- A wave of high-profile restaurant chains is investing millions in food technology startups.
- Brands support autonomous delivery vehicles, ghost kitchens, and digital ordering programs.
- A New York company has invested $30 million in 40 startups, including one that DoorDash bought.
Jamie Freshling, a food technology venture capitalist, says his father doesn’t like what he does for a living.
“My dad says I take joy from the restaurant,” Freshling said.
As co-founder of Branded Hospitality Ventures, Frischling invests in early stage food technology companies. Most of these investments involve some form of automation in restaurants and bars, such as self-serve beer walls, digital food ordering platforms, and text-based guest comment software.
Frischling said he reminds his father that his company’s mission is to help restaurants and their employees thrive and survive by supporting innovation.
“If you don’t keep up with the industry, we won’t have many restaurants,” Freshling told Insider.
Founded in 2018, New York City-based Branded Hospitality Ventures has invested more than $30 million in nearly 40 food technology startups. Successful directors include Bbot, a mobile ordering and payment software company that DoorDash bought in March, and GoParrot, a digital ordering and marketing platform for restaurants that Square bought in May.
While significant returns are essential as investors, Frischling also has skin in the game. He and his associates have been in restaurant operation for 25 years. Branded restaurants operate a string of New York dining concepts, including Isabelle’s NYC, Barbounia, and 5Napkin Burger.
The company launched its branded hospitality venture capital arm four years ago to invest in startups that solve real problems for restaurants and “ideally contribute to margin improvement,” Freshling said.
Frischling is part of a wave of high-profile restaurant and chain operators that are investing millions in the industry’s future. Over the years, Chipotle, Inspire Brands and Restaurant Brands International — owners of Burger King and Popeyes — have invested in autonomous delivery vehicles, ghost kitchens, and digital ordering software. Other companies, such as McDonald’s and Sweetgreen, have bought food technology startups.
This is good news for the food technology sector, which has seen the number of investment deals in the industry fall by about 33%, according to a recent PitchBook report. Layoffs followed across the industry.
Insider has compiled a list of restaurateurs and restaurant chains — from celebrity chef Tom Colicchio to Sweetgreen — to invest in food tech below:
Branded Hospitality Projects
Branded Hospitality Ventures, founded by Frischling and Michael “Schatzy” Schatzberg, focuses on early stage companies with initial investments ranging from $100,000 to $225,000. The venture capital firm’s first investment was in a self-serve beer pouring system, Pour My Beer.
Technology is the company’s mission: to support technology that allows restaurants to operate more efficiently without sacrificing the guest experience. Unwelcome disruption to the industry that puts pressure on restaurant profits.
“We are not rhino hunters,” Freshling said. “If a tech company is looking to squeeze between the brand, the operator and their guests, this may not be right for us. We’re on the operator’s side.”
Some of the more than 40 food technology companies backed by branded hospitality include Chowly, Ovation, Bite, TapRm, Yumpingo, GoTab, Leasecake, LuckyDiem, Picnic, Bbot and GoParrot.
Before the end of the year, Branded Hospitality Ventures plans to launch a new fund. Stakeholders will work for or within the food service space. No investments have been made yet.
Chipotle Mexican Grill
In March 2021, Chipotle made an undisclosed investment in Nuro as part of the autonomous car company’s Series C funding round. The investment was the chain’s first major investment in a third-party technology company since Brian Nicholl was appointed CEO in 2018.
In April, Chipotle created a $50 million investment fund called Cultivate Next to support early-stage companies with technology that matches Chipotle’s ethos and aggressive growth plans. In July, the chain made its first two investments through the fund: Hyphen, a robotic kitchen that produces more than 350 meals an hour, and Meati Foods, which makes plant-based products from mushroom roots grown indoors.
Brand inspiration
In 2020, Inspire Brands invested in ItsaCheckmate, a restaurant technology company that allows restaurants to integrate multiple online ordering platforms into a single point of sale or POS system. ItsaCheckmate, which includes competitors Deliverect, Nextbite (formerly Ordermark) and Olo, serves more than 20,000 restaurants, including Wendy’s and thousands of Arby’s, Buffalo Wild Wings and Inspire-owned Sonic Drive-In.
