Resy and Eater co-founder raises $24M for Blackbird, a restaurant loyalty platform

Blackbird Labs, a hospitality tech firm whose platform helps eating places keep in contact with friends and incentivize them to dine out extra continuously, at present introduced that it raised $24 million in a Sequence A spherical led by Andreessen Horowitz with participation from QED, Union Sq. Ventures, Shine, Variant and others and restaurant teams High quality Branded, Rustic Canyon Group, Soulva and Brooks Reitz.

Founder and CEO Ben Leventhal says that the proceeds, which carry Blackbird’s whole raised to $35 million, will likely be put towards serving to Blackbird scale its operations.

“The restaurant enterprise mannequin is damaged,” Leventhal advised starcrypto in an electronic mail interview. “It may be actually costly to stay on the prime of a sea of competitors. Operational prices are additionally at an all-time excessive, and eating places want income. There’s solely two paths ahead: creating new income streams or creating regulars who’ll need to come again.”

To Leventhal’s level, a 2022 survey from the Nationwide Restaurant Affiliation (NRA) discovered that 54% of restaurant homeowners needed to cut back the dimensions of their dishes in response to rising meals prices. An extra 47% of the respondents mentioned that they needed to improve menu costs, as properly.

And restaurant failure charges aren’t precisely declining. Eating places have a few 20% success price, in keeping with the NRA, with about 60% failing inside the first 12 months and 80% failing inside 5 years of opening.

Leventhal is probably greatest identified for co-founding Eater, the food and drinks publication (acquired by Vox in 2013), and Resy, the restaurant reservation service (acquired by American Categorical — which can be a Blackbird investor — in 2019). He got here up with the thought for Blackbird within the early days of the pandemic after noticing that eating places had been discovering modern methods, like rolling out clothes traces and promoting pancake combine, to maintain clients engaged.

“I used to be struck by the ingenuity of eating places, who used their manufacturers and viewers to create gross sales streams that weren’t meals,” Leventhal mentioned. “This led me to start out interested by different methods eating places may fight the intense enterprise challenges of declining margins and eroding direct buyer relationships.”

Blackbird is designed to assist eating places each amplify their attain and reward friends, Leventhal says. How? By giving operators a method to not solely greet diners by identify, however study their private preferences, together with after they final dined out, their most well-liked seating and their likes and dislikes.

“With this data, eating places can serve friends in an unparalleled vogue, making them really feel like they’re crucial and appreciated regulars, and reward their ongoing patronage with free and appreciated perks,” Leventhal mentioned.

Blackbird does this by having diners contact their cellphone to a proprietary NFC reader to create a membership or “faucet in.” Members can “degree up” with every subsequent check-in, Leventhal says, unlocking advantages like off-menu gadgets and a direct message concierge.

Blackbird diners additionally earn digital foreign money every go to, which may be spent on gadgets (e.g. an entree or drink) or tallied towards membership rewards with eating places by way of Blackbird’s smartphone app. There’s a web3 part; the foreign money is technically a cryptocurrency. Blackbird partnered with Privy, a crypto pockets administration startup, to supply embedded wallets so customers can enroll with a cellphone quantity and handle balances alongside their Blackbird membership.

On the backend, Blackbird captures a spread of diner knowledge on eating places’ behalves — together with eating historical past, birthdays and residential addresses — so eating places can goal diners with promotions. Eating places also can use Blackbird to message “top-tier” members with entry to a devoted help line, letting them know when a reservation is made out there, for instance.

Some clients won’t really feel snug sharing that kind of behavioral knowledge with eating places. However Leventhal insists that Blackbird is dealing with knowledge assortment in a “clear” method, going as far as to provide diners management over which particular info (e.g. eating historical past) eating places see.

By way of Blackbird, eating places can promote paid memberships to friends, as properly. Leventhal says that one restaurateur, a Jewish bistro in Brooklyn, offered founding Blackbird memberships — full with perks together with personalised bomber jackets and a house dinner cooked by a personal chef — as a crowdfunding device earlier than it even opened.

The idea of selling paid memberships within the restaurant business — an more and more frequent observe — is unavoidably polarizing. For many (together with this reporter), eating out is dear as it’s, and having to pay to chop the road to order a scorching new desk or obtain higher therapy doesn’t precisely really feel equitable.

Leventhal, although, assures me that the objective isn’t to foster extra ultra-exclusive eating golf equipment however to provide diners at eating places “of all sizes,” notably small impartial eating places and restaurant teams, an extra method to help the venues they love.

“With Blackbird’s know-how platform, we’ve constructed a singular, intimate and symbiotic relationship between eating places and their regulars,” he added.

The query is, can diners be persuaded to make use of Blackbird within the first place? A 2023 ballot by William Blair discovered that almost all of consumers don’t choose into restaurant loyalty applications, and that solely 35% contemplate loyalty applications in deciding which eating places to go to.

Leventhal believes that they will. And he has some knowledge to again it up: since launching a number of months in the past, New York Metropolis-based Blackbird — which has 20 full-time staff — has signed up round 80 eating places together with chef David Chang’s Momofuku chain, 22 of that are actively utilizing Blackbird.

“There’s nobody on the market that does precisely what we do,” Leventhal mentioned. “We admire the loyalty applications constructed by Starbucks, Sweetgreen and extra, however we’ve created Blackbird to be an simply accessible loyalty platform, empowering eating places to have an unparalleled capability to interact clients, reward returning patrons and drive new income streams.”

Blackbird’s future plans entail rolling out a referral program that’ll let diners invite associates to develop into members at a particular restaurant for unique dishes. Past this, Blackbird intends to experiment with its cryptocurrency, doubtlessly providing membership upgrades, rewards for exercise like tap-ins and methods to pay for components of — or entire — meals.

“These on the forefront try to determine methods to obtain a broader range of income,” Leventhal mentioned. “Blackbird is designed to be this answer for eating places — driving loyalty, opening up for attention-grabbing income performs and incentivizing clients to return repeatedly.”