Yet Another Value Podcast - Greenhaven Road's Scott Miller shares his thoughts on point of sale business, PAR Technologies $PAR

Episode Date: April 17, 2024

Scott Miller, CIO of Greenhaven Road, joins the podcast to discuss his thesis on PAR Technologies (NYSE: PAR), where more than 70,000 restaurants in more than 110 countries use PAR’s restaurant point-of-sale, digital ordering, loyalty and back-office software solutions as well as industry-leading hardware and drive-thru offerings (according to the company's website). Voss Capital write-up: https://vosscapital.substack.com/p/pars-path-to-80-redux Greenhaven Road Q4 investor letter ($PAR mentioned): https://static1.squarespace.com/static/5498841ce4b0311b8ddc012b/t/65bd570c0ba5792db938f9a6/1706907404785/Greenhaven+Road+-+2023+Q4+FINAL_.pdf For more information about Greenhaven Road, please visit: https://www.greenhavenroad.com/ Chapters: [0:00] Introduction + Episode sponsor: YCharts [1:30] Overview of PAR Technologies $PAR and why Scott is excited about the idea [4:18] What are the "haters" missing with $PAR [7:54] Burger King customer win [9:42] Competitive landscape [15:20] Why $PAR more than a Point of Sale play; additional verticals [19:04] How do they win more customers / cloud-based vs. not-cloud based point of sale matter [25:28] $PAR recent acquisitions, execution risk / convenience stores [33:55] Growth runway / what keeps Scott up at night about $PAR [38:24] Lumpiness of customer wins/announcements [41:30] Final thoughts on $PAR This episode is sponsored by our friends at YCharts. Numbers and data are one thing, but how you communicate and scale the delivery of these insights to clients is the real challenge. The reality is, people are more inclined to invest their attention and hard-earned dollars when presented with a captivating story and a skilled storyteller. YCharts empowers you with a fully customizable report and proposal offering, allowing you to expertly guide and control the narrative during client meetings. With over 30 modules for returns, risk, allocations, exposures, and holdings breakdowns, you can effectively showcase your strategies’ strengths and your competitors’ weaknesses. To top it off, YCharts Proposals has built-in sharing capabilities so you can create and share report templates for seamless collaboration among colleagues, enabling your team to gather new assets with ease. Check out YCharts' all-in-one solution and easily illustrate the value you bring to your clients. Click the link here to start your free YCharts trial and tell them I sent you: https://go.ycharts.com/yet-another-value

This episode is sponsored by our friends at YCharts. Numbers and data are one thing, but how you communicate and scale the delivery of these insights to clients is the real challenge. The reality is, people are more inclined to invest their attention in hard-earned dollars when presented with a captivating story and a skilled storyteller. Y-charts empowers you with a fully customizable report and proposal offering, allowing you to expertly guide and control the narrative during client meetings. With over 30 modules for returns, risk, allocations, exposures, and holding breakdowns, you can effectively showcase your strategy's strengths and your competitor's weaknesses. To top it off, Y-chart's proposals has built-in sharing capabilities so you can create and share report templates for seamless collaboration among colleagues, enabling your team to gather new assets with ease.

Check out Y-charts all in one solution and easily illustrate the value you bring to your clients. Click the link in the show notes to start your free Y-charts trial and tell them I sent you, new customers only all right hello and welcome to yet another value podcast i'm your host andrew walker with me today i'm excited to have on uh for the first time i've been trying to get them on for a while my friend scott miller scott is the cio at greenhaven scott how's it going uh good first time long time you know i i'm so excited to have you on i forgot to say rate follow subscribe review wherever you're watching or listening to it so people can tell how excited i am uh we're excited today before we get started just a disclaimer to remind everyone, nothing on this podcast is investing advice.

Please consult a financial advisor, do your own work, do your own research. Scott, the reason you finally agreed to come on is you guys recently, par Technologies, the ticker there is P-A-R. Don't get it confused with P-A-R, as sometimes people do, but P-A-R, you guys did a pipe into it. They did two massive deals, so lots going on there. So I just want to pause there and say maybe what is PAR technology? and, you know, I think people can read your Q4 letter. It was a big position you guys at the pipe. So what is it and why are you so excited about it? Yeah. So full disclaimer, we're owners.

It was our biggest position. We added to it. So, you know, and quite frankly, I don't think the kind of move in the share price has been reflected. I think the move in the business. And that's part of just kind of like somewhat of my frustration and why I was like, all right, well, what can I do? And I think kind of getting some more eyes or ears on it, is part of the kind of short-term solution. But so the core thing of what they do is they have a very stable point-of-sale business. So it's a vertical market software for food services. Their core business is a point-of-sale.

