When Will Technology Finally Save Restaurants?
My favourite show of the year was The Bear, a fictional workplace drama set in an Italian restaurant in Chicago. Cash-strapped, overwhelmed, and understaffed, chef ‘Carmy’ struggles to keep his family’s restaurant afloat. I imagine that The Original Beef of Chicagoland would find itself in even higher water these days, with food and energy prices soaring, and consumers reeling in discretionary spending.
I do believe that technology will be able to provide a lever to meaningfully change the economics of restaurants, to make them more profitable and more able to withstand tough economic conditions. I myself have been involved in past efforts, first at Resy, where I was in charge of our restaurant-facing analytics products, and then at restaurant Noma in Copenhagen, where I spent a summer helping Noma reevaluate its own tech stack.
In the show, Carmy’s restaurant is probably as analog as it gets (the dining room prominently features an arcade machine from the 1980’s). But in real restaurants across the world, the operators of today are more venturous and open than ever to trial new technologies.
When will we finally find the silver bullet?
Let’s see what founders have been pitching this year.
CPG and Meal Kits
During the pandemic many restaurants began using platforms like Dishpatch to sell meal kits, a more ‘involved’ way for guests to enjoy at home, or packaged products like sauces, breads, and pizza dough. Unlike delivery, this food can be prepared outside of service, smoothing out variability in kitchen utilisation. We recently backed DELLI, another platform to serve these ‘small food’ CPG sellers. Different from traditional e-commerce platforms, DELLI gives these food makers tools to curate their own brand and create personal connections with their loyal communities.
Self-Managed Delivery
Whereas delivery services like Deliveroo charge up to 35% commission on orders, platforms like Deliverect and Flipdish help restaurants manage delivery through their own website, fulfilled by local last mile delivery partners. Deliveroo justifies its commissions by the traffic it brings to restaurants on its platform, so for restaurants that don’t rely on Deliveroo to bring them demand, it makes sense that they’d want to cut them out. However as long as most of us are still in the habit of absently scrolling Deliveroo, these platforms still hold a lot of the power.
Working Capital Financing
‘Revenue-based-financing’ has been one of the hottest areas of tech-enabled lending this year, and we have begun to see food marketplaces partnering with lenders to offer financing to the restaurants on their platform. Restaurants on delivery platforms Lieferando and Foodhub can now use their transaction history on the platform to access fixed fee loans from lenders like Banxware, YouLend, and Liberis. There is so much more opportunity here, and I expect many more partnerships between lenders and data-rich platforms like POS’s etc.
Kitchen Robots
Others see kitchen automation as the greatest lever to improve the economics of restaurants. Miso Robotics’s robotic arm Flippy 2, which can flip and fry and pour with tremendous speed and accuracy, is now available for a monthly cost, eliminating the hurdle of high capex. It is unsurprising that early adopters here are larger chains where high throughput is paramount and the company has the resources to trial new technologies. I am clearly a romantic here — but I just hope Flippy 3 isn’t grilling Cuban sandwiches to the feel-good sounds of Oye Como Va or performing Salt Bae theatrics in the restaurants of the future.
NFTs and Web 3.0
In NYC, FOH.xyz mints limited edition NFTs on behalf of some of the city’s most exclusive restaurants. NFT holders are guaranteed certain perks, for instance VIP access to coveted reservations. Another model that I think could be interesting is NFTs or tokens as units of ownership, allowing users to buy stakes in restaurants in their communities to prop them up. The challenge I see here is to find a model that works across a range of restaurants, from independent neighbourhood gems, to pricey hot spots.
Staffing and Benefit Tech
Post-COVID recruiting and retaining quality kitchen and service staff has been a huge pain for every hospitality business. One way to address this is to find meaningful benefits for workers. Our investment Wagestream is widely used in the hospitality sector to provide financial wellbeing for workers, whether it is earned wage access, savings or financial coaching. We also see the rise of new ways to recruit staff such as Brigad, which uses AI to intelligently match employers with vetted short-term workers in 30 minutes on average.
QR Codes
‘No contact’ QR codes became ubiquitous during the pandemic, as guests scanned their table codes to order and pay from their phones. Beyond easing the pressure on wait-staff, proponents cite higher check averages and faster turn times, since guests don’t have to flag down their server to order another round or pay. Sunday made waves last year when they raised a $24m seed round with Coatue then a $100m Series A less than six months later, on ostensibly very low traction. This summer Sunday cut 60% of their staff. The struggle I have with these QR businesses is low product differentiation and user brand recognition. And I believe that ultimately this will be an extension of the POS offering. As a guest, personally I would be OK to reserve QR codes for super casual venues where convenience is king.
‘Restaurant OS’ Software
It’s a tragedy that so many longtime restaurants did not survive the pandemic, but the wave of young tech-savvy ‘food entrepreneurs’ that emerged in their wake has driven all-time high demand for modern cloud-based restaurant SaaS. Managers are turning to new systems like Nory, Ordio, or Haddock to make better staffing, menu-planning, and ordering decisions. From my experience at Resy and Balderton’s past investment in Bookatable, we have learned that selling SaaS to restaurants can be super tough, unless its impact goes directly to the restaurant’s bottom line.
I am passionate about technologies supporting the hospitality industry. If you are a founder building in this space, please feel free to reach out to me greta@balderton.com. We are actively investing from Seed to Series C and would be keen to speak with you.
