Our Investment in ResQ: Supporting Back of House Restaurant Operations
Over the last decade, our fund has invested in all parts of the value-chain for restaurants, an industry that generates $1T+ in top-line revenue in North America alone. Most of the innovation in this space has been around front-of-house solutions such as delivery, POS, and reservations. Back-of-house operations have largely been ignored, with over one million North American restaurants choosing to manage this manually.
ResQ aims to bring automation and efficiencies to this underserved part of the market by building an end-to-end repair and maintenance platform and marketplace for restaurants. Their software lets restaurants manage all of their services in one place while providing data and insights to empower better decision making. As a result, they increase fix rates and reduce downtime for restaurants. For vendors, the platform offers job and revenue predictability with virtually no customer acquisition cost. As a result, ResQ has gained significant traction in the market and is trusted by over 3,000 restaurants, including KFC, Taco Bell, Pizza Hut, Wendy’s, Arby’s, The Keg, and Tim Hortons. In addition, by leading with repair and maintenance, ResQ is well-positioned to offer additional products for restaurants, including embedded fintech offerings.
We’re excited to announce our investment as a part of their $7.5M seed round alongside our friends at Homebrew, iNovia, Maple, Polar, and many notable angels. Read about it on TechCrunch and BetaKit.
Our team has known Kuljeev (KJ) Singh, CEO, for many years through his past life as a VC. He has unique insights into the problem as a part-owner of a restaurant franchise and has spent a lot of time uncovering pain points with vendors.
We believe the dynamics between supply and demand lend themselves very well to the types of vertical SaaS-enabled marketplaces we like to invest in. There are tremendous operational inefficiencies and undifferentiated heavy lifting that both sides engage in to facilitate transactions.
Demand Side: Restaurant Corporations and Operators
- There is no centralized mechanism to manage facility maintenance and repair at a corporate, franchise and operator level.
- Restaurants are often reactionary, routinely underinvesting in maintenance and instead opting to fix things once they break. Due to the high opportunity cost of equipment downtime, a lack of pricing power/transparency, and the higher cost of repairs (vs. maintenance), restaurants' already thin margins are unnecessarily eroded.
- Staff routinely spend >5 hours coordinating and supervising a single repair and are often forced to manage multiple individual vendors. Key staff must leave their core duties (i.e. customer service, revenue generation) to address these issues.
- A disconnect between corporate best practices, compliance, insights and purchasing power and how restaurant operators could leverage this
Supply Side: Vendors and Service Providers
- Vendors typically engage in very little to no job planning. As a result, they are not well equipped to manage expectations with the various stakeholders, especially when it comes to ongoing communication surrounding jobs.
- Regional vendors lack brand, marketing competence, and the scale to acquire customers efficiently.
- The industry lacks integrated tools to deal with invoicing, collections, bad debt, other administrative functions.
- Job scheduling/revenue is unpredictable—the lack of information for the equipment to be repaired leads to lower first-time completion rates.
ResQ aims to create value for both sides through its SaaS-enabled marketplace. Their supply-side application allows vendors to provide a superior, more reliable experience through real-time communication, data analytics and asset tagging. The demand-side application provides restaurant operators with streamlined workflow, better compliance and reporting, and greater purchasing power than negotiating independently.
Since starting the company, KJ has recruited an experienced and high-potential team well suited to tackle this problem. This team is incredibly agile and resilient, having overcome many macro events that directly impacted their business. Despite the global pandemic spurring industry-wide industry-wide lockdowns, ResQ managed to 7.5x their business over the last 12 months. They continue to show strong dollar/logo retention across all geographies. Additionally, they reinvented their go-to-market strategy now have a flywheel that gets buy-in at the operator and corporate level, allowing them to expand across multiple geographies simultaneously.
We believe there’s lots of whitespace and opportunity to bring software solutions to overlooked industries like this. We couldn’t be more thrilled to partner with the ResQ team as they continue to build and make the lives of those who interact with the platform better.
If you’re interested in contributing to this mission, they’re hiring for many roles.