Exploring The 2025 Restaurant Business Report with Bryan Solar
The 2025 Restaurant Business Report was recently released, and it is full of curious yet enlightening information for the industry’s future. Jaime Oikle of Running Restaurants explores its contents with Bryan Solar, Chief Product Officer at SpotOn. Together, they discuss how restaurants should navigate today’s rising economic pressures, which involve increased costs, labor issues, and supply chain volatility. They explain how restaurant pricing should be adjusted and managed despite potential resistance from customers. Bryan also talks about the role of data, AI tools, and other innovative technologies in greatly transforming the restaurant industry in today’s highly digital society.
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Exploring The 2025 Restaurant Business Report with Bryan Solar
Coming up on this episode of the show, I get with Bryan Solar of SpotOn about their 2025 restaurant business report that digs into the challenges of pricing strategies, economic disruptions, financial management tactics, capital access, and more. Plus, we've got book recommendations and life advice for you.
Bryan, welcome. We're going to talk about SpotOn's 2025 restaurant business report here in a bit, but before diving into that, give me a little bit about your background in the industry and what the company does there. We'll keep going after that.
I grew up with aunts, uncles, and grandparents who all had restaurants. My dad worked in the restaurant. He paid his way through school. He was adamant that he didn't want any of us to work in restaurants. He was like, “I don't want you working Christmas Day. I don't want you working all the weekends that we did.” For me, it's in the blood. I think about my family, my cousins, and my aunts.
I've been working in restaurant tech. I started at a nonprofit that did turnarounds for restaurants. I started a business that got acquired by Google, which helped restaurants get busy when they were slow. I worked in the restaurants division at Google, and then ran the restaurants division at Square. I'm the CPO at SpotOn.
At SpotOn, we're a little bit of a different beast in that. Instead of being what we call a legacy point of sale, our big thing is we believe that we want to create the ecosystem and the operating system that allows restaurants to be profitable and successful. It's not about the till. It's about labor. It's about online ordering. It's about making sure that you can understand your customers. We've been at it since about 2019.
Volatility Inputs and Other Challenges Of 2024
One of the highlights, or where it starts, is the fact that economic pressures are rising across the industry. From your perspective, what would you say are some of the biggest financial challenges?
One of the biggest things is the volatility of the inputs. I talked to a person who owns a number of breakfast places. He said, “I see someone order an omelet, and my heart sinks because I know the number of eggs that go into that. God forbid they add guacamole on top of that because now, I'm thinking about the price of an avocado given all the volatility.” That's a big part of it.
The other part is that there are a bunch of different things that are happening with labor state by state. All of this is happening over a macroeconomic environment where customers aren't taking the price anymore. Over the last couple of years, since COVID, restaurants increased the price of that margarita or that steak, and the guests tolerated it up to a point. We're starting to see that they're starting to pull back on their spin. The prices have gone up. The willingness to pay is extremely inelastic.
First of all, I agree. We eat out a lot and go shopping a lot. I was at the market, and I'm going, “Paper towels. Holy crap.” That big thing of paper towels you used to grab for $9, it was $23. I'm scratching my head. I'm like, “What's going on? I used to get paper towels for $9.” That's happening across all the segments, and the same thing at the restaurants. In the report I read that 99% of operators agree that strong financial management is critical, but 84% think their current system needs work. What tools can folks use? What's missing? How can they do better?
One of the things that we are big believers in is that you can manage what you can measure. One of the big things that is incredibly important for restaurant owners to do, especially in times where the margin is harder to come by and the pressures are constantly volatile, is that you have to have great reporting. You have to understand what's happening in your business. If you're multi-location, you need to know what's happening at each of those locations.
We're seeing a lot of increased capabilities, not only internally, but also when we look at partners that we work with, in terms of diagnosing what's happening within a business and giving a lot more proactive and suggestive solutions to what's happening in the books. Most folks have an opportunity that's sitting in their business that's hidden in the data.
