Shawn Walchef, Host
Welcome to Digital Hospitality. I am your host, Sean Walchef. This is a Cali BBQ and Cali BBQ media production. We are coming to you live from the JW Marriott in Austin, TX. Thanks to Restaurant365 and the Restaurant Transformation Festival. This is really cool for us. We’ve been a part of the LA Restaurant Transformation Tour for Restaurant 365. Then we went up to San Francisco. This is a national conference, sold out conference, and we’re here to talk about all things digital and all things hospitality.
I have Wayne Lipschitz, the CEO of R&R FMG. They said that I had to talk to Wayne and I’m so excited to learn about you, learn about your business. We care so much. We believe that all businesses, not just restaurants, are in the hospitality business, and we believe that we are going through the greatest revolution of what technology can do for profitability, sustainability, and to help us do some really cool things. So welcome to the show.
Wayne Lipschitz, CEO
Thank you! Appreciate it. My name is Wayne Lipschitz, and RRFMG stands for Restaurant & Retail Financial Management Group.
Shawn Walchef, Host
So what do you guys do?
Wayne Lipschitz, CEO
Basically, we actually have three segments of our business. We do outsourced back office accounting. So basically we will do anything from A-Z where a company anywhere from one unit up to say 50 units where it makes sense for them to outsource. We’ll go ahead and we’ll take over their back office and we’ll do all the outsourcing. We’ll do all the accounting. Take care of taxes, licenses, financials, weekly reports. Take care of their vendors, pay their bills, process their payroll. So the full gamut of what you’d expect back office to do.
And then what else we do is we do outsourced executive services. So we’ve been CFOs of some growth companies where they need partial or fractional CFOs. We’ve been Controllers, we’ve been COOs, we’ve been President of some companies. So help smaller companies grow until they can fill their spots with full time people and it makes more sense for them to bring on somebody full time.
And then about three years ago we started working in the Philippines. A lot of our labor force is now in the Philippines, and we started a program where we do virtual CPAS, outsourced virtual CPAS. So companies that already have a full accounting department, but want to lower their labor costs, we already have people that are completely, fully trained on Restaurant365, and they’ll work as an expansion to their accounting department. So instead of them adding a senior accountant or accounting manager, they’ll add one virtually in the Philippines, that’s dedicated to them, works with their team, works on their accounts and basically, they usually do it at about a 70% reduction of what they would be paying in the States.
Shawn Walchef, Host
70% reduction!?
Wayne Lipschitz, CEO
It’s a big difference. Yes.
Shawn Walchef, Host
That’s amazing. That’s amazing. When did you learn about Restaurant365?
Wayne Lipschitz, CEO
So I happen to be ironically, and it’s an interesting story, I happen to be the first partner with Restaurant365. So I learned about Restaurant365 in 2014. I think they were established around 2012, somewhere around there.
So I was doing the fractional CFO work. I had a few decent-sized clients. One was a Popeye’s franchisee, which had about at that time had about 20 units. Today they have over 40 to 50 units. And the other one was a gourmet sandwich place called Urbane Cafe.
Shawn Walchef, Host
Really? Urbane Cafe is amazing. They’re amazing. We’re in San Diego. We’re huge fans.
Wayne Lipschitz, CEO
I was with them before they started up in their first location in San Diego. So basically I was with them when they had 8 units and I think now they’re somewhere in the 20s. For both companies, I was their outsourced CFO. I worked with the Popeye’s franchisee for about 7 years and I worked with Urbane for about three or four years, helped them build their accounting departments, etc.
So to answer your actual question, so both of them, when I started with them early, early, early on right in 2013, both of them were on QuickBooks. One of them was on Peachtree. One of them was on QuickBooks, and both of them knew they needed to make a change. So one of them was looking at some more sophisticated version of QuickBooks, and the other one was looking at Great Plains. And the Great Plains one, they had already, in their minds, committed to spend $40,000 to have the system implemented and set up.
Shawn Walchef, Host
$40,000 annual?
Wayne Lipschitz, CEO
$40,000 implementation fee and then an annual cost. Yeah.
Shawn Walchef, Host
Implementation and then an annual recurring fee? Yep.
Wayne Lipschitz, CEO
So basically at that time I started looking at more restaurant-specific companies. So I was looking at Compeat and I was looking at Restaurant365. Compeat had been around for about 10 years at that time. Restaurant365 was brand new in the game, and I spent some time getting to know Morgan (Morgan D. Harris, Chief Customer Advocate & Co-Founder, Restaurant365). We spoke for a long time. He did some demos, I got him out to both clients. And ultimately…
Shawn Walchef, Host
That’s amazing! Morgan going…I love the tech stories of when the founders are out doing the product demos. The coolest thing is that Tony and Morgan will both be here at the event literally doing what they built the company doing. But as the companies scale, it’s great to hear those original stories.
