Online ordering and delivery platform Olo is aiming to raise up to $100 million in an initial public offering, according to securities filings.

The company, founded in 2005 by Noah Glass, said it plans to list on the New York Stock Exchange under “OLO.” It filed its S-1 with the SEC late Friday. Goldman Sachs, J.P. Morgan, and RBC Capital Markets are joint bookrunners.

Olo said it currently boasts 64,000 restaurant locations across 400 brands and services 1.8 million orders per day. Its gross merchandise value, as of Q4 2020, was $14.6 billion processed through its platform. Olo has roughly doubled that figure in each of the last five years.

Coming into 2021, Olo posted year-over-year revenue growth of 94 percent and net revenue retention of 120 percent. Gross margin was 81 percent and operating margin 16 percent.

Olo’s client base stretches the gamut, from Wingstop, Shake Shack, and Five Guys to Chili’s, Applebee’s, Cracker Barrel, Jamba, Jimmy John’s, Checkers & Rally’s, Dairy Queen, and The Cheesecake Factory, among others.

“Our platform powers restaurant brands’ on-demand commerce operations, enabling digital ordering and delivery, while further strengthening and enhancing the restaurants’ direct consumer relationships,” Olo said in the filing. “Consumers today expect more on-demand convenience and personalization from restaurants, particularly through digital channels, but many restaurants lack the in-house infrastructure and expertise to satisfy this increasing demand in a cost-effective manner.”

Olo also cited an upcoming boom in industry demand for its optimism. The food industry is currently a $1.6 trillion sector. Restaurants accounted for $863 billion of that in 2019 before falling back to $659 billion in 2020 thanks to COVID-19. The FreedoniaGroup, however, believes consumer spending on restaurants will rebound to $1.1 trillion by 2024.

“Growing consumer demand for convenience has made off-premises consumption, which includes take-out, drive-thru, and delivery orders, the single largest contributor to restaurant industry growth,” Olo said.

Before COVID, off-premises consumption rose to 60 percent of orders and was projected to contribute 70–80 percent of total industry growth over the next five years, per the Association.

The average portion of total sales from third-party delivery in the 12 months ending August 2019 was 6.5 percent. Pre-virus, the figure was expected to jump to 10 percent in 2020. “This demand has only accelerated since the onset of COVID-19, as on-demand commerce has become a necessity for the majority of restaurants,” the filing said.

In just the first few weeks of COVID, 59 percent of restaurant operators added new curbside pickup offerings and 20 percent tacked on online ordering or pre-pay functionalities, according to eMarketer.

In a recent survey of Olo customers, about 70 percent of respondents offered more off-premises delivery and pick-up options in response to COVID.

This showed up in Olo’s performance. Revenues for the quarters ended March 31, June 30, September 30, and December 31, hiked by 55.2, 100.2, 94.2, and 117.6 percent, respectively, year-over-year.

“Additionally, restaurants face increasing economic pressure with an intensely competitive landscape, which has only been exacerbated by the COVID-19 pandemic,” Olo added. “Due to its unique complexities and challenges, the restaurant industry has historically been one of the lowest penetrated on-demand commerce segments of the retail industry, with digital sales accounting for less than 10 percent of sales, according to a report published by Cowen Equity Research in 2019.”

Olo’s open SaaS platform, the company said, is the only independent open SaaS platform for restaurants to provide seamless digital ordering and efficient delivery enablement. Olo offers centralized management for digital business.

There are three main components:

Ordering: This is the white-label, on-demand commerce platform restaurants deploy to allow consumers to order directly from and pay restaurants via mobile, web, kiosk, voice, and other digital channels.

Dispatch: Olo’s fulfillment solution allows operators to offer, manage, and expand direct delivery.

Rails: The aggregator and channel management solution gives restaurants the ability to control and syndicate menu, pricing, location data, and availability, while integrating and optimizing orders from third-parties into their point-of-sale systems.

Over the last five years, on average. Olo said nearly 99 percent of its enterprise brand customers (restaurants with 50 or more locations), which accounted for 91 percent of the company’s total active locations as of December 31, 2020, have continued using its ordering module each year. It said customers’ digital same-store sales increased, on average, by 44 percent for the month ended December 31, 2019 when compared to the month ended December 31, 2018. This trend further accelerated in 2020, with digital same-store sales up 156 percent for the month ended December 31, 2020 when compared to the month ended December 31, 2019.

Olo operates with a “transaction SaaS model,” meaning there are subscription and transaction-based revenue streams.

For the years ended December 31, 2018, 2019, and 2020, 93.2, 80.8, and 56.7 percent of Olo’s platform revenue was subscription revenue, respectively, and 6.8, 19.2, and 43.3 percent was transaction revenue, respectively.

Since its founding 15 years ago, the company has raised less than $100 million of primary investment capital. As of December 31, 2020, Olo had cash and cash equivalents of $75.8 million with no outstanding debt.

Over the past three years, it’s generated revenue of $31.8 million, $50.7 million, and $98.4 million, respectively. Gross profit has climbed from $21 million to $35.1 million to $79.8 million over that stretch.

During the years ended December 31, 2018 and 2019, Olo incurred net losses of $11.6 million and $8.3 million, respectively, and during the year ended December 31, 2020, generated net income of $3.1 million. 

Story, Technology