Transforming Data into Action and Implementation
Let's talk about data for a second. You can collect everything you want. There could be so much in there. I, as the restaurant owner, can log on and see a dashboard, and I might not know what to do with it. How do you guys help, or how have you seen restaurants take some of the meaningful outputs from dashboards and screens and put them into implementation?
I have an aunt who, if you told me that she worked 100 hours a week, I'd probably think that you were being conservative. One of the things that I think is tricky is that as a restaurant owner, you have very real fires that you're putting out. The chef didn't show up, we have a customer who's upset, etc. Within the data, one of the things that I think is helpful is being able to access specific reports, PMIX reports, reports on the labor, and how the service is coming. We are seeing cool data in terms of kitchen display systems, like what's happening in the kitchen, for example.
Restaurant owners must be great at reporting and knowing what’s happening in their business, especially in times where the margin is harder to come by and the pressures are constantly volatile.
As we continue to progress, one of the things that we're shipping more of is suggestions and specific tasks that people should go and look at and try to fine-tune. We're big believers that the 3P or third-party ecosystem, there are so many strong players out there. We're seeing a lot more folks using AI, for example, to do analysis of where there's opportunity.
The rate at which this technology is evolving is not just about collecting the data. We have a saying at SpotOn, which is, “No library cards.” You can't say, “The answer's in there. Go find it.” We have to give the answer. Both internally and also the way that we're partnering with third parties, we're starting to push forward a lot more suggestions. If you're working 100 hours a week, you don't have time to go and find the answer back there. You need to know, “What is the thing that I need to do this week to be more successful?”
One of the things I remember reading in the report is that operators want to dig more into this but can't find the time. They're doing 100 things a day as an operator. Have you talked to folks? I'm sure you give seminars, webinars, and talks. How can they carve out 30 minutes of your day to operate better? How can they find the time? If they only had a few minutes, how would they best utilize them? Give us some thoughts around that.
We have a restaurant advisory board. One of the things I think is interesting is that we get to work with successful, sophisticated businesses. There's a misconception out there that successful businesses typically have 20 locations or 50 locations. There are folks who are doing extraordinarily well, and they're doing it with 1 location or 2 locations.
One of the things that I think is interesting is the best practice that I've seen from some of our board members is that they have specific reports that they effectively view the same as brushing their teeth. Every morning, they’re going to wake up and they’re going to have their cup of coffee. They're going to do their morning routine, and they're going to look at these things within the business. When you have that discipline of looking at those numbers over and over again, the small changes start to pop out. It's unbelievable what the right data, with some regularity and attention, can do for a profit margin of a business.
How Restaurants Should Manage Their Pricing Strategies
Take it like the daily news. You would drink your cup of coffee and turn on whatever news channel of your preference. Let's go back to pricing for a second. You already hinted at it, but folks feel discomfort when changing prices or increasing prices. What have you seen around pricing strategy? How can restaurants approach that a little bit more deeply in their business? How can data play a role there? What do you think?
One of the things that we're starting to see is that there are good tools that are coming out that allow people to benchmark prices of specific items in areas, even things like some ChatGPT agents. The thing that I think a lot about is people talk about increasing the AOV, the Average Order Value. That's important, but the profit margin of the thing that you're adding matters a ton.
I'll give you an example. If your AOV is $20, and let's say that we add a dessert there that brings it to $25. You're selling a bunch of that dessert. The profit margin on that dessert is only $1 because it's very complicated to make in the kitchen, it has some expensive inputs, etc., whereas if that extra is, let's say, an ice cream, an alcoholic beverage, or something that's a much higher margin.
One of the things that's interesting about pricing strategy is it's not just about increasing that AOV. It's about increasing your overall profit margin of a cart. The sister that often gets overlooked with pricing strategy is the cost strategy and contribution strategy. Those two things together are things that help a business be more profitable. Everyone tuning in to this show knows the margins in the restaurant space are so tight. Let's say that you're doing a 4% profit margin a year. If you can find a way to increase that to 5%, on a relative basis, you will increase your profit margin by 25%. That's a huge deal. Thinking about that is a big thing.
