One CEO on how the company has navigated the crisis so far.
Fighting the coronavirus crisis, many restaurateurs are wishing they had more efficient and economical operations. Having to rethink their businesses, they are taking a closer look at the software tools they use, and restaurant software vendors come under their spotlight. But what does the current situation look like from those software companies’ perspective?
As foodservice operators are closing around the world, restaurant software vendors suffer from the chain effect of the coronavirus outbreak. Companies selling cloud POS software for restaurants are suspending subscriptions for their customers and are quickly getting short on cash. Will those vendors strive against the crisis?
Rodion Yeroshek, CEO at Poster POS, describes how his company has handled the crisis, and what it's seen so far.
How do your customers cope with the COVID-19 crisis?
During the second half of March, 62 percent of locations worldwide using Poster POS, Europe’s second-largest provider based on the number of customers, had to temporarily close due to COVID-19 quarantine. Being affected by the lockdowns, those foodservice entrepreneurs can now see the positive outcome of their decision to choose a subscription-based POS solution over a legacy one. This is true especially of the new restaurants, which faced the coronavirus crisis before they broke even. The owners of those restaurants can suspend their subscriptions with our service and don’t have to regret paying upfront for any expensive POS software and hardware.
The share of closed restaurants among Poster POS customers is ranging between 62 and 66 percent. While some locations are closing, others are reopening after the short pause they took in March to pivot their operations to takeaway-and-delivery-only model.
Those of our customers that have managed to rethink their operations and shift to curbside and delivery are experiencing a 70-percent drop in sales. The majority of restaurants operating during the lockdown don’t count to get any profit but hope to cover their expenses to some extent. As they don’t earn enough to pay salaries to their staff they have to retain only core employees. Seeing how many of our customers have closed or taken cost-cutting measures, I can estimate that about 30 000 restaurant employees, who worked in those locations, have lost their jobs, at least temporarily.
Coronavirus crisis will filter the restaurant industry. A number of restaurants would close because of the decrease in consumer demand. Only those food service entrepreneurs who are flexible and have proper systems in place will be able to keep their businesses afloat.
How the coronavirus crisis has affected your business?
Before the quarantine, our customer base used to grow by 50 to 80 percent annually. After reaching the milestone of 12 000 customers we became the second-largest cloud POS system operating in Europe based on the number of customers. Immediately after the first lockdowns and limitations for restaurants were imposed our sales plummeted.
In March, Poster POS revenue dropped by 15 percent compared to February. Analyzing the first two weeks of April we expect to have a 60 percent decrease in revenue this month.
As we’ve been seeing our customers closing we decided to take measures to help them cut their costs. We’ve suggested the customers who were closing to suspend their subscriptions. 60 percent of them have taken this opportunity straightaway. We keep storing their data and won’t charge them before they restore operations and start ringing sales again. During this time our customers can access their accounts to analyze their business data or edit menus.
We’ve communicated with the restaurateurs who haven’t closed to learn how they adapt to the new reality. Knowing the new trends, we’ve reconsidered our product development strategy and focused on the features restaurant owners need the most at the moment. Currently, we are developing new layers of service that help our customers manage online orders and food delivery and let them use the new features at no additional cost.
What measures do you take to cut your company expenditures?
Deciding on cost-cutting measures, our management team made employee retention a priority. The same day when the quarantine was imposed in our headquarter city, all our employees started working from home. It allowed us to quickly reduce office supply expenses. The second step was to halt hiring. Next, we had to find ways to lower our payroll. This was the most difficult part. In such cases, most companies are laying off part of their team but we didn’t want to lose anyone and decided to go another way.
On April 6 we had our first remote company all-hands meeting via Zoom. I suggested all our employees reduce their salaries voluntarily to save our team. This idea garnered everyone's support. We asked every employee to decide on the amount of the reduced salary that would be acceptable for them. As a result, we’ve managed to lower our payroll by one third and retain almost everyone.
I’m grateful to every person on the team for the vote of confidence I got in the face of crisis. Top managers agreed to lower their salaries by 60 percent. The rest of the team has volunteered to reduce theirs by 20 to 40 percent depending on their family and economic statuses. Other cost-cutting measures we took were pretty standard:
- Got rent holidays and payment deferrals
- Stopped marketing campaigns with low ROI
- Lowered subscription fees for the SaaS services our company uses
- Optimized server infrastructure
- Negotiated payment deferrals and discounts with our partners and contractors.
Although the worldwide economic downturn would cause a major financial hurdle for Poster POS, I'm pretty sure our company will make it through the crisis. In the worst-case scenario, the COVID-19 fallout would set us back to the number of customers we had a couple of years ago. However, I believe that today’s crisis is a good opportunity for us to test ourselves and build an even stronger company.