We sat down with one of the brains behind the Embargo App, Frederick Szydlowski, to chat about the coffee industry’s technology leap and what they have in-store for the Brighton Coffee Festival.
Hey Frederick, can you tell me a bit about your background?
Hey, my name’s Frederick Szydlowski and I’m the co-founder of Embargo, the UK’s number one loyalty and CRM platform. We’ve been supporting over 2,000+ venues across the UK and beyond with our industry highest rated loyalty app on the UK AppStore and marketing platform for leading coffee shops, bakeries and restaurants.
However, before that, I spent several years working at, and running, multiple hospitality businesses. In fact, my first job in London when I moved here at the age of 19, was at Joe & The Juice. Back then they only had four sites in the UK. I instantly fell in love with our industry and worked my way up, eventually becoming the youngest Head of Marketing in London’s hospitality scene, right after turning 21. It was my own experience of running and managing venues that led me to starting Embargo with my co-founder.
So you’ve seen both sides. As an ex-operator you must’ve seen and tried a lot of different hospitality apps on the market. What makes your solution unique from the myriad of others?
We approached the idea of Embargo knowing that there had been a “graveyard of solutions” trying to solve the problem of customer loyalty and efficient data capture in the hospitality industry. But we also knew that although not many succeeded, the problem and need was still there and, as we have experienced over the past year, it has only grown in size. The data is very clear and brutal – regular, returning customers are the lifeline for the majority of hospitality businesses.
Hospitality is a consumer industry, so if those consumers, particularly those regular ones, are the key driver of your revenue, your job is to know who they are and actively manage that customer base to maximise the chances of growing your revenues. Otherwise, you are leaving it all to chance. This is exactly what supermarkets, airlines and retail brands had been doing for years; think of the Tesco Clubcard, BA Miles and so on. Recently, big hospitality brands have been spending millions to do the same: retain their customers, get their data and actively drive repeat revenues. The times when you can simply wait for the next customer to arrive are gone and the costs of running a business are nowhere near what we saw a few years ago. This is why leading food and beverage chains have invested so heavily in loyalty and CRM technology.
So why didn’t anything really work for the small to medium sized businesses? They are the majority of the market after all. Most businesses still rely on the traditional paper loyalty cards.
Well that was the billion dollar question when we started but, after having now supported over 2,000 venues and nearly a million of their regulars, we have some pretty good answers. Firstly, it is crucial to understand that “loyalty” does not equal giving a 10th coffee for free. Treating your customers with a nice reward after a few purchases is a key part of it but that is only the start. It would be like saying that good service at a restaurant or coffee shop is all about being polite and chatty with customers. We all know that this is only a smart part of what makes a great service in a venue. Same with loyalty. Building loyalty is a much more complex process and our goal as operators should be to maximise the success of each element. But it is impossible to do so in the long term if you have no actionable data or tools.
Your perception will not be enough, especially in the current market where people spend less, are more picky and your costs go up. You need to fight for every customer to return and you need to fight hard. This is why the loyalty card is a great way to keep things simple and reward your regulars but it is extremely passive and gives you, as a business owner, zero long-term value. You end up giving away countless free coffee but cannot message a single customer about your menu, a special upselling offer, event or simply to encourage them to return if they stopped visiting for a while. Your perception will also not realise, even if you were present at your shop 24/7, that some customers who used to visit four times a week now, visit twice a week. Or that customers who used to buy two coffees and a pastry, now only buy a coffee. Yet, all these changes in customer behaviour might have a dramatic impact on your revenue at the end of the month.
So what we found, and what we believe has made us successful so far, is combing the beauty of both worlds. The simplicity of a traditional card, presented in the highest-rated loyalty app with a neat, smooth customer interface, mixed with the power of data and an easy-to-use CRM platform that captures data of your key customers, analyses it and gives you six marketing tools to use that data to drive more revenues. Then, suddenly, you have tools to not only maintain customers’ loyalty and engagement with your brand overtime but increase it.
Now imagine you could actually turn customers who visit once a week, into regulars who spend with you twice a week. That is double the revenue from the same customer who knows you and your offering and is the most likely to buy again. In fact, data shows that by increasing customer retention by 5%, your revenues can go up even by 90%! And of course, although all this sounds great, the reality can be much more challenging.
