This Secret Tool Tracks Everything You Do at Restaurants and Nightclubs

September 29, 2016, 6:05 PM UTC

It’s not uncommon for Joel Montaniel to schedule a business meeting for 1 a.m. In his world, work happens during the day, but business happens at night.

Montaniel, 32, is the co-founder and CEO of SevenRooms, a customer relationship management (CRM) platform that gives nightclubs and restaurants a detailed view of who they’re serving. Through the tool, businesses can see a customer’s photo, as well as his or her zip code, birthday, allergy information, previous food and drink orders, and spending. Popular hot spots like Bagatelle, Tao, and Marquee use the software to personalize their interactions with customers in hopes of turning them into regulars.

Since launching in 2011, SevenRooms has raised $6.2 million in funding from investors such as BoxGroup and chef Thomas Keller. It’s now used by clubs and restaurant in 100 cities across the globe. Montaniel would not disclose the company’s annual revenue, but said it was seven figures.

And yet, like many entrepreneurs, Montaniel failed to get it right the first time. Before he was a nightlife VIP, he was a party-loving Credit Suisse analyst who was trying to launch a web-only platform that would make it easier for people to book tables at nightclubs — a sort of “OpenTable for nightlife” called Nightloop.

He wasn’t having much luck getting it off the ground. But one night in 2009, after a night of clubbing, Montaniel got in a cab and found a pink BlackBerry in the backseat. He got a call from the phone owner’s boyfriend, who thanked him by inviting him to 1 Oak, the New York City nightclub where he worked as a promoter.

Montaniel got a taste of VIP life that night, rubbing elbows with models and celebrities. “Leo DiCaprio was at the table next to us. Kid Cudi did a live performance. Derek Jeter was there,” he says. “I mean, it was crazy.”

Just when it couldn’t get any better, the phone owner’s boyfriend got him a meeting with every top-tier nightclub operator in the city. Montaniel and his two co-founders — Allison Page and Kinesh Patel — were able to sign with the hottest clubs one week before Nightloop was set to launch.

At that point, the young analyst-turned-entrepreneur had everything he thought he needed for a successful launch — the connections, the press, and the glitzy lifestyle. Turns out, the product was a dud. “We made every mistake in the book that first-time founders make,” he says. “We overbuilt the product, we didn’t talk to enough customers, and even though 100,000 people hit our website the first day, no one came back ever again.”

Montaniel and his co-founders went back to the drawing board. For the next two years, they worked the door and shadowed managers at nightclubs, which gave them the idea for their new product, SevenRooms. They did this for 10 to 15 hours a week in addition to their full-time jobs, and they made a ton of observations — they saw doormen turn away celebrities, billionaires, and in one instance, even the owner of the nightclub. “The hospitality industry is very tribal,” he says. “Unless they think you’re one of them, they won’t really give you the time of day.”

In this game of “who’s who,” a doorman can literally lose his job if he doesn’t know who’s standing in front of him. That’s what makes SevenRooms so valuable. The doorman, server or host is able to type in a customer’s name and the system immediately pulls up the profile from SevenRooms’ database. “Even if it’s someone’s very first day working at that venue, they can treat the customer like gold,” says Montaniel.

Getting personal

And being treated like gold is pretty much the gold standard for customer service in this industry. In other words, SevenRooms’ data insights could totally change the way nightclubs and restaurants do business. The software platform, which has an app for venue operators, tracks the number of customer cancellations, no-shows, and tardies — all factors that could affect the bottom line of a hospitality business.

On top of this, SevenRooms is working to get even more granular with the information it shares. For instance, the startup analyzed customer orders of a high-end New York City nightclub, and the findings were eye-opening. Across all vodka orders in the last two years, 50% of customers ordered Grey Goose, 25% ordered Belvedere, and 5% ordered Ketel One. However, the most loyal customers ordered a very specific combination — Grey Goose vodka along with a bottle of Dom Perignon Luminous.

“So we said, ‘If someone orders this combination and it’s their first time here, you should probably give them a free round of shots because they have the capability to become a regular,’” says Montaniel.

Of course, this hyper-personalization is effective for the venue operator, but it raises privacy concerns for the customer. SevenRooms was scraping public information from social media sites to pull in phone numbers, email addresses, photos, job titles and other available information. Once LinkedIn and Facebook began to restrict their APIs and made them available to only official partners (ones who were willing to pay big bucks), SevenRooms lost the ability to automate that data.

Today, the company uses an algorithm to track what you order and how much you spend, but all other data is entered manually by staff with access to SevenRooms (including anyone from the server to the general manager). This means that your profile could also include any notes of how you treated (or mistreated) the staff. Your profile can be shared across different nightclub and restaurant properties owned by the same company. And if you don’t want any of this data tracked? Montaniel says you could personally call the venue to say you don’t want a profile; the onus is on you, the customer.

That’s not really a concern for Montaniel. He’s convinced that customers want to be treated like VIPs everywhere they go, and that means voluntarily giving out personal information to the places they frequent. “The idea is that you’re willing to do that because it means a better experience,” he says. “VIP doesn’t mean that you are special, it means you are able to build a relationship with someone.”