Industry Overview

Historically, restaurant chain owners have had limited knowledge about their customers and, as a result,have often lost the opportunity to engage their most loyal customers in order to drive sales. Restaurant marketing decisions in the past were mostly based on marketers’ intuition and backward-looking POS data. With the exception of a few chains, such as Starbucks and Domino’s, industry operators faced the challenge of not really knowing their own customer bases. Even today, many restaurant marketers launch marketing campaigns with little assurance that they will be effective. Restaurant chain owners often dedicate significant budgets to marketing without seeing a satisfactory return on their investment. Without data analytics tools, there is no systematic way to segment casual customers and frequent customers, and it is difficult to run effective marketing campaigns targeted to loyal customers without having insight into their behavior and preferences. Another major challenge in the restaurant industry is that most companies have limited IT capabilities with which to develop loyalty programs. And restaurant marketing campaigns usually run with a significant time lag:for example, a digital coupon program can take up to two months to implement. The majority of restaurant chains also have limited internal resources to develop and maintain a mobile loyalty app.

About Punchh

Punchh is a cloud-based technology platform that builds loyalty-program-based engagement in the restaurant industry. The company’s omnichannel marketing platform integrates customer data from POS systems, mobile apps, social media and email to deliver real-time customer insights for restaurant chains. With Punchh’s solution, restaurants are able to target their loyal customers with real-time, personalized engagement to increase visit frequency and drive sales. Punchh works with restaurants to engage customers with loyalty programs and offers, gaming, sweepstakes, ordering, payments, gift cards, referrals, social media, surveys, feedback, reviews and ratings. These features streamline operations without slowing line speed in-store or online.

Source: Punchh.com

Punchh is also able to predict customer behavior and provide the right offer at the right moment.The company looks at past behavior, menu and store performance analytics to drive visit frequency and spend and to offer redemptions. Additionally, it allows brands to execute marketing initiatives automatically across channels and stores through personalized offers, and provides real-time monitoring, dashboards, and segmentation and campaign best-practice information. Punchh currently works with more than 100 restaurant chains at a total of 27,000 locations globally. Its platform has a total reach of more than 10 million customers and analyzes more than1 million transactions a day. Punchh works with The Coffee Bean & Tea Leaf, El Pollo Loco, Moe’s Southwest Grill, Pizza Hut, Quiznos, Smashburger and TGI Fridays, among many others.

What Problems Does Punchh Solve for Restaurant Chain Operators?

The Punchh platform helps restaurant chains improve customer engagement, run marketing campaigns and drive sales growth, and obtain real-time customer insights.

1) Improve Customer Engagement

Punchh increases guest visit frequency and spend with loyalty programs and tailored offers and promotions. By integrating coupons and promo codes with traditional email marketing solutions, Punchh increases reach while also tracking redemptions at the point of sale and measuring effectiveness.In addition, the company’s solution can help restaurants drive new customer trials by getting brand ambassadors to refer friends and boost engagement by offering seamless online ordering, reviews, surveys and social media access without any need for the customer to leave the restaurant’s app.

2) Run Marketing Campaigns and Drive Growth

Punchh works with restaurants’ marketing teams to design loyalty programs and marketing campaigns that can effectively target different customer bases. Restaurants that have worked with Punchh have seen increases of 25%–48% in visit frequency and increases of 10%–20% in average spend. Punchh’s platform also creates personalized offers based on customer profiles. Personalized coupons designed by Punchh have redemption rates of 10%–35%, which is significantly higher than the industry average of 2%–5%.

3) Obtain Real-Time Customer Insights

Punchh’s solution gathers customer information from a number of channels, including stores, social media, mobile devices and online, and matches transactions with customer profiles in realtime. This is a significant improvement over the industry norm,which involves tracking sales data but not information about the customer who made the transaction.

Source: Punchh.com

The platform provides individual customer demographic and behavioral profiles that include information such as frequency of visits, birthday, favorite location and favorite menu items, based on data collected from the channels mentioned above. The customer information is matched with transaction data in realtime on Punchh’s cloud-based platform.Restaurant chain operators are able to understand their customers’ preferences by customer segment, and then use that information for decision making, rather than having to rely on past sales only. For example, Punchh’s solution revealed that Mongolian beef was the favorite menu item among the most loyal customers of one particular restaurant chain, even though it was not the chain’s best-selling item overall.

Competition

Punchh directly competes with three other companies that focus on the restaurant industry, as detailed below. Competitors in other verticals include Aimia, Brierley+Partners, Epsilon, Kobie Marketing and Olson.

Source: Company websites/FGRT

Revenue Model

Punchh operates a software-as-a-service (SaaS) model whereby it charges restaurant chains a recurring monthly fee in exchange for the use of Punchh’s platform. The fee varies by restaurant chain and number of locations using the service.

Management Team

Punchh’s founding team and investors/advisors have extensive experience in customer relationship management (CRM) platforms, most notably the CRM pioneer Siebel Systems. CEO Shyam Rao has a background in mobile technology and previously held positions at Motorola and Merrill Lynch. VP of Marketing and Partnerships Sastry Penumarthy comes from an enterprise software and advanced data analytics background.

Outlook

The company envisions expanding both geographically and in terms of business verticals in the next five years. The Asia-Pacific region is of prime interest for the company. Punchh is also considering expansion into grocery and convenience store chains due to those businesses’ similarity to its core client base in food service.