Joel Montaniel’s SevenRooms is more than just another restaurant reservation system. “If you ask a restaurant, ‘What are your top 10, your top 25, and your top 50 customers?’ There are 15 million restaurants on the planet and 14.95 million of them can’t answer that question today,” Montaniel tells Observer. So, SevenRooms set out to solve that problem—by offering a suite of tools that empower restaurants and other types of hospitality operators to take full control and make the best use of their customer data.

“Basically what Shopify has been doing for retail is what we’re doing for restaurants,” Montaniel explained. “We help restaurants do three things: make money, build relationships with their customers, and then streamline their operations.” Montaniel, a former investment banker and real estate investor, founded SevenRooms in 2011 with his childhood friend Kinesh Patel and former Credit Suisse (CS) colleague Allison Page. Inspired by the former Vanity Fair editor Graydon Carter “seven rooms theory,” the company aspires to create spaces where patrons feel at home, regardless of the venue’s exclusivity. From high-end establishments to smaller independent eateries, SevenRooms caters to a diverse range of hospitality operators, boasting an impressive clientele of more than 11,000 hospitality operators around the world.

Montaniel was named on Observer’s 2023 Nightlife + Dining Power List. We interviewed him earlier this month about SevenRooms’ founding story, his journey of finding the right business model, and the broader landscape of the hospitality industry amid high inflation and shifting consumer behavior. The following conversation has been edited for length and clarity.

Observer: How did you meet your co-founders and how did the idea of SevenRooms come about?

Joel Montaniel: There are three of us. One of them, our CTO, Kinesh, I grew up with in Texas, so we’ve known each other since we were 10 years old. My other co-founder, Alison, and I met at our first jobs out of school—we were investment banking analysts and shared a cubicle wall.

At first, our idea was to solve a consumer problem and try to make it easier for consumers to go to these exclusive places. We launched a website in 2009 and it failed miserably. What we learned was that there actually was a bigger problem to solve. When we looked at the systems that hospitality operators were using, they didn’t have any customer data. So, we switched over from thinking about the consumer to thinking about the restaurant or the operator. We found that by solving that problem and giving them the technology that can help them understand their customers, that could then translate into an amazing customer experience, which is what we were trying to solve in the first place.

Before diving into the SevenRooms we know today, in retrospect, why do you think your original idea “failed miserably?”

I think we weren’t solving a real problem at that point in time, and I don’t think the world was ready for something like that. I remember talking to a restaurant and they told us point blank, “We sell dinner here, we don’t sell the right to have dinner.”

We learned that we shouldn’t be solving things that we think are cool. We should work on things that actually create real value based on problems that we’ve experienced ourselves or problems that the industry talked to us about.

How would you describe SevenRooms’s core products and services?

The way we think about ourselves is basically what Shopify is doing for retail is what we’re doing for restaurants. At the center is CRM—that is guest data. Then, there’s operations marketing, and commerce that sit on top of it. We work with restaurants, hotels and entertainment venues. We help them do three things: make money, build relationships with their customers, and streamline their operations.

What was the traditional approach to achieving those three objectives and what innovation and value does SevenRooms provide?

The traditional approach would have been to use a reservation system. In the U.S., that means using an OpenTable or a Resy system, for example. Those systems are really good at bringing customers in. But what hospitality operators haven’t really made as much investment in is the guest database and marketing tools. All of the guest information would be stored in their heads.

If you ask a restaurant, “What are your top 10, your top 25, and your top 50 customers?” There are 15 million restaurants on the planet and 14.95 million of them can’t answer that question today, because restaurants don’t have the customer data, they’re not really doing retention marketing.

On your website, it says the company’s name was inspired by the “seven rooms theory.” Can you explain what that is and why it’s a fitting name for your company?

We believe technology is more than just transactional, and so we wanted to find a name that is about helping companies build relationships with people. We stumbled across this theory by the former Vanity Fair editor Graydon Carter called “the seven rooms theory.” It says that, in New York, there are seven interconnected rooms, each one more exclusive than the one before it. It suggests that when you think you’re at the top spot and the best place, there’s always another room that you don’t have access to that you haven’t discovered yet.

It hit the nail on the head for us where, you know, the seventh room is not about exclusivity; it’s about the place you go to where you feel most at home. For one of us, it might be a coffee shop, and for another one of us, it might be a bar. That captures the essence of what we want to do, which is we’re in business to help restaurants and hospitality operators make their guests feel at home.

What types of hospitality operators does SevenRooms work with?

At the very beginning, we were working with more higher-end restaurants and nightclubs. These were places that want to make people feel special. One of the very first customers we had was Tao Group Hospitality in New York. Another really early customer was LDV Hospitality, which owns Scarpetta and other places. They were super helpful in helping us understand the technology and what customer information mattered.

But today, we are in every size and dollar amount. We have over 11,000 restaurants using the platform. We power 80 percent of Las Vegas today, so all of MGM, Wynn, Cosmo and Venetian. We have everything from big hotel groups like Marriott to small, independent restaurants. And we have everything from inexpensive to $200-plus per person. As an example, 40 percent of our customers are under $50 per person and 9 percent are under $25.

Covid-19 and high inflation for the past two years have changed consumer behavior in many ways. What are some of the emerging trends you’ve observed in hospitality?

Hospitality has been resilient overall. Sales are roughly flat, but they’re not going down. People are going out a little bit more, but they’re spending a little bit less.

We will continue to see that trend, which I think is largely driven by an older demographic that has a lot of disposable income. They’re spending money on travel and they’re going out to eat. Then you have a younger generation that is all about the experiences, all about Instagram and TikTok. The reason I think restaurants are really taking off is that they’re the new kind of social currency, and people are posting about food, restaurants and even dinner reservations on social media. I’m finding that food and experiences are central to both the younger generation and the older generation.

By Sissi Cao