So if you go to a dairy queen and you check out and someone's punching in your order, they're doing it on par hardware, but more importantly, par software. And so it's a very low-churn business, you know, called 4%. churn, right? And so it's a really interesting stable base to build off of. And because the point of sale is like the spine of the restaurant and where all the information comes in, they've added on offerings such as payments and loyalty and back of house to that, which they now kind of cross-sell and upsell. But at its core, it's software for food services industry enterprise focused. Cool. I guess I've got a few things I want to. So you mentioned getting eyeballs on it at Evercore. It just cracks me out. You say that because at Evercore, the CEO said this or Evercore said, hey, PARs new to many investors. You say getting eyeballs on it. I feel like between you, Voss, ADW, like these are some of the most followed small cap investors out there. I feel like everybody I know talks about it at some point. So I'm surprised to hear that though. I guess, you know, value investors is a small circle.

let's start with this way i think if you kind of look at the surface area for opportunity for par and the progress they've made and the multiple compression you've seen it kind of doesn't all add up to me so that's you know let's start well let's start there right so you've got this company it does point of sale for people and i think i am always surprised at like the two sides of par like when i tweeted you were coming on you'll have some people come on and say oh that's a low margin hardware company or I know some people like really dislike this company. I guess my first question is, what do you think the stock market's missing? What do you think kind of, I hate to say the haters, because I try not to engage with them.

But what do you think the haters are missing when they look at this company? I guess on some level of progress, I mean, I think if you look at recurring revenue per share, which some guy on Twitter likes to claim is, you know, not a gap metric. Okay, it's not. But I think it's actually a pretty good metric for business progress. progress. You know, it's, I think, it compounded in the 50s over the last five years. And, you know, went from sub kind of $1 to share to, you know, I think roughly $6 to share now and it'll end the year at roughly $8 a share. And so I think, I think Sab Neat has done a really good job at kind of organic growth and layering on acquisitions on top of it. And I think there's kind of a coherent strategy there of the term they use is unified commerce the idea is that these products works better together than independently and i think the other piece that is um i don't know if people

are missing but uh you know if you want to if you want to look historically right you're missing i guess i'm missing a lot of the good news of the company right so like burger king which they landed as a point of sale customer uh it was announced I think last August or September, they're just rolling out their first stores in April, right? It's not in the financials. And that's a $25 million kind of a year contract for them, right? They've also done these two acquisitions that you refer to. Those aren't in historical financials either.

And for some of the sell, like there's two acquisitions, one won't close to the third quarter. And, you know, like the Goldman Sachs analyst hasn't closed, doesn't include it. Okay. So, you know, that's part of what might be missing. So let me, all right, let's just back up about the company. So par makes the point of sale. So you mentioned Dairy Queen, which is a historical customer of those. I think Bob Evans is another one.

They just landed Burger King. So I go to them, like, before I was familiar with the company, I kind of thought of them as the payment processor, right? Because even some of their competitors they talk about, that's, it's not the payment process. So what specifically are they giving the company, are they giving the customers, and what are they charging them for? Okay, well, that's another thing in terms of opportunity.

They're taking price. So just to just, I will answer your question, but you have new products, new customers, and new markets, kind of all going simultaneously for this company. So like that's when I talk about like the surface area of opportunity. I mean, I think all of those are opportunities. But, but so they have a poor point of sale software business. they, you know, charge roughly $200 a month for. And, uh, the software is so mission critical that if your point of sale system is not working, for whatever reason, you generally close

the restaurant. Okay. And so, uh, that, that's what they're providing. Yeah. I mean, the CEO talks about it sometimes like, look, if we're down for five minutes, uh, it, you know, it's a huge issue. It's kind of like a cable company. Nobody likes their cable company. Because if they provide your service, you know, 29 days and 23 hours and 55 minutes of the day, you're going to remember the five minutes. They don't do it. But in this case, you know, you and I would lose a Zoom for five minutes. If the restaurant's down for five minutes, I mean, that could be thousands of dollars of missed sales.

So I totally get that. I guess let's go to the Burger King, right? So in Q3, I think it was. They announced they get this huge Burger King when it's going to go to all stores domestically for Burger King. And this is big because, A, Burger King is huge. But B, you know, it's owned by restaurants. Restaurant Brands, so you could easily see restaurant brand zones, Popeyes, Firehouse, Tim Hortons. You could easily see the path to, hey, we do well at Burger King domestically, Burger King internationally, Burger King, Tim Hordons, all this sort of stuff.

How do they win Burger King, right? Because you said these things are really sticky, they're mission critical. Everyone knows. Nobody wants to change your POS. Rip out, what is it, about 7,500 domestic Burger King stores. Go to every franchisee say, hey, we need you to retrain your whole thing, change all your system. and all this. So how do they win Burger King? Because I think that will speak to kind of the stickiness and thinking through the potential here.

