Tech

Square Sees Traction for Its Full-Service Restaurant Payment Service

Payments company Square made a splash earlier this year when it moved into the full-service space with its Square for Restaurants point of sale (POS) system.

It’s still relatively early days but Square is pretty delighted with the take-up.

“We’ve just been really pleased. We’ve had amazing reaction to Square for Restaurants so far,” Alyssa Henry, Square’s seller lead, said at Skift Restaurants Forum on Monday.

According to Henry, 60 percent of restaurants on-boarded themselves, and a lot of those taking up the service are also choosing to use other products within the Square family, such as Payroll and Capital.

“We see the whole solution really coming together and the restaurants fully appreciating that cohesive solution,” Henry said.

Tech companies like Square let restaurants concentrate on the customer service side of the business. Henry said this wasn’t just happening at back of house but at front of house as well.

For Henry, this represents a total revolution with restaurants now operating on an omni-channel model “interacting via online marketplace or via websites, sometimes dining with you, [with] payments and ordering goes into background.”

Henry gave a good example of an enterprise that has gotten a lot out of the Square suite of products.

Wigle Whiskey, based in Pittsburgh, started life as started as craft whiskey company before moving into farmers’ markets. It has opened a bricks-and-mortar concept, followed by a tasting room, and bottle shop, cider house, and eventually a full-service restaurant and bar — helped along by Square.

Read More Recaps and Interview Transcripts From Skift Restaurants Forum

[Updated with full transcript]

Full Transcript of Discussion With Alyssa Henry

Skift Table: So it’s hip to be skeptical. And many of us were skeptical when Square debuted in 2009. Could this point of sale startup truly take on the giants of the payments industry?

Fast forward to today and now the company has a lot of momentum behind it, especially with restaurants. It’s hip to be Square, and that’s why we’re delighted to have one of the leaders of the company, Alyssa Henry, speaking with us today.

So, Alyssa, when you think about Square and the full suite of services, what is it about it that has given it such appeal to so many different types of restaurants? From counter service cafes all the way up to high end sit down restaurants.

Alyssa Henry: Well, I think with Square we really focus on a couple of key attributes of everything we do with our software and hardware. We focus on making everything fast, self-serve, cohesive, and elegant.

And it turns out that those four characteristics play well in a broad range of environments. We have to think about them differently in the different environments, but those are kind of universal.

I’ve not ever met a restaurant that wants their solutions or that wants their work flow to be slower. Right? You know, whether you’re a quick serve or you’re full serve, you really moving and that time to turn either the line or the tables really matter.

Staff turns over, and so you want your software that’s intuitive and simple and easy to use so that your training costs go down. So I think those things apply across the full range of the industry.

Skift Table: That makes sense. So in May, Square for Restaurants debuted. What’s the reception been like?

Henry: We’ve just been really pleased. We’ve had amazing reception to Square for Restaurants so far. Many folks going well finally, we were waiting for you to really address the full needs for full service.

We’ve seen actually 60% of restaurants, full-service restaurants, self onboard and self serve getting started. Which is phenomenal, because usually you have to spend a whole lot of time waiting for a technician to set you up. So that’s promising.

And these aren’t necessarily small restaurants, as well. On average, the Square for Restaurants seller’s doing about $650,000 in annualized GPV [gross payment volume]. And we see that’s increasing.

And so far we have hundreds of restaurants going and it’s really just taking off.

Skift Table: Nice. Okay. Well, let’s build a little bit on that. So there’s a lot of … when you have the full suite, you debuted also Caviar. You have payroll, you have capital, you added up SDKs [software development kit] with custom points of sale. You’ve built out a real full suite of services for restaurants now.

What does a typical restaurant that really can make the most of the full suite?

Henry: We do see restaurants really appreciating a full suite of integrated solutions. On average, Square for Restaurants customers use more than three different products from Square.

We see ones that resonate particularly well being both payroll and capital. So payroll, our payroll solution, is really focused on hourly employees. Which is actually unusual, because most of the payroll solutions out there today start with full-time employees on salary, rather than hourly.

So the model there we’re seeing a lot of pickup on. And then likewise capital, so money to help grow the business.

