Episode 15: Vishal Agarwal
Vishal Agarwal, founder and CEO at ItsaCheckmate, joins us for the 15th episode. Agarwal started the platform to solve a problem with third-party delivery but the company has expanded to help restaurants integrate online ordering and delivery. He believes that third-party and first-party delivery can exist together and sees technology as a tool to help restaurants.
Episode 15: Vishal Agarwal
James: Vishal, welcome to the show. How are you doing today?
Vishal: I am good. I’m good. Thank you. Glad to be here, James.
James: Yeah. So you were born in India and worked in finance for a while. Maybe introduce yourself and tell people about your background.
Vishal: Absolutely. Yes. I’m born and brought up in India and moved to the US about ten years ago. I did my college graduation, my MBA there, then worked with Citigroup for about four years and then moved to New York in April of 2012. So it’s been exactly ten years working with a retail e-commerce company. I was their chief marketing officer and worked there for about four years and then quit to start Itsacheckmate. And the origins of checkmate was we were developing a mobile app that could pay your check using your phone so you know how you go to restaurants and you have to ask for a check on your credit card. You have to wait for the server to come back. That’s the problem that we were trying to solve. That’s why the name checked mate, if it makes sense. And the URL of checkmate dot com was worth I think what $200,000 at that time. And itsacheckmate was worth $12. So it was a no brainer in which direction we wanted to go. But yeah, that’s a little background about me and it’s a journey. Yeah. [00:02:03][64.3]
James: And so you basically solve the problem of restaurants integrating third party delivery into the post. How did you come up with that being a problem, a real pain point for restaurants?
Vishal: Sure. Very frankly, you know, I stumbled upon it, right. Like I said, the initial product we were developing was a mobile app and I was out trying to sell that to various restaurant operators in New York City. And I wasn’t being able to do a very good job of it. A couple of restaurant operators told me like, hey, you seem like a nice guy. The problem you are solving is not the problem that we have right now. You know, if you come to my front of house, I will show you the clutter of tablets that we have. There is a whole bunch of tablets from Grubhub, DoorDash, Caviar, Postmates, and we have to manage that. Right. Is this a problem that you can solve? I’m not an engineer by profession, but it might be the job I take a very deep interest in engineering and how it bridges to technology and when I saw that problem based on what they’d already done, it seemed I could solve 50% of the problems. So then back to our CTO and I said, Hey, can we do this X, Y, Z? You said, Yes, we can. Can we deliver it in a few days? Yes, we could. And that’s how we started. So we started processing orders in June of 2017. And what we fundamentally do is now, of course, we started off with integrating third party delivery orders like DoorDash, but now we’ve evolved to integrating your digital ordering ecosystem with your restaurants, whether its a POS system or a proprietary system that you built. This is the place where we are sitting in right now. [00:03:45][88.6]
James: So if you order, say, off of a restaurant’s website through an application, an online ordering platform, your software would get it from the website through the POS to back of house. Is that kind of what you do besides the third party?
Vishal: That’s right. So it’s a two-way integration, right? When you go to a restaurant’s website and you order directly from there, that’s also be followed by one of the online ordering solution providers. Now, that application also has to receive the menu from the restaurant. Right, in order for you to be able to place an order. By you, I mean you as a customer. So what we do is we take the menu from the POS system of the restaurant, make it into a fashion that’s customer friendly. We ship out to these platforms, and then when the orders originate from these platforms, we send it back to the POS in the same exact format that the POS understands. Today we have over 40 different POS integrations, about 50 different online ordering partner integrations. So you can understand the myriad of permutations and combinations that may happen. But what this does is, at least when you talked about the back of house, one of the greatest sources of efficiency is now the orders show up on the kitchen printer or the kitchen display system in the same exact format, no matter what channel they came from. That greatly enhances efficiency. Yes. [00:05:05][64.5]
James: Yeah, I know that. That’s a huge. Problem with restaurants to get it from online ordering, whether it’s through third party or first party and still getting it to print off in the printer in the kitchen. That’s a huge problem that you’re solving. So I read that you once said that our company is not built on technology but on customer service. How do you think restaurants really balance technology and still being in the hospitality business.
Vishal: It almost feels like we are pitting one against the other. In my opinion, they are just tools. Like technology is a tool that can help restaurant operators do what they do better. For example, the television is a tool for us to watch news or watch sports. The iPhone is a tool for us to do other things. Similarly, I think just by using technology, it doesn’t mean that the operators will take away from the hospitality aspect. I think they could only enhance it if they use it right. Now. one thing that I’ve heard they often said is the restaurant industry is been behind in adopting technology. Right. And it just makes it seem like the restaurant industry is to blame for this. They’re just laggard adoption, right. But when I started this company in studying the landscape, when I realized was maybe it’s our fault or entrepreneurs or tech people like ourselves who create technology solutions, promises the heaven and the earth to the operators, then don’t deliver. Today we work with hundreds of SMB operators and we know that their finance person is the same as the technology person, and the same as a cook. Right. They work on really, really small margins. And when they get burned once or twice, they become wary of adoption of new technology. And I think that’s where my core principle came in, say we want to build a technology solution to serve the restaurant industry and of course to build a business. And we want to do it at terms where they don’t have to shell out an arm and a leg for it. So can we make this as a month to month contract? Can we give them a free trial? Can we give them no commitment adoption for this technology? If you don’t like it, you can let it go at any time. And I think that’s we’ve straight stayed true to that today. Our business model does reflect that. And I would challenge the other operators out there who talk about you mentioned customer service. Like if your customer service is so good, why do you need to buy customers in two, three year contracts? And I think if we are able to provide this level of support and this level of confidence in our product to the restaurant operators, they would be able to use technology in a way that enhances their hospitality experience.
