Acquiring customers is difficult, keeping them happy is even more difficult. Focused on meaningful customer relations, SevenRooms creates a more welcoming and engaging guest experience that drives loyalty. The hospitality platform, deployed in over 100 cities worldwide, specializes in reservations, CRM, and, marketing allowing you develop and manage a direct relationship with your patrons. Using flexible algorithms that understand relationships, the company has grown steadily in the last year working with some of the largest and well known hospitality groups.
AlleyWatch sat down with cofounder Joel Montaniel to chat about the startup, its origin, future plans and its most recent round of funding.
Who were your investors and how much did you raise?
We raised a total of $8M this round, our first institutional Series A round, led by Comcast Ventures. We opted for a disciplined, strategic approach in fundraising, as we are in a position to grow quickly, while positioning us to control our own destiny. This funding enables us to accelerate our growth and continue our focused investment in key areas of opportunity.
From neighborhood restaurants to international, multi-concept hospitality groups, SevenRooms empowers operators to create and cultivate the meaningful, direct relationships with guests that make exceptional experiences possible. Founded in 2011 in New York, the reservation, seating and guest management platform gives operators the tools they need to develop direct relationships with guests, boost revenue and enable personalized service and marketing. SevenRooms has restaurant, hotel and nightlife clients in more than 100 cities worldwide, including: Jumeirah Group, The Cosmopolitan of Las Vegas, Standard Hotels, LDV Hospitality, Live Nation, TAO Group, Zuma, Hakkasan, Altamarea Group, NoHo Hospitality Group, Chase Hospitality Group, Mercer Street Hospitality, Corbin and King, Ethan Stowell Restaurants and The h.wood Group.
What inspired you to start SevenRooms?
The idea for SevenRooms started from the other side of the host stand as guests ourselves. We started our careers in the finance industry and loved to go out to restaurants in our free time, but never had enough time to go multiple times to build a relationship with the restaurant. We started thinking about why a person has to go 10x to become a regular, and that transitioned naturally into how we could help an operator build a meaningful relationship with each and every one of their guests. During this process, we discovered that guest data is the key to these hospitality experiences, and that the systems operators were using to running their businesses didn’t provide this guest data. With that in mind, we set out to build a platform to help them capture and track the data to create a more meaningful guest experience.
How is SevenRooms different?
There are significant differences, but all of them stem from the fact that we are laser focused on empowering operators to create and cultivate direct, meaningful relationships with their guests. It is those direct relationships that empower operators to deliver exceptional service and unforgettable experiences. We leave the human connection and hospitality to the restaurants, giving them the tools they need to leverage any and all marketing channels they see value in.
What’s also different is the unmatched level of flexibility and customization that we offer our clients. We know that no two operators run their business the same way, so from day one, we’ve focused on building an open and connected platform that enables a high level of customization. We give our clients optionality in which channels they want to drive direct reservations through, establishing a direct guest relationship from the beginning. We also automate guest data collection to build a complete profile on a guest, from publicly available information on Facebook like their birthday, to historical spend data gathered through a point-of-sale integration. This level of flexibility is a large part of our success so far, and it is critical to our ability to serve hospitality clients of all shapes and sizes.
What market does SevenRooms target and how big is it?
Our target market ranges from local independent restaurants to international multi-concept hospitality groups. With $783B+ in restaurant industry sales, and $710B+ in food & drink sales in the U.S. alone, there is a huge market for us to tap into not only in the U.S., but throughout the world as well. Our market opportunities are endless, with an estimated 15 million restaurants worldwide.
What’s the SevenRooms business model?
SaaS. Our business model is a monthly software-licensing fee per location.
How has your business changed since we last spoke in the Fall of 2016?
We’ve had a pretty incredible year in which we’ve more than doubled the number of locations on our platform. Major client wins included signing 80+ Jumeirah Group restaurants across Abu Dhabi and Dubai, multi-property deals with Zuma, The One Group (STK) and Topgolf, as well as the addition of food and beverage outlets at the Waldorf Astoria Beverly Hills and PUBLIC Hotels.
We’ve also grown our team to nearly 50 employees across New York, Florida and California, and are looking forward to all the new hires we’ll have in the year ahead. Key hires have included an SVP of Marketing, Marybeth Sheppard, and SVP of Sales, Dana Konwiser, who have both seen and grown rocketship hospitality tech startups during their time at Seamless, later acquired by Grubhub.
What was the funding process like?
We came into the funding process from a position of strength, looking for an investment partner who could help us accelerate growth and understood our mission, not just help us keep the lights on. As a business with a viable and repeatable revenue model, it was much more about finding the right fit in a VC partner, and less about the dollar amount.
We went through the valuable process of looking through the lens of a venture investor at our business and got to spend time with amazingly talented and brilliant investors. While it was an investment of time, it was fruitful, as we came out of it with a richer perspective on our business.
What are the biggest challenges that you faced while raising capital?
Our biggest challenge in raising capital was finding an investor who would be a true partner for us, and for the company. We wanted someone on our board who realized our vision, and would help us reach the goals we’d outlined for our company through their strategic advice, relationships and knowledge of the space. We were excited to find that in Dinesh Moorjani from Comcast Ventures. In the first five minutes, he understood the bigger picture and the story we were trying to tell, and was candid in his feedback throughout the fundraising process. Additionally, as a founder himself, his approach to our business aligned with the way we think about hospitality and the industry as a whole. He’s sat on both sides of the table and also has in-depth experience with the SMB space through his time at IAC/CitySearch. We were happy to find someone who inherently understood our business, and the future of hospitality we are building towards.
What factors about your business led your investors to write the check?
What sets SevenRooms apart is how intently we’ve gone about soliciting the feedback of our operators and how seriously we’ve considered that feedback when building every feature on the platform. By listening to our customers, and understanding their desire to build direct relationships with their guests, we’ve created a platform that does just that while increasing their profit margin, as opposed to disintermediating them from their own guests. Also, while new entrants to the space are building out consumer-facing platforms, we’re headed in a completely different direction, focused entirely on tools for hospitality operators.
During the fundraising process, our biggest differentiators were our clients and our extremely low churn rate. Our customers are globally known and respected, and when our investors spoke to them about the SevenRooms platform and team, they attested to the impact our company has had on their operations. It was clear to them from these reference calls, as well as the strength of our business, that they didn’t want to miss out on investing in the future of our company.
What are the milestones you plan to achieve in the next six months?
With this new round of funding, we plan to continue the momentum of the past year and accelerate our growth in 2018. Most notably, this funding will enable us to ramp our recruiting efforts and scale our teams across all departments, including sales, engineering, customer success, product and marketing.
These new hires will enable us to continue building platform capabilities that increase restaurant profitability, empower operators to provide more personalized guest service, streamline their operations, and build direct, meaningful relationship with their guests. It will also allow us to focus on new partnerships and product integrations that will drive real impact to our clients’ bottom line.
Through our investment in these key areas, we will expand our footprint both domestically and internationally with new client acquisitions across the more than 100 cities we operate in worldwide.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
I’ve always said that NY-based startups have to be incredibly practical because New York is a very expensive place to start a business. From day one there are costs that you have to factor in (e.g. rent), which are representative of a more mature startup in another city. An office for 10 is the same cost as an office for 50 in other cities. This expense model forces New York startups to build stronger businesses from the start, instead of pivoting later in order to achieve profitability. For many reasons, I genuinely believe that SevenRooms would not have succeeded in any city other than New York.