Well, we don't totally know how they won. It was a wonderful thing. We don't think they won on price. They've, I think, said publicly that, you know, they were not the cheapest offering. And it was not restaurant brands first choice. So restaurant brands brought in executives for McDonald's and spent tens of millions of dollars trying to build their own P.O. system. And they effectively gave up and said, this has become too complicated. We're going third party. They ran an RFP. You know, our understanding is Oracle was the second choice. And, you know, it was an Oracle par, first race. And they chose par ultimately in the end and not on price. So, and I love, I love anything where the companies try to do something internally. And then they look at it and

say, not our core competency, too expensive. Like, we need to get like, those tend to be some of the big winners where you're just going to have everybody outsource this thing. So you mentioned Oracle. Let's start talking competitors because I think a lot of people, Oracle is a big competitor here. I guess I'm running ahead, NCR, but a lot of people wonder about particularly toast, shift four and one or two others because there are others in the industry. Now, a lot of them play in different ballpark. So I just want to lay out the kind of lay the land in terms of competition. Okay. I think Oracle is the most substantial competitor. It is not their primary business, though. If you look, Oracle has mentioned micros as they're offering once or I think

twice in the last four years in a public setting. If you look, if you search the transcripts, right? So, but they're, you know, they're Oracle. They have enormous resources. They're not known for service, right? So, Barr is generally competing on service against NCR has had a bunch of outages. So they're, they're competing at NCR on both service and, and uptime and functionality. Right. So on the lower end, in terms of toast, you know, what part would say and is seemingly proven out at least thus far is that it's just a different offering for enterprise. And so toast typically sells to small business. Your local, you know, there are a bunch of local stores in my town that use toast, right? And the chef and the CFO and the CEO and the chief marketing officer are all the same person, right?

and they go and they pick they pick um toast and it works great for them but you know they don't have they don't have a finance system it has to integrate into they don't have an HR system to integrate into right it's they don't want to necessarily pick it they have to use the toast loyalty right they're not integrating into their other it's so it's just a different um offering orientation and sales process and and so they toast is sold one um one change of 500 stores or more, and they got pulled out of it. So it was Jomba Juice. And then the other thing, like, during this is dating ourselves a little bit, but during

COVID, right, the one of the things they did was they laid off their enterprise sales team. Now, can Pote, can't toast get there? Can they throw money at it? You know, okay, maybe. Are they going to start winning large RFPs? Maybe on price, et cetera. But, you know, this doesn't have to be winner-take-all. You know, I think, you know, PARs starting here with more.

let's call it sub 10% market share. And, you know, my thesis is that they can grow that market share substantially over time. Who of the, so they're starting here with 10% market share. That's a what do you, who do you think has the other 90% like Oracle sum, NCR some. I'm guessing a lot of it is also, as you mentioned, Burger King was trying to internal, some of it's internal. What do you think the other 90% percent? Yeah, low payment has a, has a zenial is, is some of they compete in in an RFPs as well. But the two main ones that we're really going after are Burger King and NCR.

Oracle and NCR. How much do you think of the other 90%? How much you think is Oracle NCR versus in-house? It's a combination of the three. In-house is less and less. McDonald's is the primary group doing in-house. Our understanding is McDonald's employees 5,000 developers. And, you know, Pargets roughly 200 a month, and they're charging their franchise.

he's roughly 800 a month, right? And our understanding is that, you know, they didn't have a loyalty. McDonald's didn't develop their own loyalty product until 2021. They weren't, you know, arguably ahead of any of this. So does McDonald's continue to do everything in-house domestically, maybe? You know, of the company, one of the companies that they bought, McDonald's own 16% of it, use them internationally for loyalty. We'll see.

We're not underwriting that they're going to win McDonald's, and I don't think that's imminent, but I think we may talk about there's a ton of execution risk, and they have a ton on their plate right now. Oh, we're going to get there. I guess, go ahead. There are just so many different growth factors for this company right now

that I think they have a really good starting point. I don't think any one of them is like that it doesn't all rest on any one of them. There's just a lot of ways to win here. Just going back to the toast thing, one of the coolest thing I saw was the CEO was talking to conference and he said, look, toast is a great product. Like if you've got under 50 restaurants, I would actually encourage you go buy the, go use toast. Like, we're not, it's not, we are not for you. That's what toast is made for. We're going for the end of press.

