Restaurant technology company Olo is hoping to raise $100 million in an initial public offering on the heels of a watershed year for digital ordering.
The New York-based company, whose name stands for “online ordering,” was founded in 2005 by Noah Glass as a service enabling customers to order food via text message. It has grown into one of the leading e-commerce providers for chains, offering online ordering, delivery integration and other software-based services to more than 64,000 restaurants across 400 brands including Five Guys, Wingstop, Shake Shack and Chili’s. It also integrates with more than 100 other tech platforms.
Olo saw business skyrocket in 2020 amid a massive shift to digital ordering driven by the coronavirus pandemic. Revenue grew 94% year over year, from $45.1 million in 2019 to $92.8 million last year, according to IPO documents filed Friday. It was profitable in 2020, generating $3.1 million in net income, though it has largely operated at a loss, reporting an accumulated deficit of $69.3 million as of the end of last year. It reached 1 billion transactions in 2020, part of a steep increase in orders that began in 2015, and processed $14.6 billion in gross merchandise value for restaurants.
The company views the future of restaurants as an increasingly digital one, citing the growing consumer demand for convenience, takeout and delivery that have only accelerated amid the pandemic, and has positioned itself as the premier solution for restaurants to meet those demands.
“While we expect on-premise dining to return over time, we believe that off-premise offerings will continue to be an essential part of a restaurant’s operations,” the company said in the filing.
Olo believes the addressable market for its current services is $7 billion but could be as high as $15 billion as it adds new products such as on-premise solutions like QR codes and kiosks. Its growth strategy includes adding more large and/or fast-growing restaurant chains to its platform, getting more existing customers to use other Olo products, and launching new products.
“We believe there is an incredible opportunity to add more restaurant customers, sales volume, and product offerings. That’s our not-so-secret formula,” Glass wrote in a letter included in the filing. “Although we have incurred significant losses since inception and we have a substantial accumulated deficit, these losses and accumulated deficit are a result of the substantial investments we made to grow our business and we expect to make significant expenditures to expand our business in the future.”
The company said it plans to use funds from the offering for “general corporate purposes.”
Initial share prices were not disclosed. The company will be listed on the New York Stock Exchange under the symbol OLO. Goldman Sachs, J.P. Morgan and RBC Capital Markets are the joint lead bookrunners for the offering.