Wayne Lipschitz, CEO
Morgan answered the phone, took the appointment.
Shawn Walchef, Host
Tech support? Morgan on tech support? That’s great.
Wayne Lipschitz, CEO
Drove down when we had tech support problems. He was the one I called directly. So absolutely. It was 4 of them at that time.
Shawn Walchef, Host
Yes, that’s amazing. Wow!
Wayne Lipschitz, CEO
So Compeat was at that time very modular as far as their costs. Restaurant365 was one package. The beauty of both of them was it was leased software, which was fairly new at that time. Everyone was still selling these big component packages. You know they both left the decision to me. I made the hard decision of going with Restaurant365 knowing they were brand new in the industry, knowing that there was still a startup company. RRFMG at that time was also somewhat of a startup company, and I just liked the synergies and all the rest of it.
So we were, I believe, we were their #8 and #9 installs. So we worked with Brian Ackerson, who was I think their 4th employee and he coached us through the installation, and we had some definitely had some trials and tribulations. They were moving over from the Microsoft, I think it was they were moving over to HTML5 at that point, and there was a lot of during the switchover, there was a lot of downtime and slow speeds and all the rest of it. I had both my clients questioning me, what kind of decision we made here. But ultimately looking back everyone you know they ended up buying Compeat. They ended up being the leader in the industry. And both companies are still using them and have used them and love the software. And you know from there we’ve done hundreds of installs since then and just absolutely love the software. So we’ve seen it all the way from when it was virtually a small general ledger package.
Shawn Walchef, Host
What do you look for in a tech partnership?
Wayne Lipschitz, CEO
So definitely for investments in technology, right? So that they’re growing and they’re constantly evolving. So with for example with Restaurant 365, I mean they’ve tried different financial reporting packages along the way. They’ve probably been through five or six different packages to get to where they are right now with their custom financial reporting module. So and it’s OK, it’s OK to do that. It’s OK to, I don’t want to call it make mistakes, but it’s OK to evolve. And that was fine. We just grew with them. We tried all the different packages as we went along. They allowed us to give our input and all the rest of it.
And you know, I think to really answer your question, I think we felt, I did anyway, felt a lot more secure when they got some private equity money in them and they could really invest in technology and they could really invest in R&D and they could really start going out and adding a lot more to their software. So I think that’s really what gave us the comfort. I mean it was 3 founders and they did a terrific job. They supported us as best as they can with the capital that they had available to them. But when they finally got capital, they used it in the right place. They put it back into the company and really grew the technology.
Shawn Walchef, Host
So we always say that we learn through lessons and stories. So if we hear a story about a restaurant that successfully implemented a product or a service, what’s the lesson that we can take away? You guys have case studies that you’ve done with Restaurant365. Jinya, Ron and Mark, can you talk about that?
Wayne Lipschitz, CEO
So let me let me come back to that in a sec, if you don’t mind. So my background is I’m a CPA. One of the companies I worked for was Cheesecake Factory.
Shawn Walchef, Host
I’ve heard of them.
Wayne Lipschitz, CEO
So yeah, we’ve all heard of them . They weren’t much when I started working with them. So at that point, they were 19 units. Yeah, 19 units. So we go back a bit.
Shawn Walchef, Host
19 units? Wow! How many units do they have now?
Wayne Lipschitz, CEO
Now they have 300, plus they bought other concepts that they’ve added on to it. But between their own concepts, they have about 300 plus units.
So when I got there, we were working on AccPac. We had eight people in the accounting department and each one of them had several number of stores assigned to them. As far as they were the bookkeepers for those stores, right. So we knew that the concept had legs. We knew it was going to grow. We knew we had to make some changes. We knew we had to build some infrastructure, and that’s during my four or five years there we spent a lot of time doing that. So one of the things that we knew we needed to do was to get another accounting software. So we went out, we even used at that time Deloitte and Touche, and we did a lot of research and at that time the big software that was used by a lot of the restaurant players was Lawson. I’m not sure if you’ve heard of them, but back in the late 90s that was the big player.
McDonald’s used them. Panda Express used them. Chipotle used them. So they were a pretty big player. So we spent about…we finally decided after going & doing all our research and everything, we decided to go ahead and implement them using Deloitte and Touche to help on the implementation. And the reason I’m telling you this story is just to show you how (far) we’ve come in such a short time. But we spent six months doing the implementation. We spent a million and a half dollars on the software, and that doesn’t include the annual maintenance fee. And ultimately, we got a package that was as custom as it was going to be for us.
