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Consolidation Comes for the Restaurant Back Office

by Jennifer Marston
June 13, 2021June 11, 2021Filed under:
  • Business of Food
  • Delivery & Commerce
  • Featured
  • Restaurant Tech
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Consolidation of restaurant tech companies has been a topic for years. And in the last few months, deals like PAR’s acquisition of guest loyalty platform Punchh and Squarespace nabbing hospitality company Tock suggest M&A is alive and well in restaurant tech. 

News from the last week suggests that the next big area of restaurant tech up for consolidation is the restaurant back office. 

Toast, which wants to be the Swiss Army Knife of restaurant tech, recently said it is acquiring xtraCHEF, whose software digitizes and organizes back-of-house and back-office tasks. Think accounting, scheduling management, inventory management, and budgeting. While Toast’s partner network features a number of different back-office software platforms, restaurants can integrate into their systems, the full acquisition of xtraCHEF means Toast can add to its own ever-growing list of software products for restaurants. 

Shortly after the Toast news, Restaurant365 said it was acquiring Compeat, which digitizes labor, accounting, vendor relationships and other tasks for restaurants. In this case, Restaurant365 is itself a back-office company, with software that does much the same thing as Compeat. The acquisition suggest Restaurant365 wants to increase and improve its capabilities in this area. 

Both deals are notable because, until now, the back office has been less of a priority for restaurants and has received way less investment money over the years than front-of-house tech and customer-facing tech. Amid a broader industry consolidation (see above), this past week’s deals suggest a greater need, or at least desire, from restaurants for more precise management over their bookkeeping, inventory taking, and other behind-the-scenes tasks.

That isn’t too surprising. The last year or so devastated the restaurant industry. Excepting chains with deep pockets a la Chipotle, those that have managed to hang on are operating off margins even more razor-thin than they were before the pandemic. Better management of inventory, invoices, vendor relationships, and so forth means a better overall view of where costs in a restaurant are going, which could ultimately save businesses money at a time when there isn’t much of it to be had. Those restaurant tech companies that can are swooping in to add more tools for the back office in the hopes of staying at the top of a restaurant tech space that’s currently more bloated than Taco Bell’s pre-COVID drive-thru menu.

Whether digitizing the entire back of house will make enough of a noticeable difference in restaurants’ margins will be determined only at some point down the road, when more restaurants have swapped pen and paper for mobile apps and other software. If they do. After all, these systems aren’t free to implement, so it remains to be seen how many restaurants, particularly small and/or independent ones, do so in the near future.

In the meanwhile, restaurant tech consolidation will continue. It wouldn’t be all that surprising if a company like Restaurant365, which though large still only focuses on one area of the restaurant, were picked up by an even larger all-in-one platform like Toast. 

Stay tuned . . .

More Restaurant Tech Headlines

Starbucks Reinstates Its Reusable Cup Program With a Low-Tech Twist – Starbucks will reinstate its reusable cup program in the U.S. on June 22, more than a year after suspending the program because of COVID-19-related safety concerns. 

JustKitchen Raising $20M, Expanding into the U.S., Asia – Vancouver, Canada-headquartered JustKitchen announced this week it is in the process of raising $20 million to expand its network of ghost kitchens and virtual restaurant brands.

Virtual Restaurant Company Curb Raises €20M – Stockholm, Sweden-based ghost kitchen startup Curb has raised funding to expand its ghost kitchen network and virtual restaurant portfolio.


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Tagged:
  • back office
  • Compeat
  • restaurant tech
  • Restaurant365
  • Toast
  • xtraChef

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