The other thing that we look at as it relates to pricing strategy is there's this death spiral that I've seen play out with a couple of restaurants where their labor costs go up, and they decide that they're going to increase the price to cover that delta. They get that dopamine hit of more revenue coming in from the customers. What they don't see is that their returning customer count starts to decline.
That, to me, is the part that anyone who's doing price changes, especially asking customers to take price, it's important, in my opinion, that you look at the regulars versus new ratios within your business to make sure that you're not accidentally flipping the apple cart and hurting your long-term to achieve a short-term goal, which ultimately negatively impacts your business.
I was jotting down a bunch of things right there. When you were talking, I thought mostly about the example of I'm having a meal and I've had a beer, and my wife has had a glass of wine. It’s that opportunity or that little window if you get me to get that 2nd bottle of beer and she gets her 2nd wine. $7 for the beer and $10 for the wine is probably an 80% profit margin. If you miss that window, you’re less $17 in cash. You let it go. You drop it on the ground.
That is an excellent opportunity. That brings my bill from $60 to $80, but of that $20, a big chunk of it is dropping to the bottom line. Those opportunities are dramatic. That comes to suggestive selling, selling, and maximizing opportunities. You can fight costs all you want, but if you're not taking advantage of those little opportunities, you're missing a big deal.
One of the things that's interesting is people talk about pricing strategy, but what you're talking about, which is arguably the bigger opportunity, is a time-to-value strategy. I have a cousin who says that his favorite thing to do when he's walking the floor is to see a half-drunk margarita on a table that is empty. What that tells him is that they got the 1st margarita on the table early enough that someone could drink it, be done, and order the 2nd one before their entree came. Maybe they didn't even 100% want the second, but they got it because they were there.
Restaurants must focus on running a good business and not the other 100 things around it.
The thing that is interesting about that is, let's say a margarita is $12. They got a 100% increase from $12 to $24. From a consumer standpoint, they believe that they got more value because they're looking at that ticket and saying, “I got two margaritas. That makes sense.” Whereas what some people are doing out there is not increasing their speed of value or speed of service, saying, “I'm going to make that margarita $18.” That person feels like they got less value. They're less likely to come back and order 2 or 3 margaritas.
Growing Role of Tech in the Restaurant Industry
Well said. This is a weird question, but this is the perfect world to narrow. Tech is starting to answer some of these questions. AI is answering this question. What is the data? What are the insights that can help make better pricing decisions? Where does that nexus come from?
There are so many interesting inputs. I'm a big believer that there's competitive set data, which is important. It's sometimes hard to get. The one that I like the most is effectively looking at PMIX and the impact on PMIX as people make price changes. There are different schools of thought if dynamic pricing is going to be a thing. Historically, restaurants have used a relatively blunt instrument in the form of happy hours for dynamic pricing. I do think that that's going to be a bigger part of the equation.
If you're a full-service restaurant and you're trying to get that 2nd turn or 3rd turn on the night, arguably, someone who is willing to come and dine at 9:30 should get a different rate. If they're willing to come at 4:30, they should get a different rate. The tools that I would look at for pricing strategy are the competitive set, the repeat, and the customer surveys. Those are probably the three big inputs that I would look at.
What's fascinating is that dynamic pricing is starting to be tested out there in the restaurant market, but it's so common in other places, hotels and airlines specifically. I'm looking at a flight and it happened to be over the Easter holiday. It was $499. I know that the same flight can be as low as $49 or $59. It's one of those things. You're like, “It's the same flight, same plane, and same service.” They’re a budget airline. You’re like, “I'm going to pay $499 for that same flight as $49?” The reason I might want to do it is because it's a high-demand opportunity. I want to get there, and I want to be there.
