PAR Technology Corporation (PAR) Earnings Call Transcript & Summary

All right. Next up, we're excited to have Savneet Singh here, CEO of PAR Technology. Looking forward to our discussion today.

Likewise.

So thanks for being here. I know there's probably a lot of people listening who maybe are not as familiar with the story. Would you mind giving us kind of a quick overview of the long history that is PAR, kind of how it came to be and kind of what you've done with it since you took over?

It's a long history, but I'll try to condense it. The company was founded 55 years ago, originally as an IT services company for the Department of Defense. Ten years into its journey in 1978, PAR invented what today we call the modern point of sale system. And then the company went public in 1982, really off the success of McDonald's rolling out this system across a bunch of its stores. It took off, I'd say, for the next 5 or 10 years. And then I'd say the subsequent 25 years really kind of got stuck in the mud. It had a sort of a long, slow slight decline, primarily because it got stuck as a hardware and services business and not a software business. So to rectify that, albeit 25 years later, we acquired a software product called Brink. And the vision at the time was that Brink was cloud point of sale for the enterprise. And the idea was that downmarket you saw the massive growth of firms like Square doing a great job of modernizing POS downmarket, somebody do the upmarket in part had all these relationships with the large chains. That seems synergistic. And so we acquired the business at the end of 2014. And it was more of a product in the business that was in 300 stores, it was 7 or 8 or 8 or 9 people, really small. But that business really exploded under PAR. It went from just a few hundred stores to 5,000 or 6,000 in 2018. I joined the Board of the company in 2018 and then became the CEO towards the end of 2018 on this idea of recapitalizing the company, focusing the company on the software vision. Our entire piece of that now is that software is eating the restaurant, but the restaurant might not realize it yet. And in this wave of digital transformation, we thought the place to be with the POS, the heartbeat ERP of that organization. And so since that time, we've worked really hard to buy the core products that run a restaurant. So back office, POS payments and what we call front of house, which is loyalty and online ordering so that we can kind of stitch together a solution for that enterprise that allows them not to manage a dozen different products and really focus on their guests.

Got it. That makes sense. So the legacy of -- or the heritage of the company is in the kind of Tier 1 fast food and enterprise restaurant space. How does that compare to the target market of the software-oriented assets that you have?

So our software market is broader. So the historical business was the big, big restaurant chains, McDonald's, Taco Bell, KFC. The market we serve today, I would say, is quick service, fast casual and now, table service, which we just entered the last 6 or 7 months here. We are enterprise focused. So we're the right solution if you're kind of 50 stores and above. We really are -- we do believe we're the best solution in that market. But we're also really great for these emerging brands. So a number of the fast-growing well-known chains from Cava Grill to MOD Pizza to Sweetgreen, they've been customers of us since some of them were 2 stores. But that's because they had the intent and the vision back then, they wanted to be an enterprise and wanted to build enterprise infrastructure early on. But we really are that kind of enterprise is the key area that we differentiate ourselves.

Got it. And so you talked a lot about unified commerce. I mean how does -- what is unified commerce for an enterprise restaurant, and maybe separate and distinct from the SMB space that a lot of investors are familiar with?

Yes. Unified commerce division, in that today, if you run a restaurant, you would have 10, 20, sometimes 30 products plugged in across your store, managing different parts of your workflow. And that creates a ton of challenge because every single integration is a single point of failure. And so if your payment system goes down, well, that's just not your payment system going down, that's your POS is probably going down because most people need to pay with their cards. You can't process loyalty, you can't process ordering. So everything that's really connected. But the big challenge is that in a world where data is so important, it's hard to have that data be valuable if that data is not unified. So unified commerce is really simplistic. It's an order anywhere, it's an order everywhere. And so instead of the online ordering system being different than the in-store system, being different than loyalty system, and then you've taken that data reconciling and trying to say, okay, this is Will in different places, it's literally unified. That order from Will, no matter where you order, it goes back to the same systems, the same flows, everything is the same. And the key part of that is simplicity because well, I'd argue those having deep integrations for those products allows us to identify you across the store -- identify that employee across the store. But what it really does is also create simplicity to the operator because you've got one phone number to call. You've got one bill. I mean these sort of externalities that are really compounded on themselves. And then over time, our belief is that if you use the same vendor for your POS loyalty, online ordering and back office in our example, and that's under one roof. Gosh, we have a ton of unique data about who you are that we could probably deliver you products that somebody else couldn't because now we have those products, and we can sort of combine them and that's the kind of the last layer of it. And so the first layer is really putting it together, a really amazing integration, so they just work well. The second, I think, is like a service element, which is when they're under one roof, it's so much easier to work than having to call 5 or 3 vendors to figure out what your problem is. And then the last layer is actually new products.

