With warmer months upon us and Covid-related restrictions easing, restaurants are poised to see an increase in diners. Technology that helps eateries with online ordering and contactless payments are in high demand, spurring M&A in the sector.
“Many restaurant and hospitality-oriented technology companies have performed exceptionally well over the past 12 months and are poised for sustained growth into the future,” says Josh Benn, global head of consumer corporate finance at Duff & Phelps, a Kroll business.
“The Covid period intensified surviving operators’ focus on technology and consumer convenience,” Benn says. “To-go enabling and contactless payment technologies, customer relationship management (CRM) tools, supply chain management tools and labor onboarding technologies are all in strong demand among operators across the spectrum.”
One restaurant operator that has been actively acquiring software providers is Yum Brands Inc. (NYSE: YUM), the owner of the KFC, Pizza Hut, Taco Bell and the Habit Burger Grill brands. In March, Yum acquired Tictuk Technologies, an Israeli omnichannel ordering and marketing platform company. The addition of Tictuk to Yum’s technology portfolio will give the company the ability to offer more ways for consumers to order from Yum-owned chains.
“As we navigate a consumer landscape reshaped by the events of 2020, we continue to intensify our focus on leveraging our scale and reinforcing our growth model with investments in digital and technologies to enhance the customer and employee experience, strengthen restaurant unit economics and enable our brands and franchisees to compete and win in a rapidly changing world,” Yum CEO David Gibbs said when the deal was announced.
Tictuk follows other recent Yum technology deals. In March, the company announced plans to acquire Kvantum Inc. an artificial intelligence-based consumer insights and analytics company. Yum has been working with Kvantum in several international markets. The company plans to use Kvantum’s services to apply consumer insights and data analytics to help make better marketing decisions. And in 2018, Pizza Hut bought online restaurant ordering and delivery company QuikOrder Inc.
The pandemic has seen other companies buy food delivery and technology providers. In February, Uber Technologies Inc. (NYSE: UBER) agreed to acquire Drizly Inc., an on-demand alcohol delivery app, for $1.1 billion. At the end of 2020, Uber completed its $2.7 billion acquisition of food delivery app Postmates. And Just Eat Takeaway.com is buying Grubhub for $7.3 billion.
As Duff & Phelps’ Benn says, “CRM, labor management and contactless payment companies have all flourished and are extremely well-positioned to continue to capture additional market share as the health of the industry strengthens during the remainder of 2021.”