It's the same thing with Friday night at a restaurant. I want to be there. I want to experience the energy of Friday night. Should that be the same price as Monday? I don't have the answer. You see it happen in tickets. The ticket to the big game goes through the roof. The ticket to the so-so game on a Tuesday night is a lower price. Same seat, same ballgame, same baskets, etc.
We'll see. I would predict that at some point, it's going to be a factor. I don't think any of us want to see an LED menu. It's like you said with that happy hour. You want to beat the time. You don't want to sit there and watch the menu prices change as you're sitting there. I don’t know. Maybe that's where we're heading. At some point, I was going to ask you about trends. Maybe we'll stay there. Any other future trends you see coming in the next couple of years?
The thing that I have been most optimistic about, but I'm yet to see, is a level of personalization that permeates through the entire hospitality experience. There was a place that I used to go to. It was a Thai restaurant. If they had good data, they probably would've known that I was probably in their top 5% of customers. We ordered massive amounts of takeout. Every other week, we would come in and order massive amounts of dine-in. They had a bunch of employee turnover, so maybe the person who took my order every night was different. It always irked me that they would come and say, “Have you been here before?” I'd say, “So many times.”
One of the things that we believe, and we're betting pretty heavily behind, is this concept of technology-enabled hospitality. Can we help create a profile around a guest? If you are having turnover, know, “This isn't someone off the street. This is Bryan. He's been here 27 times. He always orders the spring rolls, X, Y, and Z.
He's one of our good customers, so if something bad happens, we should probably address that because he is a VIP.” That data has not yet made it into the operations portion of a lot of restaurants. In the next two years or even less, what's going to become a huge portion of it is this level of tech-enabled hospitality, which we are very big believers of.
The other thing that is a trend that we are big believers in is that AI is going to have a larger role to play in back-of-house than front-of-house, at least in the immediate term. It is this idea that people are going to have agents or tools, like some of the things that we're building and releasing, which will do the work that a person could do themselves, but doesn't have the time to do. That's the other trend that we think restaurant operators are going to get a lot more help in terms of running a profitable business.
As you were talking about the first tip there, I was looking backwards. I was like, “I know I have this book.” This goes back in time before all this tech stuff. Hug Your Customers by Jack Mitchell tells the story of tailors who know their customers well. Know your great customers. Know your top 100 customers. Know what they like and invite them back in.
You guys probably do this in some of your surveys and whatnot. If you were to ask the restaurant operator, “Do you know your top 25 customers? Do you know your top 100 customers? Do you have a relationship with them?” You're right. With tech, and some restaurants do this, you can have their profiles. They come in and sit down, and when the server comes to the table, it can be like, “Bryan, thanks for coming back. Do you want that margarita again?” That's pretty simple.
The tech is there, but can you implement that? Do you know the people as they check in? They've made the reservation, or they've used your platform to gain a seat, or they've put their phone number in. People aren't doing anything with it. You are right. It's the same thing. “Is this your first time again?” “I've been here a lot. What do you mean? I had you last time. I remember you.” Remembering me has so much value.
Loan and Capital Opportunities
This book talks about that. I haven't read it for years, but I always think about that. Knowing who your top customers are and having that relationship is a big deal. We'll switch gears. Another thing in the report talks about funding. Some people look for loans, capital, and other resources to grow. Your report indicates that as a challenge. What are some opportunities in that space?
In a world of abundance, attention is a scarcity. There is so much information coming at people right now that being present is such a rare thing.
For the longest time, banks didn't like betting on restaurants. The challenge is also that for restaurants, it was a ton of work to get a loan, not, not only from the bank themselves, but also from the paperwork, shopping around, finding a good rate, and then remembering to pay back that rate. One of the things that is interesting is you're seeing points of sale like SpotOn have baked-in capital.
The thing that I like about that is it is entirely a meritocracy. We can look at your business. We can see how you have done. We can give you a super fair, equitable, and empowering rate. Especially for a business that's growing, maybe you need that new walk-in or maybe you want to add that extra location, whatever it might be.