So today I could go do that implementation in less than a month in a fraction of the cost, probably under $50,000 and it would be a system where they could add, or it could be completely scalable.
As they grew, they would increase the costs, and as they closed locations they would decrease the costs, and that’s how simple it would be today using Restaurant365. And I always tell that story just because of living through that, and trying to get that perfect. And it even took months afterwards implementing payroll and implementing all the other modules, where with Restaurant 365, I mean, we’ve done implementations in as quick as 2 weeks!
Shawn Walchef, Host
That’s amazing.
Wayne Lipschitz, CEO
So to answer your story, we’ve, you know, we’ve come across some really great clients. We’re based out of LA. You mentioned Jinya Ramen, they have about 60 units across the country. They are a Japanese concept. They actually found us. They were referred to us by an independent CPA firm that was doing their franchise audits. So they have about less than 10 company-owned stores and the rest of them are franchised. So they came to us, they were on QuickBooks and we moved them over to Restaurant365. We kind of helped them clean up the chart of accounts. We helped them with a lot of their SOP’s and procedures and putting new processes in place. And now they are able to pull reports very quickly. They’re able to know what’s going on in the business. We close the books within 10 days and it’s been a great relationship.
Shawn Walchef, Host
That’s amazing. What struggles do you see when companies are small and they get to the point where they actually need more services? What struggles do you see that they have?
Wayne Lipschitz, CEO
You know, a lot of the businesses that we tend to deal with are moving from founders to bigger players, right? They know they need some capital, they know they need equity. They’ve always been very hands on with the accounting or very hands on with the processes and just finding them to let go, spend money and do those kind of things is usually the difficult part. I mean for some for some reason they’ve done it for so long, they feel that no one can do it better than them. And just winning their trust and letting them know that there’s this whole array of services and benefits that they can get out of their software. Getting them to that point, and letting them really believe that they made a great decision is probably the biggest challenge. I mean, we always eventually get there. Sometimes it’s rocky because you’ve got different personalities, but ultimately that’s where you want to get so they realized they made a great decision. They’re with the right software and they now have all the tools they need to run their business.
Shawn Walchef, Host
For you, why do you find it valuable for people, all different types of leaders in the hospitality space, to come to events like this Restaurant Transformation Festival.
Wayne Lipschitz, CEO
So you know, I’m going to go back to Lawson for a second. So, you know, when I was with Lawson, it’s actually one of the reasons we went forward with Lawson, and we were still deciding on the software, they threw their annual user conference. It was about 2,000 people. It was in Minneapolis. They had it at an airport hangar. They had the group Chicago playing there. It was a big deal. And it was a lot of fun and all the rest of it.
But just the camaraderie and everyone getting together and everyone talking about the software and everyone doing what they…everyone picking each other’s brains and talking about what they do with their software and how they modified it. And you know it just creates the ability to understand that there’s so much more the software does, because there’s always a lot more bells and whistles that you never touch. You just use what you’re used to using, and then you start developing relationships with people that you can reach out to every time you want to do something and be able to use them as a sounding board.
So, I’m a platinum partner. As I say, I was the first partner. I’ll tell you that story in a second. But I’m a platinum partner. I think it was October…
Shawn Walchef, Host
How many levels of partnership are there?
Wayne Lipschitz, CEO
I think there’s 4.
Shawn Walchef, Host
4? I wonder what level we are.
Maybe not platinum, but I get to sit with a Platinum member.
Wayne Lipschitz, CEO
I think you’re not on the finance side. You’re probably on the technology side.
Shawn Walchef, Host
No, we’re not. We’re on the media…we’re on the storytelling side. So platinum storytellers.
Wayne Lipschitz, CEO
Let’s go into that direction. One day, I think it was about 2014, we had just done the implementations. I liked what I was seeing out of Restaurant365. It was exciting. We were starting our business. Our business started in 2008, I got involved full time in 2013. So it was great timing between us and Restaurant365.
So I was in constant touch with Morgan and John, John Moody and Morgan as the two Co-Founders and they were very supportive. Went to a lot of the conferences and I think the first dinner they ever had where they hosted people we were involved in that. They were really worried about what it was gonna cost, because there were 10 people there and they’ve never done this before.
Shawn Walchef, Host
(laughing) Is it gonna be worth it? What’s the ROI? What’s the ROI of a partner?
Wayne Lipschitz, CEO
And I went by these three companies, there was us, it was Blaze Pizza, “us” meaning Popeye’s, Blaze Pizza, Urbane Cafe, and I think there was Capriano’s. So it was the four of us. And so these were their early, early adopters, right? And they were just really nervous. There were 10 people there. We started ordering drinks. All the rest of it. And they were worried about this.
