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Daily news and analysis about the food tech revolution

IPO

Report: Eat Just Aiming for $3B IPO in 2021

Eat Just is reportedly targeting Q4 2021 or early 2022 for its IPO, which currently has a valuation of $3 billion, according to an Eat Just investor. Forbes was first to break the news after one of its contributors spoke to an anonymous investor in the company.

To date, Eat Just has raised $440 million, with its most recent fundraise being a $200 million round led by Qatar Investment Authority earlier this year.

Eat Just is best known right now for its plant-based egg products, which are available in the U.S. through grocery retailers as well as at restaurants. The company has also steadily built a significant international presence over the last few years, too. Notably, that includes teaming up with China-based QSR chain Discos to replace traditional eggs on the latter’s menu and expanding across Canada in March of this year.

Of late, however, Eat Just has grabbed the most headlines for its cultivated meat business, GOOD, which won the world’s first regulatory approval to sell cultured meat this past December in Singapore. The company has since sold its GOOD cultured chicken bites on the regular at restaurants in the city-state and even partnered with Delivery Hero subsidiary Foodpanda to deliver them.

GOOD raised its own $170 million in May of this year. At the time, Eat Just CEO Josh Tetrick hinted to The Spoon that regulatory approval in the U.S. was on its way for the company. In its report today, Forbes name-dropped China as another potential country that could next grant regulatory approval to sell cultured meat.

Whether the company will go public before achieving these regulatory milestones or after is not clear at this time.

Food Delivery Service Zomato Files to Go Public

Zomato, one of India’s leading and largest food delivery startups, announced today it has filed for an IPO from which it plans to raise $1.1 billion. 

To date, the 12-year-old company has raised $2.1 billion in total from the likes of Kora Investments, Tiger Global, and Ant Group, among other investors. Once public, it plans to list on the Indian Stock Exchange as NSE and BSE.

The company said it plans to invest 75 percent of its IPO proceedings into further building out its Zomato Pro subscription program as well as its business-to-business supply operation called Hyperpure.

Like most other restaurant-related companies, Zomato saw its fair share of ups and downs in 2020, including having to make cuts to its workforce about a year ago. However, the company has largely recovered from that, though its paperwork notes that the COVID-19 pandemic “has had and could impact our business, cash flows, financial condition and results of operators.” 

According to its filing documents, Zomato has more than 350,000 active restaurant listings on its platform across 24 different markets. The company says it faces “intense competition,” citing Prosus-backed food delivery service Swiggy as its competition along with cloud kitchen operator Rebel Foods and restaurant chains like Domino’s and McDonald’s. Amazon entered the Indian food delivery market last year but is not named as a competitor in Zomato’s filing. Uber Eats, meanwhile, sold its India business to Zomato in March of 2020 for $206 million.

Earlier this month, chief rival Swiggy raised a whopping $800 million and is now valued at $5 billion. As yet, Swiggy has made no announcements around a potential IPO.

Restaurant Tech Company Olo Files to Go Public

Restaurant SaaS platform Olo filed its S-1 prospectus with the SEC late Friday and hopes to raise $100 million in an initial public offering. A representative for Olo confirmed this news to The Spoon today.

Olo is best known for its software platform that consolidates digital orders coming from different channels (web, kiosk, mobile, etc.) into a single ticket stream for the restaurant. Founded in 2005 in NYC, It was one of the original companies to help restaurants eradicate the so-called “tablet hell” scenario for restaurants. Prior to companies like Olo, staffers would have to manually input information from, say, the tablet processing Grubhub orders into the restaurant’s main POS system. 

The company has added its Dispatch service, which helps restaurants process delivery orders from their own websites and mobile apps. Another service, Rails, helps restaurants manage their relationships with third-party delivery providers, including negotiating a restaurant’s preferred providers and pricing strategy.

“Consumers today expect more on-demand convenience and personalization from restaurants, particularly through digital channels, but many restaurants lack the in-house infrastructure and expertise to satisfy this increasing demand in a cost-effective manner,” states the S-1 filing. “Our platform and application programming interfaces, or APIs, seamlessly integrate with a wide range of solutions, unifying disparate technologies across the restaurant ecosystem.” 

The Olo platform is specifically suited to restaurant brands with multiple locations. Among the companies customers are Five Guys, Wing Stop, Shake Shack, Denny’s, The Cheesecake Factory, Jamba Juice, Dairy Queen, and many others well-known names in the restaurant biz.