The technology aspect of unlocking capital, which has historically been difficult, is as simple as you going into a dashboard and saying, “I'm eligible for $50,000. I'd like to take the $50,000.” As every transaction goes through, it deducts. Making restaurants focus on running a good restaurant and not the 100 other things around it, like securing capital, is probably one of the better advancements in the past couple of years. We expect to see it continue to get even better.
That's on me. I didn't read deep enough to realize. You have the data in there, so part of your business has become, “Let's extend credit to this clientele because we know how their business is running.” I'm sure you have a relationship with the bank and all this other stuff in the background. Is that a quick summary?
That's exactly right. I've heard stories that in the ‘60s and ‘70s, someone would come into their local community bank and be like, “I'm trying to open a donut shop.” They would come in with a box of donuts and say, “I made this. I'm a good person. I've got good standing in the community.” It was very much a relationship thing.
As a point of sale, we have all the transaction data. Especially if you're an existing business, we can look at the folks in your area. We can look at how you've done historically. We can pull that data and make precise bets. Since we have data that allows us to de-risk it, we can typically give rates that are much better than that person who's licking their finger and saying, “That's a good donut. 18%.”
Answering Rapid-Fire Questions
That makes tons of sense. That data backs up that decision. I love it. Let's go to what I call bonus questions, for lack of a better word, and get some info on you, and then we'll wrap up. In your life, in your business, or it could be at any point in your career, what's a great piece of advice you've had?
Probably my favorite piece of advice is the importance of staying humble. My wife has a saying that I like so much, which is, “If you work hard and stay humble, the world is in front of you.” We say that to our kids all the time. No matter how good our product is and no matter what's going on, we always stay hungry. That's something that is advice anyone can use.
Let's stay with quotes...Is there a favorite quote that you love or a saying that you love?
My favorite quote is, “In a world of abundance, attention is a scarcity. The idea is that there's so much information coming at people that being present and being able to go deep is such a rare thing.
There is so much out there. Let's talk about books. Do you have a book you're reading, something on the night table? Do you have some top recommendations?
Yeah. The book that I read that I love the most is the one that I'm sure everyone here has probably already either heard about or talked about. I read Unreasonable Hospitality a couple of times. I love it. The book that I'm reading is called The 5 Types of Wealth. It goes off in your mind like a stick of dynamite. It has you re-evaluate all the life choices you've made, which I appreciate.
That makes me nervous.
It's great.
The 5 Types of Wealth, I haven't heard that one, so I'm going to write that down. Unreasonable Hospitality keeps coming up. People, if you haven't read that, read that. It comes highly recommended. We talked about trends. What about a mistake or maybe something you've learned over time? You're like, “I don't want to do that again.” It became a life lesson. What do you think?
As you get more senior, you have to move faster.
When I think about the mistakes, it's typically in not following my instincts in terms of speed to action. Rarely am I upset that I was too fast to act. Often, I'm like, “I knew that that was the right choice we should make,” or, “We knew that we had to promote that person,” or whatever. Mine would be effectively moving faster. That's probably the mistake that I think about a lot. As you get more senior, you have to move faster.
We all have this reluctance to make decisions. Sometimes, it's like, “Can we wait? Maybe something else will happen and it will get solved for me,” instead of reacting to that gut. You know what you want to do a lot of times. You've got to go do it. As we close, hit them with where to find the report, your socials, your websites, and parting thoughts. What do you think?
We've got Instagram @SpotOn. We've got LinkedIn. You can go to SpotOn.com. One of the things that we're constantly trying to do is give out little nuggets of information so that people can run a better business, whether they're using SpotOn or not. We want the industry to succeed.
Folks, this was Bryan Solar of SpotOn. You can find them on the web at SpotOn.com. For more great restaurant marketing, operations, service people, and tech, stay tuned to us here at RunningRestaurants.com. In the meantime, please do me a favor. Like it, subscribe to it, and review u. All that stuff helps spread the word. We appreciate it. We'll see you next time. Thanks, Bryan.