Hello, and welcome to the PAR Technology Corporation 2020 Annual Meeting. I now turn the call over to Savneet Singh, PAR Technology CEO and President.
Good morning and welcome to the 2020 Annual Meeting of PAR Technology Corporation stockholders. I am Savneet Singh, Chief Executive Officer and President of PAR Technology Corporation, and I will be presiding as Chair of this meeting. It is now 10:01 A.M., and I call the Annual Meeting to order. This is our first virtual annual meeting, and while we regret the circumstances that led our Board of Directors to determine to conduct this meeting virtually, we appreciate the opportunity to be more inclusive and reach a greater number of stockholders. I would now like to introduce Chris Byrnes, the Company's Vice President of Investor Relations and Business Development, to provide you with information about the annual meeting process and to conduct the business of the meeting.
Thank you, Savneet. Before turning to the procedural matters this morning, I'd like to introduce members of the PAR Board in attendance today at today's virtual meeting. First, PAR Director and Founder, John Sammon, and Directors James Stoffel, Douglas Rauch, and Cynthia Russo. Also at the virtual meeting this morning are Bryan Menar , the Company's Chief Financial Officer, Thomas Teehan, and Alain Lorenzato, representatives from Deloitte & Touche, LLP, and they will be available during the question and answer session after the meeting to respond to appropriate questions. Also in attendance today is Cathy King, the Company's Secretary and General Counsel. The Board of Directors has appointed Ms. King to act as Inspector of Elections, and she has previously taken her oath to serve in such capacity. Ms. King will also act as Secretary of this meeting. We'll begin by attending to the formal business of the meeting.
After the formal meeting is adjourned, Savneet Singh, PAR's Chief Executive Officer and President, and Bryan Menar, the Company's Chief Financial Officer, will provide brief presentations on our business. Following that, we will hold a question and answer session. Please enter any questions you may have to present to management via the portal on the meeting website. Stockholders of record, as of April 8, 2020, attending the meeting this morning can vote their shares online from now through the closing of the polls by using the proxy ballot on the virtual shareholder meeting website. If you have previously voted by proxy and do not wish to change your vote, your vote will be cast as you previously instructed, and no further action is required. PAR's Board of Directors fixed April 8, 2020, as the record date for determining stockholders entitled to vote at this meeting.
We are in receipt of an affidavit of mailing establishing that notice of this meeting was duly given on or about April 21st, 2020, to all stockholders of record as of the record date, and a copy of the notice of meeting together with the affidavit will be incorporated into the minutes of this meeting. The stockholder list shows that as of the record date, there are 18,243,672 shares of common stock outstanding and entitled to vote at this meeting. The Inspector of Elections has confirmed that there are more than a majority of those shares represented in person or by proxy shares at this meeting. Since the presence at this meeting of at least a majority of our common stock outstanding and entitled to vote on April 8, 2020, constitutes a quorum, the business of the meeting can proceed.
There are five items of business before the meeting today. Number one, the election of five Directors to serve until the 2021 Annual Meeting of stockholders and until their successors are elected and qualified. The director nominees are Douglas G. Rauch, Cynthia A. Russo, John W. Sammon, Savneet Singh, and James C. Stoffel. Number two, a non-binding advisory vote to approve the compensation of the Company's named executive officers. Number 3, an amendment to the Company's Certificate of Incorporation to increase the number of authorized shares of common stock from 29 million to 58 million shares. Number four, an amendment to the Company's amended and restated 2015 Equity Incentive Plan to increase the number of shares of common stock issuable under the plan by 700,000. Lastly, number five, ratification of the appointment of Deloitte & Touche, LLP, as the Company's independent auditors for 2020.
