Airtab’s Michael Dagen Interview on How to Upsell Alcohol

Welcome to BOH Banter, an interview series designed to introduce our audience of independent restaurant operators to the Verified Vendors on our Solutions marketplace. Have suggestions for who we should interview next? Pitch us:!


Since time eternal, bars and restaurants have relied on alcohol to drive high-margin sales. Then came the pandemic, and as cities nationwide shuttered indoor dining, restaurateurs urged lawmakers to allow to-go alcohol sales. Without being able to sling drinks, there's no telling how many more establishments would've gone under in 2020.

Such is the power of a good stiff drink. Airtab, a mobile app that uses its social network to steer customers to your restaurant, wants you to leverage that clout to pull people in the door, encourage them to buy food, and invite them to come back. The company's CRO, Michael Dagen, reminds his clients that they've already paid for that beautiful array of bottles behind the bar, "so why not use it to grow your business?"

That's exactly what Airtab is doing for its restaurant members. Its platform drives customers, promotes special events (that the app actually pays for), and provides detailed data analytics to operators, who in turn use it to target their marketing. All for free.

We chatted with Michael about how his app is doing its part to bring restaurants back from the brink.

Back of House: Tell us who you are and what you do with Airtab.

Michael Dagen: I'm Michael Dagen, I'm the Chief Revenue Officer for Airtab, a social networking app for restaurants and bars. If you take Facebook and Instagram and put it together just for restaurants and bars, that's great on the social side. But on the backend side for the restaurateur or the brands, it’s a behavioral analytical app. We use a technology called “Here Now Live” that identifies people when they're on-site live. This allows the restaurateur or the GM, or even the brands, to know that the customers are there. It also allows people to “trend” in the app so their friends know “hey, my friend is hanging out at this location” — therefore driving traffic to that location.

BOH: How did AirTab come to be? What's the history and genesis of it?

MD: Airtab was built to drive traffic to restaurants and bars. It was originally supposed to launch in January / February 2020. The pandemic came around, and we had to restrict it down and rebuild it. So we did a promotion with iHeart Radio nationwide to get people back into restaurants and bars, and ended up with 1.2 million people in our app wanting to go out. That's why we're working with Back of House to be able to get restaurants that want to receive our members.

We do all the social media marketing including utilizing influencers to get people into our app. We drive people to the restaurant of their choosing, of course, but if you're in our network, we drive them into your restaurant with a guarantee that people will be there for a minimum of 45 minutes. Our average member stays an hour and 10 minutes. We allow you to be able to re-market those people via the Airtab app at no additional charge. So none of these items — marketing, data, populating, etc. — have fees. We don't charge the restaurant anything.

BOH: How does the app work?

MD: The app works on a social aspect, so once again it's trending bars, people posting pictures, the same things they do on Instagram and Facebook. But when we drive someone to a restaurant, if they're a VIP member, and they have 10 drinks in their Airtab locker, we ask the restaurants to pour them two drinks — beer, wine, or cocktail. The first drink is poured when they arrive, and the second one is 45 minutes later. That allows the restauranteur to use the assets of the business, which is the liquor, beer, or wine, to be able to drive people in and upsell them on more drinks, appetizers, and meals.

It also allows them to be able to populate quickly — therefore making the restaurant more popular. Typically 50% of people come to a restaurant not for the free drinks but for the population of people that are there. It also allows us to do special events. For example, we have “Tasting Tuesdays” — every Tuesday we do tastings and we actually pay the restauranteur to host the tasting. These aren’t typically high volume days, and we bring in about 50 people to do a tasting of different mixologies. After the people try it, most will pick one of the tastings. This allows the bar to populate.

BOH: What is the Airtab Locker?

MD: It’s an imaginary drink locker that your drinks will pile up in. So if you are getting in a contest or if you're a VIP, they populate in this locker which is in your app.

BOH: Can consumers buy drinks through the Locker?

MD: They can do a VIP program which is 10 drinks for $10, and that goes in their locker. If they want to send a friend and drink, they can text it to them, Facebook message, or Instagram message the drinks. It leaves their locker and goes into the other locker. But our members are not buying anything from the restaurant through the app.

BOH: Let’s talk a little bit more about the marketing opportunities. When a restaurant on-boards Airtab, what do they have access to from a marketing perspective?

MD: They have full access to all the marketing on the app. The idea is to make the restaurant popular. We send the people in the area that a new restaurant is opening up. We advertise it to the Airtab members and they go there when the other Airtab members go there, so now that audience belongs to the restaurant.

