Fine Dining Efficiencies:PAR Technology Group (PAR, $38.80)
today’s restaurateurs are no more efficient than cooks of old.
Star celebrity chefs like Rene Redzepi, Wolfgang Puck, and Alain Ducasse, might make more modern and interesting dishes than the stuffy fare from classic chefs from a century ago, but are they more effcient?
Eating out today runs on the same tired margins as eating-out hundreds of years ago: Customers come into a dining room; they sit down; they order a meal; that meal gets made and served by hand. Then the customer pays a hefty bill. George August Escoffier’s 1903 classic text, A Guide to the Fine Art of Cookery, breaks down the same ghastly mark-ups found today, as those found a century ago.
But the economics of fine dining appear to be changing.
Driven by the threat of global pandemics, landlords, restaurant operators, chefs and service personnel, we spoke with say once unthinkable ideas are flowing into fine dining: Safe-distance table layouts, open kitchen designs, and sanitary microfibers, composites and alloys in textiles and finishes. Some operators are experimenting with touchless virtual environments. Single-use and virtual menus are coming to dining. And most importantly of all, there is a deeper commitment to takeout space and counter layouts.
Food service investors are quick to point out the flies in the post-pandemic fine-dining soup: Less tables equals less profit. Larger kitchens further crimp bottom lines. Cutting edge sanitary materials cost more to buy and dispose of. Take-out service simply cannot make up for the lost margins of fewer tables, bigger kitchens, and pricier fixtures. The expert server cannot upsell a luxury creme brulee on a take-out order.
Tighter post-pandemic economics, these insiders say, will therefore put a premium on restaurant operators that can master thinner margins. The successful fine dining restaurant of tomorrow must learn to unravel complex supply chain logistics, yet still deliver a quality experience.
Such tech expertise will put a premium on new tools. And at least in this early post-pandemic age, the company that appears on the fine dining new technology short list, is New Hartford, New York-based PAR Technology Group.
The Oracle of Restaurant Technologies
PAR Technologies is an enterprise software maker to the restaurant industry. It offers point-of-sale and technical software, mostly through two products called Brink and Restaurant Magic. As of the second quarter of 2020, the company claims both products were installed about 15,000 times across the food service industry. PAR Technologies also has legacy government, defense and fast-food software businesses.
What makes PAR Technologies interesting from a long-term value perspective, is how its tools can serve efficiencies to the food service industry. In our conversations and experimentation, PAR offers a surprisingly robust development platform. All the sophisticated applications a 21st century restaurant requires, from back office, to catering, to loyalty and marketing, are woven together into a single reasonable-to-use platform.
Still the Risky Restaurant Game
PAR Technologies is not without questions to be answered. The company shows simply awful technical metrics: There are serious limits on profitability. The second quarter of 2020 saw staggering increases in operational losses. There is its wobbly market value. Technical traders will gladly look elsewhere.
In terms of core value, there is something to PAR Technologies. For the fine dining establishment looking to survive, it combines back office, scheduling, analytics and inventory into a single system.
At some level, today’s celebrity chefs know how key technology will be to success. No less than David Chang devoted the premier of his Ugly Delicious franchise on Netflix, to the power of technology. After traveling to Brooklyn, Tokyo, New Haven, Naples and Copenhagen to find the world's most authentic pizza, Chang worked a shift as a delivery person for one of his favorite pizza options: Domino's.
His insight?
The technology needed to buy, deliver and sell a pizza is as important as the cheese, dough, and sauce needed to make it.
