Restaurant365 orders in $175M at a $1B+ valuation to supersize its food service software stack  | TechCrunch

Restaurant365 orders in $175M at a $1B+ valuation to supersize its food service software stack  | TechCrunch

The restaurant industry in America is expected to pass. $1 trillion in sales for the first time this year, despite broader economic pressure on consumers. now Restaurant 365Building Tech, a startup to manage these businesses, has raised a $175 million round to capitalize on this growth.

The funding is led by ICONIQ Growth with participation from KKR and L Catterton, all existing backers of the company. Restaurant365 isn't disclosing its price with the round, but Tony Smith, co-founder and CEO, confirmed to TechCrunch that it's an upside. “We're excited that it continues to grow and we have very supportive investors behind us,” he said. For some context, last year – when launched. Raised $135 million – He revealed that he had passed a $1 billion valuation.

The startup is also not disclosing any updated data on usage. Last year, we reported that its software was being used in 40,000 locations, and that's the number it's still sharing today. It seems that in 2023 the company has developed. $100 million In income, based on Price per location That starts at $469 per location per month.

Based in Irvine, CA, Restaurant365 offers restaurant businesses of all sizes a comprehensive platform to manage their accounting, inventory and workforce, along with helping them understand trends within the business. An analytics suite for – everything is basically out of perspective. of sales transactions. The plan is to use the money to expand its product suite as well as continue to grow its customer base on the company's heels, Smith said. Buying and digesting ExpandSharea restaurant training platform in April 2023.

“We are also earmarking some funds for future acquisitions,” he added. While Restaurant365 is used by both independent restaurants and large chains, another major focus will be on building tools for “large hospitality brands.”

Unlike many who jump into the world of developing solutions for business customers, Restaurant365 does not have its DNA in the food service world. “When I graduated college I had 12 jobs (only) one of which was at a pizza restaurant, so I wouldn't say my restaurant experience was strong,” Smith said.

Rather, he was an expert who saw an opportunity to solve an obvious problem. “My first job out of college was in technology and it was exciting to see the future that software could drive in all kinds of businesses.”

He co-founded the startup in 2011 with John Moody (Chief Strategist) and Morgan Harris (Chief Community Officer) to address what they discovered was a very common problem for restaurateurs. It's a rough and tough place: They operate on very thin margins (one reason many restaurants eventually die: the owners either give up from exhaustion or because of a variable like rising rents, the math just doesn't work anymore. Can; and they work on a patchwork of software.

They may not have started out with the restaurant in their DNA, but they knew they had to graft it in to solve the problem.

“As technologists, we immediately surrounded ourselves with restaurant people to fully understand the issues they were facing,” he continued. This includes some unexpected local market research, he said.

“We would go into restaurants and wait until closing for the night to talk to the manager, who would of course be a little concerned that we were following them,” he said. “I remember asking for a clipboard so I could take inventory with them, and they probably thought we were crazy, joining their job for free. (But) it was shocking. It was about how complicated it is to run a restaurant with the need to reduce food waste, control costs and manage labor.”

It seemed like a strong match, though. “The problems that restaurants are struggling to solve fit our expertise, and when we looked at what was available in the market, we knew we could help restaurants thrive,” he said. can develop more complete solutions to help resolve.” “The people at the restaurant are very hardworking, and it's been an honor to work with them and help solve these problems.”

That being said, the market is truly flooded with software for restaurants, from point solutions to those that take an all-in-one approach. Major players include Toast, Lightspeed and Crunch Time (no relation to TechCrunch!).

Smith claims that it's the only one that bundles its functions (indeed many others targeting the food service industry) that Restaurant365 provides start from a point-of-sale, or workforce management position instead. happens).

“Our big differences are that we are all one and the restaurants are distinctive,” he adds.

Will Griffiths, a founding partner at ICONIQ Growth, said the startup's attack was more attractive for how it brought together essential functions in a usable way.

“Restaurant365's suite combines essential functions such as accounting, inventory management, payroll, and employee scheduling into one unified system,” he said in an emailed statement. “Whether enterprise brands are cutting costs or investing, they always need a seamless flow of information to quickly identify areas for improvement, whether it's staffing or supply. management, to consistently and dramatically reduce costs and improve profitability.”

That being said, given the large number of point-solve players in the market, there is a huge opportunity for consolidation.

“When we started the company, we met countless restaurants that were struggling to get by with multiple disjointed systems that led to inefficiencies and limited visibility,” Smith said. “We launched as a stable product, and we are grateful that operators and the market at large have adopted this strategy, trusting us with their business, and demanding more complete technology providers.” Created presentations.

“While we have made several acquisitions, we also continue to invest heavily in our product development and research teams and will continue to do so. The question for us is not whether to add more products organically or not. Through acquisition. The question is what will add the most value to our customers' business. Then we go out and do it.

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