The COVID-19 pandemic, of course, has only heightened the urgency for restaurants to organize their off-premises orders (takeout, delivery, drive-thru, etc.) to increase the speed and efficiency at which those can be fulfilled. Olo said in its S-1 filing that in response, the company “reprioritized” its strategic roadmap “to address the most important solutions for [its] customers.” Notably, that has included takeout and curbside options.

Currently, Olo works with about 64,000 individual restaurant units across 400 brands. In its filing, Olo said it processed $14.6 billion in gross merchandise value in 2020.

This is the second major piece of news around restaurant tech IPOs today. Earlier this morning, the Wall Street Journal noted that restaurant-management platform Toast could go public in 2021 with a $20 billion valuation. 

For Olo, no price or timeline has been set as of right now.     

WSJ: Restaurant Tech Company Toast Planning an IPO

Restaurant tech company Toast is planning an initial public offering, sources familiar with the matter told the Wall Street Journal over the weekend. These people suggested an IPO could value the company at around $20 billion, and that Toast approached Goldman Sachs Group Inc. and JPMorgan Chase & Co. to underwrite a possible listing later in 2021.

Toast may also consider other options, such as a sale or a combination with a special purpose acquisition company (SPAC), WSJ sources said.

The speculation comes almost exactly one year after the COVID-19 pandemic forced the restaurant industry to close down dining rooms and significantly alter its focus towards meal formats like delivery, takeout, and curbside pickup. 

Toast initially took a major hit from the effects of the pandemic. In April 2020, the company cut 50 percent of its staff through layoffs and furloughs. It cited the “massive disruption” otherwise known as COVID-19 that “hit the industry overnight” as the driver behind these cuts.

Over the rest of 2020, however, Toast’s situation improved dramatically, thanks to its ability to quickly shift direction. Unable to serve the dining room, the company started adding more off-premises-focused features to its restaurant tech stack, including software to facilitate delivery orders and a set of so-called “contactless” tools that enable digital ordering, payments, and menu browsing. 

As of November 2020, Toast was valued at $8 billion, up $4.9 billion from February of 2020. An IPO would be one of the largest thus far for a restaurant tech company, following DoorDash’s December 2020 IPO, which valued the third-party delivery service at almost $40 billion.

DoorDash Stock Pops Upon IPO

DoorDash’s stock got the much sought after pop after the startup IPOd on the New York Stock Exchange today. DoorDash shares were priced at $102, and started trading at $182 today, giving the third-party delivery company a market cap of $57.8 million.

Founded in 2013, DoorDash had raised $2.5 billion in funding prior to going public. Today’s IPO puts a bow on what has been a busy year for the third-party delivery service. The COVID-19 pandemic forced closures of dining rooms at restaurants, pushing those businesses to offer more takeout and delivery options. That plus stay-at-home orders earlier in the year had more people order delivery around the country and translated into a lot more business for DoorDash. As CNBC writes:

DoorDash reported $1.9 billion in revenue for the nine months ended Sept. 30, according to its IPO filing. That’s up from $587 million during the same period last year. As its revenue grew, DoorDash also narrowed its net loss to $149 million over the same period in 2020. In 2019, DoorDash had a net loss of $533 million over the nine-month period.

In addition to coronavirus-driven business, DoorDash also expanded into new categories beyond its core delivery business. As the restaurant industry cratered, DoorDash added delivery from drug stores, convenience stores (it’s even building its own brand of delivery only convenience stores) as well as on-demand grocery delivery.

DoorDash’s road to IPO hasn’t been without its controversy, however. The high commissions that DoorDash and other third-party delivery services charge restaurants came under even closer scrutiny earlier this year as restaurants just tried to survive the initial fallout from the pandemic. Some cities even implemented fee caps to help restaurants stay afloat. DoorDash was also a backer of Prop 22, a California ballot measure that sought to get gig-economy services exempted from Assembly Bill 5, which requires companies to reclassify contract workers as employees (thereby giving them benefits and more protections). That measure passed. And just last month, DoorDash agreed to pay a $2.5 million to the Washington D.C. attorney general’s office as a settlement over its tipping policies.

DoorDash now joins other publicly traded third-party delivery services such as Uber and GrubHub.

DoorDash Launches Initial Public Offering

DoorDash announced today it has launched the roadshow for its initial public offering (IPO). The company is offering 33,000,000 shares of its Class A common stock, with the initial public offering price expected to be between $75 and $85 per share, according to a company press release.

The San Francisco-based food delivery service confidentially filed for an IPO in February of this year and unveiled the public S-1 filing in November. The S-1 filing revealed that the company reported a profit for the first time in its history during the second quarter of 2020 — which coincided with the rise of the COVID-19 pandemic. It’s a noteworthy milestone in an industry that thrives on promising a profitability it hasn’t, for the most part, achieved yet.

