All right, great. Good afternoon, everyone. I'm Patrick Ennis, and I'm on the payments processors and fintech team here at UBS. We're excited to host PAR today. On stage with me is Savneet Singh, PAR's Chief Executive Officer. Thank you for being here today, Savneet.
Thanks for having me.
Great. OK, so let's just dive into kind of maybe an intro to PAR. So for those less familiar with the PAR story, it may be helpful for you to give a brief overview of the company, the different segments of the business, some of the high-level trends in the enterprise POS business, and just the competitive landscape as well.
Oh, there's a lot there. OK. So we sell software to large restaurant chains, primarily in the quick service, fast casual category. We sort of sell to two buyer personas: CIOs, which is point of sale and back office, and then chief digital officers, or CMOs, which is customer engagement software like loyalty and online ordering. The sort of foundational thesis of our company is that restaurants are becoming more digital, and we believe the way for them to become digital is through a more integrated solution as opposed to a bunch of point solutions. So what restaurants have done over time has been, let me go buy a point- of- sale product here, let me buy an online ordering product here, a loyalty product here, very disjointed type of products with the hope that creates this unified, beautiful solution back to the customer and back to their operations.
We've always thought that doesn't make any sense. We thought that that should be a more integrated, a more holistic solution that allows them to take advantage of that. We've gone about. We started out with point of sale. We then bolted on back office, online ordering, loyalty to make a more integrated solution. That's kind of how we got to market. Competitively, the core thing to kind of, I think, understand about our business is we service enterprise chains. We don't sell down market, and those are really different end markets. There are some incredible companies down market, obviously Toast, Square, et cetera. We are spending 99% of our time not competing against those guys, and mostly with Oracle and NCR Global Payments through a product called Xenial. It's really because it's just such a different end market.
The needs of an enterprise chain are wildly different than a small, your local Italian sit-down restaurant. And so we've been lucky in that when we took over the company, we were in 5,000 point of sale sites. Today we're in 30,000. We're in 80,000 loyalty. And that's all net new gain. This has all been share stolen from those kind of legacy providers over time. So it's kind of a nice pond to fish in, in that while we do compete a little bit on the fringes with some of the really cool companies, we're generally competing with more legacy products.
OK, and you hit on some of this in your response there, but you've expanded PAR's product portfolio from POS to loyalty, payments, back office, online ordering, among others. How do you pick areas to invest in, and what products have the greatest impact on your ability to sell to restaurants?
We've always looked, so M&A has been a product-led motion for us, not a market share, not necessarily a financial-led motion at first. It's always been focused on where, if we were to acquire a product, could we then integrate that product into our suite of products so that the collective becomes more attractive to the customers? What that really means is if we buy, acquire, or build a second or third or fourth product, can we convince you that buying two products from PAR gives you unique outcomes you couldn't get if you were buying those from two different vendors? So I'll give you kind of a basic example. Today, if you have a point of sale company that's PAR and have a loyalty product that's not PAR, those are two different companies that are fighting for that brand's attention.
But if you buy both of those products from PAR, what's really neat is we can actually then provision a loyalty module at the register for that cashier to be like, "Hey, Pat, I saw you're ordering all vegetarian. You know, we have a secret vegan menu," whatever it is. That doesn't happen today because the POS company is never going to have real estate on their screen to a loyalty company that they don't own or have an invested interest in. Conversely, the loyalty guy is not going to give the data to the POS guy. And so it sounds very basic, but this is kind of like the majority of the interactions of restaurants.
And so by giving them this unique functionality, we can now say, "Hey, you can go buy your loyalty from someone else, but if you buy from us, here's an example of functionality you can get only if you buy those two." And so we look for what we call better together outcomes, where we can really prove to you buying more from us isn't a bundle, but it's actually unique functionality you couldn't get outside of us. And so that sort of is the rule for us, which is we have to be able to sort of say that when we're adding it to the collective, we're actually making the collective more attractive, i.e., hopefully taking up the opportunity for cross-sell and growth in the future.