Maybe we could hit on the competitive set. I think investors tend to just kind of lump the restaurant space into a single competitive group. And obviously, that's not right. It's a very large market, one of the largest retail markets in the country, not the largest. Who do you compete with in the enterprise segment of the market? And what are the kind of the barriers to entry from other competitors that maybe are looking to get into this market?

Our biggest competitors are legacy POS players, NCR, Oracle, Xenial, which is owned by Global Payments. These are the firms that we run into day in and day out and we compete with every day. They are -- they have tremendous market share. NCR yesterday, I think, put out that they're in, I believe, 150,000 stores or something like that and 75% of them are enterprises. They are really sticky products, really stable products. But we would argue, not as modern as our products, not built for the world of today, sort of have a decade or 2 of a customer service history that might not be perfect. So we compete with those guys. Downmarket, getting to your question of why it's different, you've got amazing businesses. You've got Toast, you've got Square, [indiscernible] or Lightspeed, so on and so forth, tons of firms down there. And the challenge is that the product you sell to a small restaurant is dramatically different than enterprise. When we're selling to a big chain like an Arby's or whoever, they've got a CIO, CMO. They've got a consultant in there. They've got a data science team. They've got a development team in India and wherever. They've got like an inordinate amount of people making decisions. They've got RPs, they've got auditors. When you're selling to a 2-store restaurant chain, like the CEO is the chef, the COO, the CMO, the CIO, it's a completely different product. The idea that in the enterprise, our integrations into their ERP systems or their salesforce.com, marketing automation or whatever it may be, like that doesn't exist downmarket. And so it's just a really different set of needs for that customer. And the way I think about it is if you and I were designers of vehicles and I design sports cars, and you design semi trucks, like if we switch jobs, we probably could still do it, but it would take us years of understanding the nuances, the needs of that customer to solve the customer's pain points. And so I just think they're, in many ways, completely different markets.

Got it. And so I guess, two schools of thought on restaurant. I mean software, as you said, is probably eating the restaurant industry. It's probably already taken a big bite out of the SMB space. So some people would say, software companies that have been very successful in SMB, it's only a matter of time before they get into enterprise. So we've had a lot of time over the enterprise players to see what's happening downmarket. You guys have a more modern platform. Other competitors are talking about upgrading their platform. So how do you think market share dynamics shift shake out over the next couple of years?

Well, I think in the enterprise, I think we reported last month, our POS was up, operator solutions is up, I think 37%, 38% year-over-year, and we sort of expect that kind of growth. I don't know anyone is growing faster than us in the enterprise. I'd be really surprised, unless they were super tiny. I think that there's no doubt that if you have a large market share downmarket, you need to find another avenue of growth to keep the TAM expectations so that folks in this room keep buying those stocks. I think what the data would show, and I think the people that work in those business would tell you, it's been a lot harder to get there than one would have thought because those are organizations that are not short of money, not short of values, not short of inspiration. But it's been hard for them to crack that. And I think it's because of the product side. Can you hire a bunch of enterprise sales people? Can you hire our enterprise sales team and steal them and go sell? Sure. Can you have better marketing with us? Definitely. But can you take a -- do you have a product that compete better? Like I think that's hard. I think that's why it's taken so much time. But it's also a cultural change, right? If you built an organization who's been selling POS systems by putting up Instagram ads and cold calling restaurant chains and you've got a 2-week to 2-month sales cycle, how do you turn the culture of that organization to be like, okay, now we're going to do 18-month enterprise sales cycles with people that show up in suits and ties and with consultants and HR. It's a really different cultural change, too. And then there's obviously a business model difference. So I think it can happen. And our goal is to continue to innovate on our products so that our moat expands and we don't sort of get stagnant and like, oh, we have a good product.

Got it. That makes sense. So let's bring it back to your products. You started out with Brink. Guest engagement came from the Punchh acquisition. You did an acquisition of MENU. You've had this Data Central asset for the back office. How do you kind of stitch together these products into kind of a single cohesive unified commerce experience?

