Landscape Map: Restaurants fight for independence

This is part 2 of a 6 part series on the trends that are changing Software-As-A-Service (Saas) for Small & Medium Enterprises (SMEs):

🛒Trend #1: Shopify’s growth creates new markets
🍉Trend #2: Restaurants fight for independence from delivery and discovery platforms - Below :)
👋 Trend #3: Work, reinvented
👔 Trend #4: The rise of vertical biz management software - NOV 16
🤴 Trend #5: HR made simple(r)! - NOV 23
👹 Trend #6: Bookkeeping becomes understandable - DEC 2

If you'd like to have your company featured in this article, feel free to reach out! We would love to hear from you.

Intro: Restaurants want to avoid third-party apps

As a result of the COVID-19 pandemic, restaurants were some of the first businesses to undergo (read: be forced into) large-scale digitization. Online delivery platforms such as Doordash, Uber Eats, Deliveroo, and Delivery Hero (amongst others) have been some of the largest beneficiaries of the pandemic by allowing restaurants to continue serving customers during the lockdowns.

As online food delivery becomes more prevalent, a dichotomy between the interest of restaurants and digital platforms emerges. Food delivery platforms (Uber Eats, Deliveroo, JustEat, Doordash...) and discovery platforms (Trip Advisor, Yelp, Zomato...) have now assumed a more dominant position in their relationship with the restaurants using their platforms. 

Restaurants have become dependent on them to access their customers and to generate traffic for their services. These third-party platforms cannibalize their own traffic by charging restaurants a 20 to 30% commission for directing customers to them. 

Recognizing the increasingly dominant position of food delivery and discovery platforms, a number of companies focusing on developing alternative third-party software for restaurants have emerged. 

These companies offer software that recreates many of the experiences provided by traditional food delivery aggregators while providing a greater degree of independence and customization to restaurants themselves.

Services offered by these companies include processing online orders, allowing restaurants to develop their own brands online, and fostering word of mouth through marketing campaigns.  

Some of these solutions are looking to go even deeper into a restaurant's technology stack and allow them to reassess long-accepted offline operations. These include processes like food production and supply management, personalizing the client service experience, and accelerating table turnover in physical dining areas.

In order to simplify the presentation of these various solutions, we have categorized them below.

1. Online Digitization

Restaurants are seeking new ways of managing their online operations while also creating new sources of revenue.

These include:

⭐Website Builders: ChowNow (US), BentoBox (US), PopMenu (US), Lunchbox (US), Flipdish (Dublin), Slerp (UK), Orderyoyo (Denmark), Onvi (UK) ZenChef (France), PepperHQ (UK) help brick-and-mortar restaurants to build their own ordering website using low code solutions.

Compared to classic horizontal website builders (like Wix), these solutions are specifically designed to display an online menu in an appealing way.  The idea behind these software solutions is to keep customers on a restaurant’s own website by incorporating third-party reviews, images, recommendations, and menu descriptions on the web page.

Customers are then driven to spend more time on a restaurant’s website allowing for greater conversion and an increased amount of data points to assess future interactions.  At scale, these businesses aim to allow businesses to control their own end-to-end online experience with their customers.

Ultimately, these solutions intend to have customers order and pay directly for their meals from a restaurant’s website.
(unsurprisingly, BentBox has recently been acquired by payment giant Fiserv)

⭐Marketing Solutions. These tend to be industry-agnostic, but over the last few years, there have been a number of businesses that have been developing dedicated marketing tech for the restaurant industry. As they process customers' orders through their platform-generated websites, companies such as Lunchbox, ZenChef, and BentoBox also capture specific customer data. This can then be leveraged to collect feedback, target customers via email, create personalized loyalty programs and/or gift services. 

⭐ Last-mile delivery: It is more accessible and cost-efficient for most restaurants to offer online ordering through a third-party fleet than to build their own delivery and driver infrastructure. Once restaurants receive an online order, they can rely on flexible delivery fleets like Kitch (Portugal), Quiqup (UK), Stuart (France), Shipday (US), Grupomox (Spain), Bosta (Egypt), or Olo (US, IPO). These platforms charge a flat fee or a commission fee that is significantly cheaper than the 30% fee on delivery that marketplaces such as Uber Eats and Deliveroo charge currently.

⭐Online order management: Restaurants tend to use multiple food delivery platforms at any given time. This means they can receive orders from various platforms at the same time. To manage order flows, restaurants can use platforms such as Deliverect (Belgium), Simply Delivery (Germany), Innovorder (France), RushHour (France), Ordatic (Spain), Sinqro (Spain) getpacked (Germany) to centralize their orders in a single interface. To avoid order dispersion, these platforms are connected to food delivery platforms. They work by collecting orders, aggregating them in a POS or in their own interface.

2. Offline Digitization

Increasing table turnover, helping waiters and cooking staff to become more efficient, or managing orders digitally are examples of existing offline practices that restaurants are looking to digitize. 

⭐ Offline order and payment solutions (QR codes): Taking orders, serving food, and printing receipts are examples of low-value and repetitive work for wait staff.  Sunday (France), Skeat (France), and Crave (US) are self-service menu, ordering, and payment platforms.

Customers can flash a QR code on the table ray and access all the relevant information regarding the space in which they are dining. Customers can view the restaurant’s menu, order, and pay from their phones. These apps are also connected to popular points of sales.

These solutions allow for a higher turnover per table, less human interaction in a single dining space, and more efficient dining processes within a restaurant.

⭐ Point of Sales (POS). Restaurant POS terminals like Toast (US, $902M), Lightspeed (Canada, IPO), Revel System (US, raised $189M), Touch Bistro (US, $209M), Micros (US, acquired by Oracle), Tiller (France), SumUp (UK, raised $1.4B), Onslip (Sweden), L'addition (France), Last (Spain) simplify a number of aspects within a restaurants existing payments and finance stack including billing, payroll management, and inventory management.

As these POS businesses scale, they tend to move towards allowing restaurants to monitor customer engagement and are provide further restaurant operation features. For example, TouchBistro has built a platform that gives its client gift cards, loyalty systems, digital menus, and online payment features. Toast allows restaurant owners to manage employee schedules and organize relevant shifts. 

⭐Sourcing and procurement: The ordering process between food buyers (restaurants) and food producers (farms, big corporations, and agri-combines) is currently conducted via outdated manual processes (paper notes, voice calls, handwritten invoices, and emails). Furthermore, these processes have been traditionally dominated by localized relationships and paper-run processes. 

Platforms like Choco (Germany), Rekki (UK), Heqtor (France), Butterapp.io (US), ShelfNow (UK), Katoo (Spain), Silo (US), or Tinvio (Singapore) connect restaurants, food producers, and logistic companies in a single centralized marketplace. Catalogs can be easily checked, orders can be made in a few clicks, and conversations between buyers and suppliers are now more direct and transparent. These companies intend to monetize their offerings in the long run by charging a take rate on transactions that occur over their marketplaces. In order to grow their respective ecosystems, most of them are however currently allowing buyers and sellers to transact for free.

The main challenge for these businesses is to effectively monetize their marketplaces without causing their buyers and sellers to churn. In the interim, these companies are developing  B2B supply chain and logistics management software, for wholesale suppliers and/or restaurants.

Coming next on Nov 2: Internal Comms Go Remote-First.

Many thanks to Ilan Nabeth for the invaluable research that made this series possible, and to Yusuf Janahi and Anna-Stella Fetha for your contributions!