Restaurant software in Latin America is outdated, inefficient, and expensive. Virtually all restaurant owners currently use decoupled point-of-sale software and bank terminals that require manual reconciliation. This cumbersome process makes it extremely hard for merchants to increase their productivity and make their operations more controlled, efficient, and profitable. Without a fully integrated software solution, restaurants have several disadvantages, such as:
- Increased Errors: without a POS software system, the likelihood of errors in order taking, payment processing, and inventory management increases. This can lead to dissatisfied customers and loss of income.
- Inefficient Operations: manual processes can be time-consuming and prone to errors, leading to inefficiencies in operations. This can result in longer wait times for customers and slower service, which can impact customer satisfaction.
- Poor Data Management: without a POS software system, it can be difficult to track sales, product margins, inventory levels, and customer preferences. This can make it harder to make informed business decisions and improve profitability.
- Limited Integration: processes are often not integrated with other software systems, such as accounting and payroll. This can make it more difficult to manage business finances and understand key indicators and employee metrics.
DILA has been aware of the problems that bars and restaurants face and has been looking at the space closely for several years. However, we had not found a company that had a robust fully-integrated solution with differentiated and scalable distribution channels, until we met the Pacto team.
Pacto, an all-in-one SaaS point-of-sale (POS) and payment software for restaurant management was founded in 2021 by experienced entrepreneurs Rodrigo Kuri, Gordon Whitehouse, and Ryan Croft. Their vision was to create an easy-to-use, reliable, and affordable POS system for small and medium-sized businesses in Mexico. Pacto allows restaurants to run their entire operation with ease by combining the front and back-of-house software with payment operations on a single platform.
After a thorough due diligence process with Pacto and its team, DILA identified in Pacto a very capable, appealing, and differentiated solution for restaurants and bars across Mexico and Latin America. Some main competitive differentiators and reasons why DILA decided to invest in Pacto are:
- Commercial Strategy: one main differentiator that Pacto has today is its commercial partnership with Getnet, Banco Santander’s payment system. This terminal is the top smart bank terminal for restaurants in terms of payment processing in Mexico and the market leader in terms of card acceptance rate. Getnet´s focus on marketing, direct sales, and distribution of the Pacto-Getnet bundle to its more than 17,000 existing restaurant and bar merchants is a key element that helps lower customer acquisition costs and results in a win-win for Pacto and Getnet.
- Payments Integration & No Subscription Fees: Pacto’s software has a functionality that allows it to process payments directly on its platform, which is unique in the market. Getnet charges the merchant a commission and pays Pacto a fixed amount for each transaction, as well as a percentage of Getnet’s “take rate” from the payment processing of each client. DILA believes that by offering the installation and usage of its platform for no upfront and subscription fee, Pacto has a higher conversion, as well as a sticky product for merchants.
- Product: led by CTO Gordon Whitehouse, Pacto has been focusing on developing its product since its inception back in early 2021. Its platform works with any smart device, regardless of whether it is a computer, a tablet, or a cell phone, and does not need to be integrated into a third-party platform to work. Furthermore, the system is extremely dynamic yet user-friendly, which is essential to increase efficiency and effectiveness. Merchants can quickly and easily process transactions, manage inventory, track sales, and generate reports without spending too much time figuring out how to use the system.
- Market Size: Pacto operates in a huge market that shows potential for continued growth. According to a study carried out by the Mexican Restaurant Association (Canirac) and INEGI, there are over 640,000 restaurants and bars in Mexico alone, making it a market that holds great opportunities. With a superior product in place and a strong partnership with Getnet, Pacto is well-positioned to capitalize on the potential of this market. There is also a very compelling opportunity to leverage new and existing distribution channels targeting other markets in Latin America and Spain.
- Team: DILA is very impressed by Pacto’s extraordinary, experienced, and complementary team. Rodrigo Kuri, Gordon Whitehouse, and Ryan Croft possess extensive entrepreneurial backgrounds in building and scaling companies we have seen as invaluable to DILA Capital, especially in such a competitive and fast-moving industry.
The DILA Team believes that Pacto has the potential to transform the way restaurants and bars in Mexico and LatAm manage their operations and serve their customers. We’re excited to support the team as they continue to innovate and expand their reach.
In conclusion, DILA Capital made an informed decision to invest in Pacto due to several key factors: the company’s strategic commercial partnership with Getnet, its free integrated POS system, the experienced team at the helm, the huge size of the market, and a superior product were all considerations taken into account. By investing in such a promising company, we are thrilled to officially partner with Pacto and look to help it to continue to develop and grow, and potentially unlock even greater value in the years to come.