Brazilian SaaS platform for restaurants ZAK announced on Wednesday that it has raised a Series A of $15 million from Tiger Global, with participation from Valor Capital, Monashees, Base 10, and Canary. To LABS, the startup‘s co-founders explained their reasons for going after the New York-based tiger for this round and the business prospects with the digitization of restaurants.
“The SaaS world for e-commerce and fintech is already very well attended [in terms of venture capital]. But for restaurants, we wanted to go after an investor who was already understanding where things were going,” said Ecuadorian Andres Andrade, co-founder, and co-CEO of ZAK.
Founded in 2018, ZAK originated within another company, Mimic, a dark kitchen specializing in producing food at scale with sales in online channels.
As an independent company, ZAK wants to optimize the delivery operation. “When the pandemic happened, we understood that the pain of delivery was potentiated to the entire digitalization of the operation. What we set out to do was to create an ecosystem that would help this restaurant have full control of customer information and data, both online and offline,” comments Andrade.
“As Mimic, we were a restaurant. We made food for other restaurants and sold it online through them. But in that operation we learned how difficult it is to execute in the kitchen and the lack of technology that really optimizes and facilitates production in a uni-channel way (online sale physical sale),” said the also Ecuadorian and co-founder of ZAK, David Grandes.
With COVID-19, restaurants became more interested in Mimic’s technology than the food the brand made. In Brazil, Andrade and Grandes met Marina Lima (ex-Printi and Pátria Investimentos), who holds the position of Chief Revenue Officer (CRO) at ZAK and has been part of the founding team since Mimic was founded.
Now with about 300 customers, the startup plans to reach 1000 restaurants by the third quarter of next year. “We are focused on growing fast, but growing sustainably,” adds Lima. Today, 90% of ZAK’s operations are in São Paulo, but the company is present in 25 cities in Brazil.
The focus is on Brazil for at least the next two years, but the startup does not rule out expansion into Mexico. “When you look at food service in Latin America, Brazil and Mexico together are half the market in the region,” Andrade recalled.
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To build a “Toast of Latin America“, ZAK is betting on four pillars: operations with restaurants, end consumers, integration with aggregators in sales channels, and payment processing. Much of the Series A contribution will go towards building the technology team, which today already has 110 people. “We expect to double that number in the next 12 months,” said Grandes.
It’s all about the data
For Lima, once the restaurant has experienced digitization because of Pandemic, there is no going back. “Now is the perfect time for our solution because we are not just looking at delivery, but a solution that helps the restaurant make that transition from physical to online.”
Along the lines of Shopify and Square, ZAK mixes the SaaS model with fintech. In other words, the startup does not charge via software but monetizes the base via payment as a sub-acquirer.
ZAK processes the payment and earns the remuneration on the customer’s purchase. “When I have a payment integration with the POS (point of sale), it helps in closing the restaurant’s cashier,” Lima explained.
This business model opens doors for ZAK to be a financial partner for the restaurant, with data integrated with financial institutions to help the establishment get credit, for example. Today ZAK already advances receivables to mid-market restaurant partners, who transact on average BRL 400,000 to BRL 600,000 per month at each shop.
“We are entering the ecosystem where the value is precisely capturing data from the operation to be able to help this partner of ours,” Andrade said.