This episode is sponsored by our friends at Y charts. Numbers and data are one thing, but how you communicate and scale the delivery of these insights to clients is the real challenge. The reality is, people are more inclined to invest their attention in hard-earned dollars when presented with a captivating story and a skilled storyteller. Y-charts empowers you with a fully customizable report and proposal offering, allowing you to expertly guide and control the narrative during client meetings. With over 30 modules for returns, risk, allocations, exposures, and holding breakdowns, you can effectively showcase your strategy's strengths and your competitors, To top it off, Ycharts proposals has built-in sharing capabilities so you can create and share report templates for seamless collaboration among colleagues, enabling your team to gather new assets with ease. Check out Y-charts all in one solution and easily illustrate the value you bring to your clients. Click the link in the show notes to start your free Y-charts trial and tell them I sent you, new customers only. Look, I don't think you're just playing for a POS play, right? Like the it's trading at if you look using the boss numbers as trading at kind of like, uh, their target is 27 times multiple years out earning. So obviously, that's incorporating pretty significant growth.

EBITDA, that's incorporating pretty significant growth between now and then just to get there. And then there has to be nice growth on the back end to do, you know, 27 times out your EBIT. You're incorporating a lot of it. So I think the play here is use the POS to expand into different verticals. So can you talk about the different verticals and like why you think, you could see it going from, hey, we do the POS for a couple hundred bucks a month, but then all of a sudden we're getting X, Y, Z, and it just, like, really balloons out. Yeah, so sure.

Just on that sort of the Voss piece, we may talk valuation later, but, you know, this is a company that has not been profitable. It is inflecting to profitability. It has a lot of operating leverage. So it kind of depends where on the continuum you look at it, but sort of it's like, oh, you're giving us profits. And then you're like, oh, you're like a high multiple of EBITDA, but, you know, they are, they will be cash flow positive and, you know, they're sort of entering that period

of sustainability. But your question was about what is there beyond point of sale and why do we think that might work effectively? And I think there's two pieces to it. They basically are pairing point of sale and online ordering, which is a new product for them. And it basically, again, these products work better together. There's better kind of handoffs between the online ordering and the point of sale. There's higher order ticket. and you can do things like you can dynamically adjust the kind of wait times for people so that they know, okay, like from the point of sale, you know it's busy right now, so we can tell people, okay, you can pick up in 15 minutes to 18 minutes versus, you know, a generic five.

And so people kind of will get their food when they expect to get it. And so there are benefits of that. The other kind of pairing that they're doing is their loyalty offering and payments. and the loyalty data effectively is better when paired with payments. And there are things if you use, like, while it's in the phone where you can encourage sign-ups and you can track customer lifetime better with payments integrated with it. So you tend to have customers taking both of these products right now. And this is, you know, all in the last year.

No, it's one of those things, you know, one of my initial questions when I started studying this was they say, hey, we're generally not the lowest cost person, but we think when people focus on the ROI, they will pick us. And I always have trouble with that, right? Because what you really want is to be like the Netflix, the lowest cost person with the best product, right? And so I was kind of struggling with that. But then they gave some of those examples. And I, you know, I was kind of thinking a few days ago, I order a sandwich from Panera at noon. And they say, hey, you can pick it up in 10 minutes. And I go. And because they're just absolutely swamped with orders. It takes 35 minutes to get me my product. And one of the things that Par says they can

do is go with them and they could kind of adjust. And they could have said, hey, Andrew, we're swamped right now. So our pickup time, normally we're advertised 15. It's 45 right now. Right. So we're going to push all of those online orders away by lengthening that out. So the restaurant can focus on their current orders and the people who are standing in line. And that type of pairing and stuff, Like, it sounds silly, but you could see how if all the orders are coming in from Grubhub and you have six different systems and they're not talking to each other, you don't get that. Whereas if you go with one, like, yeah, you're paying one company more and more. You might get discounts because you get three products and maybe you only pay for two and a half,

but also they all talk to each other so you get an ROI there. Let me ask, so I think bear hips, right? There are lots of bearcats, but here's one that jumps me. Okay, we just went through COVID, right? And one of the things the company says is we're new in the digital. transition, right? McDonald's didn't even launch their loyalty program until 2021. A lot of these guys are just making the big digital transition. I'd say, cool. But one of the things Scott's telling me is POS is really sticky and loyalty is really sticky. All these things are really sticky. Everybody

already had the digital win. Yes, par just won Burger King. But again, we're paying multiple times three years out, EBIT off for this thing, right? So we need growth. Isn't it just going to be a slog to keep winning more and more customers? Because even if the product's better, everybody kind of already got one. The big rush already had it. They're not all on cloud-based. So that's one of the big pieces. A lot of people are headed towards cloud-based point-of-sale. So yes, everyone does have a point-of-sale. They don't all have a cloud-based point-of-sale. And they also don't have cloud-based. I mean, people know what the cloud is, but why does cloud-based versus not-cloud- point-of-sale matter?

It has to do with data integrations. It has to do with uptime. It has to do with service. I mean, there are a number of benefits to cloud-based. I mean, historically, you know, this is like the evolution of the cloud where people are like, oh, I don't want my data in the cloud. I mean, people have gotten over that piece, and there's additional functionality that comes with it.