For DoorDash, part of that trek towards profitability appears to be expanding its service to other areas of food delivery besides restaurants. In April, the company announced partnerships with major convenience stores, including Wawa and 7-Eleven, and in August, it launched a grocery delivery service. It even went as far as to open its own “ghost convenience store,” called DashMart, which is basically a virtual convenience store owned and operated by DoorDash.  

Those new sales channels may be necessary at a time when the restaurant industry faces new restrictions to help curb the spread of the pandemic. It is difficult to say at this point how many restaurants will shutter permanently when all is said and done, and delivery services may need to branch out further to keep on the road to profitability. 

According to the Wall Street Journal, DoorDash is aiming for a valuation of $25 billion to $38 billion. The company garnered $675 million in revenue and a profit of $23 million for Q2 2020. For Q3, it posted a net loss of $43 million for Q3, but still reported revenue growth of $879 million. The company has said in the past that COVID-19-related lockdowns have played a significant role in its growth. That could be the case for a long time yet.

DoorDash Files for IPO, Could Start Trading in December

DoorDash unveiled its public S-1 filing this morning after confidentially filing to go public earlier this year. The San Francisco-based third-party delivery service is expected to begin trading on the NYSE in mid-December.

Reports of the service going public as soon as 2020 first surfaced in August, along with hints that the company was trekking towards actual profitability, which is still something of an elusive concept in the world of third-party delivery. Today’s unveil of DoorDash’s S-1 filing shows that the company reported a profit for the first time in its history during the second quarter of 2020. The company garnered $675 million in revenue and a profit of $23 million for Q2 2020. The company posted a net loss of $43 million for Q3, but still reported revenue growth of $879 million and has ample cash to fund itself — $1.6 billion, to be exact, though DoorDash has said COVID-related lockdowns played a significant role in its growth and that growth rates in revenue could decline in future.

DoorDash’s forthcoming IPO arrives at a time when demand for food delivery apps is thriving. Data from September shows that sales for these services grew 125 percent year-over-year during that month. DoorDash earned almost half, or 49 percent, of those sales — a significantly higher number than the 22 percent of Uber Eats or the 20 percent of Grubhub.

Restaurant delivery remains the biggest slice of DoorDash’s business, but it’s no longer the only one. Perhaps because of the uncertainty of the current restaurant industry, the company branched out into grocery and convenience store delivery this year, too. It even went as far as opening its own “ghost convenience store” facility in August.

Though all this cash and profitability comes at a cost of its own, a human cost in this case. DoorDash helped bankroll Prop 22, which California voters just passed and which allows third-party delivery services to continue classifying their workers as independent contractors. In other words, they’re saving a lot of money by not shelling out for benefits like workers comp, health care, and paid sick leave. The company also remains steeped in controversy around the high commission fees it extracts from restaurants at a time when businesses are shuttering in record numbers because of the pandemic. 

Unfortunately, money usually talks louder than any other issue on the table. DoorDash’s filing today shows that despite these controversies, the company’s growth is unlikely to slow any time soon. 

Report: DoorDash May Go Public in 2020 Amid Broader Delivery Consolidation

DoorDash could file for an IPO as soon as the fourth quarter of 2020, according to “sources familiar with the matter” who spoke to Bloomberg.

The third-party delivery company is reportedly “taking steps” to go public in November or December of this year through a traditional IPO, rather than a direct listing, which the company had considered earlier this year.

The potential IPO comes at a time when the third-party food delivery sector is seeing a steady stream of mergers and acquisitions, from Just Eat Takeaway.com buying up Grubhub to the more recent deal from Uber to snap up Postmates for $2.65 billion.

DoorDash itself has largely stayed out of that M&A activity. The company acquired Caviar for $400 million about a year ago. Since then, DoorDash has been largely focused on diversifying its business. It launched its first ghost kitchen facility in October 2019. And since the start of the pandemic, DoorDash has teamed up with convenience stores like 7-Eleven, launched its own “ghost convenience store,” and, just last week, started an on-demand delivery [— LINK — ] service for groceries.

Those moves make sense in light of the fact that the restaurant industry has been one of the hardest-hit business types by the pandemic. Demand for third-party delivery may be up, but many restaurants — both independents and large chains — are closing down, which means DoorDash may need new lines of business to have a shot of being profitable (which, according to Bloomberg, it is not).

