Episode 17: Lior Koren - Square

Episode 17: Lior Koren

We are joined by Lior Koren, a product lead at Square. She talks about spending summers in Israel at her grandfather’s falafel shop and how that has changed with the integration of technology. We spend some time talking about why she believes the POS needs to be the center of a restaurant’s technology stack. Her most interesting point comes at the end of the show, where she discusses A/B testing the ability of a customer to order at the table. Some tables were allowed to order from the table with a mobile phone and others were not. Most restaurants were impressed with the results.

Episode transcription 

Jame: Welcome to the show.

Lior: Thanks for having me.

James: You have a degree in engineering and develop products at Square. Can you talk a little bit about your background?

Lior:¬†Yeah, definitely. So I graduated from Georgia Tech and during college, I did an internship in product management. I knew nothing about it. But through that internship, I learned that I have a really deep passion for solving problems, whether it’s in business or for people, and building products that help make a difference in people’s lives. And I think technology and that change that makes is really interesting and exciting. And when I looked at where I wanted to work and what I wanted to work on, I knew that I wanted to work at a company that had a strong mission with Square’s mission of economic empowerment and working in the restaurant industry. I just love everything about restaurants, and I think it’s such an interesting industry where technology has really made a significant impact and will continue to make an impact. So right now, I lead the restaurant product team at Square.

James: When you were in college, what was your background in software programming?

Lior: Yeah, so I actually studied industrial engineering. I had a minor in computer science and my internship was supposed to be in computer science. And when I got there it got switched into product. And so I was kind of learning as I went and I learned that I find it really fascinating to dig into problems, really understand what people are experiencing, dig into different industries and figure out solutions and solve for them in a way that’s really innovative and brings change.

James: Yeah. So where did you end up doing an internship?

Lior: At that internship at Cox Communications. It has nothing in relation to restaurants or anything in the industry, and I worked on their mobile app as they were trying to get into sort of the Netflix type business at the time being at cable company. And so I knew I love products, but I also knew I wanted to work on something that I felt was for me more impactful to a business that I cared about. And the restaurant industry hits home a lot for me. I grew up with my grandpa working in a falafel or owning a falafel shop and spent a lot of time there. And so that to me was really important to work on something that I felt was making a difference in an area that I love.

James: Yeah. Now, how did that work? You would, like, spend some summers with him or you would? I mean, what would you do in the falafel shop?

Lior: Yeah, he owned a falafel shop in a really central place in Israel, and he pretty much poured his heart and soul into running the shop. He would be there from the crack of dawn to late at night, and we would visit Israel every summer for about two months. And, you know, back then they didn’t have any technology in the restaurant. You had to be physically in the restaurant to see what was going on. And he was involved in every parts of the operations. And I remember I would go back and help him serve and learn a little bit about making the food and see his interactions. And I think just the passion that comes in, it was really exciting. And so I would help make like the carrot juice and certain things in the restaurant and helping out.

James: Now, how much has it changed? Has he adopted and added technology over the years?

Lior: Yeah, so they’ve definitely adopted technology. I think it’s changed a lot. And I think the two things that stand out the most. One is that the customer interaction, you know, my grandpa used to know every single person who visited the falafel shop more than one time. He would have a conversation with them. He would know that by name. Eventually they knew their orders. But now, you know, employee turnover is so large you can’t really do that. And so there’s a lot more technology that goes into play of helping them understand who’s visiting, how often they’re visiting. Same with finances. Like I remember, my grandpa would literally walk after work with all of the earnings from that night to the bank to deposit it. And now payments is going over credit cards and debit cards and cash is not as strong as it used to be.

James: Yeah. Now explain the difference kind of getting into, you know, what Square does and POS systems. Can you explain the difference between a traditional POS system and one based in the cloud? And what do you think the benefits of a cloud-based system are?