Amazing. Understood. And that makes a lot of sense. So I mean, moving from the products to kind of what your current TAM is, could you just give us a sense there? And are all enterprise restaurant chains and C-stores addressable? And is this a global opportunity?
So definitely not all are addressable. We really tried to be really precise on what our TAM is, and that does guide some of our growth into convenience stores as an example. So in restaurants, there are a wide range of estimates, but there's anywhere from 300,000 to 450,000 enterprise restaurants in the U.S., and Canada. That's our core market that we're going to sell into. Lots of people will say the number is a lot larger. We don't see the math that we look at. And so we're in less than 30,000 or 30,000 point- of- sale sites, so we have a super long way to go, we think, in that market. And I think that market is an awesome market to sell into. People like to say restaurants are bad businesses, but quick service franchise businesses are awesome businesses, and they survive a long time.
And so we feel it's a good end market. On the loyalty side, it's about half that. So call it 100,000-50,000 kind of enterprise-like chains. The other half are mom and pops that have a local gas station. And in that enterprise space, we're in 20,000. So we again have a long way to go. And so in that sector, we are just getting the flywheel going on our second and hopefully eventually our third and our fourth products.
OK, great. That's really helpful context. And moving from kind of the TAM intro to PAR to just maybe latest industry and restaurant macro trends to set the backdrop, QSRs have been pressured recently with several pointing to weaker traffic or spend from the low-end consumer. Is this a time period, or is this a period of time where PAR engagement products are of even more value for your customers and prospects?
Yeah, I mean, 2025 has categorically been a weak restaurant market, particularly in the QSR fast casual space where we play. Ironically, it's been a good bookings year for us because of that, I think. I think we've had a good year regardless, but I think that when you see traffic declines or flatlining, you feel a pressure to engage your customers more. And so as a leading loyalty provider, we benefit, I think, in that. And obviously, I think our results show increased activity. At the same time, I think that on our core ops business point of sale, which is really our main land and expand product, you really learn in these kind of slower markets that not having a really robust or modern point of sale system really does limit your ability to counteract and grow in tough markets.
You're pretty limited in the digital innovation you can do because you've got an old point-of-sale system you haven't upgraded in many years, and so that also does kind of reinforce. Imagine the CEO of a chain that has declining traffic, and you're like, oh, what if we built this really amazing digital interface into our brands? And everyone's like, great idea, and then the CIO is like, well, I got to go talk to the old point-of-sale company to see if they can do some integration, and they're going to tell me it's going to be two years, and so that also kind of helps push it along, so I do think these slower times have historically been really good for bookings, and that's certainly what we've seen this year, so I think it helps now.
If you have a drastic drop, obviously, all things are off the table, but usually we see really strong momentum when things slow down a little bit.
Totally. And understood there. And I mean, in that same vein, restaurant owners have gone through a lot over the past few years with COVID-19, inflation, tariffs, technology disruption. What are some of the specific main challenges or opportunities that restaurant owners face today and that you can help them solve?
It's all that and more. I mean, I think running a restaurant is a really complicated business. People think it's relatively simple, but you've got to manage a supply chain that's far more complex than most people think. You've got to deal with labor that turns over every 90 to 120 days. You've got increasing compliance rules on food and safety. You've got incredible, incredible pressure to become a digital business when your restaurant hasn't changed. If you go into a quick service restaurant today and you went there 30 years ago, those four walls haven't really changed that much. But all of a sudden, you've got to serve the Uber Eats customer, the DoorDash customer, the online ordering customer, the loyalty customer, the guy that wants to pay out the phone, the guy that wants to pay the QR code at the table, plus the drive-through.
Like you're kind of taking a brick-and-mortar business and trying to make it digital. And so I think all these things have put tremendous pressure to make things simple, which is if you're a restaurant operator, I think you're like, I don't really want to manage 20 different vendors. Just make it simple and easy so that I can focus on my food and my guests. And so it's a long-winded way of saying, I think that in an effort to become digital, restaurants have done themselves a disservice. They've had this crazy vendor sprawl. And so when something breaks, everyone doesn't know who to point the finger at. And so a lot of what we do is sort of bring simplicity, which is saying, hey, the back office and reporting and the point of sale reporting is one reporting module.
