TouchBistro Inc., a Toronto startup looking to arm the world's waiters with iPads, has raised $16.3-million in a venture financing led by American private equity firm Napier Park Financial Partners and Tokyo technology platform giant Recruit Holdings Co. Ltd.
The company, which sells iPads to restaurateurs loaded with its proprietary point-of-sale app that enables waiters to send table-side orders directly to the kitchen and bar, handle payments and even effortlessly split bills, is planning to use the proceeds to accelerate its considerable growth, particularly in the U.S. and Japan, where it will rely on introductions from Recruit.
The company, whose products are used by about 800 Toronto restaurants, another 400 in New York – and 9,000 over all – has been doubling in size annually and adding about 300 restaurant customers per month. It is on pace to increase its staff size to 200 by the end of the year from 150, and looking to expand across the U.S., starting with the Chicago and Austin, Tex., markets.
Now the company, which generates more than $10-million in revenue and handles about $5-billion in annualized restaurant orders, is looking to build new products for its restaurant users based on the considerable data it processes. "When we look at the data that runs through our system, it's immense," said CEO and founder Alex Barrotti, who declined to share specifics on what new products are planned. "We're getting a lot of requests from our own customers."
"They have built an unbelievable restaurant operating system," said Peter Misek, a partner with BDC Capital's IT venture fund, which led TouchBistro's previous $17-million venture finance round last fall. "If they know what your sales are and what your employees are doing and what all your purchasing is, it's also an amazing repository of data for financial services. They'll expand increasingly into financial services and drive more value to customers and for their customers' customers."
Alex Baker, a partner with early TouchBistro investor Relay Ventures, said TouchBistro, which faces competition from San Francisco-based Revel Systems and Boston's Toast Inc. among others, has succeeded by optimizing its offering to restaurant owner-operators and their millennial-aged staff who are digital natives and use technology as consumers do. "They pick the thing up and know how to use it," he said. "It's very intuitive. TouchBistro understands how to market to customers more than most other companies in our portfolio. They use the customer base to try new ideas, understand what's working and make changes to product quality."
TouchBistro sells its software service for $69 per month for the first unit and also sells the hardware to restaurants, charging a narrow markup over its cost. The company has raised $45-million in venture funding to date.