And so if I was, I'm trying to think of like the oldest, most stayed Q. U.S.R. I can think of. Maybe it's like Dunkin' Donuts. If I'm Dunkin' Donuts and I have Oracle and it's not cloud-based. Like, so I'm just literally, what is happening that my data is just, is it sitting in store? Is that corporate? Like, what is it? Am I paying extra for expensive? It varies in terms of where the data is sitting and how it's set up and if it's a hybrid. You know, I think you can look at the last two calls for PAR. I mean, they've talked about this tidal wave of RFPs. Yes. Now, that doesn't mean that they're all going to convert, but, you know, I think there's a, you have both a title wave of wins and you have a title wave of RFPs.

I don't know. We're not even, we haven't even implemented Burger King yet. You know, and then, like, we haven't talked about table service. Okay? So table service is a product that was developing and shelved basically around the pandemic because no one can go in stores. So, you know, table service didn't really make sense. They just, but they've, they've had it installed in a small group in Denver as like sort of a reference site for a year. And then they announced Hooters as a win. That's 400 locations.

My dad's going to be pumped to hear that. They're just starting kind of the rollout on that. But that's a whole other, you know, sort of Tam that they open. opened up and we'll see there's uh you know look par is like silent about um potential customer wins and like you know even once they've won companies they you know it has to come out in a press release and they don't want to like they're never going to be the leak they don't want to jeopardize those relationships and it makes sense but um let's just say like the uh the par the PAR mafia, if there is one, has gotten pretty good at kind of scuttle butt and sort of surfacing things maybe before they're officially announced because like franchisees may talk and, you know, people have expert networks and like there's just a whole. So I think, don't know, but think it's highly likely that, you know, they're going to announce a large wing chain for table service, right? Like that's not in any of these numbers, right? But, but table service. services, I think is yet another kind of growth factor for that.

It is crazy how good some of these mafias have gotten. Like, I know you and I are loosely part of the Burford Mafia. And, you know, some of them, some cases get sourced real early where you're like, hey, I think Burford's a part of this. And it is wild how small investors who are really motivated with, you know, some with expert networks, some just developing relationships can really source some of these early. Yeah, I mean, look, I mean, I'm going to throw shade on the Zell side. I mean, there's one sell side analyst who I, like, kind of keep pushing and being like,

you're missing the whole thing. And like the reality is he, I have like a decent portion of my life savings in this, right? Like, I am motivated. It's one of 25 things he covers. And quite frankly, he doesn't get a lot of calls on it. And it's not like the other 24. And so, you know, I hear you. I hear it.

And perhaps lies the opportunity. Well, I mean, like one I've looked at recently is Cardlittics. and they won an Amex partnership, which you and I, mutual friend owns a big piece of them. They won an Amex partnership, and you saw some salesides be like, great win,

we're not updating our model. They just landed like basically the largest card issuer in America and you're not going to update your, you don't think that's going to drive. When do you update your model exactly? And by the way, it's like, well,

you know, and it doesn't really affect the next quarter's numbers. So, oh, you know, like, I want to go to execution and the deals that they did, but I want to ask one thing, Burger King. You know,

I mentioned, Sometimes you win a customer and there's this chicken or the A problem, right, where you'll have 10 big guys and all of them will say, hey, you know, your product is great, but you are this tiny little company, you know, par is 450 million in annual revenue, but that's small in the grand things of SaaS versus as you mentioned, NCR, Oracle. You are this tiny little company. POS is the most important thing for our system. It can't be down for a second or else all of our franchisees are going to like their businesses on fire and it's going to be crazy, right? So we can't go with you. Burger King selects you, and all of a sudden, you could have a chicken or the egg problem where everybody, you know, you mentioned Wendy's. Wendy says, oh, yeah, yeah, okay, proof of a point. You can handle Burger King, you can handle us. Do you think this could be, like, based on your talks with the CEO, I know you guys did the private place, do you think this could be kind of the accelerant where a lot of people who might have been on the fence before say, okay, you're in the big leagues now. Yeah. Yes. Short answer. Yes. That's called a softball question for you, Scott. All right. Let's ask something harder. the acquisitions.

Last week, this is what the private placement comes in. They do two acquisitions. They do TAS, which is international, and Stuzzo, which is C stores. And not only they're doing two acquisitions, but they're doing two acquisitions while they're just starting to roll out and integrate Burger King. And on top of that, if you read the 10K and the CEO is not shy at hinting about this, they're talking about finally selling off the government business. I mean, if I had any CEO doing one of those four things, I'd be like, oh, you've got a lot

on your plate right now, but doing all four things. You didn't mention rolling out menu and table service either. There you go. There you go. There's another. Doing all five to six things, I mean, that is a crazy amount of execution risk. And again, this is a high multiple, high growth company. So we can talk about the deals.