So the key is that they've got to be really heavily integrated to each other. Our belief is, we will never tell a customer you have to do this. A lot of what we've learned studying the stalwarts of our industry from a generation ago was that was kind of their playbook. They kind of slammed this stuff and said you got to do it. And what it did was it led to a generation of customers who were desperately looking for an alternative once that alternative came. We don't want that to be us. And so we -- our belief is that our products on their own need to be the best products in the market. And I think we can make an argument that all of our products are there, and I think market share would show that on Brink and Punchh for sure and I think other 2 products eventually. But what we have to convince our customers and show our customers is that if you've got 2 of our products and they are integrated as they are, the outcome is even better than if you'd pick a competitive alternative. Again, we're not forcing you, but if you have our 2 products or our 3 products, together, they work better than if they were independent. And so our goal is to deliver that through a really, really strong point-to-point integrations that make you feel that you're connected. And it's like there's small stuff like single sign-on, shared reporting, shared dashboard, but there's bigger stuff like eventually a CDP platform or all the data is in one place. Maybe a universal menu one day. There's all sorts of stuff that you can build on top of. But today, I think it's showing that the integration between the products has to be really tight so that you may have an alternative. And gosh, you may think that alternative is better than our product. But when our product is integrated with the other product, like it's the better outcome.

And when you think about the addressable market for the current product set today, maybe you can give us a flavor for what that kind of ARPU profile looks like for a location.

Yes. It's a bullish scene. Historically, our POS product, if you look back since we're running the company, it was about $1,900 per year per store. Today, that's trending $2,200, $2,300 and going much higher. If you look at sort of just the data we put out there, the average customer being signed is meaningfully higher than that on Brink. And so that POS module will continue to go from $2,300, $2,500 to $3,000 because the value provided is meaningful. And also I think aided by the competitive dynamics I mentioned. Our back-office product is about $1,400 to $1,500 a year per store. And our loyalty product, Punchh is, call it, $1,000 a year per store. There's a lot of -- tens of modules and so on and so forth. And then MENU, our online ordering product that we recently acquired, again, depending on the set of modules, it can be $800 to $2,400 a year, depending on what you choose. And that's for the core suite. And then we've got a payments product that we -- I always tell folks to sort of what are we charging for POS is roughly the same with what we're going to charge you for payments, depending on the setup. So if we can get you to buy our suite of products, it's a ton of revenue per store. And it gives us a lot of leeway too, to be aggressive on price because we get the operating leverage of one salesperson, one marketing budget and so on and so forth.

Got it. Now that makes a lot of sense. So I'm trying to do the math in my head, but it sounds like that kind of puts you somewhere in the high single-digit thousands plus maybe payments.

Yes.

Yes. Got it. Great. Maybe you can talk about the upsell or the cross-sell opportunity today. I mean you've had pretty significant success selling each of the individual products. Is there an upsell motion? How successful has that been so far?

Yes. So we've got a cross-sell and upsell motion. So on the upsell side, we have certain products like Punchh, soon to be MENU, that have modules that we can upsell. And that's always kind of been pretty programmatic. That's worked pretty well for Punchh for a long time. We try to get better and better. On the cross-sell side, we've recently created an account management team that sort of owns the account. So that if you're an existing customer of ours, you've got 1 account manager that really owns that relationship at a strategic level, and that person then brings in a direct salesperson to go sell the next product to you. And the job of that account manager is to understand what are the openings in that account, what's the price point that's going to matter? Who else are we competing against? What the tech stack look like? Who is the consultants? Who are -- who's the buyer and so on and so forth? And we've got a pretty good track record, I think. When we acquired Punchh, as an example, business was growing kind of 25% to 30%. We acquired it. And for the first 2 years, I think it grew 40-plus percent annually. And that was just because we had a -- [ on the customers ] we could say, "Hey, check this thing out". Many of which we recently acquired, we only took it to the United States in, I think, like February and March of this year, but the amount of pipeline we've driven is incredible so far. The point being that, I think we've got a good motion of like once we get the product under our roof, we can create that pipeline for it within our existing base.

Got it. Makes a lot of sense. Could you maybe touch on the macro? How do you think about macro impacts on the business? What's the most macro sensitive piece?

