On Starting A Cloud Based Restaurant Management SaaS

Vinodh Rajaraman
On Starting A Cloud Based Restaurant Management SaaS
EagleOwl
from Bangalore, Karnataka, India
started September 2018
2
Founders
18
Employees
799K
alexa rank
188
followers
19
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On Starting A Cloud Based Restaurant Management SaaS

Hi fellow entrepreneurs, trust you are doing well. I am Vinodh Rajaraman, co-founder, and CEO at EagleOwl, a cloud-based restaurant management software focused on improving efficiency at the Back of the House (BOH). We are based in Bangalore, India.

We started this company 3 years ago to help restaurants improve their bottom line. We have three products - Inventory, POS, and table reservation. Our main focus continues to be on inventory management, as we feel the majority of the restaurants aren’t doing it right and leave money on the table!

We serve clients across 120 locations, spread across 4 countries and 12 cities. We work with Bangalore’s premium breweries such as Windmills Craftworks, Aurum, Arbor Brewing Company, Bier Garten, Red Rhino. In the casual dining segment, we work with marquee brands such as Meghana Foods, Manis Dum Biryani, Potful, The Pizza Bakery, Chianti.

We were growing steadily till March 2020, till Covid 19 'punched us in the face'. The last 1.5 years haven't been easy at all. Most of our clients were shut down for many months due to repeated lockdowns in our State. At some stage, our revenue trickled down to zero and it was an uphill battle to keep the lights on!

Since Aug 2021, things are looking much better, and there’s some sunshine!

on-starting-a-cloud-based-restaurant-management-software

What's your backstory and how did you come up with the idea?

I was born and brought up in a conservative family, where the word ‘business’ was almost an expletive. I did my engineering degree at BITS, Pilani, and worked as a software engineer at Cisco, Dell, Huawei for about 15 years. I wasn’t enjoying my work beyond a point and felt there are other aspects of the business I needed to learn. I left my last well-paying job at Cisco in 2015 and joined a cloud kitchen startup called RedCooker, as VP of Operations. I knew it was risky, but as a poker player, you got to take your chances.

I had zilch knowledge about kitchen, ingredients, costing, or operations. Within 2 months I was handling operations, B2B sales, marketing, a bit of legal work for the company, etc. I tried to learn as much as possible, did things I hadn’t in my 15 years in software companies.

Get out and talk to potential customers even before building the product. Most of us are shy to talk to strangers but doing a sale means just that.

As I was handling P&L for all of our outlets, I learned the entire backend operations and had a solid understanding of inventory management and costing. We standardized recipes, removed menu items that were not very profitable, priced our menu based on desired gross margin, and eventually hit 28-30% across all of our outlets within 3 months.

I figured most restaurateurs were not doing this at all, if they were it mostly excelled or some below par outdated on-premise software. Inventory was a neglected piece, the stepchild for both restaurants and software vendors.

That’s when I figured this could be turned into a product to aid restaurants to take decisions based on data rather than intuition! Unfortunately, our company failed to raise money and had to be shut. It was then I thought to myself, “Do I build the product or find a job”. I had already taken a 35% cut on my salary joining this startup, I was 35, had 2 kids and was the sole breadwinner, and had home mortgages to pay, hardly any savings. I dipped into my mortgage overdraft facility to handle monthly expenses. But somehow, I was more inclined on doing something on my own for a while as opposed to getting back to a job. I had enjoyed working for the startup. My wife and I had a chat and she asked me to go for it, as long as I felt happy doing it. Seeing the baby grow is a completely different feeling, difficult to put in words, but something other entrepreneurs would agree with.

Take us through the process of designing, prototyping, and manufacturing your first product.

One of the founders of the cloud kitchen startup was also an investor in a restaurant business in Bangalore. Having seen me closely, he asked if I could help with costing and analytics. I thought it was a perfect way to validate my idea. I consulted with them for 2 months, right from analyzing sale data, making recipes, menu pricing, identifying profit and loss-makers, etc. Within 2 months, we were able to bring down the food cost by 12%.

This gave us the confidence to build the MVP. We built the bare minimum features required - importing sales, adding purchases, recipes. The key thing we showed was a dashboard that highlighted key metrics, along with a variance section showing how much money they were losing. Typically this runs anywhere from 2-13% of sales.

We didn’t have much of a network in the restaurant industry, so it boiled down to asking for introductions from friends, cold calls, emails, walk-ins to well-known brands. As expected, we faced rejections from most, but some were excited. We did a free trial for a brand for 3 months, sat in their kitchen, punched in all the data on their behalf. The owner liked the outcome but didn’t sign up. It was devastating. But we learned from it and continued our outreaches.