Because no further business is on the agenda this morning to come before the meeting, we will move on to voting. Again, as a reminder, stockholders of record, as of April 8, 2020, attending the meeting this morning can vote their shares online from now through the closing of the polls by using the proxy ballot on the virtual meeting website. We will now wait a few minutes to allow you to conclude your voting. If you have previously voted by proxy and do not wish to change your vote, your vote will be cast as you previously instructed, and no further action is required. At this point, I now declare the polls closed at 10:07 A.M. today, June the 4th, 2020, and ask the Inspector of Elections to report the results of the stockholder votes.
Thank you, Chris. The five director nominees have been elected. The compensation of the Company's named Executive Officers has been approved. The amendment to the Company's Certificate of Incorporation has been approved. The amendment to the Company's Amended and Restated 2015 Equity Incentive Plan has been approved. The appointment of Deloitte & Touche, LLP, as the Company's independent auditors for 2020 has been ratified. I turn the meeting back over to you, Savneet.
Thank you for attending today's meeting. The meeting is adjourned. Bryan Menar and I will now provide a brief presentation on the Company's business, and following this, we'll provide a brief Q&A. Chris, if you could turn to slide seven. I thought it made sense for us to kick off to focus, touch a little bit on what we're seeing from the impact of COVID-19, somewhat continuous from what we reported on our earnings call a few weeks ago. As we discussed then and now, we continue to see that the QSR and Fast Casual markets have performed better than the broader restaurant industry, and specifically the table service restaurant community.
In fact, if I was to guess, I think the QSR and Fast Casual market will take a significant share during this time of duress, given that they are restaurant chains that have been built for off-premise dining, are generally lower cost, which tends to do better in a recession, and have invested significantly in technology in the lead-up to the pandemic. Two, as we talked about, Q2 revenue will absolutely be impacted due to the pause on rollouts of temporary restaurant closures, but we see lots of signs of encouragement from our broad customer base as they get readjusted to a world that is now hopefully reopened. Our government segment continues to operate according to plan and has not yet felt the impact of the pandemic.
As a result of the pandemic, though, we took aggressive actions to stem some of the loss of revenue by adjusting on the operating cost side. We, as we talked about in our call, have torn out about $10 million of cost reductions in our plan and reduced our headcount by over 20% in the restaurant business. As our business comes back, we'll look to bring some of that back on, but until we see those signs of those green shoots, we likely won't. Continuing on the next slide, PAR has seen really resistant revenue through our customers. After the initial spike down, our customers have responded aggressively. They have done a lot to take care of their guests, and we are encouraged by how well they are performing. We think this is a leading indicator of likely their ability to invest in technology.
If their businesses are recovered, we expect our business to hopefully be pulled alongside that. In addition, PAR itself has done a lot to help out our customers. We've helped a number of them coordinate the PPP process. We've provided an immense amount of software, including our PARTech program, and we continue to see a strong direction towards a desire to move to a modern Point-of-Sale system to become more flexible. Switching over to our segment reviews, I'll flip over to slide 13. We think PAR is just getting started. I thought this chart was useful to sort of understand the inherent growth in this business. We've historically continued to grow very nicely, 40%, 60%, 70% a year, but early, about a little over a year ago, we really decided to slow down growth and focus on product.
I think it's important to highlight that in 2019, very little of our focus was trying to accelerate sales; it was focused on product. Now, after this sort of nine months of work, we're starting to see the success of that product, and the growth engine is ready to take off. If I flip to the next slide, here's a quick overview of our base today. Much of this is well known, but we continue to increase our site base, increase our ARPU, and lower our churn, all leading indicators of the future. Slide 15, I think, very much underestimates where we are. We wrote here 8,000, but much closer to 10,000 or 11,000 units are still in what we call white space. White space defined at PAR is a logo that we have signed not fully penetrated.
If we signed 100 store chains and have installed so far 10 of those stores, there's another 90 stores behind that. If PAR stops selling today, we think we'd be able to really capture 8,000, 9,000, 10,000 units that are still where we approved on without having to sign another customer. In many ways, I think we've got what I like to call an inherent backlog beyond our backlog that we feel very excited to be able to convert over a long period of time. Transitioning to product, this is something we've talked about many times over. Brink is investing aggressively into transitioning to an agile environment, and we have seen already the impact of change on not only our product but our culture.
