Panera Bread founder Ron Shaich explains why he led a $500 million acquisition of Taco Bell's loyalty platform Punchh
- PAR Technology buys Taco Bell loyalty platform Punchh in a deal valued at $500 million.
- Ron Shaich’s Act III Holding company is financing $160 million of the purchase.
- The acquisition is among a string of recent food tech purchases or investments. Here’s a list of the deals.
- See more stories on Insider’s business page.
Under founder Ron Shaich, Panera Bread deployed in-store kiosks and gave customers options for rapid mobile order pickup long before it became en vogue in the restaurant industry.
The industry pioneer went on to sell Panera Bread to Krispy Kreme owner JAB Holding. He is now the CEO of Act III Holdings, a private equity firm that invests in emerging and forward-thinking brands and companies. Act III’s latest investment is Punchh, a loyalty platform for fast-food brands like Taco Bell and Papa John’s.
On Thursday, restaurant software company PAR Technology announced plans to buy Punchh in a stock and cash deal valued at $500 million. Shaich’s Act III is financing the deal with $160 million.
His investment is the latest in a string of high-profile food tech purchases or investments made in the rapidly growing food tech space. Investors poured $18.1 billion into food tech startups in 2020, up from $16.6 billion in 2019, according to PitchBook.
Other recent deals involve tech purchases made by Yum Brands and website builder Squarespace. Chipotle Mexican Grill also made an investment in robotics firm Nuro. Here’s a rundown of those deals, and what they mean for the restaurant industry.
PAR Technology and Punchh
PAR Technology, a publicly traded company from upstate New York, powers POS, back office, payment, and guest engagement solutions for restaurant companies including White Castle, Sweetgreen, Cava, Dairy Queen, Arby’s, and Five Guys.
PAR’s stock jumped more than 20% on Thursday after it announced the $500 million stock and cash purchase of Punchh. Punchh powers loyalty programs for Taco Bell, Pizza Hut, KFC, Papa John’s, Habit Burger Grill, Denny’s, and TGI Fridays.
PAR is best known for its Brink POS system which integrates seamlessly with a tangled web of restaurant technologies and ordering systems such as DoorDash and online ordering solutions like Olo. That frictionless “plug and play” system is what attracted Shaich to take part in PAR’s purchase of Punchh, whose rewards platform will allow PAR to expand its services for restaurants.
“As an operator, the Holy Grail is to have a system that does the job in an integrated way,” Shaich told Insider.
Savneet Singh, PAR Technology CEO and president, told Insider that the “beauty of the deal” is that PAR will be able to stitch together PAR’s transaction and back-office data with customer data from Punchh.
That will allow PAR to develop powerful consumer insights for restaurant clients looking to “win back” guests from companies that have “extracted” customers from restaurants over the years, Singh said, referring to the standard practice of third-party delivery companies not sharing consumer data with restaurants.
For Shaich, the union of PAR and Punchh is beneficial to restaurants in another crucial way. The cloud-based system eliminates the need for restaurants to invest in multiple “disjointed” tech systems that are “extraordinarily expensive” and often under-deliver, he said.
Ultimately, restaurants shouldn’t have to be tech companies, he said.
“Nobody comes to a restaurant for technology. They come because they desire food. Technology reduces the friction and allows the guests to get access to that with lower friction,” he said.
Shaich’s Boston-based Act III has helped finance other deals including fast-casual chain Cava’s purchase of Zoe’s Kitchen in 2018. Act III’s portfolio also includes investments in vegetarian fast-food chain Clover Food Lab, Tatte Bakery & Cafe, and BJ’s Restaurants.
Tock and Squarespace
Another big B2B food tech deal was Squarespace’s $400 million purchase of reservation system, Tock.
Similar to the PAR-Punchh marriage, Squarespace’s acquisition of Tock will allow the website builder to expand its services to restaurant clients looking to add e-commerce solutions to their websites.
Chicago-based Tock started off as a prepaid reservation system for fine dining restaurants looking for alternatives to Resy and OpenTable. The firm has since expanded its services to include standard no-fee reservations and table management for restaurants.
During the pandemic, Tock launched Tock to Go, which allows restaurants to handle takeout orders without relying on third-party delivery platforms.
Taco Bell parent invests in two tech companies
Yum Brands, whose more than 50,000 restaurants are spread throughout the world, recently acquired two companies: ordering and marketing platform Tictuk Technologies and consumer insights firm Kvantum.
Tictuk Technologies allows consumers to complete orders through various digital channels such as WhatsApp, Facebook Messenger, Telegram, QR codes, texting, and email.
Kvantum uses AI to gather consumer insights needed to optimize marketing budgets. Yum Brands told Insider it plans to use those insights to determine the effectiveness of big-budget marketing campaigns and loyalty programs.
Chipotle invests in self-driving vehicles
Chipotle Mexican Grill invested an undisclosed amount in Nuro, the maker of autonomous vehicles.
Chipotle announced the investment in April 2021 and said the Nuro investment will give the fast-casual chain a “competitive advantage” when it comes to providing customers access to nontraditional delivery methods.
“It’s less about a focus on where we are today and more a focus on what the future could hold,” Curt Garner, Chipotle’s chief technology officer, told Insider.
Beyond eventually piloting Nuro’s self-driving vehicles for food delivery, Garner said the autonomous fleet could help Chipotle “move goods between restaurants or distribution centers, or catering orders,” he said.
“Lots of different applications are possible in the future,” Garner said.
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