Technology

Flipdish valued at more than $1bn in Tencent-led funding round


Chinese tech group Tencent has led a $96m investment round in restaurant technology company Flipdish, raising its value to $1.25bn — more than 10 times what it achieved in its previous funding round last year.

Flipdish provides technology for creating food ordering apps, a business that boomed during the pandemic when many restaurants found themselves having to create takeaway services from scratch.

The deal highlights investor interest in companies serving the fast-growing home delivery sector, which has benefited from consumers turning to online ordering during successive lockdowns over the past two years.

Thousands of restaurants signed up with delivery apps such as Deliveroo and UberEats during the pandemic, but Flipdish claims this model eats into restaurant profits with high commissions and said it offered a way for businesses to avoid using the bigger platforms.

Delivery aggregators have said that commission rates are spent on marketing and technology to help them increase demand for restaurants.

Conor McCarthy, Flipdish’s co-founder and chief executive, said the relationship between restaurants and delivery aggregators had become more “dangerous” since aggregators had begun to create their own food brands and compete with restaurants for orders.

Dublin-based Flipdish has about 7,000 restaurants using its technology in 25 countries, compared with more than 50,000 restaurants that use Deliveroo in the UK. But McCarthy said “a decent subset” of Flipdish’s clients generally stop using delivery aggregator services because of the high costs.

Flipdish charges restaurants a 7 per cent fee per order, compared with up to 30 per cent at Deliveroo. The Irish company tripled its revenues in 2020 and doubled sales in 2021, but declined to give specific figures.

Deliveroo said that its platform allowed restaurants “to reach customers they otherwise would not be able to through delivery, while providing a range of services to help restaurants to grow”.

In the latest funding round, Tencent has paid around $80m for a less than 8 per cent stake in the business, while McCarthy and his brother and co-founder James retain control of the board.

Tencent, one of China’s largest companies and a prolific investor in home delivery services, has also backed the German food delivery company Gorillas and is a major shareholder in the Chinese delivery app Meituan.

McCarthy said: “We’re looking forward to picking the brains of Tencent, but at the same time we are running the business in the way that we have done for the past seven years. We don’t need Tencent’s expertise to grow.”

The funds will be used to expand in markets where it already operates, including the UK, Ireland, the US and France, and to hire 700 staff this year. It currently has 320 employees.

Simon Stenning, an independent food sector analyst, said that technology companies such as Flipdish could struggle to compete with the likes of Just Eat, Deliveroo and UberEats because the big platforms were now “baked in” to restaurant business models.

“Having your own app looks great [and] sounds great, but consumers don’t want to use them. Having multiple brands on one app that works for the consumer is here to stay.”



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