We talk about it. But I guess I just want to ask, like, how do you think about the execution risk here? Because that seems to me, an analyst mentioned on the call. And when I was reading it, I was saying, yeah, these are sticky products. But to me, the biggest risk isn't multiple or anything. it's, oh, my God, they are doing a lot at once. They are. So I think about it a few ways.

So this isn't actually like about in the intermediate term about kind of integration, like tight integration. They've done a few things, right? I would say they paid down their technical debt. They invested a lot in their core products and they've invested a lot in their teams. okay so i think they kind of got themselves in a position to be able to do this they've done three or four previous acquisitions so they have you know they flex the muscle some before the sale of government i would argue is a simplification not a complication so that goes in the time i've enough but yeah absolutely that makes sense so the um for sorry for task it's not

going to close until the third quarter because of Australian process and approvals that are required. So that actually is, I mean, it's both good and bad, but from an execution perspective, you know, it buys them a little bit of time. In the terms of the Burger King rollout, they did a ton of prep before the announcement. It was announced in whatever was August or September. You know, now we're here six months later. They're doing a gradual rollout, so they're not doing it all at once. And so, and by the way, they're getting paid for a roll out by Burger King, so they have the resources to do it. And, you know, and they've, they've installed 20,000 locations. So this is another six over a year and a half for whatever

it is, two years. So it's, I feel okay about it. You know, on Stuzzo, which is for the convenience stores, you know, arguably, they were getting pulled into convenience stores with their loyalty product. They actually had a hiccup earlier in the year with them, or, like, last year with Casey's and they didn't meet their service agreement. This convenience store change cases did this massive mailing that they weren't aware of. You say this convenience store cases. You mean the largest seller of pizzas in the United States cases, if I remember correctly. Okay.

So I don't know. I mean, there's execution risk there. They're basically getting a convenience store team that will end up taking over their convenience store business. that's, you know, pretty tight and tested. Sudo's never lost a customer, at least so they claim, right? So they seem to have, be doing something right there. And so there is, there's a lot going on, right? Like, you know, the flip side of having an enormous amount of opportunity is there's a lot of execution to be done.

I don't think any single piece is like mission critical. Like, if they stub their toe on any one piece, like I think they'll be fine. But it's, it's absolutely a lot. why why go into convenience stores because i mean just the opportunity set in usr seems huge and you know i get they're going into table service so going from convenience stores to kind of more restaurant that or sorry from quick service to more restaurant that makes sense you're still in the food service but why get into convenience stores is this just like part of the i think it's a combination of um the the the company and the and the opportunity i mean i think

they're buying a rule of 40 company at a reasonable price. I think it sort of had to be done now because the private equity backer, it's their first fund, and they needed a clean exit. And so, you know, I think they're taking advantage of it. I think, and I think they think that they can bring a lot to the table on this one. So they can layer in payments, right? And when you talk to them, that's not a like 2025 project. That's a 2024 opportunity for them, right? So they can make it a better business. And longer term, there's probably an opportunity point of sale for convenience stores. And so, you know, 7-Eleven has their own proprietary convenience store point-to-sell. Like, should they be in the software business? Maybe, maybe

not. There is a 7-Eleven around the corner for me. So, you know, once every other week I'll go they grab something, and I will tell you based on my experience with their software, they should not be in the loyalty and convenience store tech space. That, you know, that's end of one. So you mentioned acquisition. So Stuzzo, they're buying from a private equity firm. I was, as you said, rule of 40 company, I was kind of surprised at the price. It looks, if you look to 2024 numbers, it looks pretty reasonable task. It is a big trailing multiple. But as you said, Like, they've got the McDonald's international relationship. It's growing quickly.

Both of these are just really strategic assets. And you and are both familiar with the winner's curse, right? Whenever a company buys someone, you're like, oh, I hope they didn't overpay. Like, you know, generally the winner is kind of sad to everyone. These are strategic deals. There are a lot of synergies, but I just want to ask, like, they both look at, like, good prices. What are they seeing that others are missing? Like, I would have thought, especially Stuzzo, private equity firms would have been coming out of the woodwork for a domestic

C-store, never lost a customer premium SaaS product? They were the winning bidder, so I don't totally know how to answer that, and it was a private equity firm effectively selling it. So I think they would be able to source other private equity firms. You know, they're subscale businesses. And, you know, like one of the things I liked about the acquisition, I'm so excited was that this gets parmore scale, right? And I mean, this is, par effectively has made a transition in the public markets.

