3 ways your tech provider is taking advantage of you
As restaurant businesses continue to grow and expand, there comes a point when restaurant executives become frustrated with spreadsheets and spending time piecing together information. It is also challenging to see what is really happening in their business.
This leads restaurant CEOs and owners to leadership teams with finding comprehensive analytic solutions to get greater insight into their restaurant data.
Enter the restaurant software companies that provide a variety of tools which can help arm these businesses with the right solutions.
As you enter into new relationships with vendors (whether a POS system, a Back Office solution or an Above Store Reporting Tool), be aware that there are a variety of agreement designs that can work both for or against you.
1. Are you locked in?
Some vendors only offer long-term agreements when they sign on a new restaurant business as a client. One strategy to get you to commit to a long-term contract is the explanation that you may not be able to get as “good a price” for a short-term versus a long-term contract. Or, you may be told they can’t guarantee that the prices will not go up in the future. Commit to a long-term contract and you're guaranteed the fees will not go up.
At times, however, long-term contracts shortchange the client. Realizing the client is already “locked in,” certain vendors fail to deliver on their promises. However, if a vendor promises that you will be able to get out of your contract at any time, they’re likely to work harder to keep you as a client. In the event the vendor doesn't deliver on the service they assured, you can feel free to end that relationship and seek another solution.
2. Are you paying upfront?
In lieu of a long-term contract, some vendors will make restaurant companies pay a very large amount upfront (whether it’s a great implementation fee or other fees). For example, let's say your initial fees are 30 times what you would pay monthly. Effectively, you’ve been locked in for three years, making it impossible to walk away from that immense investment.
3. Are your services bundled?
Another technique is the taking away of choices. Some vendors offer a portfolio of services, and every piece added to the puzzle preserves the previous pieces and increases revenue. Some software companies try to wrap you up with one solution but then offer others as an add-on. The catch is if you want to access one piece of information, then you need this other piece or you can’t access the first one. They are essentially saying it’s all or nothing. It’s about degrees of freedom. These vendors are taking away the decisions that may be best for your company.
Avoid the traps
By giving clients the option of signing on short-term, vendors are saying they are confident their service is reliable and will speak for itself. If the service is consistent, restaurant businesses will want to stay with their trusted vendor regardless of the length of the contract.
Before you make the decision to sign with a vendor trying to win your business, consider the alternatives and read the fine print. Is there a termination for convenience clause? Will you have the freedom to choose turning services on or off? Contemplate whether it’s really a good decision for your bottom line, or whether you are entering a binding agreement that may tie you down to years of unsatisfactory business practices.
Dave Bennett / With prior experience with Dunkin’ Brands and IBM Global Services, Dave Bennett has led Mirus through its formative years and its current growth phase. Dave holds a B.S. in Business Administration and MBA from Northeastern University.