The price of food keeps rising, but surprisingly, that hasn’t (yet?) put pressure on the rest of the restaurant industry. Now, a startup building technology to serve that sector has announced a massive funding round to fuel its growth.
Restaurant365, which develops all-in-one restaurant management software, has announced new $135 million funding co-led by KKR and L Catterton. Previous backers — most notably ICONIC Growth and Bessemer Venture Partners — are also participating in this round, bringing the startup’s total to $288 million.
The company’s software, which includes accounting, analytics, workforce and inventory management (but not point-of-sale solutions), is currently used in some 40,000 locations, with customers including small businesses, franchises and chains, and accounting firms that work with restaurants. It will use the funding to continue developing products in all of these areas.
It’s not clear if Restaurant365 is profitable, but the company currently makes about $100 million in annual revenue, it said.
The company – based in Irvine, CA and founded in 2011 – does not specifically disclose its valuation, although a quote from CEO and co-founder Tony Smith notes that the company has now reached “$1 billion in value” – it is unclear what value he is talking about (we try to get in touch to ask). According to data from PitchBook, Restaurant365’s 2019 valuation was just over $305 million.
The investors here are interesting and strategic: KKR and L Catterton, as PE firms, both have a number of interests that extend into the foodservice industry. (Iconic and Bessemer are more directly big VCs in the tech investing world.)
“R365 has experienced continuous, accelerated growth, a testament to our strong team eager to change the restaurant industry for the better,” said Tony Smith, CEO and co-founder of Restaurant365, in a statement. “Every time we receive funding, we recognize it as a privilege. However, the main driver of this round is uniting with two strategic investors so closely associated with the restaurant industry. We recently hit exciting milestones of $100 million in revenue and $1 billion in value, and we can’t wait for the future.”
The company’s funding injection comes at a time when many believe the global economy, and those of individual countries, are teetering on the brink of recession as the world continues to recover from the Covid-19 pandemic and the shifts it brings. brought. how consumers make and spend money. But ironically, signals from those who keep a close eye on how restaurants are doing seem to point in a different direction.
The U.S. National Restaurant Association notes in its annual state of the industry report (dated February 2023) that while some of the headwinds of 2022 continue this year, the foodservice industry is expected to grow to $997 billion in sales this year , with 500,000 new jobs (to bring the total to 15.5 million by the end of 2023, following pre-pandemic levels), and a strong consumer desire to continue going to restaurants in their leisure time. However, not everything is entirely rosy: rising food prices are driving that higher income, and the fact that more restaurants are popping up (more jobs) also means a lot more competition.
However, all of that points to a broader base of potential users for companies like Restaurant365, along with the many others in the space that (sorry) serve the same customers. They include Toast, Lightspeed, and others like Square, PayPal, and more. While many of the companies serving the restaurant industry were on their knees during the major pandemic shutdown, Restaurant365 emerged as one of the technology companies providing tools to help its customers weather the storm.
“Restaurant365 has shown compelling growth throughout its history and now serves more than 40,000 restaurant locations,” said Jimmy Miele, Director of Tech Growth at KKR, in a statement. “In addition, their software has played a vital role in helping many struggling operators keep their doors open during uncertain times. We look forward to being part of this next chapter and helping even more operators reach their highest potential.”
“L Catterton has extensive experience investing in world-class global restaurant brands,” added Ian Friedman, partner at L Catterton. “With a deep understanding of restaurant operators’ day-to-day pain points, we believe Restaurant365 is the gold standard in the industry, helping to streamline operations and increase profitability, and we are proud of our experience with consumer and leverage technology investments as a partner to Tony and the team.” Friedman joins the board.