay, QR code, but it can also have the ability to log in to your folio and place a room charge. Of course this is in connection with with those DMS solutions, but from there you can take and instead of ordering your food through the TV, you know, there is a TV morning that, you know, hotel or God forbid in calling them the room service think about is scanning a QR code that you can place everything in real time. It’s not just a dummy menu that’s a real point of sale that’s sorry inventory. Those are what we like to call the rest of our business, the 86, that item that are about to to be limited in stock. And you can order it directly from the restaurant downstairs. The future in this business, this is something we already established in Europe is cross-pollination between hotels that do not have F and B business and restaurants around them in the city and that sort of a concierge business where the hotel guests can walk down the street and have dinner in one of the preferred or recommended restaurants in the area. And the hotel will get a piece of the action because it just forward some customers to their restaurant. The guests will be happy because you got you could place a room charge into his room. And of course, the restaurant will generate business from that. And there is a lot to be done in this business. I feel that’s like the tip of the iceberg connecting these two amazing worlds. There is a gray area with retail staff. I see a lot of restaurants. A great example is Sugar Factory. Sugar Factory in each and every one of their stores. Beautiful, beautiful stores. A great experience they have there. But they also have some, you know, a celebrity zone where they have all the candies and retail stuff. And the unique thing about it is that if you can place some progress on do that, if you can place some, I would say it’s like a Bubba Gump Shrimp Company, right? Where you have some retail items that you can sell to the guests. It’s already the customer is already sitting in a restaurant. Mind you, if you think about it, if the server could upsell you with some souvenirs or candies, right? So you get to upsell stuff, you have better experience. I mean, you already got the customer sitting in a restaurant. He just walked in, so why not, you know, trying to give them a better experience but also spend a little bit more money.
James: Yeah. Or your favorite sauce that your company makes or whatever. But then you can also sell that stuff online too, right. To expand the retail outlet.
Nadav: Exactly. And I know people today through social media, they get engaged with images and pictures of specific food made by this or that chef. And they want to see it also on premise and they want to touch and feel it. And sometimes you see a lot of chefs also creating their, you know, knives or sauces, as you mentioned before, or specific, you know, like gift boxes. But yeah, you can definitely elevate the experience in the on premise sit down restaurants by offering this stuff.
James: Now, if you were going to give recommendations to restaurantors or kind of looking to go down the road of enhancing their technology, like where would you start without being overwhelmed by the whole process?
Nadav: I think the basic is go to the cloud, move to the cloud. It’s about time. I mean, still most of the restaurants, if I recall, the latest National Restaurant Association report still stated most of the restaurants are still not in the cloud. If you want to deal with numbers, if you want to get real time insights, you know, even before you go mobile, which is like the future, first of all, move to the cloud. Create yourself a cloud environment where you work based on data. You’re going to be much more profitable. You’re going to be much more sophisticated. That’s the base. Once you have that, you can build on top of those pillars more and more levels of education.
James: Yeah, I mean, I think you’re you’re talking to you got to build a foundation before you start adding different parts of the tech stack, right.
Nadav: Correct. And the foundation here is definitely cloud, the cloud solution. And then if you are full service, sit down restaurant I really encourage you. I mean, I see the numbers. I encourage you to go mobile today. 97% of our customers are fully mobile. I’m not talking about just paying the check, you know, and know the server is doing A to Z, everything next to the customer, next to the table. Yes, they do have more honor, but they’re also producing more food. So they sell more. Right. But think about what what happened. The server server using Tabit generates about oh say 12, 15% more in pay per person. We look at a table churn time in about ten, 12 minutes and you can run the same form with less servers. So at a top you have more money with more customers at a bottom, less servers multiple by 18%. On average, the servers are making 30, 35% more in tips who using Tabit. So your servers, which is by the way, it’s really hard not to keep servers working for you. The market is crazy, but then you got to I mean, you’re going to get the stickiness just based on mobile. So I really encourage restaurantors going cloud mobile, that’s definitely the future.
James: Well, I’d like to thank you so much for the conversation. I really enjoyed it today.
Nadav: Thank you so much, James, and have a great, great week.