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Restaurant Software Deep Dive – Restaurant Market Themes, Players, & Investors

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Michael Brown

August 12, 2019
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restaurant softwareWe at Bowery Capital released the 2016 edition of Opportunities In Vertical Software in November, which laid out our point of view on ten specific verticals and the potential for various software solutions to dominate each of these ten verticals in the coming years. For ten weeks, we are releasing content focused around the impact of software on these ten industries. We covered the Insurance vertical last week. For our third week, we feature the Restaurant vertical. In our third post for the Restaurant Software Deep Dive we follow up with an analysis of Restaurant market themes, players, & investors.

Restaurant Market Themes:

(1) Opportunities in Crowded Market – While the restaurant software market is crowded with many players and overlaps in the POS space, the kitchen and back of the house are ripe optimization via technology. For example, inventory management consisting of food spend management, supplier price monitoring, and invoice management is often managed manually via Microsoft Excel or even paper based and can see lots of improvement through the introduction of software. Staff management is also an area pegged for disruption as opportunities exist in onboarding, education and staff analytics. Predictive analytics present a great opportunity as an early field where advancements in actionable data and performance metrics for operators would be welcome. Startups that can improve ROI in these spaces will have an interesting opportunity for advancement.

(2) Restaurants Are Beginning to Adopt Consumer Facing Technology – Restaurant operators are starting to more frequently use various consumer-facing and behind-the-counter technologies. Limited-service restaurants also have a significantly higher adoption rate of such technology. Self-serve and interactive POS systems that allow for customer data collection can help a restaurant owner access unique customer preferences. CRM integrations can then enable businesses to target individuals in a way that will improve their experience and keep them coming back. Mobile also comes into play as an aspect of customer facing POS systems when considering in-store ordering, payment, and reservations. A proper integration and use of a branded app could allow a restaurant to develop a seamless experience across all aspects of the customer lifecycle.

(3) Adoption Is Tied to User-Friendliness – Restaurant operators are worried that technology will complicate the restaurant experience for diners and take away from the unique dining experience they aim to offer; building a user-friendly and streamlined solution will be key for adoption. With only 1.5% of a restaurants’ average budget allocated to IT, any solution presented needs to have a clear path to ROI and a strong argument for improving their end-user’s experience. This is more of a factor for customer facing technologies, but also comes into play when considering things like new forms of delivery services whose shortcomings could reflect negatively on the restaurant.

Restaurant Industry Major Players:

There are several giants in the restaurant software market focused on a specific area within the restaurant operation. Companies like Grub hub, PostMates, and Uber Eats dominate delivery, while NCR, Square, and Oracle stand out in payments and POS. Yelp is perhaps the best-known review site alongside competitors like TripAdvisor. OpenTable leads the reservation space and also offers marketing, CRM, and analytics services. Management platforms include companies like Fishbowl and Hot Schedules.

Restaurant Industry Emerging Players:

We’ve seen several interesting emerging software players in the restaurant vertical over the last few years. To highlight a few in the analytics space, there is Salido, which collects comprehensive customer profiles and analyzes the data to offer insights on predictive up-sell, intelligent discounts and branded giveaways, and Venga, which offers a CRM and business intelligence platform for restaurants to analyze their customers’ purchases, habits, and preferences. Also worth noting is Culinary Agents, a professional networking and job matching site designed specifically for the food, beverage and hospitality industry. Orderly, focused on back-office automation allows operators to snap pictures of invoices and store them in an online file management system.

Most Active Investors Focused On Restaurant Technology:

There are a number of prominent investors in the restaurant software space focused at different stages of investment. In some of the companies we covered, investors like RRE Ventures, Great Oaks, and Fortify Ventures participated. Companies like GrubHub received funding from Lightspeed Venture Partners, DAG Ventures, and Benchmark. Accelerators such as 500 startups and Y Combinator have also had companies in their cohorts seeking to disrupt the restaurant software market.

Restaurant Market Themes Link Roundup For Emerging Software Founders:

CB Insights:

CB Insights:

Thank you for reading our analysis on Restaurant Market Themes, Players, & Investors. Make sure to check out the 2016 edition of Opportunities In Vertical Software for the full report and we will be back next week with our next series of industry deep dives.

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