Escaping Appearances: Momentary Respite Suspected
Hey there! Catching up on a Saturday? I hope all had a stellar week!
Branded, when they launched their integrated investment and solutions platform roughly five years ago, had an uncomplicated, straightforward investment thesis - they would back emerging tech & innovation companies primarily benefiting the owners and operators of foodservice and hospitality venues. Essentially, companies that played nicely with restaurants were the goal.
Restaurant operators using Branded's portfolio companies would witness improvements in margins thanks to increased sales, reduced costs, and efficient solutions to operational inefficiencies. In addition, these companies had to address matters of utmost importance in the industry - the challenges, opportunities, and problems. In a nutshell: only companies with tangible solutions for operators were up for consideration.
So, you know, it wouldn't pass muster on Family Feud, but Team Branded often finds parallels between the game and their work! 😊
In the early days of Branded, the off-premise business for restaurants was their highest priority. Want proof? Take a look at their strategic investments: Bbot (acquired by DoorDash), GoParrot (acquired by Square), Chowly (now a force in the SMB market), and VROMO (a delivery management software solution).
Back in the '90s, a little software called SeamlessWeb (eventually renamed Seamless) came along. Initially, it offered an online ordering system for companies, allowing them to you know, not waste money or resources on disorganized food orders for hardworking professionals. Can you imagine?! 🤯
Before Seamless, the late-night and weekend food game was a real free-for-all. Meal dollars got pooled and stretched, covering everything from mom-and-pop joints to adult beverages to non-perishables.
Good old SeamlessWeb came along and put a stop to that madness, bringing order and accounting to the chaos. It's no secret that young analysts like to find a buck where they can, and boy, did they ever! 🤑
When our exemplary restaurant was introduced to SeamlessWeb, off-premise business represented about 1% of our sales. That's right, just one measly percent! But hey, it was better than nothing - and with negligible cost and a 5% commission on orders, it was a no-brainer.
Fast forward to today, and off-premise business makes up a far more substantial percentage of sales. It still ranks as one of the industry's biggest challenges and, let me tell you, both the Washington Post and New York Post have been questioning how the revenue is divided among the various players in the delivery game.
Personally, I'm all for free markets, letting businesses sort things out for themselves. If anything, I'd take issue with NYC regulators trying to play judge, jury, and executioner with respect to selective employment. No offense to regulators, but keep your noses out of the off-premise business!
It wasn't so long ago that the airlines and hotels were disintermediated by third-party aggregators. Once the airlines and hotels caught up and rebalanced the equation by leveraging technology of their own, they turned the tables. Frankly, I'd much rather let the hospitality industry sort out its own problems.
For instance, the New York City Department of Consumer and Worker Protection has proposed raising the pay for GrubHub, UberEats, DoorDash, and other delivery workers to $33.27 per hour for active delivery. The current minimum wage in New York City is $15, so this seems, ahem, a bit excessive.
Excuse me for saying so, but DoorDash is now on the side of restaurants. A month or so ago, DoorDash threatened to drop restaurants that didn't do a better job on orders sourced by their platform. Now, this is a remarkable example of "strange bedfellows."
But let's get back to the restaurants. How on earth are we going to staff our kitchens with a minimum wage of $15 per hour when delivery drivers could potentially earn twice that to deliver the food?
Now, I know I've already brought up an article from the New York Post, but might as well share the Washington Post's take on the state of the delivery market: "Which delivery apps eat away at your wallet the most."
In essence, the article highlights that the fees you pay in delivery are intentionally obfuscated, which isn't surprising, given that transparency isn't this industry's strong suit. That's why Branded emphasizes pick-up over delivery whenever possible, with platforms like Minnow, Curbit, and Agot.ai.
Pick-up is the most affordable option for consumers and the most profitable for restaurants. And that's that!
Now, back to the news you actually came here for. By the way, off-premise business remains one of Branded's priority investment verticals, sharing the stage with guest engagement. So, there you have it. Hoping your weekend is off to a grand start!
-Jimmy Frischling
Branded has been investing in companies that benefit restaurants and hospitality venues, including those addressing challenges in the off-premise business like delivery management software solutions (VROMO). These strategic investments were made to improve the guest experience for dining out.
Sports and hospitality industries have been impacted by the rise of ghost kitchens, as restaurants can utilize their technology to offer delivery-only services, addressing opportunities and inefficiencies in the off-premise dining market.
As Branded continues to back portfolio companies, they aim to help the hospitality industry tackle complex issues while providing tangible solutions and maintaining the guest experience during dining out and off-premise experiences.
