Magazine Article | October 2, 2017

VAR Rescue: A Hospitality Insider Shares Where Resellers Go Wrong

Source: Channel Executive Magazine

By Abby Sorensen, Chief Editor

Jon Taffer, host of Spike TV’s “Bar Rescue,” tells VARs how to win more hospitality business.

Jon Taffer has filmed nearly 150 episodes of “Bar Rescue” on Spike TV. Off camera, he’s helped turn around almost 10 times as many hospitality establishments. Taffer isn’t just a reality television personality — the man knows his industry, and he knows where technology providers and technology operators within hospitality are falling short. 

Fortunately for the readers of Channel Executive, Taffer isn’t shy about assigning blame and providing some solutions that can help resellers help their customers. If resellers want to win in this rapidly evolving and challenging vertical, they need to adapt to human behavior, learn how to sell benefits (not hardware features), and get ahead of the technology curve by focusing more on connectivity and real-time solutions.

The most glaring issue Taffer sees when he walks into a bar or restaurant doesn’t exactly make for gripping television drama. The problem with hospitality technology is that the users of that technology aren’t leveraging it to its full potential. Technology has evolved, yes, but the way technology is used hasn’t kept pace. In fact, Taffer thinks up to 90 percent of hospitality establishments are still using POS systems simply as a cash drawer and therefore are leaving valuable business insights on the table. “The amazing thing about every POS system in the world is that even the most primitive have management features and management reports that owners never use,” Taffer says. “So to me, the greatest frustration of technology in the hospitality industry is that it is not used. One thing about the hospitality industry is that operations take over, and we do not sit around with our feet up on our desk.”

Are VARs to blame for customers being too reactive instead of proactively accessing and acting on POS data in real time? There’s the old “lead the horse to water” adage that would seem to let solutions providers off the hook. Taffer doesn’t see it that way. He hypothesizes: “Did they [the VAR] do proper training? Did they set up a suite of management reports, and did they program it so that the manager, the owner, knows that when you close out at the end of the night, you also hit this button that gives you three management reports? My guess is they did not do a custom management report if they were not asked to. My guess is they are not telling them to do hourly labor checks. What they did is sell them a system, but they made it static.”

The solution is to take a consultative approach to show hospitality customers how to manage food, beverage, and labor costs within the POS system. And it’s not enough to configure these reports; solutions providers should ensure this data is actually being used. Whenever possible, these features should be automated. Taffer laments, “I believe the entire industry has failed. We have known for 20 years that managers are not using these things, but the industry did nothing about it. All they did was redesign the reports. They never made them automatic.” He envisions a day when VARs will show hospitality owners how to address labor costs, lag time on orders, or low customer counts from a pop-up on their phones. “Think of all the apps that are responsive, that are proactive, but we as an industry never did that.”

VARs also need to realize that millennials are accelerating the need for solutions to be proactive. Whether it’s a young restaurant owner or a young bartender using a POS system, end users are simply not going to spend any significant amount of time looking at a screen or analyzing data while they are busy with customers. While cloud-based tablet systems might seem to be the solution, Taffer isn’t sold. “Human behaviors tell us something. Millennials look at their phones 260 times a day. They are not looking at their tablets.”

Hardware margins are not trending up. Any VAR reading this who thinks otherwise will likely not be in business a few years from now. Yet Taffer knows solutions providers are still too married to hardware and the mentality that comes with selling hardware. “We have a problem; it is a cancer in the industry,” he says. “Stop selling hardware. Start selling benefits. Teach them how to use it. Show the value.”

Hospitality operators need to see the math, not the bells and whistles of a touch screen, or a cash drawer, or a receipt printer, or a scanner. Here’s how Taffer would approach it:

  • Most bars and restaurants generate 60 to 70 percent of revenue in 16 to 20 hours per week.
  • A slow POS system could cost an establishment
  • 20 to 30 percent of sales in those hours.
  • How much does 20 percent more per drink add up to when you are four customers deep at the bar on a Thursday, Friday, and Saturday night? About $12,000 per weekend.

“Nobody sits down and sells these things. That is selling the benefit. Say, ‘If I pull this system out of here and put in mine, you are up $12,000 in sales.’ Sell them $12,000 of sales, don’t sell them hardware,” Taffer says.

Instead of hardware features, VARs should focus on getting customers hooked on the benefits of POS data. This might mean walking a customer through how to set up a scheduling application within the POS system or showing them the power of an add-on loyalty solution. “Take the feature, get them hooked on it, make it easy for them, and focus on just that. Do not focus on 25 different reports and overwhelm them,” Taffer suggests.

Focusing on benefits shouldn’t end when the ink on a sales contract dries. Instead, VARs need to invest plenty of face time showing customers how to optimize technology. “Every reseller should put together some type of a two or three week follow-up program to make certain the value is perceived. Take on more of a consultancy role,” he says. “Budget for it, and plan for it. Make it part of onboarding and operating procedures. Honestly, the industry view [of VARs] is that you’re the guy who is taking the check and running.”

"I believe the entire industry has failed. We have known for 20 years that managers are not using these things, but the industry did nothing about it. All they did was redesign the reports. They never made them automatic."

Host, “Bar Rescue”

Taffer envisions a world of seamless connectivity from the beginning to the end of a dining experience. Imagine if you could pull up an OpenTable-like app and book a reservation that would automatically schedule your pickup from your preferred ride-sharing service, automatically pay for your meal, and automatically schedule your ride home, all while sharing data with the restaurant about what time you arrived, what kind of wine you ordered, how long you stayed, and what feedback you provided on their service.

Self-ordering kiosks are already gaining traction in fast food and quick-serve locations, and Taffer thinks that’s just the tip of the self-service iceberg. As labor costs keep increasing, restaurants will start adopting automated technology on a massive scale. In order for the hospitality industry to accelerate this kind of technology adoption, however, VARs will need to help customers get their networks up to speed. “The squeeze for VARs is around interactivity and connectivity. Most solutions coming out are going to have common files and ways of information extracting and sharing information across platforms. Resellers have to speak to the connectivity of your systems.”

That might mean charging for networking projects or partnering with other solutions providers who are already doing this. For VARs who are still content pushing boxes of hardware, this consultative approach will be a do-or-die challenge. Meanwhile, the solutions providers who are willing to embrace the changes Taffer has seen in the hospitality industry will have fewer competitors to worry about.