We used to think about this a lot, and I've spent a lot of time educating the PAR team on here's a macro who we get ready for. And honestly, the only thing that's been valuable is how we finance the company. It was the end of -- in 2022, I was like, "Oh, man, inflation is here. I can see the pricing." And so we refinanced everything. It was the greatest thing we have done from a finance perspective. But our customers had zero impact. It did not change buying decision on the vast majority of our products. The only place we had some economic sensitivity was on loyalty. And it wasn't because of the spend on loyalty, because when you do a loyalty campaign at a large restaurant chain, it's not just you're spending money on us, the entire organization has to buy-in to like, okay, this is a dramatic shift. You've got to do a huge education campaign to your franchisees, first and foremost, because they are out there. Then you've got to educate your customers, people like it's just a big initiative. And so it wasn't that they weren't spending. They were just like, okay, we're going to push out this enormous corporate initiative. That's now kind of come back. But I'd say, categorically, our customer base has been really resilient. The lowest churn we've ever had was last quarter. Our annualized churn last quarter, I think, was like 3.5%, less than 4%, crazy. I mean that's like best in the world type stuff. That's gross, right? I mean so it's been kind of interesting to see in this tough environment, we haven't seen any pickup in churn and any meaningful impact has gone down. Now will it forever be like that? I don't know. But I think that QSR businesses, particularly franchise businesses, have incredibly high return on capital. And so even when their sales are down 5%, 10%, which has not happened yet, they're still printing money and they still have the ability to be like, okay, I need to serve -- see for what these investments are. So we're seeing really strong durability in our customer base today. But I think that's completely reflective that we happen to focus on this QSR, fast casual market, which is pretty darn profitable, very resilient and has a real commitment to investing in technology because their peers have and their peers have driven ROI.

Got it. So when we think about the heritage of the business in that large Tier 1 space, we haven't seen too much in the way of like synergies between that and the software business. But there has been some chatter around some of these large Tier 1 chains deciding to kind of give up on the in-house systems and modernize their tech stacks. How do you think that process evolves? And what do you think about the probability of PAR being at a seat at the table for those processes?

So last part it's easier, which is I suspect we'll be a part of those tables because we've been a partner with some of these organizations for as long as I've been alive. We've been really strategic to a lot of what they've done. But I think like if we step out for a second, most of these organizations, I think if you really ask them to their core, would probably tell you like, yes, we probably should stop building our own software. Now getting to do that is hard because they've got whatever, 100 people working on that team and so on and so forth. But what's happening is that if you're the CIO, CTO or you're CEO, you look around, and all of a sudden, all of your competitors have made this tremendous investment in technology, great loyalty, mobile, AI, whatever, even the ones that have done crypto, like it's just been an incredible growth of the stuff. And if you've got a homegrown product, like every single time you want to do something, it's like, okay, here's a bill, we're going to do this; as opposed to you have a third-party vendor, like, "Oh, we already done all those integrations. We've already done it for these 10 customers. " The cost, I think, is actually far more prohibitive when you do it internally than externally because when you do it externally, you just build out to the franchisee. If you're building it yourself on the corporate books, you've got to negotiate with your franchisees and say, okay, like, your tech fee is not going up because we've got to build this new stuff, like there's all these things that I think make the ROI challenged. What I do think now and this is, I think, squarely the result of us being a real company, is that we are now, from a site perspective, larger than any one individual restaurant chain. And so we can go and say, hey, we can handle your size. Where historically, all these large chains had more sites than we did. And so that would be crazy for them to give us their business because they're going to be like, you guys have like 6,000 stores and I'm like 15,000 stores, like that's not going to work. I'm not going to trust you. But we've kind of like cross that chasm. And so I think that's a part of it. And the last thing I'd say is I think it's also reputational. I think that these are risk-averse businesses that make their money on how they run their menu, their marketing, and this digital thing is new. And I think they have to really believe that the company they're working with is reliable, it's going to work, but also like they can deliver without pain. And I think our reputation continues to get better and better and better, and that gives them more confidence to make that switch. But honestly, this to me -- it's just a wave, like I don't -- I think it will be very hard to be the last person standing and saying, "Hey, I want to build my own." It's like, I don't know. I guess it's like a hedge fund thing, I want to build my own trading software because I'm going to get some edge. In today's world, that's hard to argue.

Got it. And do you see this playing out as a winner-take-all type of situation? There's not that many competitors in this space, but a large chain with almost 100,000 restaurants, 50,000 restaurants comes out. Are they going to...

