Restaurant365 LLC has a big appetite for growth.
As the restaurants the company’s software helps perform back-of-the-house functions for bounce back from last year, so too is Restaurant365’s own path for expansion.
“We continue to add new customers and our existing customers are resurging and growing themselves and growing with us,” said co-founder and CEO Tony Smith, who the Business Journal awarded with an Innovator of the Year Award at a Sept. 9 event at the Irvine Marriott.
The Irvine-based company, which has raised some $127.5 million to date, makes the software that helps restaurants with accounting, inventory management, scheduling, payroll and other management functions.
Smith and company sit from an interesting perch from which to observe the industry.
With a customer base that spans some 30,000 restaurants, including BJ’s Restaurants Inc. of Huntington Beach and Pasadena’s Blaze Pizza, and revenue this year expected to be well over $60 million, Smith has access to plenty of data points.
“We do have a pretty broad view across the country at this point,” the CEO said.
“If I look at it on the aggregate, as a whole, one of the great trends I see is that over the last couple months restaurants who have remained open are now doing on average better in sales than they were pre-COVID in 2019. Now, the whole restaurant industry in total is not back to that level and so there are still some lagging restaurant sales.”
In the case of the COVID Delta variant, Smith went on to say, restaurants have largely been able to hold their own against any negative impacts with sales of those the company has visibility on, down less than 1%.
Appetite to Buy
With many restaurants resuming growth plans and making big pushes to open new locations, there’s plenty of runway for Restaurant365 to grow.
Acquisitions are on the menu.
In June, the company made its first purchase, with Austin, Texas-based restaurant management platform Compeat Inc. on undisclosed terms.
“Things have been going great in terms of the acquisition itself. Everything’s been going according to plan,” Smith said of the integration between the two companies.
Restaurant365 remains open to additional purchases to grow, while also notching organic growth of its core product offering, Smith added.
“We’re definitely open to future acquisitions and I think companies that will be interesting for us to look at are those that serve in the restaurant industry. We’re very focused on restaurants, so I don’t see us straying from there and I think it will be people who have a really additive product to ours and something that extends our product’s reach,” Smith said of what makes an attractive purchase moving forward.
It begs the question of whether the company would ever extend its marketing approach to prospective customers outside the restaurant industry.
Smith says “yes” as it relates to what he calls adjacent verticals.
That is, companies in the hospitality industry that still work with food. Hotels and arenas, he said, are good examples of that.
Preparing for the Future
The momentum the company is seeing will be good for a more than 25% increase in revenue this year.
Restaurant365 is also planning for a future that could take it public in the coming years.
“For me, it’s not IPO or bust. It doesn’t have to happen, but we will operate our business in preparation for that,” Smith offered of his thoughts on an IPO.
The Spectrum-area company, one of the better-backed, privately held software firms in OC firm, most recently raised $88 million in 2019. It marked Restaurant365’s third fundraising round since its start in 2011 by Smith, John Moody and Morgan Harris.
“The team is, over the next couple years, going to operate as a business that is IPO ready so that, if the timing feels right and we want to go that route, that we’re definitely positioned well to do it,” Smith continued of how the company is readying itself for one potential future outcome.
“At the same time, we’re going to look at the market,” he said.
“It is something that we want all of the metrics to be world class IPO-ready metrics. And we are there in almost all aspects.”