James: Yeah, I don’t know. Like it’s like a chicken or the egg thing. I think a little bit is like have the technology people not come up with the right solutions or is it that restaurants don’t understand what the right solutions are? You know what I mean? I think that there’s a gap in in the understanding within the industry. But I think that the tech industry doesn’t understand the restaurant industry well enough either.
Vishal: I agree with you. I agree. And that’s why I think trying to sit behind a computer as we are 100% remote company is a bit remote to say what, we didn’t go remote because of COVID. But one thing I try to encourage our team members to do is talk to customers, no matter which department you sit in. I personally try and take at least 1 to 2 customer calls every week, just to understand from them like how we’ll be doing. What else do you need? And I would say 100% of our product development initiatives today is something that’s driven by the restaurant operators, whether it’s a large brand like Five Guys or a small chain like the Westward here in New York, where they ask, hey, can you build this? This is the problem we are facing. So, yes, I agree with you. I’m just biased being on this site saying, I think we need to do more than the restaurant industry. It’s our job to sell to them. Yeah. So we need to do more.
James: I know that within third party delivery statements, reconciliation is a real challenge. I’m thinking about the restaurant in Chicago. I don’t know. I think it was a couple of years ago that shared his third party delivery bill on social media. And it got a lot of play.
Vishal: Yes, I remember that. Yes. Yeah.
James: Talk a little bit about the new product that you guys have on accounting reconciliation. Where did that product come from.
Vishal: I would love to talk about that. And, you know, again, that product came from trying to understand what the customers are facing. But if I may, I’d just like to dive down a little bit on the solution, right. That I clearly remember that, you know, I believe this narrative that we have going on in this industry is really, really hard. It is first party versus third party, third parties is evil, they suck away all of your profits, you should move first party. And I think that’s a really harmful narrative, which obviously the players who are peddling this narrative have something to benefit from it. Right, because they’re peddling that solution that they’re selling. But overall, in this industry, we really need to grow up and become more mature about understanding the truth from the narrative. To me, it’s not first party versus third party. It is first party and third party, both of them working together in an ecosystem to drive the maximum revenue and profit for the restaurant operators. I still very clearly remember that that exact bill, that that statement that you’re mentioning, what a lot of people missed out in that statement is that restaurant chose to do marketing with that particular platform provider. And a big part of that bill was that proactive marketing at that restaurant, how great it chose to engage in. It was not forced upon them. So this platform came to the restaurant and said hey would you like to do marketing? This would be the competition. Yes. That’s why that deal came out. That’s not a normal business. Coming to the point that you mentioned, what’s happening is obviously we take we integrate the system of restaurants and the third party platform. Right. But then another problem that we came across is all of these third party platforms send their own individual statements to the restaurant operators. They are all in different formats and they break down. This is the revenue you did and this is the amount that you’re getting in your bank account. There was a huge reconciliation issue with this particular process because they had to download these reports in all different formats from different platforms. Then they had to look at the revenue that is reported in the POS system because that their system of record. Then they look at the revenue that’s recorded on the third party statements and the actual money that came into their bank account, what our latest product does is it bridges the revenue that’s reported in your POS system to the revenue that’s reported on the third party, to the actual money that shows up in your bank account, because at the end of the day, that’s what matters. And it simplifies the view across every single third party that you use. So you don’t have to guess like what is the actual commission that I’m being here, or what is my marketing spend on this particular platform? That’s what the product solves and again it came from listening to our customers and what they were struggling with.
James: Yeah. Integration with other tech systems has been a key part of your strategy. I think you mentioned 40 POS systems, how you build up those relationships to be able to do that much integration.
Vishal: You know, we are coming up on a five-year anniversary and I think it just took persistence and time. But when we started out, it was a real challenge to integrate with these providers. And, you know, understandably so, because everyone has their own priorities and you have to be able to prove your wort if you say, hey, I need you engineering resources. To us, it was proving out that we were adding value to POS systems we integrating with. It helped them sell their product better. It helped them retain their customers better. And if you ask me, what’s our core expertise? What’s a core strength to do tha we as a company have built it’s we’ve integrated. Every single one of these integrations has been built in-house by our engineers. We have worked directly with these companies to build out these integrations. It’s been difficult, and I think that’s what we are most proud of as a company, is solving these difficult problems, of creating this integration across systems. We’re built sometimes decades apart.
James: I think that that’s one of the problems or the real challenges right now in restaurant tech is integration where people say they’re integrated but they’re not necessarily integrated. How do you think that can change to where more of the different platforms across restaurant tech can start talking together better.