You're like, oh, well, that makes life a lot easier. The online ordering and loyalty, we're on the same database, so you don't have two different menus. Little known fact of the complexity of restaurants is that you will have a different in-store menu from your DoorDash menu, from your loyalty menu, from your Uber Eats menu, from this menu, that menu, and then you'll have a different one of those for every store that you have. So if you have 1,000 restaurants, you're going to have thousands and thousands and thousands of menus floating around with different pricing, different combos, different whatever. Everyone looks to what's the source of truth, and it usually ends up rolling up to the point of sale system. But if that point of sale system is extensible across everything, well, that really simplifies your life.
It's a very long-winded way of saying that they're under attack in 10,000 different ways. We give them, I think, an opportunity to take back control a little bit so they can focus that time. From an acute perspective, the core pressures they have are traffic. Restaurant traffic is down. Restaurants are losing share to convenience stores, and particularly for the breakfast daypart, and I think over time more and more. The second meta issue they face is that while inflation has slowed, costs within the restaurants have not come down. Whether that's real estate, food, or labor, it just hasn't come down. You're dealing with a point where traffic's down, so you want to kind of bring down pricing to increase volumes. But then as you bring down ARPU, your costs haven't come down.
I think it just leads to more technology investment over time.
I appreciate those examples that really brought it to life. And I guess moving on to kind of PAR's more recent company trends, you talked about having mid-teens or higher organic ARR growth expectations now. What would be some of the drivers for getting ARR growth into the 20% plus range going forward?
So what we've kind of said is we feel really comfortable getting to mid-teens with our business we have today. And there's lots of levers and opportunities, but I think we don't want to get ahead of ourselves and say we feel really good. We're winning at high rates, and we're seeing the pipeline continue to grow. And part of it's for all the stuff that we just talked about. For us to, I think, become a 20% grower, it will be dependent on winning these large deals that we're very advanced with on a number of them. And I think it's reasonable to assume that hopefully that we can win some of those deals over time. And so I think what I can say for sure is that the durability of our growth, I think, is going to be very strong.
I think we're going to grow a strong growth for a number of years because the pipeline is so large, because of the large deals, and is there an opportunity for us to go 20%? Of course. I think we win these deals, and it is really impactful, but the durability, I think, is just really, really strong, and that all comes back to the fact that we are in 30,000 restaurants, and so there's just a long tail of stores that have to convert.
Definitely. Still a lot of runway there. And you talked about hardware and professional services margins as well this past quarter being pressured, but it sounds like you have confidence to get them both back to the 20% plus range. Can you talk about the strategy there?
Yeah. So the drag on margins has been tariff-related for us. We have been able to, for the most part, be able to start passing on tariffs to our customers. It doesn't happen overnight. And so Q3 was a big hit to our gross margins because we absorbed the tariff. From the moment tariffs go up, we go to our customers. We try to get an amendment to say, hey, we're going to pass the tariff cost onto you. And usually it happens on the next quarter where we can get that going. And so you have this customer's kind of sprint try to get in before the tariffs. And so we'll get some of it back in Q4, and then I think next year we'll hopefully get back to "normal." And so it's just a tariff mitigation plan.
Our customers have been really, really supportive of like, hey, we get why this is happening, and you've got to do this. But it's going to take us a couple of quarters to get back to normal gross margins.
Understood. And moving to kind of the recent wins in the pipeline, you announced some impressive contract wins with Burger King and Wendy's in 2024, among others. How do you sell PAR when you're pitching to management at these companies? What are they looking for in a partner?
I think when you're selling to large enterprises, there are all sorts of reasons that you win. A lot of it, I think, is belief. If you're a CEO or CFO or COO of a big restaurant company, do you have any clue about how the software is built? You don't, right? And so what you're really trying to convince them is, number one, you can trust us as a vendor. And how do you do that? Well, you can say, here's all the customers we have. Here's proof points. Here's references. And here's a product roadmap. And then I think the second part is showing them a vision of the future.
