Over the past seven years, I’ve had the privilege of consulting with some of the top B2B companies in the restaurant tech industry. This experience has given me a front-row seat to the inner workings of these businesses, from the boardroom to the sales floor. I’ve seen firsthand how companies discuss and manage churn, who’s getting it right, and where there’s room for improvement.

One thing that has become increasingly clear to me is that traditional churn targets—often set by well-meaning boards and executives—are frequently out of step with the realities of the restaurant industry. The industry is unique, with challenges that don’t always align with the benchmarks commonly used in other sectors. As someone who’s worked closely with these businesses, my goal is to help shift the conversation around churn in a way that reflects the true nature of the market we serve.

This isn’t about pointing fingers or suggesting that boards don’t understand the industry. On the contrary, it’s about offering insights and considerations that can help align expectations with reality, ensuring that both companies and their investors are set up for success.

Understanding churn in the restaurant tech industry

The restaurant industry is unlike any other when it comes to technology adoption and retention. Through my experience with both restaurant tech startups and industry-leading enterprises, I’ve observed how these factors lead to churn rates that frequently exceed those in other SaaS verticals and often surpass the expectations of these businesses. For instance, it’s not uncommon for small and medium-sized businesses (SMBs) in this space to experience churn rates as high as 12% YoY.

Several market dynamics further complicate the picture, driving churn rates up beyond what is manageable by internal teams. Competitive pressures, pricing challenges, and business closures are significant contributors. Many of these factors are unavoidable, leaving teams striving to meet churn targets that may be unrealistic.

Competitor-driven churn is a key issue, especially in a crowded market where new entrants frequently offer aggressive discounts or innovative features. This environment makes it difficult for existing players to retain customers, a topic we’ve explored in-depth in It’s a competitive time to sell software to restaurants.

Pricing is another critical factor, particularly in an industry where margins are thin, and every dollar counts. We’ve discussed the complexities of pricing in the restaurant tech space in The restaurant industry’s SaaS pricing paradox, highlighting how price sensitivity can drive churn, even for well-established products.

Additionally, the restaurant industry’s high closure rate, with many businesses shuttering within their first few years, contributes to elevated churn rates that are simply beyond the control of SaaS providers. It’s essential to acknowledge that the churn dynamics in restaurant tech are distinct and require a more nuanced approach. When these market dynamics are factored in, it becomes clear that setting overly ambitious churn targets can lead teams to chase unattainable goals, potentially harming the business in the long run.

The disconnect between investor expectations and market realities

Given that many churn factors, such as aggressive competition, price sensitivity, and the high turnover rate of restaurants, are largely beyond a company’s control, it becomes clear that traditional churn targets often don’t align with the realities of the market. This disconnect can create pressure on teams to meet numbers that are unattainable, potentially leading to short-term fixes rather than sustainable growth strategies.

In my consulting work, I’ve encountered many instances where churn targets set by boards and executives—often based on industry-standard benchmarks—don’t quite fit the restaurant tech space. A common target of 3-5% YoY churn may work for other SaaS products, but it doesn’t account for the specific challenges of the restaurant industry.

I’ve seen the pressure these targets can create, leading companies to pursue short-term strategies that may look good on paper but fail to address the underlying issues. It’s not about blaming anyone—it’s about acknowledging that the restaurant tech industry operates under different rules, and those rules should inform our targets and strategies.

Setting realistic churn targets tailored to the industry

Based on my experience, I believe that restaurant tech companies need to advocate for churn targets that reflect the true nature of their industry. This means using data-driven insights to set goals that are achievable and meaningful. For example, in my work with different segments of the market, I’ve seen how customer segmentation can provide a more accurate picture of what’s realistic—acknowledging that smaller restaurants might naturally have higher churn rates than their larger counterparts.

Given the uncontrollable market dynamics discussed earlier, such as competitive pressures and business closures, it’s crucial for restaurant tech companies to advocate for churn targets that reflect these realities. By setting more realistic, data-driven goals, companies can foster healthier relationships with their investors. When investors understand the market dynamics, they’re more likely to support strategies that lead to sustainable growth, rather than quick fixes that harm the business in the long run.

Leveraging data and intelligence data to align expectations

Setting realistic churn targets in the restaurant tech space requires a deep understanding of market dynamics, ideally driven—or at the very least informed—by reliable, up-to-date data and industry insights. Companies need access to real-time information, such as verified unit counts, confirmed tech stack deployments, and online presence trends, to accurately measure and anticipate both current and future churn.

Leveraging reliable market intelligence is essential for staying informed about shifts in the industry. By utilizing tools that offer comprehensive data and insights, companies can better track industry trends and benchmark their performance. This information helps businesses adjust their strategies proactively, ensuring that churn targets are grounded in the realities of the market.

However, data alone isn’t enough. To truly align expectations and set achievable churn targets, companies benefit from reviewing and optimizing the systems and processes that define their go-to-market (GTM) strategies. Drawing on industry-specific expertise, whether through internal teams or external consultants, helps ensure that targets are grounded in the realities of the restaurant tech landscape.

For those seeking a deeper understanding of how to track and manage churn effectively, Restaurantology’s SaaS Churn Guide offers valuable insights. Combining this with a thorough review of your GTM strategy and utilizing industry benchmarks can lead to more informed, realistic goals that are aligned with both market conditions and company capabilities.

Conclusion

The restaurant tech industry is a challenging and dynamic space where traditional churn metrics don’t always apply. By recognizing the unique factors at play and setting attainable, well-informed churn targets, companies can better align with investor expectations while ensuring long-term growth and stability. My goal is to help shift the narrative—toward one that acknowledges the realities of our industry and embraces a more tailored approach to success.

In an industry where many churn drivers, like competition and business closures, are beyond a company’s control, it’s essential to set goals that reflect these challenges. By doing so, companies and their investors can work together toward sustainable growth that’s grounded in the true dynamics of the restaurant tech space.

For those looking to explore the technical aspects of managing churn, the detailed playbook offers invaluable insights into tracking, reporting, and deriving actionable insights from churn data. But above all, we need to focus on aligning expectations with reality, ensuring that both companies and their investors are working toward the same, achievable goals.

Explore how Restaurantology’s data and consulting services can empower your business by contacting us for more detailed insights. Whether you’re looking to refine your churn strategies, optimize your market approach, or gain a deeper understanding of industry trends, Restaurantology provides actionable intelligence to guide your strategic decisions and help you stay ahead in the competitive restaurant tech landscape.