Dining Goes Digital: Why We Invested in Mr. Yum
The Market Opportunity
To say that the restaurant industry has changed over the last two years would be an enormous understatement. COVID-19 has catalyzed touchless ordering, on-demand delivery, and widespread digitization in a way that evolutionary adoption simply couldn’t. Self-service ordering and customer service was once a tool relegated just to quick-service restaurants (QSRs), but our public health concerns have radically increased the number of restaurants that can and MUST adopt these technologies to survive.
Increased demand for to-go / delivery orders and the preference for low-touch, fast-casual restaurant ordering have accelerated the need for end-to-end capabilities that enable digital ordering. In the U.S. alone, mobile ordering represents a $694 billion opportunity, but we are still in the early phases of realizing this market potential. Source: IBISWorld market report on coffee, street vendors, fast food, chains, single location restaurants, and bars/nightclubs.
Noah Glass, Founder & CEO of Olo (the restaurant industry’s digital ordering pioneer), captures the vision of this market opportunity well in his words, “We’re well on the way to digital entirety: digital across all service models (delivery, drive-thru, takeout, and on-premise) to facilitate 100% of restaurant transactions. Consumers across the board are embracing digital ordering [in] all restaurant occasions as the on-demand world evolves.”
Enter: Mr. Yum
In the U.S., many of us have experienced the 1st generation approach to digital ordering, which mostly started by scanning an image called a quick response (QR) code with our mobile phone’s camera. Spoiler alert…these codes have been around since the mid-90s, but just not used very broadly. If scanning the QR code works (often it doesn’t), we’re typically prompted to open a corresponding website (hopefully mobile optimized) and eventually a static menu, often in PDF format. How very 2006.
When we learned about Mr. Yum from our good friend Sheel Mohnot at Better Tomorrow Ventures, we were immediately intrigued by the novelty of their approach, the scale they had already reached in several Australian cities, and their early progress in LA and London. We were blown away by the product, which includes an easy-to-use dynamic menu creation utility, intelligent ordering/reordering capabilities, and a comprehensive, yet slick checkout experience with every payment option you can imagine (including Buy Now Pay Later!).
Even the most progressive next-gen POS players will only have as much coverage as their install base provides. This is where Mr. Yum shows a compelling growth case; it can be used in tandem with all of the most popular POS systems and is relevant to the broadest segment of merchants because of its many use-cases. Mr. Yum also has full-stack payment capabilities, positioning them to capture more of their merchants’ payment opportunities as people increasingly use digital ordering.
Noah reinforced the notion that a truly end-to-end solution was overdue in this space. “The restaurants that best operationalize a full digital stack to build and protect relationships with their customers will be the winners of the restaurant industry’s digital transformation,” he said.
Our excitement grew tremendously when we met Kim and Adrian for the first time over zoom. The chemistry of our shared beliefs about how the restaurant industry was evolving was powerful and led us to schedule an outdoor, in-person follow-up meeting (something we hadn’t been doing very much of, given the pandemic) less than a week later. We were as impressed by the character of this team as we were by their vision and passion for the mission in front of them.
As we sat around the Embarcadero sidewalk and went well past our allotted meeting time, we traded exciting ideas for how the industry might unfold and ways in which we (Commerce Ventures) might help the company with partnerships and distribution. On the walk back to the office, the excitement of our group was obvious — and we all knew we wanted to invest.
COVID-19 has taken a lot from our society, but Mr. Yum reminds us of the gift we can receive when we’re forced to change and adapt. What would have continued to be a slow, painful crawl to the inevitable queue-free, digital ordering and self-service experience we all so desperately want at restaurants is now a large and rapidly growing market opportunity for a better, smarter restaurant OS that delivers on the experience consumers deserve. You have only to look at the hugely successful IPOs of Toast and Olo to know that this is a space whose time has come.
We’re so excited and grateful to be partnering with the whole Mr. Yum team as they help unlock the future of this industry. Thank you for having us along for your journey!
