The restaurant industry has been slammed hard by the coronavirus outbreak, with venues in many cities in the U.S. and beyond shuttered or restricted in how they can serve customers — to say nothing of the comfort level of customers themselves to dine in public venues — in the name of helping contain the spread of infection. But today, a startup that has built a platform to help them manage their bookings business better is announcing a round of funding and an acquisition to help those restaurateurs on the road to recovery.
Seated, which provides a restaurant booking platform that rewards customers with credits for gift cards at select other retailers like Amazon, Nike, Sephora and Uber when they show up to eat, has raised $30 million in funding, and alongside that it is also announcing it has acquired another industry startup, VenueBook, a platform for event planners to reserve space at restaurants and other venues. Today VenueBook has some 120,000 event planners using its service across the New York tri-state area, Denver, San Francisco and the surrounding Bay Area, and the wider Washington, D.C. region.
The terms of the deal are not being disclosed, nor is the valuation of Seated. The funding is being led by Insight Partners and Craft Ventures; Greycroft (where Seated’s co-founder and executive chairman Bo Peabody is also a venture partner) and Rho Capital Partners are also participating. This appears to be the first funding disclosed by Seated since being founded in 2017 by Peabody and Brice Gumpel, although it had previously raised a seed round.
New York-based Seated had its start in the world of booking tables for in-restaurant eating — a business that has to date racked up some 900,000 reserved seats and $37 million in revenue for its restaurant partners across NYC, Boston, Atlanta and Chicago (covering around 800 independent restaurants in all at the moment), with some additional $7 million in tips for staff.
But in recent months it’s been recalibrating what it does to meet the needs of the moment, which include diversifying beyond providing reservations to in-restaurant individual diners. That has included the launch of Seated at Home, a takeout service that is positioned as a competitor to the likes of Grubhub and UberEats, with a 0% commission on orders. And now, the acquisition of VenueBook adds an event planning service into the mix that takes its booking platform beyond the walls of local eateries.
“We are always looking for new ways to support restaurants’ profitability and longevity, and with the acquisition of VenueBook, Seated Events offers a new way for restaurants to drive demand in yet another revenue stream,” said Gumpel, who is the startup’s CEO, in a statement. “COVID-19 has proved to be one of the toughest challenges the restaurant industry has ever faced and this funding will help us refine our current products to ensure we’re doing whatever we can to help our restaurant partners keep their doors open and remain profitable.”
In terms of just how hard restaurants have been hit, the statistics speak for themselves. Researchers from Harvard Business School noted in a recent essay that 40% of restaurants in the U.S. shuttered two months into the pandemic, putting 8 million people out of work, three times more job losses than any other industry.
And when some started to reopen, they were facing major investments as they retooled their businesses to cater to how people are “eating out” now — significantly more takeout and delivery, and a lot of eating outdoors. Even so, diner numbers in June were down more than 65% versus a year ago, with the National Restaurant Association in the U.S. predicting a drop of $240 billion in revenue for the year, with more than $120 billion during the first three months of the COVID-19 pandemic alone.
Some countries are trying to offset this huge hit: In the U.K., the government has started its “Eat Out to Help Out” scheme, which essentially subsidises the cost of meals by up to 50% when people eat out at participating restaurants.
That’s not the case in the U.S. at large, however, with federal government relief programs like the Paycheck Protection Program targeted across industry verticals.
That has opened an opportunity for startups that are building tech to at least make what business opportunities are available more accessible to a wider number of users at both ends of its two-sided marketplace: those looking to eat out or meet in restaurants and the restaurants (and now, other venues) themselves.
The tech is about measuring footfall, providing analytics and more insights into how to fill venues and kitchen utilisation in a more efficient way, but that is at the back end. On the surface, the startup makes a point of touting how low-tech it is, requiring little more than a smartphone to use it. That sets it apart from a number of other restaurant service startups, which often sell specific tablets and other hardware to be able to use their software.
Indeed, the restaurant business is not known for being high-tech — one reason why you might argue many get taken for a ride by delivery and other startups that promise to handle all the fussy tech stuff on their behalf. So in an industry where typically profits are no more than 4-5% of revenue (and those are the lucky ones), the shift into events is a critical way of improving margins at a time when restaurants’ prime revenue generation has been pulled out from under them. Events are estimated to make up 10-15% of a restaurant’s revenue, and up to 20% of a restaurant’s profit, Seated notes. Seated Events provides a seamless way for restaurants to begin rebuilding this critical revenue stream, allowing families or smaller groups of people who would like to take extra precautions while dining out to book private rooms.
“Events are not only an important part of a restaurant’s revenue stream, but they’re important for internal operations. Restaurant events help to increase employee retention because both front and back of the house employees are able to exercise creativity and tap into different skill sets while planning and executing events,” said Peabody in a statement (Peabody himself has also owned and been on the boards of a number of restaurant businesses, in a long entrepreneurial career that has also included founding Tripod — a verrrry early social network sold to Lycos in 1997 — and being the founding chairman of Everyday Health, which was sold to Ziff Davis). “We are thrilled to be able to offer yet another way for restaurants to maximize their profitability. With Seated Events, Seated at Home, and Seated, restaurants can drive demand to their three primary sources of revenue in a single, easy to use rewards platform.”
All this means that even at a time when restaurants feel like a risky bet, investors are interested.
“Restaurants are a vital part of our culture and communities, and the industry has been completely upended by COVID-19. It’s been impressive to watch Seated’s unwavering commitment to help restaurants thrive as they quickly adapted their rewards platform to offer delivery, and now events, in order to continue to meet restaurants’ needs,” said Thilo Semmelbauer, managing director at Insight Partners, in a statement. “Seated’s expanded vision is compelling and this one-stop platform will be an important piece of the restaurant industry’s recovery and evolution.”