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Innovation Economy

Restaurants are a tough sell for tech start-ups

The Toast app makes it simple to split the bill when you’re out with a group. But for now, you can only try it at one restaurant.

The Toast app makes it simple to split the bill when you’re out with a group. But for now, you can only try it at one restaurant.

Anyone who eats at restaurants regularly expects to encounter certain frustrations: the endless waiting list, the server who seems unmotivated by the prospect of a good tip, and the aggravating wait for your credit card to be returned before you can rush off to a movie.

Entrepreneurs experience those same things and, over the past few years, they’ve been starting enough companies to fill a Cheesecake Factory menu, each trying to eradicate some of the irritations.

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Part of the appeal is that the industry is massive: Americans will spend about $660 billion dining out this year, according to the National Restaurant Association’s forecast. And part of it is that, aside from the cash register, technology hasn’t yet had a wide impact on the business.

“What is a restaurant but a few guys cooking, some people carrying plates, and 50 people sitting there with smartphones, waiting for their food and doing nothing?” says Christopher Mirabile, managing director of LaunchPad Venture Group in Boston, which has backed several restaurant-oriented start-ups.

But many of the food-focused entrepreneurs have already discovered just how difficult it can be to introduce new technologies in the industry, and several have given up after chewing through hundreds of thousands of dollars. Still, Mirabile says there is “a huge glut of early-stage restaurant tech companies” that haven’t yet discovered “the soul-sucking difficulty of selling to these restaurants one at a time, while you’re also trying to improve the product.”

My favorite of the new batch of restaurant start-ups is Toast Inc., because it created an app that I would use almost daily. Once you download the Toast iPhone app and ask your server to open a tab, you can see all of the items your table has ordered. Toast makes it simple to split the bill when you’re out with a group — diners simply check off the items they ordered, and set their tip amounts — and also to pay and leave whenever you’re ready, with a credit card on file.

Toast cofounder Steve Fredette hopes that restaurants will eventually pay his Cambridge company a fee to use the app to keep track of and communicate with their most loyal customers and biggest spenders.

“As it is today, there is so much new staff at most restaurants that the regulars don’t get recognized,” says Fredette. Toast solves that by showing a photo of each user on the restaurant computer that manages the system, along with a profile of habits — like, that a customer often comes in with large groups.

Unfortunately, Toast is still in testing mode, and you can try it out at just one restaurant: Firebrand Saints in Kendall Square.

Software from a Boston start-up called Objective Logistics is a bit more widely used, but less visible to diners. It helps restaurants like Not Your Average Joe’s, The Kinsale, and Cambridge Common better manage their wait staffs.

Objective Logistics creates a digital “leaderboard” of a restaurant’s best servers, based on a formula that can include revenue they generate, tip size, and customer feedback. Servers at the top of the list get their pick of the shifts they want, which removes the politics from deciding who works when, and gives other servers a reason to try to improve.

Objective Logistics has raised $2.3 million, some of it from Google’s venture capital wing. It is focused on selling its software with the help of established “re-seller” firms that already sell cash register systems to restaurants.

Nara Logics is a Cambridge start-up that has raised $7 million — more than any other local restaurant tech company — to build a restaurant recommendation site and mobile app. After you give a thumbs-up or down to a set of restaurants, it starts suggesting other establishments you might enjoy, in Boston or 24 other cities. I haven’t found the app especially useful. It’s free, and available for iPhone and Android.

Brookline-based Tasted Menu tried to persuade diners to review, and snap pictures of, dishes they sampled at restaurants. It shut down last month.

TurnStar wanted to help restaurants manage their waiting lists by sending messages to customers’ mobile phones, instead of doling out those vibrating pagers. A year ago, the Boston company had seven employees, but everyone has since moved on, and the founders are trying to engineer a sale of the business to a bigger player.

The company earns money by pocketing referral fees from reservation services like OpenTable and takeout sites like GrubHub.

“Ever since Groupon exploded, everyone and their mother is trying to sell stuff to restaurants,” says TurnStar cofounder Josh Bob, referring to the publicly traded coupon purveyor. “We had an impossible time getting managers on the phone. They’ve sort of become inured to people selling to them.”

Bill Brayer is a senior vice president at Five Napkin Burger, a New York company testing the software from Objective Logistics at two of its locations. “You get barraged with possibilities, whether it’s an automatic drink-maker for the bar, or a digital menu that sits on the table,” says Brayer. “But the two questions we always ask are, is there a tangible return on our investment, and can it improve the way I deliver my product to my guest in a way that they’ll notice?”

An MIT spin-out called Locu helps restaurants keep menus up to date on their own sites and on others like OpenTable, Facebook, and TripAdvisor. Last year, the company raised $4 million. Locu highlights an Italian restaurant in Brookline Village, La Morra, as one of its early users on its website.

But when I spoke with La Morra co-owner Jen Ziskin, she told me that she’s using the service for free, as an early customer. Ziskin says she is extremely wary of signing up for anything that adds expenses to her business. “The margin of profit is just so small when you run a restaurant,” she says.

Ziskin acknowledges being a fan of the Starbucks mobile app, which lets you pay for coffee by flashing your phone. But she’s not exactly an eager listener when pitched on new technologies — usually about once a week. “I have a folder on my computer where I put the e-mails,” she says. “I used to meet with people, but then I decided I don’t like to waste anyone’s time.”

Despite the gargantuan size of the restaurant industry, its innate frugality will mean that many enthusiastic entrepreneurs trying to sell to it will go hungry.

Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.

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