A 90-unit cinnamon roll franchise known for appearing on "Shark Tank" is suing POS provider Revel Systems, claiming that its technology did not work as advertised.
In court documents, Atlanta-based Cinnaholic accused Revel of breach of contract for selling it a POS system plagued by bugs, integration issues and other flaws that caused it to routinely fail.
The chain, which sells fresh-baked cinnamon rolls with various flavors and toppings, also alleged that Revel knew about the defects beforehand because other customers had had similar problems. It is asking a court to force Revel to provide documents showing complaints from other restaurants.
Revel declined to comment.
According to a June 10 court filing in Georgia Superior Court:
Cinnaholic was looking to upgrade to a new POS system that could support its growth and in early 2022 met with salespeople from Revel. They told Cinnaholic that Revel’s technology was reliable, easy to use and designed for large restaurant chains.
Cinnaholic decided to go with Revel, and franchisees began using it in mid-2022 to take orders and process payments. Problems arose almost immediately. Stores across the country were set up with different configurations and menus that prevented Cinnaholic from fully integrating its operations. In January 2023, Revel said that a complete reset was needed.
However, after the reset, problems continued. Revel frequently crashed, froze or threw error messages that prevented Cinnaholic stores from taking card payments. One operator said this happened multiple times a week, and usually when her store was busy.
“The fragility of Revel’s POS system has caused many Cinnaholic franchise locations to experience debilitating payment processing outages,” the filing said.
In May 2023, Cinnaholic declared a breach of contract and demanded that its agreement with Revel be terminated and that it be refunded for the hardware it bought from Revel.
Revel disputed Cinnaholic’s claims, arguing that the problems were not a result of a product defect. It also likewise accused Cinnaholic of breach of contract, saying that it had opened only 44 locations by the end of 2022, rather than the promised 80.
Cinnaholic then requested that Revel provide documents showing that other restaurants had reported similar negative experiences. These included documents that would identify customers who left negative reviews of Revel on the Better Business Bureau’s website, as well as documents related to customers who had also alleged a breach of contract by Revel.
Revel objected to the request, citing about a dozen reasons, including that the documents Cinnaholic asked for were not relevant, were confidential or would require an undue amount of work to produce.
Cinnaholic responded on June 10 with a motion asking the court to force Revel to share the documents.
The disagreement has at times turned ugly. A Cinnaholic filing from June 20 noted that Revel employees, including CEO Greg Dukat, had referred to members of the chain’s management as “a [expletive] idiot,” “Larry, Moe and Curly” and “you cannot fix stupid” in emails.
Atlanta-based Revel offers a cloud-based POS system for chains as well as back office and marketing tools. More than 18,000 restaurant locations use Revel globally, including Dave’s Hot Chicken, The Halal Guys and Kung Fu Tea.
In May, it agreed to be acquired by payment processor Shift4 for $250 million.
Cinnaholic began as a bakery in Berkeley, California, in 2010. In 2014, it landed a deal with investor Robert Herjavec on the ABC show "Shark Tank" to develop a nationwide shipping business. It later declined the offer and decided to pursue a franchising model instead.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.