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It began with this idea: Diners like to know something about a restaurant before they arrive.
"I would look at a menu at a restaurant I had never been to before, and wonder what to order," said Mike Little, CEO of Byte, a consumer analytics service for restaurant owners and their customers.
"It would be nice," Little recalled thinking, "to have an online restaurant analytics service that would preview restaurant menus and reviews to customers, and that also could help the restaurants with insights into their customers."
Little wanted to develop restaurant review software that worked with social media and mobile devices. As he envisioned it, the software would give restaurant menus and previews to customers and consumer analytics to restaurants that would yield feedback, but also insights into who their most loyal and influential customers were. Little did some of the high-level software development himself, and then hired contract software developers.
Byte's experience highlights how hard it can be for a small software company to gain traction. Coding is the easy part. Not so easy? The marketing. In other words, how do you sell the product concept, find a price point that your customers will accept, and then expand your business?
Selling a new product concept
While Little was convinced that his restaurant analytics service was a great idea, potential customers proved harder to convince.
"This was a great challenge for me," said Little. "I was an engineer by training. Now I had to promote my product concept [to] restaurant owners and managers who had never used analytics before and who had trouble understanding why analytics would even help them in their businesses." Little hadn't expected this. "I had to take a step back so I could stand in the shoes of restaurant owners... to understand where they were coming from and why they viewed my product the way that they did."
What Little found was that most restaurant owners don't use analytics or other scientific ways to gauge customer satisfaction -- so there was little appreciation for what analytics could do.
Few restaurant proprietors thought about which of their patrons might be most influential through their connections or through social media.
"These are the points I had to address when making a sales call," said Little. "I had to ask them, what if you started rewarding the loyalty of a particular customer who visited your establishment two or three times a week? Would this enhance loyalty? Or, what if you found out that a customer had a large following on social media? Wouldn't you stand to gain more customers if this person said positive things about your restaurant?"
The lesson learned: "If customers and prospects don't recognize the product's problem-solving ability in their businesses, they aren't going to use it," said Little.
Finding a price point
A second challenge for Little was to find the right price point for restaurants.
"I researched pricing and we finally arrived at a $295 per month fee for premium restaurants, $195 per month for deluxe restaurants, $95 per month for more basic restaurants, and $50 per month for food trucks," said Little. "These were numbers that different categories of restaurants could absorb into their operating budgets."
Developing an expansion plan
Byte first became established as a restaurant referral and analytics service in the Austin, Texas area, where Little piloted the software. Now that the Austin market has taken root, the next step was finding a way to expand the footprint of the business.
"The goal is to be a restaurant referral and analytics service in cities around the world," said Little. "We are a small company, so we have to find a way to do this economically."
Little, who will shortly expand his core company in Austin to six permanent employees, is attacking this problem now: "We decided to continuously expand our software platform here in Austin, offer a cloud-based service that is globally available, and pursue a franchising model for the company where a franchisee in a particular city or region licenses the software from us and develops a local restaurant clientele," said Little.
As in the early days of his software development, Little also is learning about franchising as he develops it. "We are working now with a company that specializes in developing franchise networks, packages and training so we do this correctly," said Little.
Byte's franchising project is in early stages. It is an important next step for Byte to expand its reach and its brand.
"We are excited about the prospects for not only expanding our company, but in helping others to become successful entrepreneurs with the help of our product in their own cities and regions," said Little, "And we intend to keep building even more capability into our software at a time when some of the major food retail chains are only starting to get into analytics."
The key for Little as he moves his company into franchising is to apply the lessons he learned when he was first developing his company's software: that if you yourself don't know the "ins and outs" of everything you want to do, you need to find consulting expertise that can put you on the business path that you want to travel.
"We want to expand what we've done here in Austin, and we have developed a model for potential franchisees that tells them from our own experience what they can expect to gross with the product if they work hard and follow the instructions and guidelines that we will be including in our franchising package," said Little. "Central to this is a uniform training methodology that anyone, no matter which city or region he or she is working in, can apply. This will be a step-by-step plan on how to launch your business, and it will ensure uniformity of operations and practices across all of our franchises."
A second area in franchising that Little will address is the need for strong, centralized support. "We plan to continuously enrich our online software, and also to provide expert, continuously available support from our Austin location to franchisees when they need it," said Little. "One element we have already learned as we move into franchising is that you have to continue to diligently support and expand the knowledge and earning potentials of the people who are advancing your brand in the field."