Lior: Yeah. So to start square point of sale and square restaurants, point of sale, it’s cloud based system. And what that means is that all of the transaction sales history. All the data is really securely stored in the cloud. And to give you an example, a real life example of what that means for a restaurant, it has a lot to do with accessibility. So with the on premise non cloud point of sales, restaurant owners literally need to be on site at the restaurant to understand what’s happening in their business. If they leave at any point in time, they’re totally in the dark. So what’s happening with the cloud based point of sale? Square restaurant owners no longer need to be on premise at their restaurant to keep a pulse on how the restaurant is doing. They can be anywhere and they can view real time centralized data, could be sales data, could be inventory across all of their locations, and that helps them make more informed, real time decisions that are going to ultimately impact their profitability. And bottom line. So things like do I have the right amount of labor at my business and my selling items as I’m expecting? Should I be making changes to my menu? The real time aspect of it is so critical and being able to use a cloud point of sale system, it enables that accessibility and flexibility that didn’t previously exist. I think there’s also a lot more accessibility in terms of the upfront costs that are much lower and the setup is quick and easy. For example, a restaurant can literally grab an iPad, they can download the restaurant point of sale app and they can get started in a day processing. And so if they’re scaling or expanding their business, having that cloud based point of sale and being able to quickly make decisions to scale up to another device or switch out devices or view things remotely is is super critical, and that’s what it offers.

James: Now, most older systems within the restaurant industry are non cloud based systems, right?

Lior: Yeah, that’s right. That’s been traditionally the case. So there’s literally like a server on site. Imagine like all of your data is sitting in this box on site and you can only access it when you’re at the restaurant. Whereas now not only can you access it outside of the restaurant, you can also share that data with other systems. So you can create a broader ecosystem of tools where maybe you’re using inventory with wherever. Maybe you’re using inventory with a partner of ours that’s well integrated. And you’re able to do that because we have a cloud based point of sale system.

James: Yeah. And I assume doing things like online ordering and integrating with third party apps and those sort of things is hard to do with a legacy system, right?

Lior: Yeah, exactly. It’s much easier where all of the APIs are publicly available. And so any company, any partner of ours, any partner that a restaurant wants to work with, whether they want their online ordering to be with square or not with square, they’re able to integrate that in with square. And so everything flows directly through to the point of sale to the kitchen. So all of their operations from front of house to back of house are completely connected.

James: Yeah. Know with the restaurant industry there is a huge variability between quick service restaurants all the way up to formal dining. How does Square approach these problems, you know, with the variability and types of dining?

Lior: Yeah. So I think one of the most important aspects is where that really helps us serve that wide range of restaurants is that we build with an ecosystem approach in mind. And so when we think about ecosystem, we think about all the technology solutions that a restaurant may need and that may be three square or through a partner of square that is offering an augmented solution to ours. So that could be with payroll management, loyalty, marketing, delivery, online ordering. You know, there’s so many different aspects of a restaurant and for Square, it’s ensuring that all of that works together. We make sure that we have some first party solutions, but we cannot serve anyone one and everyone with our first party solution. So we make sure to have and build an extensible platform so that technology partners can easily integrate through us and offer restaurants the flexibility to choose the solution that works best for them. So, you know, there may be a restaurant where 90% of their business or 80% of their business and technology needs are through square. And 20, 30, 40% could be through a partner of Square that’s well integrated, that’s more focused on those more niche needs that exist within each sub type of food and beverage business.

James: Do you help the restaurants integrate that? I mean, I imagine it could get a little bit technically challenging. Like how does that process work when all of your solutions cannot solve the problems for the restaurant?

Lior: Yeah, definitely. So we have teams at Square focused on partnerships with various other technology companies to ensure that we’re building the right integration and the right solution for our customers. So we’ll sit with restaurants, will understand their needs, understand what’s important for them for in terms of information that passes back and forth between us and a partner of ours, let’s say inventory partner, for example. Right. You may need sales information to go to that inventory partner so they know to decrement the right inventory. So we’ll work with our partners to ensure that they’re building the most seamless, best integrations with us to provide that to restaurants. So the restaurants don’t have to understand the intricacies and the ins and outs. They, you know, we mostly learn, okay, what is difficult for you right now, what is fragmented right now in your business. And then we work with our partners to help solve that and build that more integrated ecosystem.

James: Yeah. Now today there are multiple buying channels for restaurants. I mean, there’s online ordering, there’s third party delivery, there’s, you know, in-house. I would assume that you think that the point of sale is really the central hub for all of that activity?