And I think one of the biggest mistakes that people make in all of enterprise software is you finally get to the C-suite, and then you paint in this view that your world's about to be disrupted, and don't worry, I'm going to save you. And that is just not a good pitch. Because yeah, the world is being disrupted, but it never happens overnight. And you don't want the vendor that's going to come in on a shiny white horse saying, I'm going to save you, because you have enough mental models that that's not the way it's going to work. And so what we try to go and say, listen, we're not going to come here and tell you your world's going to be disrupted. Clearly, things are changing. Our products are reliable. They're stable. And by the way, call any of our customers to prove it out.
And that's a lot of what I do, is like, listen, I am so subjective. So asking me if our product's the best, it's like the dumbest question in the world. But you don't need to ask me. Ask our customers. And I think that matters more than anything else. And then I do think you have to build some belief of the future because every single one of those CEOs is reporting to a board just like myself and everyone else and needs a partner on innovation and AI. And so if you can paint that vision of the future that you can help them be that partner, that's really the goal of those meetings.
How does PAR's new business pipeline look right now?
It's really strong. I mean, we've never had more pipeline before. I think a lot of it's being driven by the point of sale and back office space where we continue to see tremendous momentum in these really, really large deals. And then I think on the loyalty side, we've never had higher win rates. We've done a tremendous job making our product super competitive. Honestly, I think there were all these fears of this startup, that startup, and I think they've all kind of fallen to the wayside or really kind of given up trying to compete with us on the enterprise side. And so I think as venture money has cannily exited our vertical, the people coming in with stupid economic deals has kind of fallen away, and we've kind of scooped up that market. So we never had more pipeline.
I hope we see in 2026 and 2027 the same thing, which is as we grow, the opportunity to win bigger and bigger deals continues.
And along the lines on those bigger and bigger deals, you've talked about the several Tier one, near-term opportunities. How exactly do you define tier one? And then can you add some color on those opportunities as well?
Yes. Tier one, historically, we've said is 1,000 stores and above. But what's happened is we've now won deals that were many thousands. And so what we've sort of characterized is that we have a few deals in pipeline. One of them is very, very large, and we've got a couple that are much larger than 1,000 stores. And so that's what's kind of been unique, which is historically, we'd want to win one of these deals every few years, and now we have three all at once. We'll see if we're successful. And today we feel great. I mean, I feel like even from when we reported our last quarter, the ball's like, we're getting to the red zone of two of these for sure. And we feel more encouraged now than we did two weeks ago, three weeks ago. So we feel really, really, really excited.
We got to get the stuff signed and out there. But we're not dependent on those deals, but we feel pretty good where they are right now.
That's helpful context. When we are thinking about enterprise, and I know every deal is unique, but in terms of the sales cycle and implementation timeline, could you just give us kind of broad swath on what that looks like usually?
Sales cycles for us are kind of nine months to a year, generally. The loyalty one is, I think, shorter. And that's generally shorter because the big loyalty RFPs are almost always big consultant-driven, Accenture, Deloitte, so on and so forth. And so they're very organized processes, and there's a date, there's a winner, and you start rolling up. From contract signing, we launch six months later, and we start billing six months later. So signing to go live is six months. Some deals come before that, but nothing goes beyond six months. Six months, you're paying us whether you've launched or not. So we're pretty strict on that. On point of sale, you sign the deal with the corporate. And once you sign that MSA, you quickly work to configure the software to make sure you can solve all the needs of the customer.
And then you roll out store by store. So those rollouts can take. It just depends on the size of the organization. So Burger King will take us two and a half years, kind of two and a half, three years. Smaller chains we can get done in three months, six months. But generally, we try to make it a defined timeline. So we will go to our customers and say, hey, this is our price point, provided you roll out within the next 12 months or the next 18 months, whatever the size is. And so there's a ramp in revenue on the operator side of our business. The market engagement side is you go live in six months.
