The legendary American novelist Samuel Clemens — far better known by his nom de plume Mark Twain — was once famously called upon to debunk a morbid outbreak of fake news suggesting that he had died on a trip to London, riddled with debts and disease. “The reports of my death,” Twain wittily warned a reporter poised to write his obituary, “are an exaggeration.”
There was something of a Mark Twain twang about investigating the curious disappearance of Eatsa, a partly-automated healthy fast-food chain where robots rustled up nutritious bowls of quinoa.
Reports in the San Francisco Eater seemed to tell a classic tale of Ozymandian startup hubris. One headline from 2016 had shown signs of proud ambition: ‘Eatsa Robots Now Hard at Work in the Financial District, Faster Than Ever’. But by 2019, things seemed to have crumbled in spectacular fashion: ’Automated Quinoa Restaurant Owes Thousands in Unpaid Rent, Says Landlord.’ Another Bay Area publication, the SF Gate, added to that theory of decline and fall. The SF Gate reporter Alix Martichoux — in an article titled ‘I tried to eat at all the Bay Area robot restaurants. They were almost all broken.’ — paid visits to various dysfunctional robotic eateries before alighting on two Eatsa branches. “In what was starting to become a full-on farce,” Martichoux wrote this July, “I find the windows blacked out with a sign reading ‘UPDATE IN PROGRESS’ on the front doors. Their second location, a few blocks away, looks exactly the same.”
The writing, it seemed, was on the wall. And by July 22 this year, Eatsa’s founders clarified that no such update would ever be in the offing: Eatsa was dead. And so Rest in Peace, quinoa robots … wherever your unmarked grave may be. But can we call the company’s death itself “an exaggeration”?
Twain would perhaps chuckle — because indeed we can. The company behind the Eatsa restaurant chain lives on under a new guise, rebranded as Brightloom, and refocused on providing software and hardware solutions to other restaurant chains seeking to digitize and automate their services. And that is not simply fighting talk akin to that of a Monty Python knight with his arms chopped off; Brightloom’s coffers have been handsomely and healthily replenished with a $30 million funding round led by family office Tao Capital Partners and Valor Equity Partners, along with Starbucks licensees, including Alshaya Group and Alsea.
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$30m Series B led by Tao
In a statement sent to AFN, the management at Brightloom explained what was behind its change of corporate identity. “The company will offer a complete end-to-end, cloud-based software as a service platform that weaves together a number of digital solutions for restaurant brands, allowing any restaurant to provide its own best-in-class mobile engagement, loyalty, and omni-channel digital ordering offerings to its guests.”
Sound vague? In further correspondence with AFN, Brightloom CEO Adam Brotman got more specific, outlining plans to build “a software and hardware platform that focuses on simplifying the total guest journey – from the time of order and payment, through the kitchen, all the way to pick-up as well as after the in-store experience with digital rewards and offers.”
Brotman, who formerly held various digital-related senior roles at Starbucks before going on to be ‘Chief Experience Officer’ and Co-CEO of the clothing line J Crew, was anything but wistful about shuttering their healthy fast food brand, describing a discreet yet steady transition over the past few years “from restaurant operator and technology provider to strictly restaurant technology provider.” In order to successfully pivot, he says, “we decided to invest all of our resources into our technology and close our locations.”
The fingerprints of that transition can be seen through various deals. Over the last year or so, Chicago restaurants Wow Bao and Rōti Modern Mediterranean both embraced Easta’s digital shelving system. On July 23, day two of being called Brightloom, further strong signs came from PizzaHut, which announced it was piloting a digitally-powered pizza pickup system designed by Brightloom, with plans to roll it out nationally in 2020.
These sorts of national restaurant owners have been interested in the technology from the beginning, recalls David Friedberg, CEO of the SF-based incubator and investment company the Production Board that helped create Eatsa in 2015. Friedberg, who was also CEO of the agtech unicorn Climate Corp, described how he and Eatsa’s management team had been having “so many conversations to licence parts of our hardware and software to other restaurant chains,” that by late 2017, they realised that “more than half the staff at Eatsa were finding real estate, managing the build-out of restaurants, hiring staff to work in those restaurants.” There was on one side, he notes, “a tremendous resource investment in building and running this restaurant business.” Meanwhile, he adds, “these opportunities with other restaurant brands seemed like really compelling, good economics for us.”
Come Flywheel me
One of these, Friedberg says, was the coffee giant Starbucks. In a statement also published on July 22, Starbucks confirmed it was “granting Brightloom a software license to select components of Starbucks proprietary digital flywheel software.” (In connection with this licensing agreement, Starbucks will take an equity stake in Brightloom and will receive a seat on the company’s board of directors.)
