Before it was a Tim McGraw song, “Do you want fries with that?” was simply McDonald’s way of up-selling or growing the check. Having grown up in a restaurant family, you learn pretty quickly that the easiest sale is already standing in your restaurant with their wallet out, waiting to hand you money.
I will give you a real-life example. Recently, my kids have become obsessed with the restaurant Chili’s. During one of our visits, I was a little cold so I ordered a cup of soup. The waiter pointed out that there were some lunch combinations on the back of the menu and asked if I wanted one. It looked good so I ordered a half sandwich. His simple question grew my order from $3.19 to $8.00. It might not seem like a lot, but how many people across the country ate lunch at Chili’s in the last week?
Another great example is Southwest Airlines. A few years ago, they started charging $20.00 for Business Select, which allowed 15 people on each flight to board first and giving them first crack at the non-reserved seats and carry-on space, as well as a cocktail.
This little add-on increased their revenue over $100 million.
While everyone is making their predictions for CRE Tech in the coming year, mine is very simple. As the first wave of companies mature, they will add services as a means of growing revenue.
It’s hard to build a customer base and even harder to build a loyal one. Smart companies will covet those customers, ask them how else they can help, and give them what they want. The days of waiting a year, or more, for software upgrades are over. Most tech companies today can roll out new features as soon as they can build them, which isn’t very long.
We have seen it already with the explosion of VTS.
VTS has improved their product rapidly from the days of shooting videos of vacant office spaces. Now that they have merged with Hightower, I expect the new innovations to come even faster.
Companies with significant cash on hand will start to push around those that simply don’t. Acquisitions will continue, but I also see the larger companies building new products on their own rather than acquiring smaller companies who are still growing.
I was recently offered the opportunity to invest in a relatively new CRE Tech company. I love the product, but ultimately decided not to invest. I will still advocate for them in the market, but from where I sit, I worry about one of the well-funded companies liking their idea, throwing a team of developers at it, and asking their existing customers if they “want fries with that”.
Later this month, Michael Keaton is starring as McDonald’s founder Ray Kroc in the movie, The Founder. I don’t think the turning point of the movie will be when they start asking people if they want fries or if they want to supersize. But I guarantee one thing: it didn’t hurt their business when they did.