Exactly. I think most of the industry’s business owners have been burnt at least once with a technology solution before. It’s why many have become very sceptical.
Without a doubt. Especially around the pandemic, you had a spike of new platforms that appeared out of nowhere, which never really understood the reality and needs of a coffee shop or restaurant. The idea and concept are one part, and these are usually the main ingredients for success, and failure if done incorrectly. At the end of the day, you need a solution that your customers will adopt and that works for you, as an SME. If you then mix it with the eagerness to use technology to your advantage rather than passively waiting, then you will reap the rewards. We have learned that our platform needs to speak the language of hospitality owners, managers and staff. It needs to understand their day-to-day reality.
Starbucks can afford to build it all themselves and then hire an entire department to run it and make it successful, but what about the other 70% of the market? This is where we come in, as our solution is not only plug-and-play and affordable, but entirely built from a manager perspective, knowing how hectic the day-to-day in a venue can get. We see how powerful technology can be for any size businesses in our industry but we have also learned that it needs to be easy and accessible for everyone to make it work successfully.
You’ve supported plenty of businesses which will be visiting the Brighton Coffee Festival this year. How should they expect to see Embargo develop in the future?
This is very much connected to the essence of the way we operate from day one, which is that we assume we know nothing and are eagerly searching for answers, inspiration and data from the countless businesses we work with; their owners, managers, staff and customers. One of the findings, especially post-covid, is that building loyalty, capturing data and reusing it to increase revenues should all be done not only across walk-in customers, but across every sales channel and user journey; from delivery, to click & collect, staff tipping and more.
So we have already built our own ordering system, allowing venues to offer direct, end-to-end delivery and pickup sales channels on low commission, all linked to the venues’ loyalty card. We heard businesses complaining about the high fees of the typical ordering platforms or the challenges that come with launching your own ordering system. We listened and built a solution that is all integrated into our loyalty technology, the CRM Portal, with the biggest delivery fleets in the UK and even with several POS systems.
We already have customers who manage to beat their UberEats volumes with Embargo. And this product development will never stop, as we believe that whether you are a single shop or a nationwide chain, you deserve the highest quality technology centred around loyalty and data, without having to spend millions or having to sign up to ten different platforms. This means we will continue to develop our direct integrations with even more POS systems, grow our staff tipping solution that already allows coffee shops to collect hundreds of pounds of tips every month, implement machine learning to our CRM Portal and ordering system to help venues generate even more revenues, and continue to listen to the needs of our industry.
How would you like to see the coffee industry progress in the coming years?
I think the positive change has already started and we see more and more owners, managers and staff looking and asking for efficient technology solutions. I would like this trend to continue because, despite all the challenges, technology has proven to be a major support for businesses.
One thing that I would love to see more, which I am sure is just a matter of time, is more diligent, businesses-focused processes when choosing a solution. We still see many venues making their decisions without properly looking into the options they have; the differences between the platforms, the track record of a platform and what is best for their business, not what “feels good”. But that is a natural process and as long as there are more and more people in our industry being curious, this will lead to great results. The good thing is that venue owners gain more and more experience in that field every year, which we can see.
You’re a headline sponsor at the Brighton Coffee Festival this year, what have you got planned?
We thought in depth about how we can contribute to the festival but also to the entire industry on a higher level. As a technology platform which supports some of the best SMEs in the UK, we felt like we should not only provide our platform for all the exhibitors and guests as the BCF loyalty solution, but share our experience, spark conversations about technology and really face the questions, doubts and challenges that often surround implementing apps in venues.
This is why we have put together a super exciting discussion panel with three extremely successful hospitality entrepreneurs who run multi-site coffee shop and bakery businesses. They’ll be sharing and comparing their experience and thoughts with two technology experts.
Having been on both sides of the table, I will be hosting and moderating the panel. Expect blunt, difficult questions and serious, thought-provoking answers, knowing the panellists that will be there. I am beyond excited for it as I think it will be a great food for thought, inspiration and base for further discussion for anyone who runs hospitality businesses or is looking to do so. Make sure to be near the panel stage on Saturday 10th August at 3:30pm!
How can people find out more about Embargo?
Head to www.embargoapp.com – there you can read more about our platform, countless case studies and testimonials, and also book a live demo with our team. Should you have any questions directly to me, drop me a note on LinkedIn or at frederick@embargoapp.com
