A founder who has carved out a reputation for himself constructing merchandise to assist restaurants join higher with would-be diners has raised $50 million for his newest startup: a brand new tackle the concept of buyer loyalty.
Blackbird Labs has constructed a payments-meets-loyalty-meets-blockchain platform for restaurants to develop repeat enterprise whereas decreasing among the friction round transactions. Now, with some 1,000 restaurants signed up, CEO Ben Leventhal mentioned Blackbird plans to make use of the cash to launch its latest product, a cross-restaurant “points” service it’s calling Blackbird Club, in addition to to increase into extra markets exterior of New York (its headquarters), San Francisco, and Charleston, South Carolina.
Why Charleston, you ask? “Charleston punches above its class,” Leventhal mentioned in an interview with Ztoog. “It’s a great restaurant city for its size.” It additionally seems to be Blackbird’s equal of New Zealand for Meta, with Leventhal calling it “a good test market for us.”
Spark Capital, a brand new backer, is main this newest spherical, with participation additionally from Coinbase Ventures, Amex Ventures, and Andreessen Horowitz — three traders that backed Blackbird in its $24 million Series A in 2023. Valuation shouldn’t be being disclosed, however for some extent of reference, PitchBook notes that the startup was valued at round $124 million in that final spherical. The startup has raised $85 million to this point.
Coinbase and Amex are strategic names in that listing.
Amex acquired Resy, a reservations platform that Leventhal beforehand based, in 2019. The two firms — Resy and Blackbird — will not be integrating now, however “it’s fair to say we will,” Leventhal mentioned. Prior to Resy, the third restaurant-focused startup Leventhal based, the meals weblog Eater, was additionally acquired: it’s now a part of Vox. No plans on how or if that’ll result in a partnership deal.
Blackbird describes its Flynet fee service as a layer-three transaction protocol constructed on Coinbase’s Base. Diners can use it to pay for meals on the desk by way of Blackbird’s app, in addition to to redeem loyalty factors once they go to restaurants.
It’s value asking whether or not blockchain was strictly a needed a part of the combo. There are loads of different loyalty and fee applications available in the market, together with a quantity which can be direct opponents to Blackbird, like Punchh, Toast, and Lightspeed, constructed on extra standard monetary buildings.
“I don’t think it necessarily ‘has to be built on blockchain,’” Leventhal mentioned. “Visa’s network, more or less, was created using the same principles that we’re using for Flynet, and obviously they didn’t have blockchain.”
But Leventhal identified, too, that “there are a few things that we do believe that over time will be important opportunities, and those opportunities will be based on being on-chain.” These embrace how Blackbird and restaurants maintain buyer profiles and exercise, he mentioned. “Consumers will be able to continue to own that profile,” Leventhal instructed Ztoog. It additionally pertains to how Blackbird envisions its engagement with restaurants, he mentioned: Each restaurant buyer in the end will likely be a shareholder of Blackbird.
You may assume that, with two startups devoted to the consumer-facing aspect of the restaurant commerce, Leventhal may need had his fill of the enterprise. As it seems, he’s nonetheless hungry for extra.
Owning restaurants has lengthy been a difficult enterprise, however the financial system and altering client habits have particularly knocked the world of restaurants round loads in the previous couple of years.
Leventhal cites figures from the National Restaurant Association that observe that the common profitability of restaurants as of late is below 5%, in comparison with a median of round 20% within the early 2000s.
While platforms like Instagram and TikTok have turned the world into armchair foodies, producing legions of people that virally flock to the newest and coolest cafe, they’re doing this amid a time of quickly declining margins and heightened worth sensitivity. These are areas which can be solely going to get harder if the U.S. actually locks down on its newest tariff hikes.
“There is a disconnect in the restaurant industry between the popularity and the intensity of consumer love for restaurants and ultimately the profitability of the industry,” he mentioned.
That disconnect, in fact, in startup pondering means alternative.
“The restaurant industry is made up of millions of local, small business owners around the world,” Arianna Simpson, a basic companion at a16z, instructed Ztoog over e mail. “Those restaurants are at the mercy of tech platforms that can charge a large, and often growing, percentage of a restaurant’s margin.”
Simpson believes that is particularly the place blockchain can play a task: bettering that margin construction. “Ben’s vision is for a network that is owned by the restaurants and the diners themselves, which is something that only blockchains enable,” she mentioned, including that Blackbird is already saving its restaurant prospects 3-4% in fee processing charges.