Shawn Walchef, Host
Where was the dinner?
Wayne Lipschitz, CEO
It was in one of the restaurants in Vegas, and they were worried about what this bill was going to cost because they’ve never done this before. So it was pretty interesting when you go back to those days and then you see an event like this, it’s an event like this where they’re having a whole big party tomorrow night.
There was one Sunday morning we had just set up a website, everything was great. I reached out on a Sunday morning to Morgan and John, and I said we’d like to be a partner of yours. I said, “We like the software. Would you mind if we add you to our website?” We were in the process of setting up our website and they thought it was like the greatest thing in the world that somebody wanted to add them to their website.
So they sent us a logo. We put their logo on our website and yeah, the rest was history. I just remember that day sitting in the parking lot at Equinox Gym. I had some extra time. And I’m thinking, you know, we really need to have a page where we have strategic partners. And I reached out to them and they, within minutes, they both responded and said that would be awesome.
Shawn Walchef, Host
Why is that important?
Wayne Lipschitz, CEO
You know, for us it’s important to show who we associate ourselves with, right? As far as these are the companies that we associate ourselves. So we took a risk at an early stage saying that we’re not going to compete with Restaurant 365 and we’ve made that decision.
So when you ask why it’s important, I’m talking about from us, from a provider standpoint. In addition, what it did for us is it started actually creating a relationship where they actually felt we were partners and we started slowly taking our clients off QuickBooks and off other programs and moving them over to Restaurant365. And eventually we got to a point where we were 50/50, and we made a company decision, we made an executive decision, that we’re only going to support one software. At that point, we didn’t give our clients a choice.
Shawn Walchef, Host
I love it.
Wayne Lipschitz, CEO
We moved them all over on to Restaurant365. You know the one thing which has always been a little bit of a concern for us is the AP. They never had AP when we got started with them. It was a basic General Ledger package. So at the same time, Plate IQ was coming out with their product. So we partnered with them as well and we’ve kind of kept both partnerships and that’s kind of how we’ve done it. Every single one of our clients has both products. There’s a few of them that have asked to go on to Restaurant365, and we put them on there because it’s a partner and they requested it. But I would say 90% of them is Restaurant365 for the financial and Plate IQ for the invoice routing and matrix approval.
Shawn Walchef, Host
It’s interesting to me when you talk about the partner relationship because I just showed you before we started this is the tech stack that we have as Callie BBQ. We publish our tech stack and it’s something that we teach other restaurants that are listening to this show that typically we don’t think of it when we’re in the B2C side. It’s definitely more of a B2B signaling to the market that these are people that are preferred partners.
But I would argue that there’s a huge opportunity for us to signal who our technology partners are, who our primary food vendors are. If we’re a Pepsi product, if we’re Coke, whatever it is. You make those decisions in your restaurant. Why would you not signal it to the people that care? And trust me, most people aren’t going to care about our BBQ business. What point of sale we’re using. What accounting service we’re using.
But the people that do care, which we know are a lot of restaurant owners who we follow each other. We’re on Instagram, we’re on TikTok, we’re on LinkedIn. We’re listening to podcasts. And I want to know if one of my friends that owns 20 restaurants in Chicago, if he’s using something that I don’t know about, I would love for him to tell me about it.
Wayne Lipschitz, CEO
That’s right, absolutely. And I think that’s nice thing, what you see at this conference, is that Restaurant365 used to be a standalone allowing APIs and allowing all these different companies to come in. But now they’ve actually developed a whole partnership program.
And it’s not just in finance, right? I mean it’s in accounting and communication and everything else. So I think that’s made a big difference because now you’re really dealing with not just a software company that handles accounting. You’re dealing with a software company that supports the restaurant industry and everything related to the industry, whether it’s marketing, whether it’s repairs, whether it’s outsourcing to the Philippines, whatever it may be. They bring in everything that as a restaurant owner, as a restaurant supporter, that you’d be interested in.
Shawn Walchef, Host
So if you were giving a keynote to all of the restaurant owners that are on Restaurant365, what is the most important report for them to use on a weekly basis?
Wayne Lipschitz, CEO
You know, I think there’s so many reports in there and so many people are developing their own reports. We’ve developed a lot of our own reports. But as far as custom reports that are coming out of Restaurant365, it’s definitely just really simply looking at a prime profit report.
Shawn Walchef, Host
How often?
Wayne Lipschitz, CEO
Every single week.