Do I see it that way? No. Do I wish and plan for that? Yes. I mean we wanted to winner take all. I think we would win. I hope you win. But it's a big market. If you look at the last version of this market, you had 2 really, really, really big winners and a bunch of medium-sized winners. But one of the great things that's happened with the slowdown in sort of external funding into our market is that it's allowed a lot of noise to get sort of squeezed out and I think puts us in a really strong position to potentially be a consolidator, but also be able to make the continued investment in R&D to show to our customers that we are the ones at the back. If you're a big brand, a lot of what you want to do is not just pick the right product for today, but you're like, what's the right product 5 years from now? And it's impossible to know today. What you can say is how much is that company spending in R&D? Like who is the person I'm talking to? Are they innovative, are they future -- how are they looking at that world? And I think we can give them confidence that we're really spending and hopefully that they align to our vision. So I don't think -- it doesn't need to be winner take all. I certainly -- we're certainly trying to make it that way. But I don't think it needs to be for there to be a couple of big winners.

Got it. Makes sense. Maybe let's talk payments starting to become a more meaningful contributor to revenue. You set out a couple of goalposts for where you expect that to be. What do you view as the key value proposition for why a restaurant should choose PAR for payments in addition to the POS software that you offer?

I will give you -- I want to give you three. One is cost, two is simplicity, and then three is data. And I'll go through this fast. On a cost perspective, most restaurants, not all, like don't -- can't actually tell you what they're paying for payments. They have a number in their head, and then they'll say, "Give me your statements," and then it's a completely different number. And so we really go in there transparently and say, Here's actually what you're paying. Here's what we can deliver for you." And that matters a bunch. Second is simplicity. The number one -- generally the number one call for resolution to a POS helped us because of an issue with the payment device or the payment terminal or the payment connection. Simplicity of having that be the same vendor is really powerful because it's like the number one reason I'm going to call and complain is the same, we can try that out together. So you're not pointing fingers or say, "Okay, the payment guy is down? Oh, that's me. The POS is down, that's me. We can figure that out." But the simplicity is also I can trust that what I'm being charged is real. There's an entire little business of people that will go to restaurants and say, Give me all your payment statements, I'll tell you all the charges that were wrong and you can claim this back." Like when you have the POS in the payments company, the data integrity is high, transaction fee, transaction fee, it's all there. The last part is data. And what I think is interesting here is that we own the largest loyalty product in restaurants. And if we have your payment data and loyalty data, like we literally know every single guest that has ever shopped in your store. And having that data and combining it, whether it's a POS data or loyalty data, is an incredibly valuable tool that we can then let you take charge of. And most payment providers, they don't really give you that data or they charge you a lot for it, but they try to -- that really becomes their data. And the way we do it at PAR, we really give you the ability to monetize that data all over again. And I think our dream -- I sort of have this dream, which is we should be able to build a product on top of this payment data or all of our data at some point that will allow us to continue to bring down the cost of payments because we're making money on a product that's actually adding a ton of incremental ROI for you.

Makes sense. I guess just following up on the payment side. You mentioned that there's a cost advantage. Could you give us a sense for like how much a restaurant can reduce their cost of payments by adopting PAR Pay?

It's meaningful and it depends on the chain. But we've gone to chains and saved them well over half what they were paying, which is a large amount. I would say, I could give you an average, but I would say sometimes it's 20%, sometimes it's like 60% or 70%, but it's a meaningful savings where it's hard not to take us .

Got it. Makes sense. So you've seen a lot of momentum in Brink, the POS which you've historically talked about this being sort of the tip of the spear for the software platform. What's the outlook for operator solutions over the kind of intermediate term?

I think we'll continue to grow as we've been growing. And we have a couple of irons in the fire with super large customers that would take us another hopefully a step-up in growth from even there. But payments has been a huge driver of that and will continue to be a big driver of that because of the value that we add. And the way we report payments is net. If we were to sort of gross it up like our peers, the number would be like, I don't know, $40 million, $50 million, I mean way bigger than it is -- than we think is -- we think that this ingenuous, but the combination is powerful for the end customer. And so I think by just ticking what we're doing, I expect it to continue to grow really nicely. And we've grown into this table service market, which is a nice extension for us, where it's a more complicated workflow, but you also get compensated for that. And so that's sort of another nice tributary for us to grow down.

And in that pipeline, so what is the attach rate of payments in the pipeline for the new Brink deals? It sounds like a lot of those are still in the pipeline today.

