This was a fun week if you’ve spent your career in restaurant technology. There is a turning-the-page shift that happened, all on Tuesday. And it’s fun to watch. To me the piece that has the biggest US impact seems to be the most misunderstood: DoorDash buys SevenRooms for $1.2 Billion dollars. WOW. Tectonic plates shifting in real time. So I thought to offer my analysis of acquisition and what it means for Reservation Wars 3.0 (yes, there have been two other battles here). Oh, and just because I’ve always wanted to write like Jimmy, all footnotes will be an ode to Jimmy’s TOTF.
What is SevenRooms
The reality is that we should kinda do this in the reverse, as in what is SevenRooms “not”. There are four essential components of a reservation platform - Marketplace, Reservations, Table Management, CRM. Resy and Opentable are all four - they have their own branded online channels (app and web), they can power 1st party reservations, and they have a software tool that combines table and guest management for the restaurants.
SevenRooms has three - all but the Marketplace. They can power reservations made by all the first party channels such as restaurant's website or more importantly, Google. And when you’re on Google, the consumer starts to notice (see pic 2).
The Deal
This DoorDash deal just makes sense to me. SevenRooms has always been a powerful CRM, one that would bridge the guest profile of multi-unit restaurant groups so that your regular at one spot is a regular everywhere. While they dominate the 3rd party ordering space, DoorDash has made it’s first party intentions clear with restaurants - it wants to power that too. So by adding SevenRooms to it’s “Platform” business, DoorDash has another thing to offer out to it’s full service restaurants: reservations and CRM.
The Real Deal
Remember how SevenRooms didn’t have a Marketplace. Whelp, DoorDash has 42 million active monthly users. For comparison, I estimate Opentable’s MAUs at 11 million (31 million diners sat a month divided by the average party size of 2.8 seats). So, to me, it cannot just be about more 1st party tech to restaurants. It must be about connecting the 31 million to some of the best restaurants in the world. It’s about becoming the SuperApp for mealtime, from grocery to reservations to delivery. It’s about making SevenRooms the third largest reservations platform - proper, with all 4 components - with the stroke of a pen. SevenRooms knew their value to DoorDash. And the $1.2B valuation could be justified by asking “what other reservation platform was available to buy?”. None.
The Questions
This opens up a lot of opportunities for DoorDash and some fears for restaurants. And caution from the other reservation platforms. And concern for some of the other restaurant tech companies. Instead of giving hot takes that are speculation, let’s just frame out what are the 10 major questions we should watch for in the coming months.
- Does DoorDash flip on reservations in their App? (must be a yes) so When?
- Will DoorDash use big cash incentives to move restaurants over to their platform, as many have speculated that Opentable and Resy has done? Will those deals be exclusive?
- Will DoorDash use SevenRooms as a giveaway to lock in high end restaurants for higher delivery fees? It’s likely that their customer overlap is lower than we think, so maybe more of a cross-sell opportunity.
- How does Resy or Opentable defend? Fighting a two front war will be costly to all involved and confusing to guests. SevenRooms always had the intention (and to some extent ability) to ingest reservations booked elsewhere. Might we see, finally, the uncoupling of Marketplace from the other three components of a reservation platform? Thus making bookings more like the hotel space?
- What will be UberEats’s response? Last month there was an OpenTable x UberEats partnership announcement that could have been a prefire. Seems thin on details to date so there must be a bigger response coming.
- What does Toast do here? Toast has been showing it’s hand in the past few quarters as they shift positioning to be a consumer brand (thanks Matty Matheson and Marea!). Toast has, I’m sure, incredible customer overlap with SevenRooms. Were they in the bidding war for the last of the reservation platforms?
- Is DoorDash going to make a push into point-of-sale? It seems to be one of the last major pieces of tech in the restaurant that they would not offer.
- What will Wonder do? Have to mention the new-kid-on-the-block[3] who owns a large delivery platform and has outwardly stated they want to be the mealtime SuperApp. Raise more and buy more companies seems like a safe bet.
- If the intent is to give restaurants more data about their customers, and unite this data under one roof, will DoorDash give restaurants the customer data about their delivery orders if the restaurant picks up the SevenRooms product? This blows my mind.
- Maybe the most important one: Will the loyal SevenRooms restaurants embrace DoorDash, bringing in a new, collaborative conversation between restaurants and “the third parties?” Can this acquisition finally be the olive branch this industry needs?
It's nice to end this thinking about a kumbaya moment for restaurants and tech companies, working in perfect harmony. But like I said upfront, tectonic plats are shifting, and that usually results in earthquakes and volcano eruptions. Like Samuel L. Jackson said in Jurassic Park in 1993, “Hold onto your butts.”
IYKYK. (See this is fun to do the Jimmy thing.)
By the way, I would be remiss if I didn't bring up John Meadow and the incredible LDV Hospitality team, owners of Scarpetta, who Branded helped raise their expansion funding last year. If interested in the funding, reach out to our investment team for more opportunities.
Joey was the cutest NKOTB, this is indisputable.
Which reminds me, Joe vs. the Volcano is the worst Tom Hanks movie of all time.
Fine, I put this Jimmy-ism in the main body. So what. It’s like the time I put on this B-side track from Tommy Tutone in 1984….ok I’m done :).
