From Tablet to Table

“The company founders knew the iPad was coming out, so they developed a prototype system to tie a printer and cash register together into a terminal that could be used with the iPad,” said Ben Harrison, Lavu senior vice president for development. “They were ready when it came out. Lavu was the very first full-featured, point-of-sale system in the Apple App Store.”

Two years later, Lavu’s software is being used in more than 3,000 restaurants in 57 countries, said co-founder and CEO Andy Lim.

From left, Lavu CEO Andy Lim and Senior VP for Operations Travis Kellerman train staff members at Leone’s restaurant in New Jersey to use Lavu software on mobile devices as cameramen from “Kitchen Nightmares” film the scene. (COURTESY of LAVU )

It’s been featured six times on the popular, weekly cable-TV show “Kitchen Nightmares,” hosted by British chef and entrepreneur Gordon Ramsay, which spotlights ways failing restaurants can become more efficient. Each episode draws about 4 million viewers.

Some 270 distributors are now selling Lavu software and services worldwide, helping drive company revenue up from $900,000 in its first full year of sales in 2011 to $3 million in 2012.

Tripling in growth

“We project three times that amount this year, and we believe that’s realistic,” Lim said.

Lavu held its first annual conference for distributors on Feb. 23-24 at Isleta Pueblo’s Hard Rock Casino, attracting more than 100 participants from seven countries.

“Lavu is taking Albuquerque by storm,” Albuquerque Economic Development President Gary Tonjes told attendees in an opening speech at the conference. “It’s a creative, smart, high-energy company with a promising growth product and a bright future.”

Lavu’s rapid success reflects, in good part, booming demand for business and consumer applications on mobile devices. Sales of handheld point-of-sale, or POS, system devices reached $1.1 billion in 2011, and are projected to hit $3.1 billion by 2018, according to a recent forecast from Massachusettes-based WinterGreen Research Inc.

As mobile payments and transactions become more popular, competition among providers is becoming intense. But Lavu has carved a niche for itself by focusing almost entirely on restaurants, rather than retail in general.

“Our software is specifically for the restaurant industry,” said Senior Vice President for Operations Travis Kellerman. “That’s our core customer base.”

Gordon Ramsay, British chef entrepreneur and host of the reality TV show “Kitchen Nightmares,” calls Lavu software, shown on a tablet, “bloody brilliant.”

In addition, ongoing software upgrades that allow Lavu users to manage many business operations beyond payment processing is reinforcing Lavu’s market foothold.

Listening to clients

David Harrison, CEO of California-based Savvy Restaurants, installed Lavu’s system at his establishment, the Pita Grille in Florida, in 2011. He then decided to launch Savvy to distribute Lavu nationwide.

Harrison said the software company is building brand loyalty by meeting a range of customer needs.

“When I opened the Pita Grille, Lavu was the largest (mobile payments) provider available,” he said. “Now there are numerous players in this space, but Lavu is keeping up with the desires of restaurateurs. They listen to clients’ needs and respond.”

The Lavu system allows restaurant managers and staff to conduct most front- and back-end operations on tablets and other mobile devices. Table servers can take orders directly on iPads or smartphones, allowing cooks to instantly read those orders on a tablet screen in the kitchen. The entire meal is automatically logged and processed for payment, either directly at the table by servers, or at a tablet-based cash register.

On the back end, owners and managers can remotely track and manage all inventory, employee issues and other operations.

Lavu’s Albuquerque team with the company mascot at the firm’s 4,000-square-foot office in Old Town last June.

“The owner can look at inventory or a new hire, change the menu or change prices without having to be on site,” Kellerman said. “With our system, they can be anywhere in the world. All they need is an Internet connection to log in and they can remotely see everything and make real-time changes.”

Customization

Distributors help restaurants customize systems to meet individual needs.

That’s a big selling point, said Roberto Mendoza, co-owner of MexLavu, which has installed systems at 47 restaurants in Mexico.

“Owners feel like it’s their system, because they know how to manage it and it’s customized to their needs,” Mendoza said.

Low costs compared to traditional, computer-based systems is a central reason mobile POS providers like Lavu are thriving. Lavu charges a one-time software licensing fee that ranges from $895 to $3,495, depending on how many terminals a customer uses. Monthly hosting fees then range from $29.99 to $99.

“An average, medium-sized restaurant using two terminals with a traditional system will cost upwards of $20,000 initially, plus hundreds of dollars in monthly fees and often thousands of dollars for ongoing maintenance,” Kellerman said. “Our hardware and software combined cost less than $5,000. If distributors do full installation for customers, the whole thing will cost less than $10,000.”

Lavu plans to expand to retail and other industries in the near future, but for now, it remains focused on restaurants to cement its leadership there, Lim said.

Poised for expansion

And, thanks to its recurring revenue model and lack of debt, the company is well poised for expansion.

“We invested less than $50,000 to start up, and we’ve reinvested our revenue to grow,” said Lavu co-founder and Chief Technology Officer Corey Fiala.

Lavu now occupies a 4,000-square-foot office in Old Town with 30 employees. Lavu’s website is http://www.poslavu.com.

That’s up from just five people at a 500-square-foot space on the West Side in 2010. Doug Brown, dean of UNM’s Anderson School of Management, called Lavu a “showcase” startup.

“They have a dynamite product that meets a real need, and their energy, confidence and optimism is infectious,” Brown said. “It’s the kind of company we want to help grow and succeed in New Mexico.”
— This article appeared on page B01 of the Albuquerque Journal