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With a background in software engineering,&nbsp;<a href="https://www.linkedin.com/in/walshray/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-barmetrix-ceo-ray-walsh-transformed-restaurant-profits-with-data-2727603" target="_blank" rel="nofollow">Ray Walsh</a> left the corporate world to pursue entrepreneurship, eventually joining&nbsp;<a href="https://www.barmetrix.com/franchise?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-barmetrix-ceo-ray-walsh-transformed-restaurant-profits-with-data-2727603" target="_blank" rel="nofollow">Barmetrix</a> in 2003. Starting as a small consultancy in Sydney,&nbsp;<a href="https://www.1851growthclub.com/brands/barmetrix/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-barmetrix-ceo-ray-walsh-transformed-restaurant-profits-with-data-2727603" target="_blank" rel="nofollow">Barmetrix</a> grew into a global franchise that helps bars and restaurants maximize their profitability. With a focus on reducing inventory losses and improving operational efficiencies, Barmetrix uses data analytics and proprietary technology to empower business owners.The brand has expanded to 35 locations across six countries, with over 1,100 clients benefiting from its services. For Walsh, Barmetrix’s strength lies in its ability to offer restaurant owners transparency and control over their operations.&nbsp;“It’s a people-based, trust-driven business,” Walsh told 1851 Franchise Founder and Publisher&nbsp;<a href="https://www.linkedin.com/in/powills/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-barmetrix-ceo-ray-walsh-transformed-restaurant-profits-with-data-2727603" target="_blank" rel="nofollow">Nick Powills</a> on an episode of the&nbsp;<a href="https://www.youtube.com/watch?v=aKw4nx7rfpI&utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-barmetrix-ceo-ray-walsh-transformed-restaurant-profits-with-data-2727603" target="_blank" rel="nofollow">“Meet the Zor” podcast</a>. “Our clients give us their keys, alarm codes and access to all their data, and that level of trust doesn’t come from a quick email or direct mail. You need to be out there, shaking hands and building relationships.”A summarized transcript of Walsh’s interview with Powills has been included below. It has been edited for clarity, brevity and style.Nick Powills: Ray, we've talked with franchise buyers who say it's simple: they want to know the culture of the business they're buying into and the business opportunity. Let's start with the culture, focusing on you and your backstory. How did you accidentally fall into franchising? What's your franchise story?Ray Walsh:&nbsp;Yeah, "accidentally" is probably the right word. It ties in with my journey into entrepreneurship, leaving the corporate world behind. My background was in software engineering. I worked for a large software company after graduating from college. Then the dot-com bubble hit around 2000, and like many other engineers, I found myself with some time off. I did some traveling and kind of meandered for a while.When I was in Sydney, Australia, I was doing technology contracting, but I realized I didn’t want to continue on that path. I started looking for other opportunities. I always say there are different levels of entrepreneurship. Some people wonder if franchising is true entrepreneurship. In my mind, there are just different levels. You’ve got the pure entrepreneurs who start multiple businesses and take on all the risk, and then there’s franchising, which offers a more structured, proven path. I fell somewhere in the middle — I didn’t want to start from scratch but was looking for something established.In 2003, I got involved with Barmetrix, a small consultancy serving bars and restaurants in Sydney. The model was proven, we had a great team and the opportunities were there. I decided to leave the corporate world — I was young, single and able to take the financial risk. From there, we expanded the business to the UK through a licensing agreement. My business partner was Canadian and we had contacts in Canada, so we expanded into Toronto, Ottawa and Vancouver. We started franchising in Canada in 2005.The U.S. market was always our goal, so we moved there in 2008 — right at the beginning of the financial crisis, which wasn’t ideal. We made a lot of mistakes, like many new franchisees, but franchising seemed like the best way to grow. Even though we didn’t have experience in franchising, we learned along the way, and that’s how I ended up in the franchise world. I was responsible for the technology side early on, and over time, I became comfortable with franchising as a business model. That’s my path into franchising.Powills: All right. There's things that I want to unpack there, but let's flip over to the business side to frame it. What is the business opportunity?Walsh:&nbsp;What we do is work with bars and restaurants to help them maximize profit and revenue from their bar programs. In the U.S. market, where the biggest opportunity lies, most bars and restaurants are losing 20-25% of their inventory each week. We show them where and what they’re losing. Our goal is to reduce that 20-25% loss to less than 5%. By doing so, we significantly lower their cost of goods, which more than covers the cost of our service — typically providing at least a 5x return.In addition to a service that pays for itself, clients gain access to data they’ve never had before, providing full transparency into their business. They can see if staff are pouring correctly, following recipes, or if there are issues with the point-of-sale system or equipment like draft systems or wine glasses. We provide comprehensive data on purchases, sales and inventory, allowing us to analyze and identify specific opportunities for improvement. Ultimately, it’s about data analytics combined with coaching.Powills: Are you a technology provider for how you're measuring those metrics too?Walsh:&nbsp;When I got involved, my background in technology played a key role in the early development of our product. We built all our software in-house over the past 20 years, evolving it significantly. It started as an old Access database and now it's cloud-based, utilizing the latest industrial barcode scanners and incorporating AI technology. Our focus is on making the system as mobile, fast and efficient as possible for collecting data — because that’s how we make our money. The faster we can collect, analyze and deliver a report to a client, the better. All the technology is proprietary, and we provide it to all our franchisees.Powills: Number of locations currently?Walsh:&nbsp;We have 35 different locations, so 35 cities — and that's operated by 23 different operators.Powills: And how many active restaurants? How many current clients do you have collectively among those?Walsh:&nbsp;We're just over 1,100 bars and restaurants across six different countries.Powills: And how much average savings are you giving