I think that we can thoroughly say that we do not believe that engineering is a bottleneck for our future growth. In fact, we think it will be the key to our future growth. I think the key part that makes us excited about this market is the TAM. We think in the U.S. there are something like 700,000 restaurants with a Point-of-Sale system, and we think those same 700,000 restaurants also need a back-office product like Restaurant Magic. We think the TAM in and of itself is a multi-billion dollar TAM, but we believe this TAM is going to grow over time. If I take you to the next slide, you'll see why.
Today, the average Brink customer spends something around $170 a month, yet they spend $700, $800, $900 on other software in the restaurant, and we will take a larger and larger share of that restaurant. We started with, obviously, back-office with our acquisition of Restaurant Magic, but there will be more to come, whether we develop that product, acquire that product, or partner with that product. This TAM increases. Not listed in this number is the fact that once a restaurant transitions its infrastructure to a modern product, whether called the cloud or not, the need for innovation does not stop. It accelerates. The TAM today will be far smaller than the TAM tomorrow because the needs of that restaurant are going to evolve well beyond what they needed.
A great example of this is that two years ago, I don't think PAR would have had chain clamoring as aggressively to have a third-party delivery solution. The idea that you would have DoorDash and Uber Eats become such an important part of your business was just starting, and now it's a mandate. These are ways of innovation that will continue and continue because the modern software solutions allow you to do that. If we look at it just from a metrics perspective, I think these are numbers we're very proud of. In 2019, as I mentioned, we didn't focus on growth yet. We still grew very nicely year-over-year without great attention to sales and marketing because the focus has been on product. I think that shows the quality of product.
I think our retention highlights that even more in the sense that our retention continues to get better and better and better. We will continue to monitor this, but as we have built better product, as we have focused on the right customer, we have been able to continue to grow our business without an emphasis on sales and keep our existing customers happier. Slide 20 is a quick refresher of our numbers, and I think this has all been recorded already. Slide 21 is the quick overview of Restaurant Magic. This is a business we feel incredibly excited about. It is a great complement to Brink. We serve the exact same type of customer: enterprise restaurant chains. We have been integrated for Restaurant Magic for a number of years, have almost never had a problem with the product.
I think we often like to say that there's very few things that are as sticky as Point-of-Sale. Back-office might be one of those. Their retention is in the very, very high 90%, and we think that the combined entity has a lot of momentum to move forward. I think the early progress in our first quarter of ownership of the business, we've already transitioned three customers over to Restaurant Magic and are in pilot with two large Brink customers. There are signs that the synergies are going to happen a little bit faster than even we expected. COVID will absolutely impact this business. I don't think we will hit the growth numbers we would have internally expected because we've lost, obviously, a quarter of the year, but I think the long-term momentum behind this business is very powerful.
The health of economics are on the right side of the next slide. Our team and the restaurant—a chair of the restaurant we pitch to now has grown considerably, and I think this is just the beginning. Skipping slides, flipping to slide 24, we continue to operate our core business, the business that we've operated for over four years. We continue to occupy very high market share in very, very large brands, and we stay in these brands because I think they admire the quality of the PAR product and, most importantly, the PAR service. We believe this is a community of customers that will continue to evolve their own technology and provide ample opportunity for us to sell Brink, Restaurant Magic, Drive-Thru, and other products into. Flipping through to the 3M acquisition, slide 26, we have transitioned to 3M business now. It's a PAR Drive-Thru.