It should have been made in the private markets, right? They've, and they were able to fund it by their government business and a convertible debt, which, you know, and now they're selling their government business, so it'll be more of a pure play. But, you know, so what are they seeing that others don't? I don't know. They're partially able to better monetize task than a private equity firm. you know they don't have hard doesn't do international right now just you know Burger King has more than 10,000 international locations like are they going to be able to

tomorrow take task international point of sale and marry it with Burger King they're not going to be able to do it tomorrow they're going to even close for three months but like there's certainly that opportunity and that's you know multiples of of of task revenue right now so um you know similarly with stoozzo right like you know they have point of sale and payments that they can layer on top of the business that most other people can. And so I do think they were kind of symbiotic. Let me ask one more.

I think a lot of the people who, again, I imagine the start there are a lot of haters. And a lot of them say, hey, these guys sell hardware at single digit margins. I think you've done a nice job of addressing, hey, that's kind of looking at the past, right? Like they're evolving. They've got the POS. They're shifting, especially post-Burter King. I guess just the. Actually, I don't know what a question is.

This is a business that will do close to $300 million in recurring revenue at the end of this year. When you layer in, you know, Stuzzo and you layer in task, right? And, you know, we're sitting here with a market cap of a billion, too. What do you think? Let's say we run this forward to, so I mentioned the boss piece, right? Which the value investor reads, hey, $80 stock price target on 26 EBDA of about 27 times. They're like, ooh, that's a big multiple. there, what do you think we're playing for in like 2030? Like, are we talking about at the height of the

2021 growth bubble, everybody who's asking like, what's the next $100 billion company? Do you think this is, so me as said, I want this to be the largest enterprise, enterprise food service company out there. Are you playing for like the next, you know, $50 billion, $100 billion company? Or like, how do you kind of frame that? Because if you're playing for 27 times, 26 EBIT, you have to see a big pie at the end of this. Yeah. Look, I think there is a long runway for profitable growth. I think that, you know, again, 70 is compounded, AR per share at, you know, 55% over five years. Like, will that go down almost undoubtedly? But you have, again, you have new geographies to play for with international. You have new products and you have new customers. And so, like, the Voss piece, you know, has, I think it has AR growing in the sort of low 20s. It seems imminently doable.

And there are a number of scenarios where you're significant, you can be well above that. I listed to execution. I mean, I'd also say, look, like, if you just look at, like, Meritech, like, puts out things on, you know, growing software companies and, you know, cash flow positive software companies growing, you know, 20 to 40 percent are. creating 11 times revenue, right? So, like, we can argue with value investors, like, what, like, is that fair? Is that right or whatever? But, like, cash flow positive, quickly growing software companies do command multiples. So I mentioned execution risk, which I think would be the biggest risk in my mind,

just because double acquisition, burger can rollout, and a few other things. Would you, if I put execution risk to the side, like, what keeps you up at night? about this business? Is it new competitors like Toast coming up from the small, the under 50 store size and kind of taking things that way? Is it legacy people just being too lazy to switch to a better product? Like, what keeps you up at night about this company? I might, that we get, it gets bought out under us.

That's, I mean, honestly, if I'm, if I were Larry Ellison, I would buy it. I'd give $7.8 a big package, and I'd ride this horse. So just take it. You must sleep better at night than me because if getting taken out of a big premium by Oracle is your biggest worry. I've got some real ship codes that I didn't sleep a lot worse at night with. We're in one of them together. I have a difference out of worries for that one.

But, you know, I don't know. Look, on each one of these pieces, like so Stuzzo's you know growth slows down or whatever it's it's kind of not going to matter right they have trouble with table service so yes like if they start having like real technical problems and and a lot of downtime on their POS system right which is not historically been a problem but like that would scare me that would really scare me this episode is sponsored by our friends at Y charts numbers and data are one thing but how you communicate and scale the delivery of these insights to clients is the real challenge. The reality is, people are more inclined to invest

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Click the link in the show notes to start your free Y-charts trial and tell them I sent you, new customers only. You know what one of the tough ones with this is, so you mentioned the Burger King win and the company is very, very quiet about wins even after they get them. I think, as you mentioned, the PAR kind of mafia is good at sourcing and talking to franchisees and seeing. But one of the tough things here is if they go two years, like these RFPs for a giant company, as you said, POS is the most important thing they have. These RFPs can take a lot of time and involve a lot of testing. And one of the tough things here could be, if they go 18 months without a big customer win or something, right?