Startup costs aren’t much in India, we had a CA who helped with formalities. We took space in a shared workspace and got things moving.

on-starting-a-cloud-based-restaurant-management-software

Describe the process of launching the business.

We didn’t focus on the launch. I feel it is a vanity statement. Our goal was to acquire our first paying client and validate our premise. I also started writing about what we are building on LinkedIn. Eventually, we got our first paying client after 4 months post the MVP. This was one of the top breweries in Bangalore and we were delighted. We also had another highway restaurant sign up with us during the same time.

After about 2 months of them using the product, we invited our first 2 customers for a party at our office, that was the launch. As we were doing a services business in parallel, we didn’t take any loan or external money. We weren’t paying ourselves, so that hurt for a while. Had to dip into whatever savings we had and manage for the first 1.5 years.

I had never done sales before in my career. My biggest learning was in sales and handling rejection. It was extremely demoralizing and devastating. Eventually, I got used to it.

Since launch, what has worked to attract and retain customers?

I was focused on acquiring the innovators and premium brands - i.e. the guys who are looking for the next promising product and willing to bet on us. Fortunately, that happened for us and we then iterated quickly to make the product better just for them. If it added value for them, chances are high that it would work for others.

So I would suggest finding that one customer who believes in you and your vision. Post this he introduced us to his network and we signed up a few more. We didn’t spend anything on SEO or social media. Our initial customer acquisition was the word of mouth and references from existing customers. This wasn’t because we didn’t want to, but I wasn’t exposed to that world and had to learn.

The one thing that we did well was written good content, case studies of existing clients, and how they benefited from using us. It is only in the last 5 months that we invested in marketing such as industry events, SEO optimizations, content marketing, etc. In hindsight, we should have done this much earlier.

How are you doing today and what does the future look like?

We are seeing good momentum in the market with more operators looking to solve their inventory issues. We are talking to many well-known chains in India. One of our immediate goals is also to acquire clients in the USA. We feel we are perfectly positioned to capture the large opportunity. This requires more spend on marketing so that we can generate leads.

We are also looking to double the number of locations to 250 by March 2022. We are looking to add more talented people to our company, particularly in sales, CSM, engineering.

Through starting the business, have you learned anything particularly helpful or advantageous?

Learned so many things in the last 4 years that no other job would probably enable me to. I also made a lot of mistakes, by not focussing on marketing or setting up the sales playbook. I realized that selling SaaS in India is extremely hard, the MRR is low, touchpoints are high and customers are very demanding. It is also common for people to not honor signed contracts and also not pay on time. We should have focussed on acquiring customers abroad much earlier.

In our early days, we also lost some opportunities by not iterating the product fast enough.

The one thing we did well was developing features that are ‘really’ used and investing in good design. Our product stands out when compared with many bulky products out in the market.

We also did exceedingly well in customer support. We prided ourselves and pushed ourselves to be renowned for this. We are also ranked among the top 10 products in this segment by G2. And this year, we were ranked #1 for customer support.

What platform/tools do you use for your business?

We use pipedrive for sales CRM, freshdesk for customer support. We use Zoho Books for invoicing and accounting. Zoho books were the first tool we started using. I am a big fan of Zoho books, it helps us keep track of income and expenses, syncs with bank accounts, invoicing, payment reminders, and a bunch of other stuff that helps track the company’s financials.

What have been the most influential books, podcasts, or other resources?

I am not a big podcast person, but about time to tune in!

I was impressed and heavily influenced by Paul Graham’s blog on ‘Doing things that don’t scale’. The book “How to get rich” by Felix Dennis was a great inspiration. And I guess the biggest inspiration for me was the movie “Shawshank Redemption”. Gives me the courage to persist and keep going.

Advice for other entrepreneurs who want to get started or are just starting out?

Get out and talk to potential customers even before building the product. Most of us are shy to talk to strangers but doing a sale means just that. The founder of one of the co-founders needs to do initial sales.

Another key thing is to execute rapidly, this is for engineering. There is no need to make a ‘perfect’ product - this doesn’t exist. In our early days, our product used to crash in every demo, customers would face it too. That’s normal.

Spend time on good design, make the product easy to adopt. Invest early in a good sales CRM, define your sales playbook right from the beginning and keep updating it (this will happen as your learning with time would change, with more data points).

Set the right culture and direction by focussing on delighting your customers. Even if the product is not spectacular, this can swing things in your favor.

Are you looking to hire for certain positions right now?

We are looking for restaurant software resellers and strong partnerships in the USA. Interested people can send an email to [email protected]

Where can we go to learn more?

If you have any questions or comments, drop a comment below!

-  
Vinodh Rajaraman   Founder of EagleOwl
Pat Walls,  Founder of Starter Story

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