It has been a smooth transition. We feel very grateful at the timing of our acquisition. Drive-Thru is obviously a high priority for every restaurant today. Even before COVID-19, we saw organizations like pizza chains and coffee shops moving quickly to Drive-Thru. With the impact of COVID-19, we have seen that now accelerate. This product line is higher margin and very hands-off for PAR. PAR does not assemble and manufacture this product, so it is a high-margin product that we can leverage our existing distribution for and engineering capabilities to drive. It helps diversify the historically very cyclical nature of our Point-of-Sale hardware businesses. Transitioning to our government segment, our revenues decreased year-over-year from 2018 to 2019 by a small amount, but we ended with the highest backlog we had. We probably had in a generation. That backlog has continued to grow.
As we've mentioned on the call, our Q1 was up 15%. This business continues to perform in a really challenged broader global environment, and we think it will continue to perform for the rest of the year, and we feel very happy where we are today. I'm going to pass the mic over to Bryan Menar to do a quick review of our financials before we open it to Q&A.
Great. Thanks, Savneet. Chris, if we can go to slide 30, please. I just wanted to take a couple of minutes to provide a high-level recap for everyone for 2019. We finished the year with $187 million of revenue, weighted 66% in the restaurant retail operating segment and 34% with government. This mix was consistent with 2018. We continue to deploy restaurant retail hardware and services and provide government contracting services globally. Brink deployments are in North America at this time. Chris, if you can go to slide 31, look at more color around our revenue here. Total revenue was down 7% versus prior year, driven by the reduction in product revenue that was led by contraction in our tier one core customer, hardware product sales, and also the correlated installation revenue that is reported in our service line.
Although year-over-year consolidated revenue contracted, we continue to see growth in our Brink business line. Brink experienced a revenue increase of $16.5 million or 66% in 2018, 2019, and with total revenue of $41.5 million in 2019. Moving on to the next slide, slide 32, as we look at it now from our margins, looking at the gross margin and EPS from a non-GAAP perspective, adjusted gross margin declined 3%. That was as a result of the core business line and government operating segment contraction and partially offset by Brink's growth in margin. We experienced a $0.26 increase in adjusted loss per share.
This was broken down by 8% for gross margin, $0.09 as a result of an increase in operating expense, and that was driven by investments in our Brink R&D, and approximately $0.10 for non-operating expenses driven by interest expense as a result of the issuance of the 2024 notes back in April of 2019. We move on to slide 33, a little bit more color on the balance sheet, kind of showing you both the end of 2019 and the end of Q1, also 2020. For most of 2019, the cash burn was approximately about $1 million per month, and in Q4, the burn increased with network and capital needs that was driven by accounts receivable. Inventory balance ended the year with turns of 4X, and we ended the year with cash of $28 million.
In Q1 of 2020, there were a couple of large balance sheet movements, just to note. Notably, the refinance of the majority of the 2024 notes with the issuance of the 2026 notes in February. Net cash proceeds from that transaction was $48 million, and we ended the quarter with just over $60 million in cash. The quarter saw higher than normal cash burn. That was driven by some larger net working capital requirements, which included our strategic procurement of additional inventory. That was in light of kind of potential supply chain limitations that we could see later in the year due to COVID-19. We did not want that to impact our deployments of Brink, as we have high attachment rates to those deployments in regards to hardware.
Annual payments for variable other things that increased the networking capital needs were annual payments for variable compensation in Q1 and also annual insurance premiums and also an increase in prepaid expenses. We do not expect the cash burn levels to be similar to Q1 rates for the remainder of the year. To go to the last slide here, just to provide to summarize some of the main financial points that both Savneet and I have discussed this morning, right? We have in Q1 2020, we executed a successful refinance and expansion of 2019 capital raise with the issuance of the 2026 notes in February. The government business did contract by 4.8% year-over-year, but we did end the year with a strong government contract backlog at $148 million.
