Today, Lightspeed is announcing our Series A investment in Table22, a novel e-commerce enablement platform that helps the food and beverage industry unlock profitable new revenue streams and better monetize their brands.
Over the last decade, hundreds of billions in market capitalization have been created by enabling restaurants to serve food to customers in a more convenient way. While historically Americans spent equal amounts on food in and outside of the home, DoorDash, Uber Eats, and other delivery platforms have driven that ratio to 60/40 in the favor of restaurants, which in the U.S. alone produce $1.5 trillion in aggregate annual sales. To adapt to a digitally native consumer, merchants have been forced to adopt software more rapidly than ever before. Today, the majority of US restaurants have online reservations, POS, payroll, accounting, and more. Loyalty platforms have also become pervasive: 51% of US diners use at least one loyalty card, and some of the largest QSR chains like Chipotle have amassed tens of millions of monthly users in such programs.
Yet, for all the technological progress we’ve seen in hospitality in the last decade, merchant outcomes have not been fundamentally improved — especially among America’s ~500k independent operators. Indeed, many owner-operators say that business is harder than ever. A recent piece in the LA Times described an industry in crisis, quoting one operator as saying, “We can’t afford to be open. We can’t afford to be closed.” After the pandemic subsided, a litany of rising costs hit merchants across ingredients, packaging, labor, rent, and more. Much of these costs cannot be effectively passed onto consumers.
Food delivery promised a path to add new revenue, but not incremental profits, because 80% of delivery sales come during the 30% of restaurant hours where diners are already seated and the kitchen is highly utilized. Independent restaurants can yield up to 40% of their AOV on delivery purchases to the platform itself — decimating any achievable margin that might have been captured. The current set of solutions has put merchants in a “lose/lose” situation that has led to record high business closures, despite what is otherwise a relatively resilient US economy.
What merchants need instead are entirely new sources of revenue that generate meaningful incremental profits and let them build on the brand equity they’ve earned from their most loyal customers. Table22 has built the best solution for these merchants, extending their dining concept outside of the kitchen. Its platform draws on a unique mix of technology, fulfillment, and marketing superpowers to help merchants unlock an entirely new e-commerce workflow from their existing assets and fixed costs. Across 38 states, Table22’s merchant partners have leveraged the platform to launch totally new business lines, all consumed in the comfort of the end-customer’s home. Examples include retail wine subscriptions, family supper kits, value-packed butcher boxes, and more.
Table22 extends a merchant’s brand outside its four walls, all without cannibalizing in-house revenue. Consumers who purchase subscriptions, retail packages, and other offerings from Table22 merchants are more likely to spend in-house, as they feel a deeper sense of loyalty to and connectedness with their favorite local spots. Overall, Table22 empowers its merchants to tap into $1 trillion of incremental food & grocery spend for the first time, creating a positive sum game for merchants and Table22 itself. During our due diligence, one merchant told us that “using Table22 is like adding another week to each month,” with Table22’s best merchants boosting their monthly profit by more than 100% thanks to the platform.
Table22 has shown remarkable growth as a result of its compelling value proposition for merchants. Over the last year, the company grew 3x YoY, with 150% sales rep attainment and best-in-class 99.5% monthly logo retention among its core merchants. Table22 has also broadened the segments it serves to include not just restaurants, but butchers, bakeries, beverage shops, farms, cheesemongers, and more. We envision a future in which all food & beverage merchants use Table22 to reach their best customers, and similarly those customers look to Table22 to discover the best offerings in their local area.
At Lightspeed, we have made multiple investments in companies touching consumers via SMB distribution (what some call “b2b2c”), including Affirm (NASDAQ:AFRM), Archive, Balance, Faire, Flex, Seel, Tabs, and more. The most successful of these build a system that “grows the pie” for all parties involved, solving information asymmetries and tapping into net new consumer spend. Table22 is an excellent example of this principle and is really the first one we’ve seen applied to the hospitality market.
We couldn’t be more excited to partner with founder/CEO Sam Bernstein to help scale Table22 to the next level after getting to know him over the last 3 years. We’re also thrilled to be joined by our friends from Forerunner, Footwork, and Alt Capital, as well as a group of hospitality industry founders and leaders from the likes of Sweetgreen, BentoBox, Blue Hill Stone Barns, Scribe Winery, Square, All Day Kitchens, Casamata, SevenRooms, and more. Table22 is hiring leaders and doers across sales, product, engineering, and operations, and interested builders can learn more about open roles here!
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