[With] restaurants we see some that start with, say, a food truck, and then it’s going well and they take capital and they expand into a full-service restaurant. We had one customer in his restaurant was actually wiped out by a hurricane. He’d been using a different solution.

And to get up and going, he bought a food truck and was serving out of his parking lot. And then used Square capital and the loans that he got as a result of the volume he was doing on Square to turn around, pay off the loan, and get his business back on the feet and the full-service restaurant reopened.

We see the whole solution really coming together and the restaurants really appreciating that cohesive, integrated solution so that we integrate it. They don’t have to.

Skift Table: Cool. Sounds like there’s obviously a lot of success stories. We’ve talked with some customers who have used Square and they sort of push back a little bit that sometimes they don’t feel like they have enough resources to figure out how to make the most of the full suite, that maybe they have to lean on the sales rep from Square, or they have to forego some of the opportunities.

Do you feel like there’s sometimes a gap that you have to fill, at all, in order to help restaurants take full advantage?

Henry: So I think there’s … People are different and restaurants are different. And so as I said, we see many that self onboard and get going and are successful on their own. But we also know that there are some that have questions or just want to know that there’s somebody to kind of hold their hand through this.

And so we offer 24×7 support, as well as professional services that will come on site. And actually you can hire and we’ll set up the solution for you.

So we offer the range of services and solutions in there to kind of meet all of those restaurants where they are, and give them the level of service, or self-service, that they want.

Skift Table: Cool. Earlier today we heard from Stan from Grub Hub and we heard from Ben from E Res and they talk a bit about the future of the in restaurant stack. So what’s your vision, as you see the different pieces falling into play for restaurants?

Henry: Well, it’s an exciting time. I do think that technology is becoming more and more a part of restaurant operations. Not just the back of house, but front of house experience as well, depending on the concept that you have, seeing it manifest in different ways.

I think the whole omnichannel play that really started, I would say, more heavily on the retail side, is now really kind of fully hitting the restaurant space. Where you see your diner maybe interacting with you, they may be ordering via an online marketplace like a Grubhub or a Caviar, or even from your own website, for in store pickup.

They may be dining with you, you have a sit down. We’re starting with EMV [a standard for chip-based card transactions], I suspect we’re going to start to see more of the table side payments and table side ordering starting to make its way over to the U.S. in ways that had been in Europe and other countries for longer.

So I think there’s a lot of shifts happening there that technology’s enabling. And it’s enabling it in such a way that the payments and the ordering starts to go further into the background, so that you can really focus on your guest experience and the hospitality. And not the nuts and bolts of ordering and taking a payment.

Skift Table: One of the trends at Skif Table has been tracking is that cashless is a way a lot of restaurants are moving. What’s your take on that trend?

Henry: Obviously we see it and believe that it’s an important trend. I think there’s a couple of things that are underlying it. One, there are more and more of us want to use digital payments or credit card payments, just because it’s convenient.

But two, I think what many sellers are starting to see is that there’s a lot of hidden costs to taking cash. Things that you may not think about, where you’re having to make sure that you have the right change, you’re going to the bank. Even closing out the drawers and all of that.

We had one customer that went cashless with us and they said that they had a full-time person that they were employing for their operation, they had multiple locations, but effectively just to manage cash.

Skift Table: Wow.

Henry: And when they went cashless with Square, they were able to redeploy that person on other, higher-value opportunities for them. Yeah.

Skift Table: Totally. So Square has an opportunity for providing business intelligence to restaurants. So how do you see that vision coming together?

Henry: Yeah. Data is more and more important to run efficient operations, regardless of the business that you’re in. Data from understanding who your customers are and who is in your store, particularly … well, for quick-serve restaurants have very struggled with this. Full serves have done a little bit better via reservation systems.

But customer data is sparse. One of the things that we hear from customers using Square is the amount of customer insight and data that they get goes up meaningfully.

But then, you know, all the other things in terms of what are you selling, when are you selling it, all the BI tools. Square has a very rich set of analytics that are easily accessible via the Square dashboard, or via APIs if you want to export the data into other systems for analytics, that can really help you figure out how to optimize your customer experience, your employee experience, and things like food cost.