It's super high. In some quarters, it's 100%, some quarter it's 50%. I think we'll -- it's hard to know what we'll shake out. We haven't been doing it long enough to give like this is like the true attachment rate. Where we don't attach payments, it's pretty simple. One, they have recently signed a new deal with their payment providers that doesn't have an out. And sometimes if there's an out, we will pay out, we'll actually finance the out because we think we can still get a great deal. Or b, it might be one of these mega, mega chains where they've got a deal directly with, I don't know, First Data or whatever. And it's like you're not going to rip out that payments deal. But for the most part, they should be taking us or taking our payments product.

And then you've had a pretty good acquisition track record since you came on board. Can you maybe talk about the most recent acquisition, MENU?

MENU is an online ordering product that we discovered in Europe. It's the modern version of the legacy online ordering products that we see in the United States. It reminds me so much of Brink or Punchh in the early days where there is a big product that has a huge market share that starts becoming extractive on price and functionality and gets a little stodgy and then it's the young upstarts. So it's kind of a fun thing at PAR because it's a young upstart thing. It's a young upstart team. It's creates energy and dynamism. The product itself has a couple of core pieces to it. One, it's online ordering. So it's your online ordering website at a restaurant. What's unique about it is it's incredibly configurable, and it's modern. And so when we demo this for our customers, it's almost like, "Oh my gosh, " like this is the way the world should be working. I shouldn't have to work with a consultant to update my menu. I shouldn't have to like have my online ordering website look exactly like my competitor's online ordering website and their competitor's website. Like I have this beautiful functionality. The other part of what they do is sort of this linking up your third-party orders, whether it's with DoorDash into your POS. It's got a kiosk product, so on and so forth. So think of it as like what we call off-premise orders, that's really where it fits. We bought the product, at the time, it was pretty much a European and a little bit South America focused, not U.S. And it had a good pipeline growth in front of it. And we thought we said, "Okay, let's start to do that for the next year or so, and we'll slowly kind of retool it." After owning it for 4 months, we were like, wow, so many of our U.S. customers are asking for this product now. Let's start showing it to some of them. And then we started showing it, and we're like, "Oh, my God, " we're like they're almost asking us for orders. And so in Q1 of this year, we really shut down the European pipeline. We pissed off a couple of customers saying, "Hey, we're going to focus the business in the U.S., " and we've started to build on infrastructure and roll it out. And the pipeline is quite meaningful. It's a really strong pipeline of customers in the United States, and now we've got to get out the door and improve the value. But I think it's a really exciting product. We think it's a killer app. We think when we give a demo to a customer, it's the funnest demo to give because every time I could give it or I watch it, it's just like you just see the other side being like, I want that thing. And our -- what works against us is we just started in the U.S., so we don't have like a big reference to our clients. Because the pipeline is large, it's going to take us a little bit time to get you live because we've got to get a bunch of other people live. And it's going to get all the integrations done in the U.S. We had to get the DoorDash, Uber Eats and Seamless web and the POS companies and so on and so forth. And so it will take a little bit of time, but we -- it's -- we've made a massive investment. It's a vast majority of our burn, like -- but we believe very strongly in that it not only being head-to-head a better product than what exists there, but we also believe it will be the pull forward of like all of our future strategy.

And I guess pre-pandemic online ordering was nice to have kind of special during the pandemic because it's the only thing around. What is the value prop today to a restaurant that doesn't have an online ordering solution? What -- how much of an uplift in sales does the average restaurant see when they adopt something like this?

