Chinese technology group Tencent led a $ 96 million investment round in restaurant technology company Flipdish, which increased its value to $ 1.25 billion – more than 10 times in its previous funding round last year.
Flipdish offers technology for creating food ordering programs, a business that flourished during the pandemic when many restaurants found they had to create takeaways from scratch.
The deal highlights investors’ interest in companies serving the fast-growing home delivery sector, which has benefited consumers who have turned to online orders over the past two years during successive restrictions.
Thousands of restaurants signed up to delivery programs like Deliveroo and UberEats during the pandemic, but Flipdish claims that this model takes restaurant profits with high commissions, saying it provides a way for businesses to avoid using the larger platforms.
Delivery aggregators said commissioning rates on marketing and technology are being spent to help them increase demand for restaurants.
Conor McCarthy, Flipdish’s co-founder and CEO, said the relationship between restaurants and delivery collections has become more “dangerous” since compilers began creating their own food brands and competing with restaurants for orders.
Dublin-based Flipdish has around 7,000 restaurants using its technology in 25 countries, compared to more than 50,000 restaurants using Deliveroo in the UK. But McCarthy said “a decent subset” of Flipdish’s customers generally stop using delivery aggregator services because of the high cost.
Flipdish charges restaurants a 7 percent fee per order, compared to up to 30 percent at Deliveroo. The Irish company tripled its revenue in 2020 and sales in 2021, but refused to give specific figures.
Deliveroo said its platform has enabled restaurants to “reach customers they would not otherwise be able to reach through delivery, while providing a range of services to help restaurants grow”.
In the latest round of funding, Tencent paid about $ 80 million for a less than 8 percent stake in the business, while McCarthy and his brother and co-founder James retain control of the board.
Tencent, one of China’s largest companies and a productive investor in home delivery services, also supported the German food delivery company Gorillas and is a major shareholder in the Chinese delivery program Meituan.
McCarthy said: “We are looking forward to choosing the brain of Tencent, but at the same time we are running the business the way we have been doing for the past seven years. We do not need Tencent’s expertise to grow. ”
The funds will be used to expand into markets where it is already operating, including the UK, Ireland, the US and France, and to hire 700 staff this year. It currently has 320 employees.
Simon Stenning, an independent food sector analyst, said that technology companies like Flipdish may struggle to compete with people like Just Eat, Deliveroo and UberEats because the big platforms are now “embedded” in restaurant business models.
“Having your own application looks great [and] sounds great, but consumers do not want to use it. Having multiple brands on one application that works for the consumer is here to stay. ”