You kind of don't know, hey, is this back to there were some internal issues, there was a technical cadet, there's something we're not seeing. Or is it just, hey, you know, we just missed out on two RFPs and these RFPs move really slow, but the next Burger King is right around the corner. I don't know. That's just kind of an interesting thing to think about because I've definitely, you and I've both been in somewhere, you sit around waiting for Godot, waiting for something to happen here, waiting for Godot, the sale of the government side. And you don't know, am I just being too rushed or is, you know, are things that I can't see happening? it's a lumpy bit it's going to be lumpy right like in terms of customer wins and the announcements that's absolutely true um like you the challenge you're talking about like a year and a half from now problem right which as far as we know the RFP pipeline is full yeah it's ever been like you know

I don't know I so maybe announcements slow down whatever if you look at at bookings in the last quarter, which don't include Burger King. Burger King, right? They're, you know, they're kind of double what they historically have been. And so they're at 3,000. So if they don't land another RFP whale from here on out, what do you think the business would grow at? Because they would still have pricing and they would still have going from, you know, the one to 1.5 products that they sell to their customers right now to hopefully to three, you know, going from just POS to loyalty to loyalty and payments, all this sort of stuff. What do you think the business would grow out like x rfp if that makes sense i mean it's been growing in the you know

they can grow in the 20s i think in the low 20s um and that's without landing a new whale so i mean low 20s would get you i hate to keep referencing the boss that by the way how do you how do you handle the rest of rbi i is that adding is that a whale or did they already land that whale because they really only landed a quarter of that whale and you know most people aren't given credit for any of the rest of it There's Popeyes. There's Tim Hortons. There's international. No, I'm not in my head. I completely agree. By the way, I mean, if the, if the, if the, if the, if the, if the, if the, if the, if the, if the, if the, if the, if the, if the, they might be in a, another whale. what's the other whale I don't know

I did like I think it was your Q4 letter where you ended by saying hey they we think they've got another RFP it ends in NDs and starts with a W or something am I remember that correctly

because of the W ends with Y or something like that yeah anything else people should be thinking about PAR um I would say look if you haven't spent 45 minutes listening to

at an investor conference I would I think he does a really good job telling the story that's part of the reason why I was reluctant to do that because I honestly think he is the best ambassador for the company now I think and I think he's basically delivered on

what he's said and then some but I think he does a really good job of kind of laying out the opportunity And so I would spend some time on that if you haven't. I also thought the boss piece was great. The boss piece was great. The business is fascinating. I mean, again, this is a who's who of small cap investors who did the pipe and who were already involved between you, Voss, ADW.

I love that Adam was the only, I texted you this, but I love that Adam was he did the pipe and then he was the only by side person who opted on to ask a call on the deal with the pipe he had just done. I absolutely love that, but it's a who's who, and that's why people are so... I would say, look, so, you know, doing the pipe, we kind of got an early look at the acquisitions and I'd really ask some questions, and, you know, I was never so, I've never been so excited for a Monday morning to roll around. And, you know, I'm like, this is it. And, you know, price didn't really move that much. And I talked to another investor in the pipe, not Adam, who, you know, he made me play the game of like, where do you think it's going to open on Monday? And, you know, I really didn't want to play that game in Jinks myself. But, you know, his number was, you know, he's like, I've been

doing this for 20 years, the best set up. My number's 54 or whatever. You know, it hasn't shown up yet. Now, maybe there's some technical reasons why, you know, a lot of large shareholders did participate in the pipe and got full, you know, as full as they can. And so, you know, sort of who's an ex-logical buyer? I don't know. And maybe some of the task, you know, know, shareholders are or Bing Ed or, you know, I don't know. You know, I think you're right there. I also think this is me, right? I've done a day of work on par.

And I see the story. It's exciting. I have no doubt it's a really good business. But as I said, like, you're paying 27 times 2026 EBITDA and you have to have conviction. Like, so we're talking about a longer term play that you're excited about, right? Like you have to have real conviction in the story, the company, the man who never everything. And it's hard, you're not going to develop that in a day, right? You're going to develop

that in a month of research. You're going to develop that in a month of going and speaking to Tiga, speaking to experts on whatever expert network you're using and, you know, talking to the company really management. And I say that all because we've had a week since the pipe was invested. So I think you're right. Like any new investor, they have two acquisitions, a lot of expert calls, like all this sort of stuff. So I do think you've kind of got like a conviction chasm where all the guys who have conviction are maxed out right now. And then anybody who's coming in is either, Yolo, hey, I trust Scott, eyes blind. I'm buying the stock on, you know, 12 hours of research, or I'm going to do a lot of research,

but it's going to take me another three weeks minimum to get there. I don't know if that makes sense or not. No, it makes total sense. I mean, it makes sense. Cool. Anything else we should be talking about here? No, I think we cover the waterfront. Well, you know, you and I have one, as you said, one other.

dog in common that we can talk about at some point. And then at some point, this podcast is well known for its coverage of Argentina's inability to pay their creditors. And I know we've got one of those in common too. So we'll have a lot to talk about in the future. But Scott, this has been great. I've been wanting to have you on for since the first podcast. I'm glad to finally have you on for such an interesting company. And yeah, we'll go for there. Thank you very much. A quick disclaimer. Nothing on this podcast should be considered an investment advice. Guests or the host may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.