Tock's Takeout Win

The unlikely functionality that pushed the reservations company over the $400 million finish line

In the end, it was takeout that carried the ticketing and reservations company over the proverbial finish line. You could probably argue that Tock’s $400+ million sale to website builder and hosting company Squarespace wouldn’t have happened were it not for Tock To Go, the takeout and later delivery platform recently credited by Fast Company for saving restaurants in the nick of time. (Their words, not mine.) 

On Friday, Squarespace filed publicly to go public via direct listing on the New York Stock Exchange. As part of the filing, the company shared some details about the last year of Tock’s business, which was clearly boosted in a big way by the new takeout offering. Tock charges 3 percent plus payment processing fees to restaurants on the to go platform. Restaurant customers who also have a monthly plan to support reservations and table management pay 2 percent per takeout order. Tock’s 2020 revenue totaled $23 million; $9.6 million, or 42 percent of that came via transactions from Tock’s own payment processing system. A smaller amount — $3.4 million, or 15 percent — came via monthly subscription fees. According to that Fast Company piece, Tock doubled the number of businesses on its platform during 2020 to 7,100 restaurants and close to 1,000 wineries. It expects to hit $1 billion in gross merchandising volume in 2021. 

It’s an unexpected ending to Tock’s story that once started (and, to be honest, never really finished) as an aggressive rebuttal to 20-year-old OpenTable’s business model. Tock founder and CEO Nick Kokonas was never shy about punching up at his chief competitor, and was even once proudly served a cease and desist letter for registering the url (The url still redirects to OpenTable’s homepage.) 

Kokonas recently tweeted a pre-pandemic Tock office photo that  shows a large dinosaur still looming in the background in what appears to be a conference room, so I can’t imagine those early days are easily forgotten. But it was the Covid-era business pivot that made the biggest mark.

Kokonas said this was the moment he told his team they’d be moving to remote work last March. Spot the dino!

In its filing, Squarespace shared some initial details about Tock’s value (they say that these numbers are estimates): It values Tock’s tech at $4 million, its tradename at $6 million. But Tock’s customer relationships are core to its value to Squarespace: $19 million for enterprise customer relationships; $64 million for its relationships with restaurants. Net assets acquired were just over $90 million leaving $336 million of goodwill — an intangible asset that accounts for the difference between acquired assets and fair market value of an acquired company. 

For a comparison that is not exactly apples to apples, OpenTable was acquired for $2.6 billion in 2014. Two years later, Priceline, OpenTable’s parent company, took a $941 million write-down on the company against the goodwill it paid. “Priceline's plight shows what can happen when a company pays top dollar for potential growth, which obviously can't be guaranteed,” read a Bloomberg piece published at the time. Priceline paid a 53 percent premium for OpenTable based on its average stock price at the time of the acquisition. 

Since then, leaders at Booking Holdings (Priceline’s new corporate name) have said they’ve not moved quickly enough to integrate OpenTable into its other product offerings. A leadership shuffle that’s unfolded slowly over the last few years has OpenTable’s corporate structure positioned under Kayak CEO Steve Hafner’s leadership, though the company does have its own dedicated CEO. Debby Soo joined the company last year, and there are signs that parent Booking is working to leverage its assets across the travel business, including rental cars and restaurants, to create a more holistic user experience. (For example, Booking’s logo showed up in the OpenTable app last year; recent dining-travel marketing emails highlighted the companies’ connection to each other.) 

I’d argue that all of this — the slow moves, the rethinking and restructuring — is a relic of the weight that a reservations and restaurant marketing service like OpenTable used to pull. But, as mentioned a few weeks ago, the way we discover and interact with restaurants has changed largely thanks to the social internet. Businesses are further diversifying their offerings beyond just in-person service; the pandemic only expedited that change. The value of a direct customer relationship has been proven.