Okay. Got it. And moving to M&A and how you've kind of grown some of these products or actually brought them to market. Last year, you made three acquisitions: Stuzo, Task, and Delegate. What was the strategy behind these acquisitions?
Yeah. So I'll work in reverse. So Delegate is more of our down-the-fairway M&A where we're looking to add a product to the collective that makes the collective stronger. Delegate was in the back office space. Our back office product is growing super well. It's probably got more pipeline relative to revenue than any of our products by a long shot. So tons of demand there. But in Delegate was a module that fits in there that we thought we could upsell and make that work really well. That's kind of our more down-the-fairway type of deal. The other two deals were really distinct. They were completely unique for us. And those were called TAM expanders. So Task, which we acquired in July or closed in July or August, was focused on international. We were getting more and more pull from our customers to have an international solution.
We did not have an international solution that could service them. We made that investment or acquisition to try to go after that international market. Task was a platform that we thought we could win some of these global brands that are not just international but want the same point of sale product in the United States and internationally. It was really well-tooled for that. I think a really cool product that we thought we could scale. Given the RFPs that were in, we feel like, okay, that seems to have worked. That was really focused on adding international as an increase in the TAM. Stuzo was kind of cementing our place in the convenience store space. We had grown pretty quickly in our loyalty business within the convenience store space.
10%, 15% of our revenues were coming from convenience and growing faster than restaurants. The challenge for us was that as we got pulled into convenience stores, we weren't experts in convenience stores. Our product wasn't really built for that, right? So think of all the stuff that's in a convenience store that's not in a restaurant: tobacco, alcohol, age-restricted products, regulation, gas. We didn't have any of these integrations. But we had the best food product in the world. And because these stores were becoming restaurants overnight, we grew super fast because we were able to handle that food business. But we realized if we're going to be great here, we're going to need to make a big investment, or we're going to need to acquire something.
We stumbled across Stuzo that made it very clear that there was a best-in-class product that we think had an incredible team, incredible culture, and had enough scale where we could leverage that to go upsell additional and incremental products. So we took the swing. I'd say it's one of the best deals. It'll come back as one of the better deals we've ever done. We bought it on an EBITDA multiple, but it was growing at revenue multiple type businesses. It's probably our highest satisfaction product across PAR. But more importantly, certainly gives us the belief that we will be able to do the same playbook in restaurants as we did in convenience stores, which is land with one product, add the second, add the third, and integrate them so the customer gets something really special. So it's been really exciting to see how fast that's grown.
Sticking with C-stores here, what's the TAM look like, and who are the main competitors?
So there's about 150,000, something like that, enterprise, give or take, in C-stores in the country. And there's a huge market internationally, which we haven't serviced yet, but we probably will serve over time. Today, that market is not very digitally penetrated like it is in most other markets. And so as an example, there are three big point of sale players in convenience stores. For the most part, they're all on-premise and really old legacy software. And that's not me saying it as a point of sale guy trying to act like we're cool. The people that work there would tell you that as well. These aren't products that have received that I don't think anyone that works at those businesses nor anyone in the category would say these are super innovative or digital businesses.
They just have incredible market share, and they're super sticky because they haven't had to be innovative, and so we came at it from the loyalty space because what we have observed is that the digital growth within convenience stores is going to be in loyalty, online ordering, kiosk, not the point of sale, unlike restaurants, and so that's why we came at it that way, and so the way we look at the opportunity is that there's 150,000 stores. We've got one product that's roughly $1,900-$2,000 a year per store, and then we just launched our second product, which is called Touchpoint, which is kind of a self-checkout product, and hopefully, you'll see product three, four, five, and we will grow this business by site count growth, but also adding a lot more products.
That's great. And sticking with M&A and just going specifically to Task, it serves that global marquee customer base that you've mentioned. Following the acquisition, what's the opportunity for PAR internationally now?
