Startup Update: Hospitality Loyalty Platform Getting Results

We talked to the founders of Embargo a while ago and wanted to catch-up to see how the platform has developed. Embargo is a loyalty and rewards platform that connects users to hundreds of London’s bars, restaurants, cafes and events and lets them enjoy thousands of perks and rewards at their fingertips – just for being loyal. They have launched in London with more than 350 venues on their platform and almost 2,000 rewards available to claim by the most loyal users.

Hospitality a difficult market

Embargo is the brainchild of co-founders; Tsewang Wangkang, Nik von Solodkoff and Frederick Szydlowski which created quite a trio linking their finance, hospitality and IT background to solve a problem all three had experienced themselves – the huge disconnect between customers and venues in the bar, restaurant and coffee shop scene.

Collectively, the founders realised the ideal solution was to foster a better connectivity and relationship between venues and customers via an easy to use app and create a CRM platform for venues to drive business. Their goal was not to digitize a manual process, but use technology to help the hospitality industry solve an issue that existed for a long time. They connected what has been disconnected for years and improved the relationship between the industry and its customers.

However, hospitality proved to be a difficult market for tech start-ups with some giants already on the market or numerous apps shutting down every year, including some spectacular failures in the recent years.

Why is it working for Embargo?

Embargo’s CEO Tsewang Wangkang: ‘I think the biggest challenge in creating a two-sided market with a new product is to gain very quickly traction. In our case to grow fast enough and create value for both venues and users. If the users do not have enough choice they will lose interest quickly, if the venues do not get much value and traction – they won’t be keen on trying yet another app. It is a bit of a chicken and egg situation to start with, but we are happy that we managed to get over it pretty fast showing strong growth in both aspects. Especially on the venue side, launching 60+ venues a month at our current stage with a small team in a short period of time. It helped a lot that the value of our platform is clear for the industry. They see it as a tool to drive their business instead of sharing their revenues with us.’

Frederick Szydlowski, the CMO and ex Head of Marketing of The Cuckoo Club, adds: ‘Hospitality is an extremely tricky industry. It is very important to understand the industry itself – day to day operations, rules and behind the scenes KPIs. We have built the product from a venue perspective and have been listening to them and their customers since our beta-launch. This has led to exceptionally great feedback from leading hospitality businesses and created a buzz among users and investors.’

London appears to be just the beginning. Whilst the app has been successfully growing in London – can you scale the loyalty and rewards platform to other cities?

Tsewang: ‘Besides great feedback from our existing clients and users, we also had disappointed ones outside London who are asking us on a regular basis when we expand to their cities. Especially the venues on our platform with sister venues abroad want us to expand asap – however, this is all very positive pressure for us. At the end of the day we have built Embargo for our venues and users. We have already plans to expand Embargo to other cities in the UK and the world. This and next year a lot will happen on this front.’

Definitely one of your steps towards expansion was your recently closed funding round, which attracted angel investors from all over Europe. Tell us about your advisory and investor teams?

Frederick: ‘All successful start ups were built by great teams. We as founders are aware that there is a lot that we don’t know and the only way to succeed in the long run is to surround ourselves with exceptional individuals and specialists in each area we are in. From our hard working and talented employees, ‘smart-money’ investors, to our Advisory Board Members that include Gerry Calabrese founder of Hoxton Spirits or Tomasz Fajfer European Financial Director of Sephora and ex Board Member of Costa Coffee. We’ve learned that our product solves a problem occurring in hundreds of cities in the world and scalability is key for us’.

Overcoming tough App revenue challenges

One of the biggest challenges for young start-ups is to convert a product that people like and use into a product that someone is willing to pay for. Embargo has just started generating revenues from two streams.

Besides their subscription-based CRM freemium model for bars, restaurants and cafes, Embargo has also triggered great interest within the beverage industry. Beverage brands spend significant amounts of their resources on Below The Line Marketing using the venues to activate their products at the point of sale with limited control over it.

Tsewang: ‘We knew from the start that we cannot introduce our revenue model until we have gained enough traction and knew exactly what our clients want. Given we work very closely with our venues we could built exactly what the market needs. Furthermore we already had early discussions and test campaigns with beverage brands that proved to be very successful. We have now started generating revenues with a product that the market demanded and asked for. ’

Frederick: ‘With my previous experience in the industry dealing with beverage companies, I knew that there is significant potential to improve the process. Given we are already serving the brand’s venues as well as their target consumer, it puts us into the ideal position to help the beverage companies to activate their products at point of sale in a much more efficient and smarter way. This way we are creating a triple win situation where customers get rewards, venues a tool to drive business and brands a smarter way to activate their products at point of sale.’

So far so good, but…

The company has set a strong tone and great expectations within 2 years from their beta-launch and only 1 year since their full launch. The long list of venues includes high end hot spots like Chotto Matte, Ours or award winning 108 Garage, as well as, famous casual bar and restaurant groups – Simmons Bars, Hippo Inns or Bird Restaurants to name of few.

The company has just released a brand new version with a new design where the instant perks and available rewards are on a separate tab and the Home Page turned into a content lead site helping customers discover new places, easily navigate among their favourite venues and drive even more footfall to venues.

The business model for their loyalty and rewards platform seems to make sense and is already gaining traction. The founding Team managed to attract great investors and advisors. But… it is still early and the industry they are in is not that simple. Nevertheless, their promising growth makes one curious about the next 12 months for this London startup.

Embargo is available to download from iOS and Android and at www.embargoapp.com.