Every bar has its own musical identity
So they just create a Spotify playlist and collect a huge fee, right?
Oh, if only it were so simple! They don't use any streaming music service at all, as it'd seriously ruin the mood if during happy hour "all of a sudden your music starts jittering" when the Internet goes out. Unless it was a bar that played dubstep all the time, and then no one would think anything was amiss. To avoid connection issues, each client has a music player with preloaded playlists that they're even empowered to add/delete music from.
How is music selected?
Smith's team visits the bar/restaurant and talks with the brand about "how they position themselves from a PR standpoint". They might even look at the menu. They go deep. After taking in all that info, they go through a "sonic identity process" to find what's unique about the bar or restaurant, and possibly if Detlef Schrempf has ever eaten there, then a team of curators (including musicians and music bloggers) pick a "core sound".
What's a "core sound"?
It's not necessarily just finding one artist, genre, or era of music to play. It's how those three all combine to create a "unique feel and special sound" that's a restaurant or bar's own. For example, when they program music for all five Michael Mina's Bourbon Steak locations (LA, SF, DC, AZ, and Miami), they want people to feel like it's "not their granddaddy's steakhouse". Because that guy is old and no fun, and he always hugs your girlfriend until it gets uncomfortable. So, at Bourbon Steak, you'll be bathed in the sexy, raw sounds of Howlin' Wolf, The Black Keys, and Gary Clark, Jr.
Another steakhouse client of theirs, Palm Restaurant, has 22 locations, and it's quite a different vibe. It has "downtempo elements", and you'll hear funk and soul music playing in the bar area, as well as jazz remixes.