Because it is an important area.

Skift Table: I’d like to build on that a bit. Let’s say I’m addicted to the chocolate chip cookies at the Best Friends Bakery on Fifth Avenue. I’m not actually addicted, I can quit at any time.

But if I were, would Square be able to tell Best Friends, assuming that they use Square, that I’m their number one cookie buyer for the month?

Henry: Yeah. So if they use Square, and if you weren’t paying with cash, the seller would be able to see your name and your transactions. If then you also enrolled in, say, a loyalty program or for digital receipts, where you have contact information, and enrolled within that store, then the cookie shop would also be able to contact you and engage with you through that program.

So we do find that sellers are very appreciative of understanding not only what items are selling the most, but also who their top customers are. So that they can provide a richer experience for their customers.

Skift Table: So I’m interested in what data that you share. So would you sell me out via third party to my health insurer, to my employer, that I’m this crazy cookie buying nut or?

Henry: No.

Skift Table: Oh, okay.

Henry: So yeah. We have a set of customer data principles that are kind of well defined and we hold to. Because customer data is obviously an important part of every business, but it’s also, as a consumer, we want to make sure that our data isn’t kind of getting abused or used in ways that you wouldn’t think it would.

For customer data in the store, of the seller, that’s their data. They have access to it if they want to use it. But other merchants wouldn’t have access to like the buying history of you in a different seller, nor would we sell that to a third party.

Skift Table: Okay. So I have a bit of a beef with Square, and we talked about this before I went on stage. Which is that I went to a merchant, the merchant asked me if I wanted to get an invoice, I said yes by email. I didn’t realize in that transaction that Square was going to be sending me messages on behalf of a variety of merchants, for the rest of my life.

So why is it that you do that?

Alyssa Henry, the Seller Lead at Square, speaking at Skift Restaurants Forum in New York City on September 24, 2018. Skift Table / Dan Loh

Henry: So we actually hear there’s a lot of convenience for both buyers and sellers to sign up and associate your email, and then you can get the digital receipt where you shop. But we also know that there are some buyers that are not interested in that.

And so there’s opt out. Every time you get an email receipt or an invoice, there’s the ability to opt out and say please don’t send me any more information.

Skift Table: And you had talked about business intelligence before. So if I give Best Friends information about what I’m buying, all the customers do, are they going to be tempted to just do the greatest hits with all the number crunching?

Is Square causing the future to be nothing but a bunch of kale bowls?

Henry: I do love a good kale bowl. So obviously we want to data empower restaurants. Although we think that by having better data and actually more streamlined operations through technology, it allows a restaurateur to not spend time on those aspects and a bunch of the back-end muck. And instead really focus on both the hospitality and the creative experience.

Because we think that’s where, really, the differentiator is. And if you can get rid of a lot of the operations and automate them, that aren’t differentiating, that everyone’s doing and having to do independently, then we see and believe that it actually spurs more creativity because you can spend time on that.

Skift Table: Okay, that makes sense. You came over from Amazon Web Services, 2014 to Square. You led up a lot of product development as head of engineering. Are there any anecdotes of things that went wrong in product development? Or things that went awry?

Henry: Well, there’s all sorts of ways things can go awry. I think some of the lessons learned … I’ll talk to a couple of the lessons learned as we were building Square for Restaurants, the product really geared mostly for just full-service restaurants.

Couple of things. One is actually the digital receipt that was printing out in full service restaurants, it was like a mile long and it was showing all the modifiers and variations of the ways that people wanted to change the ordering of their dish. In QSR land, that made sense because oftentimes there’s actually different fees or the various things with that.

But it didn’t in the full service world. And so we actually had to go change how we were presenting both the digital receipt, or the paper receipt, in the full-service restaurant so you didn’t get a thing falling out your folio of a hundred lines. As well as kitchen tickets, to really optimize them for full-service restaurants.

Skift Table: Cool. Well, you guys originally had done obviously the famous Square register with hardware, and then you got into software. But a lot of that was first party. And under your leadership you’ve moved a lot more into interacting with the world, being a platform. What’s that been like as a transition for the company?