Lior: Yeah, definitely. So, that’s right. I mean, I think meeting diners where they are has become extremely table stakes. And so that could be ordering via mobile device for delivery and pickup or even at the table via mobile device or kiosk or drive-thru. There’s so many channels and so many ways of ordering and the original point of sale stood for a point of service. And that’s mainly because it originated from the initial use case of you have a diner on-premise and you have a server and they’re transacting within the same location on the same device, and that’s no longer the case. So I really think there’s a shift from the point of sale in traditional state to really become that central hub for the restaurant and not one stop shop restaurant management system that is holistic the technology needs. So the way we’re looking at the point of sale and square is really shifting from just that point of service need to the holistic command restaurant management technology that includes all of the various solutions that are restaurant needs to make sure it’s fully integrated. And so if an order comes from an online ordering site or from a kiosk or from the drive thru, it could still appear on the same point of sale center and then the same place in the kitchen and have logic around where it’s routing so that the restaurant has a more seamless operation. They can adopt new channels without hindering their current business.

James: And I know that aside Square, there are multiple different point of sale systems. If a restaurant was looking at changing or upgrading their place, what what recommendations would you give them or what questions should they ask?

Lior: Yeah, I think a big one is making sure that the technology is going to scale with your business. And so what does that mean? It’s hard to anticipate what needs you’re going to have in the future. And so having a technology point of sale company that has a platform that works well with other technologies out there, and that you can build that one stop shop solution that’s not fragmented, that is more integrated, is super critical. And so as restaurants are evaluating a technology company, I think it’s important to not just look at where it is today, but where it’s headed and how flexible and how open the technology is to be able to piece together an ecosystem of solutions that is seamless end to end for the operation.

James: Yeah, and that just involves, I would assume, just asking a lot of questions and really digging deep and not just kind of taking people at face value. Right, but really doing your research.

Lior: Yeah, definitely. And I think even seeing like, you know, what exists today, you can see what square. There’s so many different partners that we work with. And for example, the customer data is centralized, so a restaurant can take an order online, they can take it through a mobile app all the various ways, and they have that one central view of the customer. So when you look at a solution, understanding and seeing that, there’s that one central view of the various pieces of your business that you’re able to holistically see. It, I think is really important as well. So it’s partly looking at what does it offer in terms of the types of extensibility that I may not use today but I might use in the future?

James: Yeah, you know, a lot of like at the table ordering, right is kind of gone away from pen and paper and towards digital ordering. What do you think the benefits are to restaurants, to moving away from pen and paper to more digital ordering at the table?

Lior: Yeah. You know, we talk a lot about the shortage in labor and the restaurant industry and the impact that has on the restaurant and the service they’re able to provide their diners. So I think there’s sort of a two part focus to mobile ordering. One is that it really helps remove that wait time for the diner so they have more autonomy in the way that they’re choosing to order and to pay. But it also creates efficiencies for the restaurant. So it frees up that employee from doing the more manual tasks to focus on more important tasks, such as relationship building with their diners and and so that they create that experience for them. So they want to come back. We’ve seen restaurants, turntables faster with mobile ordering, and that really does hit directly at the bottom line for a restaurant for how quickly they’re able to serve their diners. And so there’s a real bottom line impact by adopting some of these digital ordering solutions.

James: Yeah, my wife and I went to dinner a couple of days ago and they just still had pen and paper and we had to wait. I don’t know, was like ten plus minutes for the waiter to show up. And I mean, I like having service at the table with the waiter, but I do think things like, you know, ordering a drink or paying at the table, you know, really can just make the overall customer experience better.

Lior: Yeah, 100%. I went to dinner last night with my friends. I always look, you know, what point of sale are they using? How are they running their business? And they were using a non cloud based point of sale. And we waited for a really, really long time for the bell. And one of my friends was like, I wish I could just like that QR code they have there where I can see the menu. I wish you could just scan and pay and just leave because we were waiting for like 15 minutes and in that time they could have gotten the whole other table to sit down, a whole other table to order. You know, people are waiting outside as lines out the door in New York and they’re just not able to keep up with the demand. And so I don’t know, for me personally, just as a consumer, I would love to have more of that become more common ground to have that flexibility. Yeah.