Brightloom, the statement went on, “will combine its existing technology assets with software licensed from Starbucks industry-leading digital flywheel. The combination will lead to the development of a cloud-based software solution for the restaurant industry that will connect customers to their favorite restaurant brands – particularly valuable given the recent hypergrowth of mobile ordering and 3rd party delivery platforms.” Starbucks CEO Kevin Johnson describes this as part of an agenda at the company to extend “relevant customer experiences from brick-and-mortar to a digital-mobile customer connection.” Boasting of strong results and greater digital customer loyalty, he expressed excitement at applying these innovations “toward an industry solution that elevates the customer experience across the restaurant industry.”
An industry-wide solution would indeed be a major prize. Just take a look at the 2019 Self-Service Kiosk Index compiled by Tillster, specialists in the development of digital ordering solutions. The index claims self-service kiosk market will reach an estimated $30.8 billion by 2024, a conclusion drawn after surveying 2,000 Quick Service Restaurant (QSR) and fast-casual customers with the help of the research firm SSI. Equally positive notes are sounding from the National Restaurant Association’s 2019 State of the Restaurant Industry Report, which claims more than eight in ten restaurant operators believe technology provides a competitive advantage to their business. “Now more than ever, restaurants must provide their guests effective technology solutions if they want to compete for a piece of the $863 billion dollars in sales expected at restaurants in 2019,” says Hudson Riehle, Senior Vice President of the Research and Knowledge Group for the National Restaurant Association. “Our data shows a majority of restaurant customers rely on technology, in some capacity, to decide how and where they will get their food.”
A slice of market share, to go!
That said, the restaurant industry may have other tech solutions that will doubtless nibble away at Brightloom’s potential market share. In the same way that Eatsa’s pivot to Brightloom seemed suddenly possible, similar-minded startups could also be plotting to leap into this growing space. Delivery apps like Glovo, Deliveroo or Uber Eats are potentially well placed to pivot gracefully in a similar direction. From the corporate catering angle, startups like EatClub — which is owned by the celebrity chef Marco Pierre White and announced its $2 million series A funding round as well last week — could, for example, also potentially make that sort of jump.
Check out Standard Cognition and its $35m Series B
Another potential transition could come from the automated checkout company Standard Cognition, which last week announced its $35 million Series B funding round. The round — led by the EQT Ventures fund, with participation from existing investors Initialized Capital, CRV and Y Combinator. That round brings its total funding to over $86 million, and leaves Standard Cognition valued at a cool $535 million. A budding competitor for Brightloom? Perhaps not yet; currently the company is still focused on its mission of automating check out systems at retail stores; it operates its own 1,900-square-foot retail store in the San Francisco Bay Area where it sells food, cleaning supplies and general household and convenience store items. But will this one store at a time approach really be the way it become a competitor to giants like Amazon? After all, it has developed a system where you use a Standard Checkout mobile app to check-in, and then everything a user carries out the door is identified along with the user, and they are billed automatically. That could morph easily into software as a service, and a leap into restaurants does not seem so hard or distant.
Robotic retail on the scrapheap?
As for competition from Brightloom’s former ecosystem of roboticized restaurant owners, it does beg the question of whether this transition sets a precedent. Will others also have to move on from running their own operations to leasing their technology to incumbents? Can they scale successfully, opening up restaurant after restaurant themselves? Or are we on the verge of seeing the disappearance or transition of robotic food and drink brands like Truebird, Cafe X, Blendid, Ratio, Alleycorp, Chowbotics, Pazzi, Spyce, Zume, or Miso Robotics?
Of the potential competition from the big players building out and leasing their own systems, the tide has already been turning to mobile-led ordering and purchasing solutions. According to the catering news site Restaurant Dive, Panera Bread was an early mover in the self-payment kiosk space, while McDonalds is already “delving deep into self-order kiosks as part of its Experience of the Future remodels (…) Overall, the brand is investing heavily on technology, recently spending $300 million to purchase app developer Dynamic Yield in addition to its $6 billion investment into (its) tech-centric remodels.”
Brands like Shake Shack and Subway are on the verge of a revamp in this direction, and might go their own way in designing their respective ordering systems rather than turn to Brightloom; Taco Bell has aimed to install self-order kiosks in all of its restaurants by the end of 2019. No word as to who is designing that. One early adopter of self-order technology, Sonic Drive-In has meanwhile been full of big talk about its own inroads in AI development.
Brotman, however, reckons that building your own unique digital flywheel may be an expensive and time-consuming endeavour, perhaps achievable for industry giants but not for the small players. “It involves the combination and seamless integration,” he says, “of new technology development, 3rd party integrations, an understanding of loyalty economics, analytics/data science, digital marketing and UX design. For brands to build that themselves can mean millions of dollars, and teams of experienced subject matter experts. Up until now, only a select few brands could afford, or knew how to put this together.”
“But we believe we can change that,” he adds, “because our platform will be in the form of a simple and affordable software as a service offering, it has the power to truly level the playing field.”
In terms of fending off the competition, Brotman can at least take consolation in another line from Mark Twain: “The secret of getting ahead is getting started.”