IGC . Hospitality
The New York restaurant company, also known as the In Good Company Hospitality Group, invested in restaurant tech company MarginEdge in 2021, according to PitchBook. IGC and Schooner Capital led the $27 million increase. MarginEdge tracking software provides restaurant owners with automated billing processing on restaurant costs, including food and beverage analytics and data insights on employment and inventory.
McDonald’s
In 2019, the fast food burger giant made two major technology purchases aimed at improving service speed, customization and accuracy while driving. McDonald’s has bought Dynamic Yield, a platform that specializes in personalization technology and decision logic while driving. At that time, the Wall Street Journal, citing anonymous sources, said that McDonald’s paid the company $ 300 million.
McDonald’s also bought Abrent, a Silicon Valley startup that specializes in voice chat technology. Since then, McDonald’s has sold both platforms.
Brands International Restaurant
This summer, the father of Burger King and Popeyes participated in a $100 million Series C tour for ghost kitchen operator Kitchen United. RBI did not disclose the amount of the investment. But in an interview with Insider, CEO Jose Seal said the “small investment” was a good opportunity for the Reserve Bank of India to invest in technology that best serves guests “through these mock kitchens or these kinds of central delivery platforms.”
sweet green
A few months before it went public in November 2021, Unicorn Sweetgreen bought the robotic-focused restaurant concept Spyce. Upon making the purchase, CEO Jonathan Neiman said the robotic kitchen technology was “perfectly aligned” with Sweeetgreen’s vision of bringing “real food” that is constantly being prepared to more communities.
Sweetgreen executives also participated in a $50 million raise from Lunchbox’s Series B, which was announced in February 2021.
Taco Bell
In May, the Taco Bell Foundation, the nonprofit arm of Taco Bell, launched the Ambition Accelerator program. The new program is designed to help 16- to 26-year-olds raise seed funding. Taco Bell supports a range of innovations that support “technology for good” and sustainability projects.
In early September, Taco Bell named 25 finalists who each received $1,500 to fund ideas. The teams will be transported to the Taco Bell headquarters for the Ambition Accelerator Summit, where one winner will be announced and receive an additional $25,000.
Tom Colicchio
The host and referee for “Top Chef” was an early investor in the Tattle customer feedback program. The platform uses artificial intelligence to record the results of detailed feedback from restaurant guests, providing real-time data to help general managers address operational or customer service issues.
Colicchio, who uses Tattle in his restaurants, made investments in 2017, 2020, and 2021. Colicchio also participated in a $7 million funding round announced this month for social media cooking app Flavrs. The shoppable video platform is a one-stop cooking app that lets foodies watch cooking videos, find recipes, and shop for ingredients. Eric Ripert, co-owner of the Michelin-starred Le Bernardin in New York, also took part in the founding tour.
Yum Brands
In 2021, the father of Taco Bell, Pizza Hut, and Kentucky, embarked on a tech buying spree. In March of that year, the fast food company acquired Tictuk Technologies, an ordering and marketing platform based in Tel Aviv. That same month, Yum also bought consumer statistics company Kvantum. The company did not disclose the value of all the cash deals with Tictuk and Kvantum.
In May 2021, Yum Brands announced plans to buy Australian food technology company Dragontail Systems Limited. The AI-powered solution optimizes the food preparation process from ordering to delivery. The company agreed to pay $72.4 million for Dragontail at the time.
But Yum Brand’s most notable investment was its 2018 support for powerful food delivery company Grubhub. The $200 million deal made Grubhub an exclusive national delivery partner, allowing the chain to negotiate favorable commission rates for brands like KFC and Taco Bell. In October 2020, Yum Brands sold its shares for a profit after a legal dispute that followed when Yum expanded its delivery partners to include Postmates and Uber Eats during the pandemic.
from San Jose News Bulletin https://sjnewsbulletin.com/restaurant-owners-and-restaurant-chains-such-as-chipotle-investing-in-food-tech/
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