Blackbird Labs, a hospitality tech firm whose platform helps eating places keep in contact with company and incentivize them to dine out extra regularly, at present introduced that it raised $24 million in a Series A spherical led by Andreessen Horowitz with participation from QED, Union Square Ventures, Shine, Variant and others and restaurant teams Quality Branded, Rustic Canyon Group, Soulva and Brooks Reitz.
Founder and CEO Ben Leventhal says that the proceeds, which carry Blackbird’s complete raised to $35 million, shall be put towards serving to Blackbird scale its operations.
“The restaurant business model is broken,” Leventhal informed Ztoog in an e mail interview. “It can be really expensive to remain at the top of a sea of competition. Operational costs are also at an all-time high, and restaurants need revenue. There’s only two paths forward: creating new revenue streams or creating regulars who’ll want to come back.”
To Leventhal’s level, a 2022 survey from the National Restaurant Association (NRA) discovered that 54% of restaurant homeowners needed to cut back the scale of their dishes in response to rising meals prices. An extra 47% of the respondents mentioned that they needed to enhance menu costs, as nicely.
And restaurant failure charges aren’t precisely declining. Restaurants have about a 20% success charge, based on the NRA, with about 60% failing throughout the first yr and 80% failing inside 5 years of opening.
Leventhal is probably greatest recognized for co-founding Eater, the meals and drink publication (acquired by Vox in 2013), and Resy, the restaurant reservation service (acquired by American Express — which can also be a Blackbird investor — in 2019). He got here up with the thought for Blackbird within the early days of the pandemic after noticing that eating places had been discovering progressive methods, like rolling out clothes traces and promoting pancake combine, to maintain prospects engaged.
“I was struck by the ingenuity of restaurants, who used their brands and audience to create sales streams that weren’t food,” Leventhal mentioned. “This led me to start thinking about other ways restaurants could combat the serious business challenges of declining margins and eroding direct customer relationships.”
Blackbird is designed to assist eating places each amplify their attain and reward company, Leventhal says. How? By giving operators a solution to not solely greet diners by title, however be taught their private preferences, together with after they final dined out, their most popular seating and their likes and dislikes.
“With this knowledge, restaurants can serve guests in an unparalleled fashion, making them feel like they’re very important and appreciated regulars, and reward their ongoing patronage with free and appreciated perks,” Leventhal mentioned.
Blackbird does this by having diners contact their telephone to a proprietary NFC reader to create a membership or “tap in.” Members can “level up” with every subsequent check-in, Leventhal says, unlocking advantages like off-menu gadgets and a direct message concierge.
Blackbird diners additionally earn digital foreign money every go to, which will be spent on gadgets (e.g. an entree or drink) or tallied towards membership rewards with eating places through Blackbird’s smartphone app. There’s a web3 part; the foreign money is technically a cryptocurrency. Blackbird partnered with Privy, a crypto pockets administration startup, to supply embedded wallets so customers can enroll with a telephone quantity and handle balances alongside their Blackbird membership.
On the backend, Blackbird captures a vary of diner information on eating places’ behalves — together with eating historical past, birthdays and house addresses — so eating places can goal diners with promotions. Restaurants may also use Blackbird to message “top-tier” members with entry to a devoted help line, letting them know when a reservation is made accessible, for instance.
Some prospects may not really feel snug sharing that form of behavioral information with eating places. But Leventhal insists that Blackbird is dealing with information assortment in a “transparent” method, going as far as to offer diners management over which particular info (e.g. eating historical past) eating places see.
Through Blackbird, eating places can promote paid memberships to company, as nicely. Leventhal says that one restaurateur, a Jewish bistro in Brooklyn, bought founding Blackbird memberships — full with perks together with customized bomber jackets and a house dinner cooked by a personal chef — as a crowdfunding software earlier than it even opened.
The idea of selling paid memberships within the restaurant business — an more and more frequent apply — is unavoidably polarizing. For most (together with this reporter), eating out is pricey as it’s, and having to pay to chop the road to order a sizzling new desk or obtain higher remedy doesn’t precisely really feel equitable.
Leventhal, although, assures me that the objective isn’t to foster extra ultra-exclusive eating golf equipment however to offer diners at eating places “of all sizes,” notably small impartial eating places and restaurant teams, a further solution to help the venues they love.
“With Blackbird’s technology platform, we’ve built a unique, intimate and symbiotic relationship between restaurants and their regulars,” he added.
The query is, can diners be persuaded to make use of Blackbird within the first place? A 2023 ballot by William Blair discovered that almost all of consumers don’t decide into restaurant loyalty packages, and that solely 35% think about loyalty packages in deciding which eating places to go to.
Leventhal believes that they’ll. And he has some information to again it up: since launching a number of months in the past, New York City-based Blackbird — which has 20 full-time workers — has signed up round 80 eating places together with chef David Chang’s Momofuku chain, 22 of that are actively utilizing Blackbird.
“There’s no one out there that does exactly what we do,” Leventhal mentioned. “We admire the loyalty programs built by Starbucks, Sweetgreen and more, but we’ve created Blackbird to be an easily accessible loyalty platform, empowering restaurants to have an unparalleled ability to engage customers, reward returning patrons and drive new revenue streams.”
Blackbird’s future plans entail rolling out a referral program that’ll let diners invite mates to grow to be members at a particular restaurant for unique dishes. Beyond this, Blackbird intends to experiment with its cryptocurrency, doubtlessly providing membership upgrades, rewards for exercise like tap-ins and methods to pay for elements of — or complete — meals.
“Those at the forefront are trying to figure out how to achieve a broader diversity of revenue,” Leventhal mentioned. “Blackbird is designed to be this solution for restaurants — driving loyalty, opening up for interesting revenue plays and incentivizing customers to return again and again.”