The Spike in RFPs Isn’t Bureaucracy – It’s a Warning Shot!

Friends of Branded:

Happy Saturday and I hope you had a great week.

My first job out of college was as an analyst for a New York City based investment bank. This was a 2-year analyst program that despite the grueling hours, I have very fond memories of my experience thanks to some amazing people, a steep learning curve, and the countless times when meeting rooms emptied, and platters of food were left behind.

At the bank I worked at, the analysts were located in cubicles on the 3^rd floor (often referred to as “the bullpen”) and when there was word of leftover food in a conference room anywhere in the building, the result was analysts racing to see who gets to the spoils first. I learned a great deal during my time at that firm and while the comment about the leftovers sounds like joke (b/c it’s funny to think about a group of young “suits” running around a building to scavenger of leftover food), there was skill and pride in the ‘game’ we were playing (and yes, it was a game and it created many smiles & laughs).

Unnecessary, but still an honest comment here - you can’t get that experience (and laughs) working from home. 😊

I once read that it was actually an analyst that worked at an investment banking program, not unlike my own, that inspired the successful and long-running TV program, Survivor.

To be clear, I wrote this thought down and then read it, so my preceding statement is in fact true, but the show Survivor, was created by Charlie Parsons and premiered in 1997. Survivor puts a group of contestants in isolation and has them compete in challenges that test both physical and mental abilities and has the contestants progressively eliminated. This analogy (and attempt at humor) is far more similar to the life of a 2-year analyst than I have ever thought about before since I finished the program in 1992.

I think I need a moment as I’m getting flashbacks. Okay, I’m back.

One of my first assignments for the Government Agency Finance group was to run the RFP process for the many service providers that would be needed for a series of transactions for the Department of Veteran Affairs.

RFP stands for “Request for Proposal” and it’s a formal document issued by a company (or organization) to solicit proposals from potential vendors or service providers. The RFP describes the project or problem, it outlines the requirements and asks vendors to submit detailed proposals on how they would deliver a solution (the deliverable would typically include scope, methodology, a timeline, pricing, and the responders’ qualifications).

An RFP is like holding up a banner that says, “we need some help, show us what you got” and is used primarily by organizations that need to have a structured, competitive, and transparent decision-making process.

Stick with me friends, we’re about to dive in and my walk down memory lane is over.

The hospitality industry is experiencing a heightened level of RFP activity and its a clear signal that the ResTech market is entering the next phase of this digital transformation that is underway.

First, let’s make clear about how important RFPs are for the restaurant industry. Spoiler alert, they’re not.

Don’t get me wrong, there is a spike in RFP activity underway, but RFPs are only used primarily by a small (albeit very important) segment of the market which consists of enterprise operators as well as some mid-market and regional chains.

Let’s remember, that 70% of our industry is comprised of independent & SMBs (small and medium sized businesses). This segment of the market is one that rarely uses RFPs, but the spike in actual RFPs is real and it’s meaningful.

Change is coming when you see the RFP activity increase among the enterprise restaurant companies. But ResTech changes aren’t limited to the enterprise sector and mid-market companies, albeit less formal and more likely to rely on pilots and possibly consultant-led processes, are actively exploring changes as well.

And no one puts baby in the corner (at least not on my watch), so let’s not leave out the super majority of the market, the independents & SMBs, who base their decisions on peer recommendations, trusted influencers, referrals, and direct outreach.

The data available on RFP volume is admittedly limited, but these RFPs from industry giants garner attention (and buzz) and my conviction that we’re in an environment of heightened RFP activity is strong and that means we’re going to see more ResTech changes.

The digital transformation landscape is clear, a tech-shake-up is underway. The RFPs get the attention b/c the enterprise players have thousands of units and monster sized tech stacks, but don’t miss the message, the entire restaurant ecosystem is engaging in tech-stack changes.

It’s hard for enterprises to make changes (just like its hard for an ocean liner to change course quickly), so the heightened use of RFPs isn’t just a statement about technology procurement, it’s a statement that the era of messy and siloed ResTech is coming to an end.

M&A bankers, let’s get ready rumble, b/c the RFP process is signaling that a period of increased consolidation is upon us and don’t think for one second that AI-empowered ecosystems aren’t a key driver here. Antiquated tech platforms don’t integrate well (play nice in the sandbox) with the more modern AI-powered solutions, so the biggest restaurant companies are looking to modernize their tech infrastructure.

There’s a knock-on effect here that will benefit the other segments of the restaurant industry. Mid-market & regional chain operators, despite not being likely to run a full-on RFP process, watch and take cues from the Big Dogs. These players want and believe they deserve the same, if not better, tech stacks as the enterprise folks.

The mid-market and regional players don’t just follow the leader, they tend to lean in faster and use their relatively smaller size as a competitive advantage. This group also wants the same integrated, AI-ready solutions, but the mid-market players won’t run a year-long RFP process (b/c they don’t have to). They’ll test and adopt through pilots, value peer referrals and are looking for bundled solutions.

That leaves the independents & SMB operators, who explore changes in ResTech in a similar way to the mid-market folks, but can move even faster and often lean into bundled solutions (best-in-suite over best-in-class).

An unintended consequence of the changing landscape in ResTech and specifically the heightened RFP activity will prove particularly beneficial to the independents. As vendors respond to enterprise RFP demands, they will also rollout “plug & play” versions of the very same solutions ‘down-market’. I expect the independents & SMBs will be the biggest winners here as they will see easier, cheaper and more effective tools coming their way (without ever having to even create or issue an RFP).

Call this a spillover effect or whatever you want, but simplified, and bundled packages are EMERGING. 😉

I’m not prepared to call this moment the end of Phase One of the ResTech digital transformation (unless you think that sounds cool and agree, in that case, let’s do it) but I believe we’re now fully entering a phase that will be dominated by consolidation, intelligence, and scalability. The enterprise folks are writing the playbooks, the mid-market players are running faster, and independents are being afforded the best bundled solutions this industry has ever seen.

Fragmented ResTech? Isolated ResTech?

Friends, if you’re in this space, you don’t have to believe me, but you should at least consider the increased RFP activity, and the knock-on effects, is a warning sign.

People often associate the running of an RFP process as an example of bureaucracy and that’s a word that almost always connotes negative thoughts. Respect and I get it, b/c the word usually means red tape, inefficiency, rigidity and maybe most importantly, slow decision-making.

But let’s look at the other side of this proverbial coin.

The definition of bureaucracy is a system of organization built on rules, roles, and hierarchy to ensure consistency and fairness. Taken in that light, the word bureaucracy doesn’t sound too bad, now does it?

You don’t believe me?

Ask a franchisor about their “franchise system” and the importance of manuals, SOPs, and standardization. Sounds pretty darn bureaucratic to me.

The rise in RFPs at scale should not be viewed as bureaucracy, but rather as a war cry! The game just changed (again). Are you ready to play?

Before I close out this week’s Top of the Fold, I want to give a big THANK YOU to our friends at the Prosper Forum and to all the corporate partners that made that event happen. This is a special and I dare say unique gathering that fosters genuine conversations and some real talk. Traveling for work is taxing, not just on those who hit the road, but also to the families and people we leave while we’re on the road. The bar is being raised when it comes to events that we can attend. The Branded team appreciates the care and thoughtfulness that makes the Prosper Forum one of our very favorites.  Thanks for setting and expanding the table.

I wish you all a wonderful Labor Day weekend and the unofficial close to Summer 2025!

It takes a village.