Last week Small Cab Network’s newsletter featured an emerging company, Posera Ltd (TSX: PAY.TO, OTC: PRRSF), a Toronto based technology company that specializes in IT solutions for the hospitality industry. Posera is catching the eye of investors due in large part to its recent joint venture with DLT Labs Inc., a global leader in blockchain solutions for enterprises. The two companies are joining forces to deliver Blockchain Technology into the hospitality point of sale ecosystem, including developing a real-time transaction and inventory management system. Blockchain technology is the new hot thing making waves in the market, as the technology creates an unchangeable time-stamped record of transactions, and provides additional protection of encryption, making data immutable and inherently secure.
While this is good for both vendors and consumers, where Posera is also poised to make another splash in the hospitality market is with their Table Pay product. If you have dined in Europe or Canada recently you likely paid via a small machine which was brought to your table by the server. This payment method allows you to retain full control of your credit card, it expedites service because you don’t have to wait for your processed check to be returned to you, and it also has the added benefit of built-in tip calculations so you know exactly how much to add to the check. This machine is also great for restaurants as well, since it allows servers to handle more tables per shift and turn tables faster, while simultaneously reducing or eliminating charge backs due to fraudulent charges.
Table Pay is commonplace across Europe, Asia, and Canada, but has relatively low penetration in the US hospitality market. That is beginning to change, however, as more and more dining establishments in the United States are beginning to integrate iPads and table pay functionality into their organizations.
Because of the efficiencies with pay at the table systems, some restaurants report an increase in table turnover of more than 15%, which in turn increases revenues. The Table Pay terminals make record keeping and inventory tracking much easier for restaurants, and there is also the inherent environmental benefit that comes with using less paper for orders and receipts. If it’s a win for everyone, then why is use in the US so low?
Opinions vary, but the set up costs are high, given that each server has to have a terminal. Some customers report a feeling of being rushed, preferring to linger over coffee and a check. But with advances in technology and increased reports of credit card fraud and hacking, more and more consumers are asking for the payment service as part of their dining experience.
According to some analysts, the US dining market, which represents $800 billion in annual spending, is 10 times larger than the Canadian dining market. Estimates suggest that in 2017, fewer than 40% of all US based restaurants use a pay at the table system, but trends show that the technology is catching on, and is expected to grow exponentially in the coming quarters. In the past year VC firms invested over $356 million in tablet and point-of-sale platforms – compared with $400 million in meal subscription and $134 million in reservations platforms.
This investment in a large and established sector lays a solid foundation for a company like Posera Ltd to dominate a relatively young techonology application. Moreover, Posera’s entry in to the US restaurant market is though licensing technology. The company does not have the hardware or capital liability or exposure, which creates a cleaner and more efficient stream of revenue back to the company.
Roger Dent, head of Quinsam Capital has indicated he feels the growth potential for Posera Ltd is very high, and he is looking for the stock price to double in the coming year. A recording of his interview with Capital Ideas TV can be seen here: https://www.youtube.com/watch?v=v6_ccMfhU2o&feature=youtu.be
Currently the stock is trading on the TSX and by appointment on the OTC. It has a $24 million CSD marketcap, and reported revenues of $4 million USD in the previous quarter. Given the fact that millennials spend almost 50% of their food budgets on restaurant dining, and the rising tide of technology enhancements, Posera Ltd. appears to be in the right place at the right time.