Bristlemoon Global: PAR Technology ($PAR) Investment Case
In their Q1 2025 quarterly report, Bristlemoon Global Fund presents a detailed investment thesis for PAR Technology Corporation (NYSE: PAR), highlighting it as one of their two largest portfolio holdings. Bristlemoon positions PAR as a compelling investment opportunity in the restaurant technology space, emphasizing the company’s mission-critical software platform and significant latent pricing power. The fund’s conviction in PAR stems from the company’s unique position selling essential technology solutions to a highly durable customer base at what they believe are substantially undervalued prices relative to the value provided.
Investment Highlight: PAR Technology Corporation ($PAR)
Business Overview
- $2.1 billion market cap restaurant technology company based in New Hartford, New York
- Serves enterprise restaurant chains including 50% of top 100 US restaurants
- Key customers include Burger King, Arby’s, Dairy Queen, and Wendy’s
- Sells hardware and software products, with software representing the primary investment attraction
Market Position
- Core point-of-sale (POS) software enables all restaurant transactions
- Unified platform offering best-in-class solutions across multiple modules
- Products include payments, online ordering, loyalty programs, and back-of-house operations
- Gaining market share from legacy incumbents (Oracle, NCR, Xenial)
Performance Analysis
- Mission-Critical Platform Strategy:
- POS system acts as system of record for all restaurant transactions
- Without POS functionality, restaurants cannot process sales
- All Q4 2024 POS deals were multi-product implementations
- Platform approach creating comprehensive technology ecosystem
- Strategic M&A Execution:
- Disciplined, product-led acquisition strategy focused on platform enhancement
- Revenue synergies through cross-selling vs traditional cost synergies approach
- Multiple arbitrage: acquiring at 4-6x ARR, re-rating to PAR’s 8x ARR multiple
- ARR growth from $11 million (2018) to $276 million (2024) – 25x increase
- Customer Success Metrics:
- Example enterprise QSR customer: $2 million to $18 million ARR over 5 years (9x growth)
- Multi-product customers demonstrate higher stickiness and lifetime value
- 45% of ARR growth from organic sources despite acquisitive strategy
Growth Runway
- Expected organic ARR growth of 20-30% annually going forward
- Cross-selling opportunity: Only 30% of POS customers have second PAR product
- “Picks and shovels” model compounds with customer unit expansion
- Early partnerships with high-growth chains (Sweetgreen, Cava)
Market Dynamics and Competitive Advantages
Resilient Customer Base
- Exceptionally low churn rate of ~4% (primarily store closures, not logo losses)
- Pandemic stress test: Churn spiked to 14% but returned to 7% by end-2020
- Almost all customers returned post-pandemic, validating value proposition
- Customer comparable sales growth outperforming industry averages
Recession Resilience Factors
- PAR represents miniscule portion of restaurant cost base
- Restaurants unlikely to shelve technology investments during downturns
- Value-oriented customers benefit from economic trade-down activity
- Go-to-market strategy emphasizes ROI communication during tough periods
Pricing Power and Value Proposition
- Current pricing: $2,500-$3,000 per store annually for core POS
- Represents only 0.2% of typical $2 million annual restaurant sales
- Full suite potential: $10,000-$12,000 per store (3-4x core POS pricing)
- Long-term target: $20,000-$30,000 per store annually
Validation Points
- Burger King RFP victory in 2023 despite Oracle’s lower-priced competing bid
- Recent Burger King expansion to Data Central product validates platform approach
- Consistent multi-product deal wins demonstrate platform resonance
Financial Outlook and Valuation
Growth Projections
- Expected $330 million ARR in FY25
- Mid-20s percent annual ARR growth anticipated over next several years
- Strong incremental margins emerging as investment phase moderates
- Organic ARR growing mid-20s percent while opex growth in low-single digits
Profitability Inflection
- Historical losses due to heavy investment and acquisition integration costs
- True underlying software economics beginning to emerge
- Expected $100 million adjusted EBITDA in FY26 vs consensus $43 million
- Margin expansion as platform scale benefits materialize
Investment Returns
- Underwritten 23% IRR through 2028
- Projected 2.3x money multiple over investment period
- Value opportunity obscured by historical losses and M&A noise in financials
Risks
- Acquisitive strategy execution risk despite strong historical track record
- Restaurant industry cyclicality and consumer spending pressures
- Integration challenges as platform complexity increases
- Competitive response from legacy incumbents
Key Investment Thesis Points
- Mission-critical software position with high switching costs
- Significant pricing power relative to value delivered to customers
- Durable customer relationships in recession-resistant industry segment
- Multiple expansion opportunities through cross-selling and unit growth
Bristlemoon Global Fund views PAR Technology as a high-conviction investment opportunity, representing a company with substantial latent pricing power selling mission-critical software to a resilient customer base. The fund believes PAR’s true underlying economics will become increasingly apparent as the company transitions from investment mode to margin expansion, supported by its disciplined M&A strategy and comprehensive platform approach.