There’s a couple of parts. Task is really strong in Australia and New Zealand, a few other markets, and we’ll continue to kind of grow there. But where Task is getting more interest than we would have ever expected is on global brands. We have purposely taken down Task growth and focused those R&D resources on trying to win the very large restaurant businesses that want a global brand across everything they do. It’s way ahead of schedule, but wildly exciting because we have a product that we think is best in class. We have a product that we think we’ve made it as PAR much more durable.
Given the halo of the PAR brand, we can go to the biggest brands in the world and say, "Let's go become your global solution." So I think I used to tell investors, "There's a call option that this becomes a global thing. There's a call option to win more business from the biggest brands in the world." Those call options have seemed to be coming in a lot faster. So the core blocking and tackling, we've actually slowed down the go-to-market motion because it's a small business that we've geared the R&D to focus on these really, really big opportunities. And those big opportunities are potentially transformative to who we are as a company as well.
So, while it sucks to slow down revenue growth and something that had a lot of revenue that can have a lot of revenue growth, we think the trade-offs are in our favor.
Yeah. No, that's great to hear the potential success you could have and see with Task and the global brand. We're coming up on time. We have a few minutes left. So I just thought if anyone in the audience has a question you'd like to ask, we can do that. Otherwise, I have a few questions on competition.
You mentioned a few hundred thousand restaurants in Canada. You guys have a lot of. How many of those come up for R&D and therefore all together?
That's a really, really great question. So it varies widely. So there's 350,000 enterprise restaurants. Historically, we would add to our base four to six thousand a year, sort of what we've historically done for five, six, seven years. And so that's kind of how I'd look at it. And assume our win rates are 25%-50% in a given year. So relatively high win rates. And the number one reason for loss is you stick with incumbency, and then you probably come back in a year or two anyways, is generally how I've looked at it. The reason why I say it varies is that in the last 12 months, we have numerous deals that are much larger than anything we've looked at in the past or are multiple tier ones in one year that will likely change that from hopefully 4,000 to more than that over time.
So, it seems like it is accelerating, is the point I'm making. But normally, we kind of pulled in four to six thousand a year. And that number seems to be accelerating in general. But the dispersion of how many logos that is varies tremendously.
Any other questions? I thought maybe we could end with one on kind of competition, and you hit on this at the beginning, but you have those modern POS players, more down-market. What are the main challenges they would see from trying to move up-market into enterprise, especially the larger brands?
Listen, I think building a product for the enterprise is really different than building a product for small business software. Maybe simplistically, when you're selling to an individual restaurant or a chain of two or three restaurants, generally, the CEO is also the chef, is the CMO, the CIO, the CFO, the head of everything. It's a single or it's two people making decisions for everybody. That's a really tough, really different sales motion than you're going to go sell to Arby's, and they've got consultants and private equity and just your product integrating to SAP or Oracle. There's so many different layers of that. And so there's very different products. Cultures are also very different. When you're selling down-market, you can win a customer on an awesome Instagram ad. In the enterprise, you're really focused on true product-led differentiation. Your marketing does not matter a ton.
It's really that your product differentiates when you're in the lab and when can your customers see that. So they're just really different needs of the customer. When you're doing enterprise, you'll be integrated into many of our stores have 20-30 different integrations just from the point of sale system to 20-30 different products. When you're, again, selling down-market, you might have one or two integrations to Breeze store, not a lot more than that because you're looking for a very captive, simple product. It's like QuickBooks versus SAP. They kind of both are financial reporting for businesses, but they're really different needs. So I think those companies are incredible, and they can absolutely work their way up-market. It's super slow. It takes a long time to understand the nuances of the customer base.
And I think in the end, I just have always thought that they are better focused on dominating that down-market and bursting up-market and kind of getting blows. And then when markets slow down, you're like, "Why are we wasting time?" But to me, it's just very different products. And if they focused all their efforts on enterprise, of course, they could do it. But I don't think they can do that given the success they have down-market.
Gotcha. Understood, and I mean, I think we're coming up on time here, so that's all we had for today. I appreciate you joining us and for PAR being a big part of the conference and Chris attending as well. Thank you, guys.
Thanks for having us.