Frederick Szydlowski, co-founder of Embargo, sees his company's technology as "democratising" the hospital sector so that smaller players can better compete with large chains. One of the curiosities of the current U.K. high street is the astounding number of cafes or coffee shops. Moreover, they are mostly full of people — at pretty much any time of day. Given that in many of these towns the other premises are often dominated by charity shops and not especially inspiring outlets of chain stores, it would appear that most of these patrons are coming primarily to meet other people and to drink coffee rather than to shop. This would seem to be good news for the coffee shops. But appearances can be deceptive. After all, ever since the pandemic initially kept people at home and then changed how they go about going out the hospitality industry in general has been claiming that it is in deep trouble. Rising payroll bills — partly because of the Government’s decision to raise the minimum wage and increase the contributions employers pay towards social security benefits — and uplifts in other costs, such as energy, have all hit profitability. But, according to Frederick Szydlowski, there is another problem. The coffee shop sector is dominated by a few large, international chains, but in fact 65% to 75% of outlets are small or medium-sized businesses and — unlike their larger competitors — they generally “have no clue how many customers they have or who are repeat bookings.” This lack of useful data means that they can fall into the classic trap of confusing sales with profits and also fail to develop loyal, profitable customer bases because they rely on random customers dropping in from time to time. Moreover, a lot of their business is down to online ordering, which has expanded rapidly in recent years and is dominated by well-known large platforms, such as Deliveroo, which has recently agreed to a £2.9 billion ($3.9 billion) acquisition by Door Dash of the U.S., and Uber Eats, that take substantial commissions and keep all the customer data that would be so valuable to small stores. Szydlowski knows all this because he was one of the first U.K. employees of Joe and the Juice, a Danish coffee and juice chain whose backers are said to be targeting an IPO in the U.S. valuing it at about $2.4 billion. He is now co-founder of Embargo, which promises to help small players in the hospitality sector catch up with their larger rivals by providing a software tool that enables them to boost customer loyalty at the same time as enabling customers to order online while also collecting the data that can drive future business. MORE FOR YOU A plug-and-play customer relationship management (CRM) system that can be up and running within 48 hours at a cost of as little as £30 to £40 ($40 to $54) a month, Embargo “democratizes” the sector, says Szydlowski. “We’re empowering people who don’t have technology. They are realising how many people are returning and how often they are coming.” With such information they can target existing customers with special offers or encourage them to spend more or visit more frequently. Changing work habits mean that many people are not in their workplaces every day, so small coffee shops and similar outlets can no longer rely on casual trade. “They have got to get them to come in every day [that they are at work]’” he adds. But as well as increasing retention of customers visiting outlets, users of the technology can also boost their online sales without having to use the big platforms and hitting their profits. In this sense, Szydlowski says, it can do for small hospitality businesses what Shopify has done for the smaller retailers that are no longer reliant on Amazon to reach online customers. Embargo has clearly struck a chord. It is used by nearly 3,000 venues in the U.K. and has a presence in parts of Europe and elsewhere. A recent funding round of $3.5 million from a group of investors with experience of the food and hospitality sectors will be used to boost expansion, and is a sign of others’ confidence in the offering, says Szydlowski. But he and his co-founder, Tsewang Wangkang, are also keen not to follow many technology companies in using the money to expand their headcount. Szydlowski said in an interview earlier this month that the number of employees would only rise by three to five from the current 20, with most of the investment going into digital tools designed to make the already highly-rated app even more appealing to businesses. If Embargo’s customer base continues to expand at the rate of recent months, it is probable that those high-street cafes and small restaurants will become even busier — in spite of the lingering cost-of-living crisis. Editorial StandardsReprints & Permissions