Mobile app Seated, which launched in 2017, began as a platform that rewarded users with perks like gift cards for dining out with one of its restaurant partners in a handful of major cities.
Amid the pandemic, the past six months have forced the startup to expand much faster than originally planned. It’s pivoted to layer in pickup and delivery orders and event bookings into its digital offering, buoyed by $30 million in new funding and its August acquisition of VenueBook, a reservations app for private events.
Seated now bills itself as the only app offering all three services in one comprehensive platform, serving the crisis-challenged restaurant sector a revenue stream from multiple sources.
Though users can make restaurant reservations through the Seated app, it’s more of a marketing tool than a player in the increasingly crowded electronic reservation book (ERB) software market, with big names like OpenTable, Resy and Yelp Reservations. Seated works instead in coordination with the restaurant’s booking platform to fill empty tables and facilitate takeout orders, incentivizing customers with an assortment of rewards from brand partners like Amazon, Sephora and Starbucks.
Now with many restaurants crippled by the effects of the pandemic, Seated co-founder and CEO Brice Gumpel sees the brand playing an important role in driving traffic and encouraging new customer relationships that will continue long after everyone returns to mask-free indoor dining.
“As we look beyond COVID, whenever that ends up being, we still want to help restaurants as much as we can,” he said.
While COVID has obviously been extremely challenging and difficult for our restaurant partners and us, it has forced us to make our platform more robust.
Brice Gumpel, co-founder and CEO, Seated
Pivot
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Navigating a post-pandemic food-service landscape
It’s an undeniably tough time to be in the restaurant or hospitality business. Even as restaurants in major U.S. cities begin reopening for indoor dining, seating capacity is mostly limited and subsequently, so is the revenue. According to the National Restaurant Association, restaurants suffered an estimated $120 billion loss over just the first three months of the pandemic.
“We asked our restaurants how we could be most helpful, and the answer was quite clear,” Gumpel told CO—. Forced to close in-house dining, takeout has become a new priority and a challenge for restaurants to solve. For restaurants, particularly at the higher end, where takeout and delivery were often an afterthought, new attention had to be paid to presentation and customer experience.
Seated’s rewards program quickly expanded to include pickup and delivery when the pandemic hit, competing with players like DoorDash and Grubhub. Then, with the acquisition of VenueBook and its network of event planners, the brand was able to help restaurants maximize revenue though one more channel, all the while expanding its reach beyond New York, Boston, Atlanta and Chicago to include Denver, San Francisco and the Bay Area, as well as the Washington, D.C. region.
Though it may seem like an inopportune time to invest in events as many states’ regulations cap public gatherings at a certain number of people, Seated is angling to appeal to the families and “pods” of friends who are looking to gather somewhere out-of-home safely, Gumpel told CO—.
“It’s actually their most profitable revenue stream, so they really need to make sure coming out of COVID that their private event spaces are booked and they’re doing as much volume as possible.”
How a dynamic rewards algorithm helps fill empty seats
Digital has been an invaluable traffic driver to restaurants throughout the pandemic, as well as a pivotal path to delivery sales. According to the NPD Group, the percent of traffic from digital transactions increased from 5% in January 2020 (pre-crisis) to 13% in July 2020.
And many restaurants are reliant on digital marketing and online ordering tools like Seated to maintain future growth, Gumpel said. “The folks that run restaurants are hospitality and culinary experts, they’re typically not marketers or pricing experts,” he said. “We let them focus on what they do best, which is provide great food and great hospitality, and we help them fill those empty seats.”
For Seated users, the incentive is clear: For every meal eaten in a Seated partner restaurant, diners can upload a photo of the receipt and receive a reward in the form of credit to shop with one of the app’s brand partners. The rewards percentage is dynamic, determined by an algorithm that factors in everything from the weather and time of day to the number of seats and type of cuisine.
For restaurants and brand partners, the relationship is symbiotic. For a flat monthly rate paid to the app, restaurants are able to fill seats they might not have otherwise; meanwhile, the brands get a new customer.
Catering to future foodies
Gumpel and his team are anxious to get back to business as usual, helping restaurants maximize profits with as many revenue streams as possible. He’s optimistic about the future of hospitality, which he believes is “the last form of social interaction that can’t be digitized.”
Other industry experts agree with Gumpel’s prediction that restaurants will inevitably come back stronger than ever. “Although we’re stuck in neutral for now, I firmly believe there is still a lot of upside recovery for restaurants,” writes NPD Group food advisor David Portalatin. "My belief is rooted in one reality: consumers are not willing to give up on the convenience and experience a restaurant meal brings to them and their families regardless of the barriers.”
Going forward, Seated is focused on bringing all three of its new products together cohesively. “If we can help get that pickup or delivery consumer to also book a dine-in reservation or a private event, that $50 or $60 customer can turn into a multi-hundred-dollar customer for a restaurant,” Gumpel said. “We need to be quite nimble and very product driven to figure out how to create those upselling or cross-selling opportunities.”
According to Gumpel, the company is “profitable on every individual transaction,” but as a startup, “we’re not profitable on the whole just yet.”
“While COVID has obviously been extremely challenging and difficult for our restaurant partners and us, it has forced us to make our platform more robust,” he added. “As we come out the other side of this, we are in a better position to help restaurants than ever before.”
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