Innovation in the restaurant tech space is accelerating, which is undoubtedly a net-positive for the overall industry. There’s an unfortunate byproduct of this ongoing innovation, though, and too few people seem to be talking about it.

In the past few years we’ve seen an influx of software providers that have simultaneously flooded the marketplace and, as a result, made it an increasingly difficult time to sell just about anything to restaurants. Worse yet, an astonishing number of these restaurant tech B2Bs appear to be prioritizing a relentless Growth-at-Any-Cost (GAAC) mentality, something we believe to be both outdated and counterintuitive.

As the industry continues to evolve, it’s crucial that we address this debunked growth strategy and steer modern go-to-market motions toward their younger, more sustainable counterpart.

Let’s put on our MarketMinded^TM hats and talk about it…

How did we get here?

When you zoom out, it’s not that hard to understand both why and how so many restaurant tech companies ended up with GTM motions built on GAAC. Whether by design or unintentionally, software companies targeting the restaurant industry largely found themselves succumbing to a common pattern that many businesses experience when navigating the delicate equilibrium between meeting investor expectations, fulfilling founder ambitions, and addressing challenges related to market saturation and profitability.

The influx of venture capital into the tech industry, particularly the restaurant tech sector, played a significant role in nurturing the GAAC mentality. When startups secure substantial funding, there’s often immense pressure to deliver rapid growth, driven by investor expectations of quick returns. In many cases, overzealous founders, eager to fulfill their vision and meet investor demands, prioritized aggressive sales strategies to scale quickly, sometimes at the expense of long-term sustainability or despite what the industry can bear. Many of these strategies relied heavily on BDRs, which without a doubt were trending in the early 2010s, and in some instances revenue orgs made up as much as half of their overall business structure.

Furthermore, intense competition within the restaurant tech arena has led to price wars and diminishing profit margins. As more and more players entered the market, the race to offer lower prices and secure market share intensified. This cutthroat competition inadvertently encouraged a GAAC mindset, where companies focused on expanding their customer base rapidly to outpace rivals, often disregarding the profitability concerns that should accompany such growth. The result? A crowded marketplace with companies struggling to differentiate themselves and achieve sustainable profitability.

GAAC does more harm than good

The Growth-at-Any-Cost mentality may promise short-term gains, but its negative consequences are undeniable and often immediate. GAAC companies typically have two hallmarks:

1. They prioritize acquisition over adoption; and,
2. They set unrealistic sales targets that hurt more than they help.

By prioritizing rapid logo acquisition over fostering genuine product adoption, GAAC neglects the second of four fundamental tenets of Product-Market Fit (PMF), which states that customers must both use and love using your product or service. When companies chase new customers without ensuring that they derive discernable value from what’s being offered, it damages brand reputation and erodes customer retention, ultimately jeopardizing long-term profitability.

With all eyes on YoY growth, GAAC also leads to the setting of unrealistic targets, which, in turn, fuels overly aggressive sales practices that prioritize quantity (over quality) and pushiness. Companies pursuing GAAC often emphasize unsubstantiated-yet-surprisingly-high outbound activity, leading to less personalized interactions and frustrating signal-to-noise ratios. These practices are fundamentally at odds with the modern buyer’s journey, where prospects are increasingly turning to backchannel partners, community, and content when assessing need, fit, and urgency.

This is a real problem. For years, countless organizations have collectively accepted the predictable-revenue-style approach with hardly any scrutiny and now, a decade later, the cracks in this outdated strategy are becoming increasingly evident. We need something better. Luckily, one is gaining steam.

A round hole requires a round PEG

Sam Jacobs predicts that GAAC is effectively dead, and that companies holding onto this mentality will inevitably suffer. Whether it truly is dead, or perhaps just in a temporary coma, we need a clear-cut path forward, a so-called “north star” to ensure go-to-market history doesn’t repeat it self. Sam Jacobs has a prediction for that, too: Profitable Efficient Growth (PEG). Companies who trade in GAAC for PEG shift the two previous prerogatives for their alternatives:

1. They prioritize strategic focus, recognizing sometimes doing less yields more; and,
2. They set sustainable targets that emphasize profitability over time.

PEG prioritizes focusing teams on one or, at most, a few strategic investments, directing resources to areas that truly matter for long-term profitability. For restaurant tech, this is tough. Companies being asked to produce hockey stick growth from an exhausted TAM often find themselves gravitating toward similar strategies—introducing new products, expanding into adjacent industries, or venturing into international markets—in an effort to diversify their sources of revenue. These endeavors, however, demand significant resources and effort. And if there isn’t thorough amounts of research proving the investment will work, that’s GAAC. The path to the most profitable and efficient growth often entails returning to a single core product with established brand recognition and a proven competitive edge (unique differentiation) in the marketplace.

PEG goes beyond just focusing on strategic investments; it also places a strong emphasis on sustainability and responsible expansion. In contrast to GAAC, which might prioritize exponential increases in headcount or rapid market expansion without adequate consideration for the consequences, PEG advocates a more measured and conscientious approach. For restaurant tech, companies must recognize the importance of proving, or maintaining, Product-Market Fit (PMF) while safeguarding the well-being of their employees. Instead of blindly pursuing growth through massive revenue org hiring sprees, they should take a more thoughtful approach to ensure all resources are directed to areas that promise sustainable and predictable returns over time. This calculated strategy not only ensures that the quality of products and services remains high but also prevents employee burnout and preserves a healthy work environment.

Conclusion

The restaurant tech industry’s rapid innovation is both a boon and a challenge. The increased number of software providers has created a highly competitive environment, which, in itself, is not a drawback. The issue arises, however, when too many of these companies opt for GAAC as their primary expansion strategy.

Profitable Efficient Growth lays the groundwork for a robust and enduring business foundation. It acknowledges that growth should be meaningful and purposeful, rather than hasty and impulsive. By prioritizing sustainability, companies can navigate the challenges of the competitive market while building a future-proof organization that thrives over the long term.

It’s time to adapt, evolve, and thrive in the restaurant tech industry, where PEG is the compass pointing the way forward in the face of rapid innovation and rising competition.