The app that’s making restaurant payments a piece of Cake

FusionWire, 2015.

Screen Shot 2015-10-22 at 12.49.08The app that’s making restaurant payments a piece of Cake

There’s plenty of competition among mobile payments apps, but Michelle Songy thinks the hospitality sector needs a unique approach. We spoke to the co-founder of London startup Cake, which has a brand new recipe for paying restaurant bills.

It’s too early for the lunch rush at Comptoir Libanais yet, but when this place is busy there’s a queue out the door and down Berwick Street. And did you know the average bill in a UK restaurant takes 12 minutes to arrive? Michelle Songy, my companion for a mid-morning brew, is quick to point out that if you eliminate that wait in a place like this, which has over 20 tables, that’s hours saved: “Here, they served 500 more tables last month than they did before using the app.”

Songy is talking about the mobile payment app she co-founded, Cake, which I’ve just downloaded so we can share a tab for our rose-mint teas. There’s a lot of interesting things about Cake: it’s aimed at the hospitality industry, enabling diners to pay their bills directly from their phones. Cake links to the restaurant’s point-of-sale system, meaning there’s no need to wait. Where it gets even more intriguing is how the app makes it easy for groups to split the bill. Using Cake means no one will be left paying for someone who’s short on change, or having to compensate for that person who went home early but didn’t leave enough to cover gratuity.

Songy opens the Cake app on her phone. Now that I’ve signed up (one minute, including adding a bank card) she can add me to her tab. Once we’re ready to pay we can each choose what we had from our bill, add the tip percentage, and then the app triggers the card payment. I deliberately waited to sign up until I was in the restaurant, wanting to see if it would still be easy with patchy mobile data coverage, loud music and potentially impatient waiters, and I have to admit: the Cake app is pretty slick, and the Cake business is well thought out.

That last part is vital, because there’s not exactly a shortage on competition in the mobile payment space. Songy will admit this, sure, but when it comes to hospitality, Cake is in a niche: “When my co-founder Charlotte [Kohlmann] and I were talking through ideas for startups, we saw a gap in the market for payment in hospitality – the scene was growing so much then, and still is,” says Songy. This was back in 2013, before the pair started Spleat, the predecessor to Cake, early the next year. “We’d seen the likes of Uber, and apps for booking planes and hotels, so we thought – why not speed up the time it takes to pay a bill, and make it a much simpler process?”

Right now, Cake is rapidly adding users, with the numbers growing 20% week-on-week. There’s only 30-something restaurants using the app yet, but the company’s in line to have 100 up and running by the end of the year. In July, Cake raised more than £1.1 million on CrowdCube, overshooting their £800,000 target. “I think crowdfundng can be really good for B2C businesses, at least if they’re not too new,” says Songy, who’s also raised money from traditional investors. “It can make people feel they’re part of a company they like.” The big push now is sales and development: “[The money is] going into raising London to the next level. That means getting more developers, and more salespeople to sign up as many bars and clubs and restaurants as we can. We’re also looking into doing a few more pilots in other countries, for future expansion.” So the order is the UK first, then Europe, and then the US.

It’s a lot of work, getting the first restaurants 50 onboard, but Songy is confident it’s going to get easier. For one, it’s clear that people in hospitality talk to each other, so you get little clusters of places using the app – the discovery feature shows several close to where we’re sitting: “We’ve had to sell the restaurants on this, first and foremost. We have to show them how it works, that it’s efficient, that it saves them time and hassle. We need to show how people will be spending more money, how you can serve more people.”

One major element still to be added to the app is table reservations, as well as a loyalty feature: “That’s probably the biggest platform we’re building for the restaurants: that they can look at their data. … They can be learning more about their customer [demographics], and spending down to an itemised level. That’s important to us: working with the restaurants and figuring out what they can get out of it.” Having said that, app users can rest assured that not every sandwich shop in town will be given your email address. Cake is still looking at the legal issues around data sharing, but the idea is to create a bespoke marketing service.

Listening to Songy, it becomes clear there’s a lot to think about when building a hospitality app. This is a sector that’s seen less technology innovation, relatively speaking, partially because it’s very fragmented: “Half of these places are independents,” says Songy, indicating the restaurants up and down the street, “So you have to go into each of them, sign them up, teach them how it works. All the systems are different so you have to integrate each one. … I don’t think a bank’s going to go do that.” She says that last bit after I’ve asked why a bank or payment card provider hasn’t done this already. There are some straight-up payment apps out there, like the Barclays Pingit app, which you may or may not know can be used by non-Barclays customers too. “But Cake is at festivals and events. We do ground-up marketing,” says Songy, who’s not at all troubled by point-of-sale payment tech like Apple Pay: “We’re going to use that in our app. We’re not competing with them. If anything, it helps us.”

The biggest competitor to Cake may instead be companies like MyCheck and Flyway, which make bespoke white label apps for restaurants. “It’s a bit of a trend in the industry to have an app,” says Songy, adding it also has to do with data ownership. “But I think many people don’t understand the maintenance and cost to continually market and upgrade an app.” But, I ask, are people really going to want to have 50 different restaurant apps on their phones? Surely only Starbucks can get away with something like that? Songy laughs: “You should go tell them that!”

There are other benefits for restaurants getting behind a single app too. Using Cake actually means paying less for card processing: “We have really good rates, because we’re taking in the volumes from a lot of the restaurants together.” Then there’s the fact that the Cake team is highly focused on customer service: “I think part of the reason people choose us is because we have an amazing team. If something breaks down they call us” – as opposed to users having to troubleshoot first with the bank, then the payment terminal manufacturer, and then the phone connection. After all, Songy and her co-founder are both from the American South, an area known for good service: “We grew up with the best hospitality. You’d never be looking around for the waiter, waiting for the bill. You’re very taken care of! … We’re trying to make it less a payment app, and more an easy new way of doing things.”

Published by Jessica Furseth

Journalist; Londoner.