‘Based on trends, not dreams’: Food app me&u boss promises profitability in months
Food ordering platform me&u is racing against time. Chief executive Katrina Barry had a clear and immediate task when she joined the hospitality tech outfit in March 2022: to raise capital, and to do it as rising interest rates were tightening the tap of easy money for start-up ventures.
In December, me&u quietly raised $30 million in a series-C round led by Acorn Capital, bringing the total amount of funds raised to $66 million. The cash injection is going almost entirely towards global expansion efforts to hit a self-imposed profitability deadline coming up in little over a month.
“We’re losing money. We’re a start-up,” said Barry. “We’re not at break even or profit-making at this point in time.
“We will break even this year in financial year 2024. That’s what I’m using that $30 million for.”
Me&u is a QR code-based ordering and payment app that can be recognised by its round “beacons” attached to restaurant tables.
Barry, a former managing director of Contiki Australasia with executive experience at BT Financial Group, Virgin Active and Virgin Money, was installed to take the reins on me&u’s day-to-day operations to allow founder Stevan Premutico – who started restaurant booking site Dimmi (now TheFork) – space to focus on leading a team of 18 to crack America’s hospitality and service culture, known to be vastly different to Australia’s.
Me&u’s trajectory hangs, in large part, on the success of its growth abroad. It has already conquered 70 per cent of the Australian market in terms of large-scale venues, and in 2022 processed $1 billion in transaction value.
Capturing even just a tiny slice of the UK or US market, with populations of 67 million and 332 million compared with Australia’s 26 million, would represent a leap in revenue that could rival the Australian market in a fraction of the time it took to achieve profitability and market leadership here.
“It’s a steep S-curve when you start on the market. You’ve got to get traction. It took us 3½ years to be profitable here, for just the Australian market,” Barry said.
“Texas – just one state – their food and beverage [sales], on an annual basis, is larger than Australia’s. We are creating the [tap-order-pay] category in the US.”
Pathway to profitability
The US and UK teams have been on the ground for 12 to 18 months, targeting the enterprise market to achieve scale quickly. Barry believes both are on the cusp of an exponential growth curve: in the US, me&u has partnered with Texas-based MML Hospitality, food truck park Truck Yard and NYSE-listed restaurant management software company Toast.
The UK team of 11 people, meanwhile, is jostling for space in a playing field made fiercely competitive after pandemic restrictions temporarily introduced by the government made table service mandatory, creating a boom in the QR code payment sector.
“There were 65 competitors. Every man and his dog created an order-and-pay platform. We just turned up in the market just after that,” said Barry. “We weren’t winning.”
But me&u held its own as some competitors fell away during market consolidation, said Barry.
The Sydney-born app started winning back clients, such as upscale bar operator New World Trading Company, which had experimented with rivals.
Barry says she “wouldn’t know” what market share me&u has in the UK, but she has received feedback from marketers that it is “one of the top players”.
“All of the Brits are saying you have the far superior platform.”
Me&u is live in about 120 US locations and more than 100 in the UK, with more rollouts in the pipeline.
It is not only racing to scale fast enough to break even and give backers a return on their investment, but it must keep tabs on its Melbourne rival Mr Yum, which has similarly ambitious international expansion plans. The local competitor, which raised $100 million in 2021, has been caught up in the tech sector bloodbath, laying off 40 people seven months after a redundancy round last August.
It turns out me&u hasn’t escaped unscathed, either. “We had to be more capital efficient, and we made that call last year. So we, in last July, let go about 20 people,” the chief executive said.
Reaffirming the company’s plans to break even within months, Barry said she doesn’t plan to make any further cuts.
“You do it once, you go hard. We have a pathway of profitability based on trends, not dreams.”
Closer to home, me&u will seek growth in Australia by expanding its services to hospitality venues. Barry insists the company is not just another tap, order and pay app. “We’re a business transformation tool.”
The start-up recently signed an exclusive partnership with Eagle Eye, a loyalty, promotions and subscription software platform behind the likes of Woolworths’ Everyday Rewards program. The partnership will give venues a deeper insight into its customers, issue certain promotions based on order preferences and unlock new revenue streams.
Barry believes macroeconomic headwinds and cost of living pressures are a tailwind, not a headwind, for the ordering app as the hospitality sector seeks productivity gains and ways to maximise order values.
The $30 million injection will provide what looks to be the final gust of wind in its sails to carry it over the profitability finish line.
“We’re in an incredibly fortunate position that we don’t have to go raise capital again,” said Barry.
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