Startup of the Day: UK and Poland-based Embargo, a loyalty solution for hospitality businesses

Founded by Fryderyk Szydlowski and Tsewang Wangkang in 2017, Embargo provides a CRM platform and loyalty app for the hospitality industry that allow restaurants, bars, and coffee shops to recognize, reward, and communicate with their customers. Since 2022, when the startup entered the Polish market, Embargo has multiplied its revenue by over 300% and increased the number of venues that use its solution to 1,500. And now, due to the startup’s significant growth, Embargo is in the process of raising its next funding round, which will be used to expand its sales team and product development.

In the Startup of the Day column, Tsewang Wangkang, co-founder and CEO of Embargo, shares more details about the startup’s idea, its product, and future plans.

Tell us about your startup. How does it work?

Embargo is driving the digitalization and automation of consumer-facing operations in the hospitality industry (restaurants, coffee shops, bakeries, and other high street businesses).

Our CRM software empowers businesses by actively managing customer data, driving revenue growth, and facilitating informed strategic decision-making. With our intuitive CRM platform, businesses can visualize key actionable data that had previously been unavailable to them and leverage valuable insights to achieve sustainable success and maximize revenue streams.

From the user’s standpoint, the Embargo App serves as a convenient digital wallet for paperless loyalty cards offered by renowned hospitality brands. In one app users can keep digital loyalty cards of their favorite coffee shops, restaurants, bakeries, and other high street businesses, using them across every customer journey. Our comprehensive solution covers walk-in customers and ordering for Click&Collect and Delivery, seamlessly integrating with loyalty programs through the user-friendly Embargo App. This streamlined approach enhances the overall customer experience while reinforcing brand loyalty.

How did you come up with the startup’s idea? What was the reason/motivation behind it?

Fryderyk and I personally encountered a pressing issue that highlighted the need for a solution. As a loyal customer at venues where Fryderyk worked as a Marketing Director, we became friends over time. However, we noticed that there were many other regular customers who remained anonymous to Fryderyk, making it challenging for him to ensure their continued patronage and therefore repeat business. Recognizing the importance of leveraging data insights and implementing cost-efficient sales channels, we understood the urgent need to address these issues with a scalable solution.

We firmly believe that digitalization and automation of the revenue-generating front-end based on consumer behavior is inevitable for the food and beverage industry. We have seen this transformation occur in numerous other sectors in the past. The question is not whether it will happen, but rather when it will become an established global standard.

By implementing a customer data engine, businesses can make informed decisions based on data and consumer behavior, lay the foundation for dynamic pricing in the hospitality industry as well as build successful communication and sales channels focused on repeat business.

How long did it take to reach the prototype or MVP? What did you encounter?

We embarked on our product journey in mid-2018, investing three months to develop our initial prototype. Today, our product has evolved significantly since 2018, yet its essence remains centered around active customer management, loyalty, and data engines.

What sets us apart is our collaborative approach to product development. We actively engage our customers in shaping our offering and technology, ensuring their valuable input from the outset. This distinctive process guarantees that each new feature we introduce already boasts a user base from day one. By being in a unique position, where circa 1,500 venues use our platform as well as countless their most regular customers, we can cultivate a profound understanding of the market’s desires and demands, empowering us to deliver precisely what they crave.

Tell us about the startup’s business model. How do you monetize your product?

We have a subscription model for our CRM software and charge a commission on our Delivery and Click&Collect features. We want to make sure that our customers have a healthy margin on Delivery and Click&Collect orders as well can use our CRM software to drive revenue and overall success.

What are your target markets and consumers?

As a B2B SaaS company, our primary users are businesses and particularly coffee shops, restaurants, QSRs (Quick-Service Restaurants), bakeries, and similar establishments. Although we do have a customer-facing user app that our venues and their regulars utilize, our business model and sales strategy is B2B.

If the startup has already launched the product, what are the results: metrics, income, or any clear indicators that can be evaluated.

In our case, some of the key metrics are Monthly Recurring Revenue, Churn Rate, Customer Acquisition Cost, Payback Period, MoM growth, Number of monthly transactions, Revenue per Customer as well as New Customers Signed Up per sales employee.

As an example, we have around 1,500 venues on Embargo using our CRM with close to 300,000 transactions a month through the Embargo App, although we spend zero on app user acquisition.

Since January 2022 we have multiplied revenue by over 300%.

What about your team? How many people are working in the startup? If you’re looking for new employees, indicate whom exactly.

We are 16 people across the UK and Poland, including sales, IT, founders, and other positions in the company. On the back of our significant growth, we are in the process of our next funding round and will be looking to add talent this year across the board.

Have you already raised any investments? Provide us with more details on each funding round: the amount, investors, the purpose of the investment.

We have had multiple smaller rounds of around $600,000 each over the last few years. Our rounds were backed by angel investors from the hospitality as well as the tech industry.

The round we are currently in the process of raising will be used mainly to hire more people for our sales team, as well as to further develop the product based on our customer needs so that we can continue to increase our revenue per customer.

What’s next? Tell us about your future plans.

In the upcoming phase, our focus will be on two key areas. The first area is product development.

Our product development efforts revolve around leveraging machine learning techniques to automate interaction features. We aim to create a seamless experience for our customers by considering external factors such as holidays, weather changes and fluctuations in business activity, as well as data and learnings from the traction on our platform. It will empower our customers to set up initial automation settings for sales, marketing and pricing processes and easily adjust them as needed.

The second area of focus is customer growth, so adding more businesses to our platform. We remain committed to expanding our presence in the Polish and UK markets, with the goal of further increasing our market share. By strategically penetrating these markets, we aim to capture new customers and solidify our position as a leader in the industry.