James: And the places we were, I mean, you could tell they were understaffed because the waitstaff were busing and clearing tables. And, you know, it’s definitely like you said it does help with the labor issue because that’s just one less thing for waitstaff to worry about.

Lior: Yeah, it’s one of those tasks where actually the diner like I would love to be able to just pay on my own. I don’t need to have that interaction with the server. Whereas for other things like answering certain questions on the meal or hearing about the specials, you know, those kind of interactions or asking how the meal is going are much more impactful ones and they can spend the time on that instead.

James: Yeah. So now overall, I mean, you’re in the restaurant tech business. I mean, it’s a little bit fragmented with a lot of different solutions. Where do overall do you see this industry going over the next, say, 2 to 4 years?

Lior: So it’s really interesting. I think restaurant owners are becoming a lot more savvy and understanding. I know you asked earlier, how do you know what’s integrated, not how it’s integrated. We hear a lot of restaurants say, like, I am looking for a one stop shop solution. I do not want to patch together a bunch of Frankenstein solutions that don’t really work, spend time moving information from one place to another. And so I think the demand is really high from restaurant owners, and that’s going to push where the industry is heading. They’re starting to prioritize and we see it when they talk to Square. They’re looking at our integrated ecosystem and they’re seeing the value, the tools between loyalty to online order delivery all in one place, and the automation and efficiency that introduces and the ability to give that holistic picture of the operations that they didn’t previously have. So I expect that industry is really going to head much, much faster towards a solution that is a lot more integrated, a lot more seamless between all the various operations because restaurant owners are starting to look to that for their own success.

James: Yeah, I mean, I think you’re seeing some of that right, that the larger players in the industry are buying up some of the smaller providers and integrating them. And that way they can be, you know, like you said, like a one-stop shop. Then owners don’t have to piecemeal things together. Also like finally is you know thanks so much for this conversation kind of two ended up one of the last questions I always like to ask guess is if you’re a restaurant owner and you’re looking to start improving your technology and you don’t know where to start, what kind of questions or what kind of things would you start doing?

Lior: I mean, I think the first piece of advice is don’t be afraid to try something new. There’s definitely always an upfront cost, but there’s ways to adopt functionality piece wise, see if it works and then continue expanding. We see that a lot with restaurants using Square. They’ll start using just online ordering with Square. They don’t want to change their on premise point of sale. They like the online ordering and then they start making more and more switches in their business. So it doesn’t have to be all at once. You can take an incremental approach, but I do think leaning back on that company, that will add technology, that will grow with your business, making sure that you ask a lot more information around where they’re heading, what they’re thinking from the business perspective, make sure they understand the business that you’re in as you’re adopting technologies. And I think it’s okay to test to see if it works, trying it out. And there’s a lot of technology companies out there where there’s no contracts. You can start, you can try it out, see if it works. And if it doesn’t, you can try something new. And I think that’s really important is to find technology that’s flexible and offers you the ability to to test and decide if it works for your business.

James: Yeah, I think that’s one of the things that’s so different about the current era. You know, historically, I think restaurant owners got locked into these gigantic contracts for five years or whatever, and now they have the ability to be more flexible and contest a little bit more.

Lior: Yeah, definitely. Like, for example, you know, you can start you can see if mobile ordering works for you. You can even do. We’ve seen restaurants do it. They’ll do have their restaurant has mobile ordering at the table. The other half doesn’t. And they’ve done a lot of experiments to see like what’s working well. Are tips changing? Are we seeing table churn faster? And they test it out and they adopt the ones that work for them. And with mobile ordering, for example, we’ve seen restaurants have really great success.

James: That is interesting of like having half the tables with mobile ordering and not and try that for two or three weeks and see, you know, what’s the feedback from customers? Is it more efficient to run the kitchen? I mean, that’s just a great little example of how testing can really help restaurants improve their operation.

Lior: Yeah, definitely. And I think the simplicity of the technology you’re using is really important. Like, if it’s simple enough to use and understand, you should be able to get up and running quickly and test it out. And I think that’s important as well. And a value in technology is how easy is it to use. How easy is it to get up and running on your own and just try it out?

James: Yeah. Well, thank you so much for joining me today.

Lior: Thank you for having me.