Are you Olo or are you Toast? It might seem weird, however *that* is the question.

In the 15 years I’ve spent obsessing over restaurant tech GTM strategy, I’ve become more and more convinced that, given the dynamics of the industry and how SaaS is adopted, deep down there are only 2 approaches to go-to-market in this industry. To figure out which one is right for your business, all you have to do is answer the following question:

Can your product be mandated? Or can operators ultimately decide whether or not they want to sign up?

That’s it.

Now, of course you can answer this question on your own. But realistically, the industry will decide how it adopts your software, and in instances where your answer is different from the industry’s, well… the house always wins.

Regardless of where the answer comes from, mandate or no-mandate can and will shape how your business builds out the systems and teams that grow company revenue, drive product adoption, and take over the world. If you’re into that kinda thing.

MarketMinds^TM of the world unite. It’s time to talk about how software is adopted.

The mandate advantage: Olo’s path to market dominance

Imagine having a product or service that can be mandated across restaurant locations, whether they’re corporately-owned or franchised. What a dream, right? I hate to be the bearer of bad news, but for many this is in fact just a dream; the majority of SaaS software on the market just doesn’t fit this bill.

Companies like Olo, who realized that many brands want to take online orders from a single website regardless of who owns the store the order is sent to, seized this “mandate” opportunity and established an easier-than-normal path to market dominance. They built a v1 revenue org that was exclusively focused on Enterprise (ENT) deals, and quickly gained a rumored 80% adoption rate across the ~250 brands in that segment. Super impressive.

Why did they only target ENT deals? Back in the day, if you had less than 100-or-so locations and wanted to use Olo, there was a good chance you were deemed “not tall enough” to ride the ride. Implementation was white glove, initial investment was high, and, thus, Olo had the luxury of focusing on a reasonable number of logos with a reasonable number of internal resources. This worked out for them, and in March 2021 they IPO’d, 16 years after they were founded.

Sure, this storytelling of Olo’s success is an oversimplification. But it is a fact that their early success can largely be attributed to their ability to mandate online ordering products in an industry notorious for complex deal structures. And objectively, it worked. Olo investor relations confirmed in their Second Quarter 2023 Financial Results that their product suite maintains around 77,000 active locations.

The Long-tail approach: Toast’s journey in the non-mandate world

Not everyone can be an Olo, because not all restaurant tech products or services can be forced on unwilling operators. A good example of something that often can’t be mandated? Point-of-sale.

When top-down sales proved to be impossible, Toast took to a grassroots approach and filled every major city with feet-on-the-street AEs promising to revolutionize what a restaurant POS could do. And it worked. Where other companies shied away from selling to mom-and-pops—due to CAC, due to timing, due to scale—Toast built their customer base opposite to that of Olo’s, with 99.99% of their installs in the sub-100 unit space.

Toast’s journey illustrates the complexities of building out a rev org to tackle the “non-mandated product” world with intention, but it’s something they’ve faced head-on and done successfully. With continued growth and a competitive product suite, they IPO’d in September 2021, a mere 10 years after they were founded.

Again, this narrative is intentionally oversimplified to make a point. Toast built the bottoms-up approach needed to make headway when your product cannot be mandated by corporate. Selling to single units isn’t for everyone, requires a giant sales and support org, but it can absolutely generate revenue. Toast’s investor relations confirmed in their Second Quarter 2023 Financial Results that their software runs in over 93,000 active locations, up 35% from the previous year.

So which GTM is better?

That’s hard to say. And depending on what’s important to you now or 5 years into the future, answers can be pretty subjective. I’m an optimist, though, so let’s dive into the positives.

I can see how Olo’s business model is both attractive and favorable:

• Fewer deals, bigger deals, fewer customers to support.
• Software that can be mandated takes a lot of strain out of your sales and implementation processes.
• Big wins and reputable logos make it easy for emerging brands to identify what they need to level up.
• When you inevitably need to head down market and sell smaller deals, you can position yourself as offering an enterprise-grade solution to regional and local hot concepts.

That said, I can also see how Toast may be better poised for long-term success:

• The portion of the industry they are built to target and support has more revenue potential (more units total worldwide).
• Their revenue model extracts more profit per unit thanks to payment processing.
• There’s less risk/fear of losing a significant portion of revenue if a single customer churns.

Whether you like one company more than the other, or one GTM strategy more than the other, we can agree that they’re both crushing it. And that means regardless of which tactic is appropriate for your business, there’s still potentially success ahead. If you know how to get there.

Knowledge is power, but without action it is useless

So what are we to do with this binary approach to GTM? For starters, I’d recommend you assess your existing go-to-market to see if it aligns with how the market adopts SaaS.

If you know your product can be mandated, and the software is worth a damn, you likely can consider the Olo approach and solely focus on gathering ENT logos. Lucky you.

Otherwise, your path forward is a little more precarious. Companies that want to be Olo but don’t have a product that can be mandated, are going to end up targeting ENT brands, but won’t find easy adoption and won’t have 100% of stores sign up. To compensate, they’ll target franchisees (if they can find them), only to learn that a 2-unit will ask for pricing as if all 2,000 were onboarding at once. Enterprise sales reps will be forced to pots-and-pans their way to massive quotas and are going to have a heck of a time actually getting there.

The balance smart companies with non-mandated products typically strike is an obvious one: sell where your product can be mandated. That is, sell to brands that can make a decision for all stores. This means avoiding anything over 500 units (most franchise or bake their software in-house), and focusing on the 10-to-100-unit brands that can say “yes” today for everyone. This will help you minimize rev org cost and complexity, gather logos and street cred, and get to a level of profitability that allows you to invest in a v2 team that can brute-force sell to the rest of the industry.

Conclusion

Realizing that you don’t have total control of your GTM can be a tough pill to swallow. Denying the “mandate or no mandate” reality, however, can have dire consequences for your business. Acknowledging and embracing this industry truth is the first step toward crafting a winning strategy for your restaurant tech. By understanding your position on this spectrum, you can make informed decisions and chart a course that maximizes your potential, and your success.