Indeed, Tock’s value skyrocketed when it became a way for consumers to directly interact with restaurants outside the four walls of a restaurant. It was a perfect storm — Tock’s perceived customer base of mainly higher-end restaurants that typically wouldn’t offer takeout needing to quickly pivot to an offering that felt more personalized than a third party delivery app.  Suddenly, it was offering useful functionality but not the sort of walled experience that comes with the exclusivity of a single reservations partner. Any restaurant can use Tock To Go, even if they used someone else — OpenTable included — to power reservations and table management.

That’s not to say that Tock won’t be an incredible asset to Squarespace, who wants to use the technology “to expand the company’s complimentary suite of services available with a platform for reservations, take-out, delivery and events for the hospitality industry.” (I can’t tell if they actually meant to write “complementary” since Tock will, presumably, still cost money to use, but that’s splitting hairs, I suppose.)

In March, Squarespace announced a $300 million investment at a $10 billion valuation. It had a 28 percent growth in revenue in 2020. Its e-commerce business had revenue of $143 million in 2020, a 78 percent increase over the previous year. 

What else is happening?

Uber Eats is going to Germany. The company announced it would expand its presence to Berlin, taking on Just Eat Takeaway, the dominant player in the market. JET’s CEO was… not shy in sharing his take on Twitter. Uber’s Dara Khosrowshahi was not shy in his response. You’ll remember two important things: 1. Uber was rumored to be the most likely buyer of Grubhub before regulatory concerns tanked the deal; Just Eat Takeaway became its eventual parent (and the deal is still set to close shortly.) 2. Uber has said it will get out of restaurant delivery in markets that it can’t be the number-one or -two player and likely sees room for success in the market. 

Grubhub might change the way it lists non-partnered restaurants. As Restaurant Business reports, a class-action lawsuit could change the way restaurants are listed on Grubhub’s site. The suit was filed by a Denver restaurant and accused Grubhub of misleading consumers via non-partnered restaurant listings, using language that instead steered them toward Grubhub partners. Apparently the parties have agreed “in principle” to a settlement that would, among other things, change Grubhub’s language. For example, according to the piece: if Grubhub lists a non-partnered restaurant on its site (which it can do in places that aren’t California), it can’t also say the restaurant is: “not accepting online orders.” It can qualify the language; i.e., “this restaurant is not accepting online orders via Grubhub.” Semantics? Yes. Important semantics? Also yes. 

Yelp shares some new numbers. Yelp’s latest economic average report is out today and finds that restaurant openings in the first three months of the year are up from the same period a year ago — but haven’t quite reached 2019 levels. Bars, sandwich shops, coffee houses, breakfast and brunch spots all experienced more than 50 percent of their reopenings in Q1, since August 2020. 

A restaurant tech startup called Sunday raised $24 million in seed funding. The company provides QR code-based payment for restaurants and was built alongside a couple of European restaurateurs known for very successful businesses in France. After deploying the new tech, which integrates directly with point of sale systems, at its own restaurants, the group saw 80 percent adoption among guests leading to a 15-minute faster table turn. Half of the bills were split between multiple people at the table. Restaurants pay no subscription fees; just processing fees based on usage. 

A press release noted that the technology is in 1,300 restaurants in Europe. It also features a testimonial from a Chicago-based restaurateur, though I didn’t get a response when I asked a company rep where else in the U.S. the technology was in use. Still, a $24 million seed round is significant.  “That’s a lot of money for a company that started just a few months ago but that’s because Sunday wants to move quickly,” reads a TechCrunch piece. Indeed. 

In San Francisco, big delivery alums launched a couple new ghost kitchen concepts. According to the SF Chronicle, a pair of ghost kitchen companies prepare food from several different restaurants in one kitchen space. 

Restaurant technology gets the NYTimes treatment. The Times business section has a (very brief) look at a few companies working in the “restaurant tech” space. (The Times added the quotes, not me!) The gist: the pandemic caused many independent restaurants to realize they needed a heightened digital presence to diversify revenue and keep up with an increasingly tech-literate customer base. You don’t say!?

Deliverect, a Belgian software company that connects delivery companies with restaurant point of sale systems, raised $65 million in Series C funding to continue to expand its platform. Its customers include London’s Dishoom (so good!), per TechCrunch, but also giants like KFC and Unilever.