Henry: Yeah. So we absolutely have transitioned from kind of the little white reader and a single app into a broader ecosystem built on an open platform. We really believe that open platform, with both first and third party offerings and ability to integrate into all of the back house systems that customers may have, is the winning strategy and is the right thing to do for customers.

Internally, though, that was a big shift. It was definitely some cultural changes to get the team okay with yeah, we’re going to let other people integrate with our hardware and software. And so if you want your point of sale to win, it has to be better than the other points of sales out there because we’re going to let them use our hardware and payments as well too.

So we believe that competition and then the open platform is the best thing for sellers. And as a result, it will make us a more attractive partner.

Skift Table: And has it? I mean has it been a differentiator for you to be able to have the third party integrations? And in August you added with the SDKs.

Henry: Yeah. It absolutely has been. There really isn’t another solution out there like that, where you have great first party hardware, great first party software, but then great third party integrations on both the hardware and software side.

So we really allow people to pick and choose. It’s interesting when we go, our sales teams goes calling on larger restaurants today, what they come back and tell me is that restaurants love our hardware and software. The part that really sells the customers is the fact that it is this open platform and we do have a set of APIs.

And so you can go and build, if you want to build a first party order ahead app that really highlights your brand, or a first party kiosk, you can do that with Square.

Skift Table: So obviously Square is something that works for so many restaurants of all different types and for a variety of merchants. But is there like a sweet spot customer that’s really great at getting the full suite and then you see is having a lot of rapid adoption now that you’ve rolled out all these new tools?

Henry: So I mean there really are a range of customers, like I said. There’s a customer called Wiggle Whiskey, out of actually Philadelphia I believe. And they started with, as a craft whiskey brewing company. They then were selling at farmers markets and they were using Square at farmers markets.

Then they opened their first brick and mortar concept, and they were using Square point of sale there for their tasting room and bottle shop. Then they opened a new concept, which was a cider house, using Square there.

But then they opened a full-service restaurant and bar within these concepts. They brought in Touch Bistro, one of our partners, and using them for the restaurant’s point of sale. This was prior to us having one, but we think Touch Bistro’s a great offering as well too and good partner.

And then a third-party integration, it was like Vino Shipping I think, for distributing and selling wines and spirits across state lines. So a good example of a full ecosystem of using multiple Square products, multiple partner integrations, and really growing from a pretty small concept up into a much larger concept.

Skift Table: That’s a fantastic example. Well, let’s go to some audience questions please. So how do you see Stripe’s approach tapping into the point of sale market with its new terminal product, going directly after Square? This is sort of a competitive question.

Henry: Sure. Well, we think imitation is the sincerest form of flattery. I think there’s a clear demand from customers of really in all industries to have an integrated view and an integrated offering, from online to offline, and being able to meet their buyers wherever they are.

So it’s not surprising that companies that started in the offline space, as we did, are doing more and more online. And companies that started in the online space are doing the alternative.

Again, we think we are unique in that we’re really the first. We’re the only one that has sort of the beautiful, elegant, low-cost hardware. I think that is a real differentiator for us versus really everyone else out there.

And then have this growing suite of tools that help work across offline and online.

Skift Table: Cool. There’s a question. Restaurant tech sometimes feels like the support teams for the vendors never worked in restaurants, clubs, and don’t understand the nuance and urgency. How do you combat that?

Henry: It is a unique experience being in restaurants and the middle of service and stuff’s going on. And so we combat that a couple of different ways.

The tech team spent a lot of time meeting with customers and sellers and being in there and being down in the basement, in the kitchen, watching how service is going, watching how the technology’s getting used. I’ve spent time in a lot of New York restaurants with the team here over the last year or so.

We also, on both kind of the sales and support side, are hiring for people that have industry background that are then supporting this product. Because it really does pay to know and understand the industry.

Skift Table: Awesome. Well, Alyssa, thank you so much for joining us for Skift Restaurants Forum. We really appreciate it.

Henry: Great. Thank you, Sean.

Skift Table: Yeah. Thank you.

Read More Recaps and Interview Transcripts From Skift Restaurants Forum

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