7 M&A deals that put dining fintechs first

May 17, 2019 11:42 AM

The fintech M&A wave is sweeping over the dining and fast-food industries, with major companies like Amazon, Walmart and American Express spending on smaller firms that focus on digital food delivery and payments.

In many cases, the buyers have an appetite for more than one acquisition, and steadily built their food payments operations through M&A over just a few years. It's a trend with strong momentum behind it, and many food payment companies still on the map to buy up.

This item is compiled from reporting by PaymentsSource writers including John Adams, Kate Fitzgerald, David Heun and Michael Moeser. Click the links in each item to read more.

Amazon invests in Deliveroo — a boon to Whole Foods?

Amazon just became the largest investor in Deliveroo, a food delivery company based in London that serves 14 markets — a relationship that complements the e-commerce giant's growing food services.

Amazon may be building on the foundation of its $13.7 billion purchase of Whole Foods in 2017. Within a year of completing that acquisition, Amazon began scouting for larger Whole Foods locations to serve as both grocery stores and delivery hubs.

Despite being based overseas, Deliveroo fills a gap in this strategy — Instacart, which handled Whole Foods deliveries from 2014, said last year that it would cut ties with the chain. Amazon's investment was part of a $575 million Series G funding round in Deliveroo, alongside T. Rowe Price, Fidelity Management and Research Company, and Greenoaks.

Amex buys Resy, Cake Technologies and Pocket Concierge

American Express agreed to acquire Resy, a digital restaurant reservation booking and management platform, this month — adding to a growing menu of dining fintechs.

The deal builds on several recent American Express purchases aimed to provide more digital services, experiences and access for cardholders. In January 2018 Amex acquired the Mezi personal assistant travel app. In March of that year, Amex acquired Cake Technologies, a U.K.-based fintech that provides mobile payments for restaurants and bars, for $13.3 million.

This January Amex acquired Pocket Concierge, a Japanese restaurant booking service, and in March it acquired LoungeBuddy, a digital platform that enables travelers to discover, book and access over 1,200 airport lounges worldwide.

Walmart gives Jet.com an upgrade

Facing increasing pressure from Amazon's retail innovation, Walmart purchased Jet.com in 2016 for $3.3 billion and has been improving the e-commerce unit to make it more appealing to a younger audience.

Jet has added a range of improvements including voice-controlled shopping lists, faster delivery turnarounds and customized delivery options including same-day grocery delivery in Manhattan. The faster arrivals are powered by Parcel, a delivery service Walmart purchased in 2017.

Grubhub buys LevelUp, bringing payments into delivery

Grubhub's 2018 purchase of LevelUp is a deal that seems to make more sense for LevelUp — expanding its offerings to include delivery — than it did for the buyer.

LevelUp is very different business model from Grubhub, since the payments and rewards company is focused on the diner going to the restaurant for pickup through gamified incentives and rewards. Grubhub, by contrast, is a delivery service aggregator that did not previously participate inside the restaurant or offer its own point of sale hardware.

What LevelUp brings to the table is a plucky history of innovation. The Boston-based company's experiments included flat-fee processing (which merchants rejected in favor of traditional interchange), NFC payments (which never replaced its standard QR code system) and even giving Google Glass to cashiers. Its platform, once based on using a 3G smartphone to read QR codes, eventually became a white-label system with dedicated hardware.

Square adds to Caviar after considering its sale

Tightening its connections to restaurants with a brisk delivery business, Square acquired a longstanding Dallas-based local food delivery service to add to its Caviar food-ordering platform in early 2018.

Square bought Entrees On-Trays, which operated in the Dallas area since 1986, to make it part of Caviar, significantly expanding the number of restaurants and volume the platform handles.

The move indicated that Square was recommitted to driving growth for its Caviar unit, which it purchased in 2014 for $90 million in stock. Two years earlier, Square was said to be in talks to unload Caviar possibly to Uber Eats or Grubhub.

Global Payments buys Sicom Systems

Global Payments hoped to strengthen its position among restaurant merchant acquirers by paying $415 million in cash for food services and software company Sicom Systems from LLR Partners in 2018.

Sicom complemented existing technology at Global Payments to give the company a stronger foothold in the restaurant vertical.

"The transaction also allows us to expand our owned software solutions into food service management, a large addressable market globally with attractive fundamentals, while further accelerating our business mix toward technology enablement," said Global Payments' CEO Jeff Sloan said in press release at the time.

Lavu brings delivery to mPOS

Mobile point-of-sale provider Lavu acquired online and mobile ordering platform MenuDrive in April to aid both restaurant management and online presence — and skip the costs of incorporating third-party services.

Lavu, of Albuquerque, N.M., views MenuDrive's technology as a key to helping restaurants succeed in the competitive digital landscape for payments and customer interactions such as online ordering.

"Lavu and MenuDrive share a single vision and goal, which is to provide restaurant owners with the online ordering technology they need to thrive," Lavu CEO Saleem S. Khatri said in a press release. "Together, the strength of our combined companies will enable our customers to achieve higher profit margins and increased levels of customer satisfaction."