Running a restaurant is hard. Very hard. Rising material costs (food and labor), competitive markets, fickle customers, and perishable inventory make for an almost impossible business model. Making matters even more challenging, restaurant operators are mostly flying blind when it comes to data, making decisions on everything from suppliers to menu prices without the data needed to inform and optimize their choices.
Today we are announcing a new seed investment into a software company called xtraCHEF, which uses mobile camera technology coupled with high accuracy OCR to process invoices for restaurants and other food service establishments. The company has grown rapidly from its launch 14 months ago and now services 1200 restaurants across the country.
On the surface, this investment may seem like an unusual investment for ValueStream, but as with most high-growth opportunities, it comes down to data, which can be highly valuable in a variety of ways. Restaurants, like any other company, have to manage their corporate finances – securing loans, managing P&Ls, and planning for multi-year growth. Unit economics are a key component of strategically managing these finances, and yet only the biggest hospitality groups have the staff to capture and calculate this kind of information on an ongoing basis. For the rest, the necessary data is locked in paper invoices from hundreds of vendors, leaving restaurant operators to rely on rough estimates to plan their pricing and without insight into wholesale pricing intelligence to effectively negotiate with vendors.
xtraCHEF allows restaurant operators to capture pricing data at the line item level, enabling better cost intelligence. Further, when aggregated across metropolitan areas, this data can begin to facilitate superior market intelligence on wholesale food and agriculture pricing – a notoriously opaque market.
With better data on wholesale food pricing and consumption, restaurants can begin improving their financial management, which will in turn unlock new opportunities for financing, supply chain management, and procurement. We look forward to working with the xtraCHEF team to see where their data can take the industry.