Like other restaurant third-party delivery companies, DoorDash is also navigating a substantial amount of controversy. In April, DoorDash, Grubhub, and others were the subject of a class-action lawsuit alleging third-party delivery companies used their market power to push restaurant prices higher during the pandemic. In June, the San Francisco DA sued DoorDash over worker misclassification, and if a ballot measure that would loosen restrictions over gig worker classification in California does not pass in November, DoorDash (and others) will face another threat to its chances for profitability. That’s to say nothing of commission fee caps, much-maligned tipping policies, and other gripes a growing number of the general public has against third-party delivery companies.

DoorDash was last valued at nearly $16 billion and, throughout the pandemic, has been an “essential service” more and more folks are using as the future of restaurant dining rooms remains uncertain.

Like everything else these days, the timeline for the company’s IPO could change based on, among other factors, the trajectory of the pandemic.

DoorDash Confidentially Files for IPO

Food delivery service DoorDash has confidentially filed to go public. TechCrunch reports that the company has filed a draft registration statement on form S-1 with the Securities and Exchange Commission, according to a press release from DoorDash. The company didn’t name a specific time for the IPO, noting only that its expected to take place “after the SEC completes its review process.”

DoorDash, which has raised $2.1 billion is valued at $13 billion, is currently the leader among third-party delivery services in terms of marketshare, having unseated Grubhub from the number one spot in 2019. The company operates in all 50 U.S. states as well as parts of Canada and Melbourne, Australia, and in October of last year, DoorDash accounted for 35 percent of consumer spend on third-party delivery.  

But will that lead be enough to sway the public market that DoorDash is a good buy? The Wall Street Journal reported last December that three-quarters of DoorDash’s markets weren’t profitable. While third-party delivery services are expected to gobble up 70 percent of all delivery orders by 2022, the entire third-party delivery services market is in the midst of an existential crisis.

Some of that crisis is self-inflicted as companies like DoorDash employed shady tactics when it came to paying its drivers. DoorDash is also among a group of gig economy companies spending $90 million to defeat California’s AB 5 law, which reclassifies contractors as employees. The entire third-party delivery model is built around cheap labor, and if more workplace regulations are enacted, then that could greatly impact the industry’s ability to make money.

But restaurants themselves are starting to question the value of third-party delivery services. In addition to tiring of the high fees for the pleasure of being on an app like DoorDash, more restaurants are realizing the value of owning the direct relationship with the customer, and not handing that over to someone else.

Then there is the whole issue of timing. DoorDash is setting to go public months after Postmates, another third-party delivery service, pulled its own IPO plans. And we are in a post WeWork debacle world, where numbers are more highly scrutinized than ever.

DoorDash going public is good news for us at The Spoon. It’s going to generate a ton of news to report and transparency into the third-party delivery world when it holds quarterly earnings.

Now we’ll just have to see if it’s going to be a good move for DoorDash, and other players in the space with similar ambitions.

Week in Restaurants: Moe’s Goes Digital, Denny’s Adds Pay-at-the-Table Features

Some weeks are all about the incremental developments. Such has been the case over the last few days, with much of the news in the restaurant-tech space about chains adding new tools and features to their digital-focused operations. As the weekend sets in, here are a few more of those developments. 

Moe’s Southwest Grill Plans Digital-First Locations
Joining the growing number of restaurant chains experimenting with off-premises-focused store formats, Moe’s Southwest Grill announced this week it will launch its first-ever “all-digital/kiosk-only” locations in the first quarter of 2020, one in Pittsburgh, PA and the other in Charlottesville, VA. Each store will be equipped with four self-order kiosks and accept cash, Apple Pay, and, for, University of Pittsburgh students, university credit cards. Both locations will also offer limited in-house seating and one traditional cash register.

Denny’s Adds Pay-at-the-Table Feature
Denny’s, beloved pit stop of roadtrippers everywhere, plans to add tabletop devices in its restaurants that allow customers to pay for their meal, rather than having to wait for a server to run a credit card. The Spartanburg, S.C.-based chain has teamed up with restaurant tech company Presto, whose partners also include Applebee’s, Red Lobster, and Outback Steakhouse, among others. An initial deployment of Presto tablets at Denny’s is slated for 2020, and guests will be able to pay, complete feedback surveys, and access loyalty points on the devices. As of now, they will not be able to order food. 

Now You Can Reorder Your Favorite Chipotle Meal With Alexa
Chipotle added a little extra beef to its existing Alexa efforts this week by announcing a reorder skill for the device that functions just as it sounds. Customers download the Alexa app, enable the Chipotle skill, link up their Chipotle profile, and say something like “Alexa, tell Chipotle to reorder my favorite for delivery.” While a very incremental development in the world of restaurant tech, as voice-enabled technologies improve and become more integral to the order process, we’ll see more restaurant chains offering similar functions for repeat customers.

