Thanks for the thoughtful comments! Here are some responses:
1. Shift4 is more chain oriented from what I can tell. That changed a bit when they bought Revel -- which is single-location focused -- but Revel is pretty small
2. Great point! Annoyed that I missed this myself
3. I am aware of the GPN efforts. They have a great sales force in the old Heartland franchise, but I think it is too little, too late to have much impact. Their Genius solution is untested in the market and likely lags Toast, Square & Clover on functionality given how new it is -- but I haven't done a feature-by-feature comparison so this is supposition
4. I agree. But churn comes from 2 sources: a restaurant switching providers and restaurants going out of business. Churn cause by customer failure is higher among small establishments, so Clover and Square suffer more based on who they target. The average Toast establishment has ~$1.5M in annual sales so it is not as vulnerable to failure
1. Why is Shift4 not really in the analysis? Not a large enough player?
2. Toast and Shift4 both use HW as a marketing expense and give it away for free, whereas Clover and Square haven't historically. Jack Dorsey recently announced they're going to go full force into direct sales and give away HW for free to compete on restaurants.
3. GPN is trying to reenergize their many different brands under one - 'Genius'. We'll see how that turns out.
4. Toast has lower costs regarding churn because once they're established in a market they receive the predominant share of new openings, so churn reappears, but takes time.
Thanks for the thoughtful comments! Here are some responses:
1. Shift4 is more chain oriented from what I can tell. That changed a bit when they bought Revel -- which is single-location focused -- but Revel is pretty small
2. Great point! Annoyed that I missed this myself
3. I am aware of the GPN efforts. They have a great sales force in the old Heartland franchise, but I think it is too little, too late to have much impact. Their Genius solution is untested in the market and likely lags Toast, Square & Clover on functionality given how new it is -- but I haven't done a feature-by-feature comparison so this is supposition
4. I agree. But churn comes from 2 sources: a restaurant switching providers and restaurants going out of business. Churn cause by customer failure is higher among small establishments, so Clover and Square suffer more based on who they target. The average Toast establishment has ~$1.5M in annual sales so it is not as vulnerable to failure
Great analysis. Few thoughts/questions:
1. Why is Shift4 not really in the analysis? Not a large enough player?
2. Toast and Shift4 both use HW as a marketing expense and give it away for free, whereas Clover and Square haven't historically. Jack Dorsey recently announced they're going to go full force into direct sales and give away HW for free to compete on restaurants.
3. GPN is trying to reenergize their many different brands under one - 'Genius'. We'll see how that turns out.
4. Toast has lower costs regarding churn because once they're established in a market they receive the predominant share of new openings, so churn reappears, but takes time.
Really good stuff.