back to these restaurants?Walsh:&nbsp;It's tricky to answer because, while we can easily show cost savings through a drop in the cost of goods, other factors are less predictable. For example, when a bartender gives away a free drink to a customer, possibly for a higher tip, the cost of that free bottle of beer might be a dollar, but its retail value is $10. In that transaction, the immediate cost saved is a dollar, but the real loss is $11 — the cost plus the lost sale.It's difficult to calculate because we can't always predict where the loss is happening. It could be a free drink at the bar, which someone would have paid for, or it could be product walking out the back door. The closer the loss is to the stockroom, the closer it is to cost; the closer it is to the bar, the closer it is to retail. That’s why we aim to provide a minimum 5x return on investment.Powills: So on the cost of goods sold, how much should that percentage drop?Walsh:&nbsp;Typically, for every 4 to 5 percent variance, that translates to about a 1 percent drop in the cost of goods. From what I see daily, servicing our corporate store here in Washington, D.C., and new clients, we usually reduce cost of goods by 3-5%, depending on how severe the client’s situation is.On average, our service costs around $10,000 per year, though larger venues can pay up to $50,000. For a client spending $10,000, we recently did a discovery meeting where the opportunity for them was about $130,000 in returns on that investment. On average, any business doing close to a million dollars annually in beverage sales should expect to recoup six figures if they follow our advice and coaching.Powills: This is where I’m going to turn this into a coaching call. Let’s start with your franchise story: you were tired of corporate America and took control of your future. Most people entering hospitality consulting feel the same way — they’re tired of working for someone else and want control over their time and money. Your message to them is clear: “When you're ready to take control, we have a business for you.”On the consumer side, your pitch is simple. For restaurants, dropping cost of goods by 3-5% essentially gives franchisees back their royalty, increasing profitability. The question for them is, “Would you like to stop paying royalties?” By reducing costs, you offer a solution that directly impacts their bottom line. Does this approach resonate with you?Walsh:&nbsp;I think that's a great idea. Ironically, we've always focused on independent restaurants because the sales cycle is easier — independent operators can make decisions without corporate approval. We've viewed franchise groups as too bureaucratic, with too many decision-makers involved.But maybe we’ve had blinders on to that opportunity. The way you put it — being able to tell franchisees they can save on royalties — is huge. It addresses one of the biggest complaints franchisees have: "I hate paying royalties." What am I getting for my royalties? I love that idea.Powills: Stay on that. You have 30 or 35 locations, right? So, it depends on the chain size. Let’s focus on emerging brands with under 100 units. A 100-unit brand might still take a shotgun approach, with one location in Seattle and another in Florida. Can your 35 locations go outside of their territory to set up the program, or does it require them to be on-site?Walsh:&nbsp;It currently requires our team to be on-site, but we are experimenting with a remote program. The challenge is that while there are plenty of good tools out there, everything relies on accurate data collection. If the data is off, it makes everything else meaningless.Our team is trained and experienced, typically handling three or four restaurants in a day, ensuring proper data collection. We’ve introduced software checks to help in-house teams count inventory accurately. While we can access point-of-sale and purchase data electronically, we can't count inventory remotely. If we can train restaurant staff to handle the counting, we can run the report and flag any issues that need rechecking. It's a newer process we're testing, but it's not yet our standard service.Powills:&nbsp;I'm not sure that solves it, but here’s another point. Think about the deal value if Brand X, with 100 locations, decides to bring all of them on board. If you hire someone who doesn’t have the capital to become a franchisee, you could build their book of business, using sweat equity or a higher royalty structure. You could also approach your current franchisees and say, "What if we built a national accounts team to target franchise restaurants interested in participating?" It might be worth exploring who would help build that network.Also, we worked with an independent restaurant group in Chicago that had 12 bars. Their head of marketing set up metrics similar to yours and used the cost savings to fund marketing. It’s another angle — telling independent restaurants, "We’ll save you 5%, and you can reinvest that into marketing to grow your business." If they don’t have the funds for marketing, they can find it in the savings.Walsh:&nbsp;Yeah, that’s a good idea. I love the business model, and I think what you have is spectacular. Simplifying the message to your buyer on both sides could be the key to taking it to the next level.Powills: Right. If there was a candidate watching this conversation up to this point, any last things you want them to know about the business?Walsh:&nbsp;In terms of the right people for this business, we’ve learned that while we’ve had some great operators, this is a highly relationship- and sales-based business. It’s a low-cost, low-investment franchise, but to succeed, you need to get comfortable with knowing your market and engaging with people.It’s a people-based, trust-driven business. Our clients give us their keys, alarm codes, and access to all their data, and that level of trust doesn’t come from a quick email or direct mail. You need to be out there, shaking hands and building relationships.This is a great business for those who are comfortable in that environment, want to make a difference, and help small business operators. If you have that energy and motivation, we’re the kind of business that facilitates opportunities for people entering the industry. We’re looking for good people.Watch the full podcast above or on&nbsp;<a href="https://www.youtube.com/watch?v=aKw4nx7rfpI&utm_source=1851franchise.com&utm_medium=article&utm_campaign=how-barmetrix-ceo-ray-walsh-transformed-restaurant-profits-with-data-2727603" target="_blank" rel="nofollow">YouTube</a>.

Ray Walsh on Growing Barmetrix: From Software Engineer to Franchisor

1851 Franchise

Ray Walsh, originally a software engineer, shares his journey to franchising and how Barmetrix helps bars and restaurants boost profits with data-driven inventory solutions.

How Barmetrix CEO Ray Walsh Transformed Restaurant Profits with Data

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