DoorDash May Go for a Direct Stock Listing Instead of an IPO
There have been plenty of rumors about DoorDash’s IPO, which we first heard rumblings about in August. But according to Bloomberg, DoorDash many now opt for a direct stock listing, which would allow it to enter the public markets without incurring the burden of investor pressures that go hand-in-hand with IPOs. This is an approach both Slack and Spotify took when they entered the public markets, and it’s one that lets companies save on bank fees. Whether this is the better approach for food delivery companies, who continue to struggle with the problem of becoming profitable businesses, remains to be seen.

Postmates Raises $225M, Now Valued at $2.4B Ahead of IPO

Third-party delivery service Postmates has raised another $225 million in funding, TechCrunch reports. The round was led by GPI Capital and brings the service’s total amount of funding to roughly $1 billion. Postmates is now valued at $2.4 billion.

The San Francisco-based company confidentially filed for an IPO in February of this year. At last check, the company will make its IPO paperwork public this month and is expected to debut on the stock exchange at some point during the fiscal third quarter of 2019.

As TC writes:

. . . last-minute financings are critical for companies poised to run out of cash and in need of an infusion prior to hitting the public markets. The motives for Postmates last-minute financing are unclear, however, the company will certainly begin trading on the stock market at an interesting time.

Postmates would follow third-party delivery rivals Grubhub and Uber Eats into the public markets. Rival and current market leader DoorDash is also rumored to be going public.

But as we’ve written before, the long-term viability of third-party delivery is still in question. Postmates and DoorDash might be valued at massive sums right now, but as a model, third-party delivery has yet to become profitable.

It’s also an almost-constant source of controversy these days. From shady tipping policies to proposed caps on commission fees, these services have received endless headlines calling into question the ethics of the model. Meanwhile, California’s Assembly Bill 5, which was just signed into law, is a major blow to companies like Uber and DoorDash and will most likely have a ripple effect across other Democrat-led states.

Recent numbers put third-party delivery app users at 44 million users in the U.S. by 2020. When Postmates lines up next to its rivals in the public market, it will also be joining the struggle to somehow turn a profit from those millions of users.

Beyond Meat Reports $40M Q1 Earnings, Predicts $210M Net Revenue for 2019

Today Beyond Meat had the first earnings call since they went public last month.

The company blew growth expectations out of the water and reported net revenue of $40.2 million in Q1 of 2019, which is an increase in 215 percent since the same period in 2018. It reported a first-quarter net loss of $6.6 million, or .95 per share.

Beyond’s CFO Mark Nelson gave guidance that the company will have a net revenue of over $210 million by the end of 2019. That’s slightly higher than Wall Street’s estimate of $205 million. In response to these positive numbers, Beyond’s shares rose 16 percent after the reporting was released.

The plant-based meat company’s sales are no doubt helped by its well-publicized IPO, as well as its expanding retail and restaurant footprint. Interestingly, the revenue from the two sources is almost split 50-50: grocery store sales accounted for $19.6 million of Beyond’s revenue, while restaurant sales made up $20.6 million.

On the earnings call Beyond Meat CEO Ethan Brown stated that the company would use its new capital to “invest in current and additional manufacturing facilities, to expand its research and development and its sales and marketing capabilities, and for working capital and general corporate purposes.”

Perhaps most notable was Brown’s emphasis on international expansion. He mentioned the high market potential in South Africa and Chile, as well as Europe and Asia. This could help it differentiate from plant-based competitor Impossible Foods, which is only available in the U.S., Singapore, Hong Kong, and Macau.

Despite their impressive stats, Beyond still has lots more room to grow. On the call Brown stated that Beyond Meat has only 2 percent market penetration in the U.S. He hopes to increase that both here and abroad, all while driving down the cost of their products.

That’s ambitious to be sure. Several investors (very reasonably) asked questions about production capacity. If a big fast-food chain, like McDonald’s, opts to add Beyond Meat to their menus, would they be able to quickly amp up production to fulfill those orders? What about overseas? Brown seems confident that their new production partners and manufacturing methods can handle growing demand, but clearly Beyond’s production issues of last year (and Impossible’s current struggles) aren’t far from investors’ minds.

Things may be looking rosy for Beyond right now, but the company still has plenty of competition who wants to take a bite out of their customer base. Impossible Foods recently raised $300 million and is planning to head into retail later this year. Nestlé’s meatless Awesome burger is hitting shelves in the U.S. this fall. The Swiss company currently sells a different plant-based burger, called the Incredible burger, at McDonald’s in Germany. Tyson Foods, who recently parted ways with Beyond Meat, is also releasing their own new line of plant-based protein products this summer.