Vishal: You know, the ideal answer is, well, everyone should be open to each other, right? I don’t think that’s practical because the business model that any solution provider has, it may not support a completely open ecosystem. What I do think would help is I think it comes down a lot to the markets driving this more than anything else. So when the restaurant operators are choosing their solution providers, they should look at what is their goal? Are they looking for an open platform that can integrate the best of each little aspect? Or are they looking for one solution that gives them a mediocre level of functionality, but it has everything in one package? My reading of the market is it’s going towards the former where the operators and I’m talking maybe ten locations and above, they’re looking at a system that can give them an openness where they can integrate with various solution providers. And then again, it comes down to the solution providers themselves being able to create a business model where their adoption towards these by these operators becomes easier. You know, you can, you know, on the one hand say we value customer support and on the other hand, have a huge up setup fee and have a long term contract and make it difficult for operators to even try you out. So I think it’s a little bit of both where the operators can drive this and the technology solution providers can make the system a little more open.
James: Yeah, I mean, I definitely think I agree with you. There are several players in the market that seem to be trying to integrate and be all things to all people. But at the same time, yeah, I think you’re right. There might be operators that want to look at more customizing with various solutions. So, you know, you really focus on third party delivery. And I know there’s a lot of conversation about the role of third party delivery within restaurants. How do you think restaurants should approach first party and third party delivery?
Vishal: Right. This is something I covered earlier because it is a topic that’s very close to my heart. I think they should approach this from a perspective that we need to do both, not one or the other. I think it is very naive for a restaurant operator of any size elects, well let’s just exclude Domino’s from this right to say, hey, we want 100% of our customers want to order to us only to order through our channel directly. We do not want them to order to third party. I think that’s not reasonably safe. And third party platforms provide a level of scale at a level of distribution that’s unmatched by 98% of the restaurant operators out there. But again, the question is, you know, third parties take a lot of money and erodes my profit. A very, very simple answer to that is almost all of the operators we work with today increase their prices on the third party platforms. Their menu prices are inflated. We’ve done split tests with some clients and it does not affect their volume. What this means is the customers who ordered delivery and I myself ordered delivery 3 to 4 times a week sitting here in New York City. They are price inelastic. So this whole notion of third parties evil and it takes away all my profit. It just feels such a discussion that’s rooted in 2015 and not in 2022. By making the third party profitable or at least breaking even, you’re getting your word out there and then your loyal customers should have a way for you to them to order with you directly. Then create the first party channel, make sure they have a good experience so that they can continue and coming back and ordering from you. You know, we are going to conferences and we speak with a few operators and they say, you know, everyone tells us third party is bad and we’re looking to go away from it. And it’s scary because that could sink their business, which is why it was such a strong narrative floated in the industry about, hey, operator, stop using third party, only use first party and all your customers we used to order from your party would just suddenly magically appear on your first party. That does not happen. Right.
James: Okay. And just to wrap up, one of the questions I like to ask all my guests is if you’re an operator and you’re looking to be more tech-focused as a restaurant, but a little overwhelmed by all the different options, where would you start or what kind of questions would you start asking?
Vishal: You know, when we were entering this phase, we also thought of like, hey, how do we at least make ourselves open to a trial? Right. So we said, you know what, let’s do free trial. Let’s give them a month to month contract with. Today, we have rolled out with large partners like Arby’s and White Castle. We did an absolutely free proof of concept with that. And we said, you know, if you don’t like our solution, you can rip it out and it won’t cost you anything. So I think when operators are looking for solutions, they should look at, you know, what’s the pricing model? What am I being locked in for? How much confidence does this company have in the product that it’s selling to me? And then, of course, the pricing that comes with it. But one aspect that gets overlooked quite a bit is the customer support side of it. We have an incredible focus on customer support. If you go to our website, the top banner there shows you the customer support number. We were very clear about this that the customer support numbers should not be very deep into the third layer of the homepage. So they should look at the pricing model. They should look at the customer support that’s offered. They should just look at like, hey, does this company care about me? Like I said, I try and do two or three calls a week with customers. And a couple of things that came up is when we work with tech companies, it doesn’t seem like they understand our business or they care about us. That’s one of the things that we’ve tried to put into the ethos of our company is let’s make sure we care. We care about their business. And I think it’s served us well.
James: Yeah, well, thank you so much. I really enjoyed the conversation. I mean, partly because there are certain individuals in the restaurant tech business that are really pushing that third party narrative is bad and it’s good to hear other people say that it’s not black or white.
Vishal: Right. If it was bad, it wouldn’t have grown so much, right? Yeah. Not even considering the fact that third-party delivery literally bailed out the restaurant industry in the time of COVID.
James: Yeah, that’s true.
Vishal: Otherwise, most of these restaurants would not have made it through even keep that aside. I think it’s just a narrative that I have not heard anyone else except for the third party delivery platforms themselves talk about this. Right. And it’s really surprising to me.
James: Yeah. Well, thank you so much for your time today. I enjoyed the conversation.
Vishal: Sounds good, James. Thank you for your time as well. We really enjoyed it.