So let me answer a different question first. Why would they switch to another provider? Because I don't think there's a restaurant chain that doesn't have online ordering that's going to have us. The ones that don't have online ordering to me today have made a proactive decision not to, which is like it messes up my experience. I don't want to touch it, like I'm not doing it. Everybody else, I think, has got some form of online ordering. In my eyes, they -- if you think about a restaurant company, what they really are, are amazing marketing organizations, right? Huge shop at restaurants, again, QSR and fast casual because they have done incredible set of marketing to convince you that for the food type you want, that's the right place to go. And your online presence needs to match the ethos of your in-store. It has to be the same thing. It has to feel exactly the same. It has to give that same warm and fuzzy feeling. And we believe that what's been happening is because there's been so many templated versions of everyone kind of having the same look and feel that you're actually giving that away. It's sort of like, "Wait, I'm not getting the same feeling that I had when I sat down at that amazing place." Like In-N-Out Burger doesn't have any online ordering. They proactively decided probably not to do that. But if they ever did, I guarantee you that website and feel is going to feel like you're at In-N-Out yourself. And I think all restaurants want that. And so they've been prohibited in doing that because of a legacy set of technology that didn't allow them to do that. We've sort of modernized that. But what's more powerful to me is not just that, which is today, if you use Brink as your POS or NCR as your POS, whatever, and you have online ordering product, those are different products. They have different schema. They have different menus. They have all this stuff. And you got to like kind of take the order here or there, throw into something, figure out what's the same, like -- it just doesn't connect to what's -- you're losing the value of that data. And so we can give you that sort of ability to say, "Hey, we're your POS company. We're your loyalty company, and we're on an online ordering company." You see the beauty of it? That is like you get up in your menu once and it all update at the same time. You're well over there ordering like, we know there, there, there and there. And so there's so many like sort of these benefits that are really concrete that we can show. The last part is online ordering is expensive to the restaurant. It's already expensive because the fees and all the stuff. You've read articles about it, but it's also a really complicated thing to maintain every time you update a menu there. Most of these businesses, because they don't like the template website of the legacy online ordering providers, they all spend millions of dollars customizing the website, redoing the flows like, I joke at one of our largest customers, I think one of our largest customers, they spend more customizing their online ordering, and they have an [ awesome one ] like really the SaaS guy. I'm like, that's insane. But that's not right because you don't want to limit the creativity of the brand because in the end, that CIO, CTO, CMO, they should -- they're trying to create a brand experience that is consistent with the brand experience everywhere else you touch them. And so we think that, that's what our product allows, that they can have control of that versus having a third party in there and manage it.

So maybe we can tie all this together, and I'll try to lump two questions in one here. It sounds like you've got a lot of momentum in payments. Punchh has kind of improved after seeing a little bit of an air pocket. You're investing in MENU. Margins recently have taken a little bit of a step back. That's mostly been through some of the investments in MENU and some of the acquisitions. How do you kind of frame the growth algorithm from a financial perspective over the next year or 2?

So I think we're in a really nice position. I think -- I suspect we'll continue to grow at the rates we've been growing for the last few years. We haven't really had a massive deceleration like many, primarily because I think the work we did on the POS side a few years back, we're going to benefit from that. I also think there's a decent probability we win a large transaction at some point, a large customer at some point with these mega, mega whales that take -- could take that revenue growth far higher. And I think we will likely continue to be acquisitive and probably more acquisitive than we've ever been before, given our view of our currency versus the currency of the companies that we think would be attractive to us. So I think that to me, the growth value is pretty simple. We will continue to grow at the rates we're going. And I think there's a couple of levers for that to grow even faster. And then I think on the cost side, we're trying to be really disciplined. We're not drawing OpEx. We did have a blip last quarter, which I think is explainable but unacceptable. And we're going to continue to be that way. I think if you -- I take a lot of pride, anybody at PAR in any part of the organization, I don't -- I think there wouldn't be one person that say, "Oh, we waste a penny here or penny there." I think most people will be like we're pretty tight on everything, but also they would explain that's because we're focused on ROI. So I think the growth in profit algorithm and I think is really clear, and I think the M&A that I mentioned will only enhance that because we wouldn't be buying stuff that's burning a ton of money, we would be buying stuff that's profitable or very close to profitable.

Makes sense. I wanted to ask about the government business a little bit. I mean it sounds like acquisitions are top of mind. You've publicly stated that you're looking to kind of free up some capital and divest this business at some point in time when it makes sense. What's that decision tree look like? Does the recent kind of opening up of capital markets make that process easier to get accomplished?

In our 10-Q, we put in the MD&A that we are looking at strategic alternatives. We are crystal clear, there's no strategic fit between the government business and the restaurant technology business. And it's a very good time to divest the business in this category, whether it's the Ukraine war, whether it's the uncertainty among all the world's powers, the DoD will continue to invest in technology and particularly in the areas that we operate in, which is counter UAS, drones, communication forces, we're involved in some of those today. All these are areas that have long-term secular growth trends. And so I think there'll be no shortage of buyers if when we sell it, and I also think that it's a growth asset in an industry that doesn't have a lot of growth assets. And so hopefully, we get lucky. Somebody sees it that way, too.

Awesome. I think that's just about all the time we had. Savneet, thanks for joining us today.

Thanks, Will.