Restaurants fought for survival in pandemic, some with tech helpers

The past year has crushed independent restaurants across the country and brought a reality to their doors: Many were unprepared for a digital world.

Unlike other small retailers, restaurateurs could keep the tech low, with basic websites and maybe Instagram accounts with tantalizing, well-lit photos of their food.

For the past decade, Krystle Mobayeni had been trying to convince them that they needed more. Mobayeni, a first-generation Iranian-American, started her company, BentoBox, in 2013 as a side job. She wanted to use her graphic design skills to help restaurants build more robust websites with e-commerce abilities. But it was a hard sell. For many, she said, her services were a “nice to have,” not a necessity.

Until 2020. The pandemic sent chefs and owners flocking to BentoBox, as they suddenly needed to add to-go ordering, delivery scheduling, gift card sales and more to their websites. Before the pandemic the company, based in New York City, had about 4,800 clients, including the high-profile Manhattan restaurant Gramercy Tavern; today it has more than 7,000 restaurants onboard and recently received a $28.8 million investment led by Goldman Sachs.

“I feel like our company was built for this moment,” Mobayeni said.

The moment opened a well of opportunity for companies like BentoBox that are determined to help restaurants survive. Dozens of companies have either started or scaled up sharply as they found their services in urgent demand. Meanwhile, investors and venture capitalists have been sourcing deals in the “restaurant tech” sector — particularly seeking companies that bring the big chains’ advantages to independent restaurants.

“A lot of what’s happening is reminiscent of what we’ve seen in the broader retail sector in the past decade,” said R.J. Hottovy, a restaurant industry analyst and an investor at Aaron Allen & Associates. “COVID accelerated the transformation quite a bit. This is a once-in-a-lifetime chance to redefine the experience.”

Part of what Mobayeni offers restaurants is a one-stop shop and the ability to own their customer data. Many restaurants rely on third-party vendors, such as DoorDash or UberEats, to handle delivery. But those companies charge significant fees and retain customers’ data because the transactions go through their websites. That’s not such a big deal when delivery is 20% of a restaurant’s income stream, but it’s a game-changer when delivery becomes 100% of income — and you can’t contact any of your customers.

“Restaurants realized they had to think of themselves as larger businesses and brands,” said Camilla Marcus, co-founder of TechTable, which connects the hospitality and tech industries. “You have to expand into other things: e-commerce, delivery, products. You have to think outside the four walls.”

Helping restaurants deepen relationships with customers is where Sam Bernstein saw an opportunity. Before the pandemic he ran a tech startup that connected students to housing, similar to Airbnb; when universities sent students home last spring, his revenue fell to zero.

He went to his board of directors and offered to return what investment was left and close down. Instead the board suggested he regroup with a smaller team and new vision.

“It was an existential crisis, as you can imagine,” he said.

Bernstein laid off all but 10 employees and took them for a brainstorming retreat. They considered dozens of business models, looking for the right problem to solve. The more they discussed options, the more the members of the team realized they were all interested in food and hospitality and wanted to help restaurants.

They hit upon the idea for a site that would allow customers to “subscribe” to their favorite restaurants. The new firm, Table22, would help chefs develop and market subscriptions for monthly meal kits and wine clubs, for example, and then manage the sales, recurring billing, scheduling, data analytics and more. In exchange, Table22 takes a percentage of each transaction.

Table22, which is based in New York, went live with its first restaurant in May. Since then, it has grown to more than 150 restaurants in 50 cities. Late last year, the company received about $7 million from investors, who include David Barber, owner of Blue Hill farm and restaurants.

Shelby Allison signed up her Chicago bar, Lost Lake, for the service on a cold email from Table22. She was hesitant at first, planning to listen just long enough to learn how to create a cocktail subscription service herself.

“We get lots and lots of calls from these tech companies trying to help — or prey upon — us struggling businesses,” she said.

But she was impressed by the low service fee and the fact that Table22 shared customer data. She started the service in October, hoping for 30 sign-ups; 100 people joined. Allison now has 300 subscribers and five employees working on the make-at-home cocktail boxes.

“This will 100% stay in the future,” she said. “I love this program. I thought it might cannibalize my to-go business, but it hasn’t at all.”

Ping Ho considered signing up with Table22 to host the wine and meat clubs she offers at her Detroit restaurant and butcher shop, Marrow, and wine bar, the Royce. She decided against it, however, because her existing subscription platform, Zoho, gave her the essential tools.

“It’s a bit more work, but there’s more agency,” she said.

But because her website was mostly informational, she realized she did need help offering online ordering and a delivery system for the butcher shop. So Ho turned to Mercato, which enables e-commerce for independent grocers. In a bit of fortuitous timing, she had signed up a month before the pandemic struck. When stay-at-home orders were issued, she was able to quickly begin offering grocery items, such as milk and eggs, in addition to meats.

Her sales jumped “tremendously” she said, although they have flattened out in recent months. Still, Ho intends to maintain the service.

Mercato began in 2015, but 2020 was its year. In February 2020, the service had 400 stores across 20 states; it quickly ramped up to more than 1,000 stores in 45 states. It continues to grow and has added some big-name clients, including the Ferry Building Marketplace on San Francisco’s Embarcadero, with dozens of merchants.

“We’re trying to give independent grocers a sustainable competitive advantage,” said Bobby Brannigan, founder and chief executive of the company, which is based in San Diego.

It’s a mission that he has been training for all his life. Brannigan’s family owns a grocery store in Brooklyn, where he started working when he was 8, stocking shelves and delivering groceries.

“It’s ironic that I’m back to doing what I was doing as a kid in Brooklyn,” he said.

In March and April 2020, Mercato brought on hundreds of new grocers each week — clients that weren’t used to having online orders or weren’t used to the sudden volume of orders. Some stores that were accustomed to 10 orders in a day were flooded with hundreds, Brannigan said. Thankfully, his dad already had him build tools into the system that would allow grocers to limit the pace of orders and schedule them.

Brannigan is also adding more data analytics to help his clients better understand what their customers want. They can now see what was bought and what customers searched for.

“You’re amassing a valuable treasure chest of data that lets you sell the products they want today and that they want tomorrow,” he said.

Of course, not all solutions are tech-centric; sometimes, it’s just a grassroots community of chefs helping chefs. Alison Cayne, for example, has been giving free advice to chefs looking to create packaged goods, like her line of Haven’s Kitchen sauces. Having that extra revenue stream was critical when she shuttered her Manhattan restaurant and cooking school last spring, and she wants others to have the same options.

“This is all very much from my perspective, not the supercapitalized, venture capital-backed, cool-kids business,” she said. “I just want to help them take a brick-and-mortar business and develop a product and build a brand that makes sense and is sustainable.”

In Detroit, grocer Raphael Wright and chefs Ederique Goudia and Jermond Booze developed a “diabolical plan,” as Wright called it, to offer a weekly meal kit cooked by Black chefs during Black History Month.

“Black food businesses are hurting in the city, so we thought, what if we created this meal box in a way that celebrates Black food and Black contributions to American cuisine?” Wright said.

They named the project Taste the Diaspora Detroit and brought together Black chefs and farmers to create the weekly dishes — like gumbo z’herbes and black-eyed pea masala. The three organized all of the e-commerce and scheduling, which allowed chefs to participate even if they weren’t tech-savvy, and created the packaging and inserts that told the history of the meal. They topped it off with a paired Spotify playlist.

“Being a part of this project woke everyone up and made them think they have a little hope they can push through,” Wright said.

They hope to reprise the service for Juneteenth and are currently talking to funders to support the effort.