For example, Buca di Beppo has 90 locations. So when our members go in there, there are two people that have access to it: corporate, which has access to the entire brand; then you have the general manager, who has access to their specific location. So maybe there's a Wednesday that they have extra shrimp, and they want to do shrimp scampi special, they could send out a message in the app: “Hey guys, come on in and get two drinks and have and the shrimp scampi special” — it draws the people in there. It’s like Groupon but without having to give away the 50% upfront. Shrimp scampi can be full price but the people are getting two complimentary drinks to do that.

BOH: And in terms of how they put that blast out, that's a dashboard that’s built-in that the restaurants can use?

MD: Correct.

BOH: As we start hopefully seeing the light at the end of the tunnel for this pandemic, what is Airtab’s vision where this product fits as we start to reemerge? What’s your main focus right now?

MD: Right now we're focused on getting restaurants on-board. We just cut a deal with the state of Hawaii / Hawaiian Airlines. So anybody that goes into Hawaii gets two drinks sent to their AirTab locker to use at restaurants and bars in Hawaii. We're gonna be expanding this to the rest of the United States, obviously. But right now it's getting restaurants on board and bringing them traffic. That's what they need right now.

BOH: You mentioned that you guarantee restaurants that people who come in through the app will stay 45 minutes. Is that accomplished from the framework in place: receiving one drink when they arrive and then another 45 minutes later?

MD: Yep. There’s a timer on the phone that doesn’t allow them to order their second drink until that 45-minute mark has passed. So they can't get their next drink for 45 minutes.

BOH: It sounds like customers are spending more money than just these two drinks, is that right?

MD: They have a $10 minimum spend, but our average member spends anywhere from $40 to $60.

BOH: That’s a good check.

MD: Great check, yeah. Especially because you didn’t pay anything to get them in there. Remember that alcohol is an asset. It’s been sitting there, whether they bought it today or about a month ago — it’s already paid for. So different than the rent, different than the electric bill, different than their employees — those are called liabilities. This is an asset since you've already spent that money, so you may as well use the asset to make your business grow. That's how businesses grow. They don't grow by liabilities, they grow by assets.

BOH: What about the Tasting Tuesdays. Is that something that anyone that on-boards with Airtab can participate in, or is it a special program in which they have to enroll?

MD: Nope, it's a no-cost program to the operator. Actually, as I mentioned, we pay the operator to have them participate in Tasting Tuesdays, as it allows them to get people in the restaurant to try different drinks. It also allows the brands to be able to take advantage of the knowledge from the data we’re providing from everyone drinking the drinks. They rate the tastings for all of their drinks, and it’s all done electronically. That data goes right back to the manufacturer

BOH: Are they able to host additional events or promotions with their Airtab customers?

MD: They can do whatever marketing they want through the app to drive people into the restaurant. It’s direct marketing. It’s not shotgun marketing, it’s sniper marketing.

BOH: For our skeptical operators, are there things about this app that you want operators to know upfront? For instance, things that they should be weighing as they think through whether it's right for their business?

MD: We don't charge to join. You can cancel at any time. We don't charge, ever, for anything. All we have to do is serve our members. So if no one shows up but you interact with them, no big deal. If they tell us we're sending them too many people, you can cancel.

BOH: Have you had that complaint from many operators? I can’t believe you have.

MD: Sometimes people think that it's just free drinks. I explain it in two ways: I want to do the marketing for you. We drive people to your location and guarantee they'll be there for 45 minutes as well as give you the data to re-market them to come back. Would you pay me $3 for that? They all say yes. Same concept pouring two drinks, sending in three bucks if they were to pour beers or wherever, but still round it up to $1.50 a drink and those are your costs. When our guys go door-to-door, we have about an 80% closing ratio of signing people up. They all say the same thing: you're doing the marketing for me. I'm not paying for it. I've already paid for the liquor and it’s sitting here, so why not use it?

BOH: In terms of geographic areas is this something that any operator across the entire economy can access and participate in as long as they have a bar?

MD. We’re located in Hawaii, but we're nationwide. We actually prefer restaurants — we want the establishment to have food so they can upsell food. But yes, it’s the drinks that bring them in and the food and experience that keep them going. That's why there are ladies' nights or the two-for-one drink or $5 margaritas or dollar beers. Those promos bring you in and the restaurants are still making money on them, but hopefully, then you also stay and order more.

BOH: What's the future hold for Airtab?

MD: Right now we have the member program and the Tasting Tuesdays, and eventually we’ll have our Airtab music program put together, which will be beneficial to everybody — but right now we don't want to mix up any of these messages. Our goal is to drive people to your restaurant and allow you to re-market those people. This is the only app that allows you to do that.