Consumer demand drives innovation and nowhere is this more true than in today’s restaurant sector. While consumers have flocked to food order apps like Grubhub and UberEats, a recent deal shows how a new channel is emerging that could potentially drive M&A in the restaurant tech sector: ordering via social media.

“Today, social ordering is an essential way to meet consumers where they are and is more than just Facebook or Instagram,” says Deliverect CEO and co-founder Zhong Xu. “It’s also about messaging such as Facebook messenger, WhatsApp and text. This allows restaurants to connect with their end customers more seamlessly and conveniently.”

Belgium-based Deliverect is a software company that integrates online orders from food delivery companies such as Uber Eats and DoorDash. Among its services, Deliverect helps keeps online orders and menus up to date. Over 43,000 businesses use Deliverect.

Earlier in May, Deliverect acquired Dubai-based ChatFood, which is known for social media ordering and order and pay at table services. Outside of social media, Xu expects the restaurant tech industry to grow and consolidate. Deliverect will be looking to make more deals in the future, Xu says.

“Restaurant tech investment is at an all-time high,” Xu says. “The multi-billion-dollar market for restaurant-side technology is being fueled by multiple tailwinds including a change in consumer habits spurred by the pandemic and enterprise need to adapt to the ever-changing landscape of delivery networks and shifts in foodservice.

“As the market is tighter, there will be some market consolidation happening, and we will continue to look for opportunities to help our customers,” he says.

Xu emphasizes that social media is not going to replace other services, but expand them. “In today’s world, it’s crucial that restaurants offer people choices and flexibility,” he says. “Restaurants should be where customers are.”

There are several factors that will drive M&A in this space, such as automation and artificial intelligence. For example, robots can fill multiple orders quickly and accurately, automating these processes and enabling restaurants to invest in better customer service. And software applications that enable restaurants to reach the consumer directly and personally. Many of these ideas, and others, make restaurants more efficient.

The restaurant sector is capital and time intensive. Any technology that allows operators to run their businesses more efficiently and improve service will produce greater cash flow, making the industry poised for M&A.

Demitri Diakantonis