Every weekend, as close to Monday as you can. You wanna see it as soon as the week’s over. You wanna be able to adjust. You wanna be able to make adjustments before you get too far into the next week. And you want to know by the time you get to the end of the month when you’re dealing with historical financials, that you’ve been able to have as big an impact as you as you can to manage those numbers. And you didn’t wait till the end of the month, and you’re halfway into the next month, before you made adjustments.
Shawn Walchef, Host
So this might sound like an ignorant question, especially for a Rrestaurant365 audience, but we have a lot of single unit restaurant owners that also listen to this. How do you get a weekly financial report? What actual things have to happen in the restaurant for you to be able to produce a weekly financial report?
Wayne Lipschitz, CEO
Great question! So as far as getting a report, you’re pushing a button, right?
Shawn Walchef, Host
Sure, but inputs need to come in in order to get that.
Wayne Lipschitz, CEO
If you want your numbers as accurate as possible, you need to take an inventory. Some sort of an inventory, right? A weekly inventory.
Shawn Walchef, Host
Weekly inventory. Weekly inventory. That’s counting everything?
Wayne Lipschitz, CEO
It could be counting your high-priced items, or your high volume items. So it just depends on the concepts because some concepts are very, very stable. They get deliveries six or seven days a week, so they really go through all their products. So it’s not as important. But the ones that build up a lot of inventory, it’s much more important because it moves the numbers.
But you definitely gotta take some sort of an inventory. It all depends on your concept. You’ve got to get your invoices into the system right away as soon as you receive them, because those are the things that are going to move the numbers. And the other thing is you got to be making sure you’re loading your sales and doing your bank recs and are on top of your cash all the time because you want to know that you’re dealing with real numbers. That your dealing with your full sales, your full cost of goods, you’re not missing any invoices. And the third thing is labor, which is one of the great things about Restaurant365. It was one of the first times I actually even saw this, where they pulled the labor directly from the POS, and you’ve got real labor right there every single day, which has been terrific.
You know those reports have been very, very close unless, to your point, unless you’re not taking a full inventory. The labor’s gonna be close, right, because you’re putting the numbers and as long as you have good procedures in place and people are clocking in and clocking out, you’re gonna capture your labor. There’s the opportunity to put in salaried labor as well, plus benefits. So you’re gonna get your real, real labor, other than somebody not clocking out.
As far as the cost of goods, that’s the more challenging one because you’ve got to make sure you’re counting your inventory and you’ve got all your invoices, and you’re not missing any invoices. And your sales are straightforward, as long as you’ve got a good system and you’re posting your sales every day, you’ve got all that. So it’s really not a lot of work to give you some very useful and accurate information that really controls your business. And when you think about it, that’s roughly 60% of your costs, anywhere between 50% and 60% of your costs that you’re managing on a weekly basis.
Shawn Walchef, Host
Very important. So every single week on Wednesday and Friday on the social audio app Clubhouse, you can join us, come up on stage, tell us about your restaurant. If you’re a content creator, if you’re a sales, marketing, digital hospitality leaders from all over the globe, it’s our micro community where as a podcast, if you’re listening to this, we want to hear from you. Stay curious, get involved, ask for help. You’ve done the curiosity part. You found the show. You’re watching it on YouTube, you’re listening. But we need you to come on stage, take the next step. Tell us about your journey. Tell us about what you’re building. And hopefully we can help you along the way.
If people want to reach out to you, what’s the best way for them to do that?
Wayne Lipschitz, CEO
Always call. Website.
Shawn Walchef, Host
What’s the website?
Wayne Lipschitz, CEO
It’s rrfmg.com.
Shawn Walchef, Host
OK, we’ll put a link in the show notes for you guys.
Wayne Lipschitz, CEO
Appreciate it. You can always get me at wayne@rrfmg.com. Company number is 818-888-9579 and my mobile, anyone’s welcome to call it, 818-679-9595.
Shawn Walchef, Host
That’s awesome. Well, we appreciate it, Wayne.
As always, if you guys want to get in touch with me, it’s @shawnpwalchef. That’s on Instagram, LinkedIn, TikTok, Threads, all the platforms. I’m weirdly available. What’s important is your digital hospitality journey.
Wayne, thank you so much. It’s a pleasure to meet a legend as yourself. Thank you for helping so many restaurants.
Wayne Lipschitz, CEO
Absolutely. Thank you. Or a Restaurant365 legend.
Shawn Walchef, Host
Now you’re a digital hospitality legend. The only way restaurants grow is by finding the right humans that embrace the right technology and then we can really make an impact on our community and do some really cool things, so thank you.
Wayne Lipschitz, CEO
Thank you. It’s a pleasure.
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