Growth, Profitability, Responsibility in Investment
Welcome to Expedite, a (mostly) weekly newsletter by Kristen Hawley covering what’s important in restaurant technology.
Expedite has a new partner! (Its first, if you’re keeping count.)
I’m working with the team at TechTable on something fun. TechTable Connect is a monthly series that covers the intersection of technology and hospitality, with deeper insight into the most interesting headlines. It’s more of the themes you (hopefully!) love from Expedite in a monthly package (and excerpted in this newsletter.) Subscribe here.
Balancing Growth, Responsibility, and Profitability
For the inaugural TechTable Connect: thoughts on avenues to profitability in technology, inspired by an interview with Alice Cheng, founder and CEO of Culinary Agents. She shared her own fundraising experience and associated challenges. Culinary Agents hasn’t taken outside investment for a few years, though Cheng said it’s not off the table for the future.
But funny enough, she said that some potential investors told her early on that the company might have been a better sell if she wasn’t making money, since “investors tend to take whatever information you have that is tangible and apply their own logic and experience to predict the risk of investment,” she said.
This means a company filling a presumed widespread need might get more attention, and probably a lot more funding, than a company with a product that’s unfamiliar to investors. At the very least, it can make fundraising even more challenging.
“We are a tech company that supports hospitality,” she said. “One of the biggest challenges in the beginning was explaining why [staffing] was an issue, because a lot of people just couldn’t relate.”
It’s an interesting time to think about this. Companies like WeWork and Uber, once thought to be potential Wall Street darlings, are under serious scrutiny. Uber has never been profitable, though CEO Dara Khosrowshahi recently said he expects that to change by 2021. Where there was once a growth-at-all-costs mentality, investors and analysts are pausing to consider a company’s ability to actually produce results.
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What else is happening?
WeWork shut down Spacious, a coworking company it acquired in August 2019. Spacious created daytime work spaces in restaurants when they would have otherwise been closed, charging for access and giving restaurants a cut of the cash. The shutdown was abrupt and cuts a revenue stream from many businesses in New York. Just before the acquisition, Spacious downsized its offerings, cutting San Francisco locations. And in October, officials began investigating a whistleblower complaint filed with the SEC that WeWork executives pushed the $42.5 million deal through without a thorough financial review.
The gig economy comes to restaurant kitchens. Eater has a look at how a new crop of mobile apps are changing the way some restaurants staff their kitchens. Apps like Pared vet kitchen workers — only those with experience can join — and businesses sign on to staff kitchen shortages on demand. The piece also mentions California’s AB5, the bill scheduled to go into effect on January 1 that potentially reclassifies on-demand workers as employees, which could change the way on-demand marketplaces work. There’s a lot of uncertainty around what will happen, and companies like DoorDash have committed a hefty sum to fight the measure.
Expedite is taking a couple weeks off to celebrate, see you next year.
Expedite is produced by Kristen Hawley, a San Francisco-based journalist with over six years of experience covering the restaurant technology industry. Previous iterations of this content were available via Chefs+Tech and Skift Table. Thanks for reading.
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