We continue to be focusing on ensuring our core business within the restaurant retail segment stays profitable, doing that by right-sizing that business. We continue to see strong hardware pull-through in the Brink sales at 70% plus. Along with Brink's growth in sales, this has also provided relief for overhead absorption in the hardware side. Brink RPU continues to increase and stands at $2,147 at the end of Q1. ARR run rate now totals $22.2 million at the end of Q1, which is a 54% increase from a year ago. As Savneet was just saying, the Restaurant Magic and the Drive-Thru acquisitions are performing beyond expectations as they properly complement our current offerings and, as you all know, as we continue to build out a full solution platform. With this, this concludes our management presentation, and we can now move this on over to Q&A.
Thank you, Brian. Thank you for participants who have already submitted questions through the portal. Please feel free, if you have any additional questions to submit, and we will do our best to answer them. The first question is a question about our cost savings. The questioner asked if we can elaborate on the layoffs made and savings and how you think that won't impact our ability to capitalize on certain competitors exiting the market.
Sure. A few points there. The first is I think the quantity impact of our layoffs was far less impactful than competitors, both at a percentage of the workforce and also where we cut. Second, we cut primarily, I'd say, in back-office administration, sales, and marketing. We did not touch product and R&D, and in fact, I think we continue to invest beyond that. To your point, historically, our limiting factor has been our product and R&D, and we were careful not to touch that area of the world. I think we feel very confident that as our customers ramp- up, we are ready for them and are in concert with them, particularly related to installation.
The second question is you noted the following during the presentation that continued growth in Brink, but we're not yet at critical mass. At what unit count, ARPU, ARR metric, whatever you'd like to use as a measure, do you sense that we reach scale?
I guess I don't remember saying critical mass, but I think we're still probably a year away from true critical mass. I think Brink today is a little over, when you, $20 million-ish of revenue on a standalone basis and at Restaurant Magic. I think we're probably a year away from really being to what I think will be steady-state economics as we have made the aggressive investment into R&D, the rebuild of the management team. We've almost had 100% turnover of the Brink management team. From a P&L perspective, I think we're less efficient than we need to be. Within a year and less than a year, I think that fixes itself as we've now, I think, completed the big surge of product work, and we're moving to a much more steady state. I think we're less than a year away from getting there.
I think it's more tied to our R&D investment than it is sort of an objective number of X many stores or X million in ARR. I think in many ways, there's just a lot of juice yet to squeeze in the Brink business. 10,000 stores of white space of existingly signed concepts, our payments business. We feel there's a ton of opportunity, and hence we took the time to get the product right before we went after that opportunity.
Next question surrounds payment processing. Can you give us, the shareholders, an update on payment processing? What kind of pricing is PAR getting? What is the feedback from some of the larger chains and our potential in winning that business, not only in our existing install base but prospective customers going forward?
Sure. I obviously can't share the exact pricing we're getting. It would be a huge competitive giveaway. Across our systems, we process an enormous amount of volume, double-digit billions of dollars. In finding partners, I think we were able to secure a very attractive rate that we hope to win business on. This business has absolutely been impacted by COVID, only in that our initial focus on this was in our table service launch and product line, which was impacted by the pandemic, which has slowed those rollouts. I'd say inherently, we're more excited about it than we were when we started as it relates to the larger chains as the point of your question.
I think we've been encouraged how larger chains look at combining payments and point of sale as actually value-add as opposed to, "Let me find the lowest-cost provider." I think that they feel that way because the ability to sort of have one provider provide, maybe call it an all-encompassing solution, is valuable to the end customer. It makes their lives easier, makes the billing easier, but also provides them with data that they historically didn't have great access to. We think that data layer is going to continue to grow. In addition, it gives us the opportunity to allow them to acquire hardware from PAR and not have to front that CapEx upfront. That is a very, very big value proposition to a lot of the chains we work with. Shorter term, definitely impacted by COVID.
Longer term, I think this business will be bigger than I expected.
Great. I'm not seeing any other additional questions in the queue, so I'll turn it back to Savneet for any concluding remarks. Thank you, everyone, for participating today.
Thanks, everybody, for joining. We appreciate the support and look forward to an exciting year.
Yes. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.