SaaS Interviews with CEOs, Startups, Founders
1265 How $100m ARR HotSchedules Passed 160,000 Restaruant Customers, 110% Net Annual Dollar Retention
10 Jan 2019
Chapter 1: How did Mike Arenth become CEO of HotSchedules?
have more fun joined hot schedules back in about two years ago 2016 and then eventually took over as ceo uh more recently call it mid-2017 now they're serving over 160 000 restaurant locations across over 3 500 concepts think wendy's yum brands you know mcdonald's things like that they've raised north of 20 million bucks but more importantly they're profitable so they don't have to ipo they don't have to raise more capital
And they're growing caught about 20% year over year, currently doing about $100 million run rate, 110% net dollar retention. Under that metric, you've got about 90% gross dollar retention annually. So healthy economics, payback periods, all healthy, less than 12 months. And quite frankly, sometimes less than two, three months, depending on the cohort.
600 people based across remote locations, again, helping restaurants manage their businesses more effectively. This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines.
We went from a couple of hundred thousand dollars to 2.7 million.
I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Mike Arendt.
He serves as the CEO currently of Hot Schedules. Before being named CEO, he joined the company in 2016. That was October 2016, focusing on implementing key leadership changes to support innovation and growth at the company. Other previous roles include Senior Advisor at Silver Lake, Executive VP for SAP, and Senior Vice President and General Manager at Ariba.
Mike received a BA in Economics from John Hopkins and his MBA from George Washington University. Mike, are you ready to take us to the top? I'm good, Nathan. How are you? I am doing well. All right. Walk us through the company as best you can because you have many product lines. Who are you serving and what's the company do?
Yeah, so we are the leading cloud-based intelligent operating platform for restaurant management. So what does that mean? We're the actual backbone that runs the restaurant. When you think of two-thirds of all spend in the restaurant are on people and product, that's what we do, right? We have a platform that allows the back of the house to run efficiently and effectively.
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Chapter 2: What is the business model and product offering of HotSchedules?
We've got a good foundation and right, continuing to build on it.
Where is the majority of that growth coming from? Is it expansion revenue across the current customer base or is it brand new customers coming on?
So it's both. You see that in our net dollar retention, right? We're able to actually land in accounts then, right, expand them with the different products. We actually have come to market with a new platform called Clarify.
Clarify actually brings together a lot of the different assets that we had independently within the company over the last four and a half years to really deal with the two major issues that are happening in restaurants today. One is this fragmentation issue. Restauranteurs are just, they're tired of it. They're willing to, like I said before, sacrifice functionality for simplicity.
The second thing is, in order to run a really good, successful restaurant, you've got to have a great product and great guest experience. If you do that, you get satisfied customers. Satisfied customers pay more than new customers. But the issue is, it's harder than ever to balance that equation. One reason is, there's just not enough good managers.
And the fragmentation of the technology is not helping to make their lives any easier. So we provide the technology in a way that really drives intelligence and insights to help them run that perfect shift. And by doing that with a platform, it just makes their lives easier. So they're not in the back of the house right? Dealing with issues. They're out on the floor, right?
Driving that great guest experience. That's what it's all about. But it's hard when you got multiple, go into any restaurant today and look at how many different pieces of technology they're trying.
Oh, I believe it. I believe it. Yeah. I believe that you're clarified platform. I mean, you're talking, you're spanning a subset of kind of labor management, inventory, assets, talent, financials, and cash, everything, right?
Yeah, and we're providing it in a way that doesn't feel like a mini ERP, right? We're using what we call an intelligent workflow that guides the manager through their shifts. So the analogy that I give is everyone's got a smartphone, but how often do you use it to make calls, right? In the morning, it's your alarm that wakes you up.
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Chapter 3: What is the average cost for restaurants using HotSchedules?
And right. It allows us to think about the next level of growth. It's given the fragmentation, there's a roll-up strategy to happen, whether we're the ones driving it or someone else.
That's why I asked by the way. Right. So, so I think you raised about 20 million to date, correct?
Well, no, we, over the years, there's been more that have been raised. We're not going to kind of disclose what that is today, but right. There's the investors have been in the business for the last, right. Four and a half, five and a half years. They're really supportive of what we're doing.
There's a long roadway ahead of us, runway ahead of us when you think about, hey, there could be upwards of 800,000 restaurants in the US. We have 160,000 globally, 10 million globally to go after, but there's still a lot of runway.
Yeah. And what year was the company founded in?
So it was brought together by four or five different companies. Hot Schedules, which is the core labor part, was founded almost 20 years ago. But bringing the companies together was formed in 2013. Wow.
2013. Okay. So call it maybe 2000, the first thing, and then kind of a mini roll up in 2013 with some other products brought in.
Yeah. We brought in from a labor, from an inventory, from a task management, and then spent the last two years really bringing those, uh, um, solutions to market together as a platform.
And what, um, what's the team size today and where are you guys based?
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Chapter 4: How does HotSchedules manage churn in the restaurant industry?
600 people based across remote locations, again, helping restaurants manage their businesses more effectively. A lot of this happening through their mobile app as well. Mike, thank you so much for taking us to the top.