Case Study

Better Commerce Tools and Memberships for Independent Restaurants in the U.S.; Our Investment in Table22

Nicole Johnson, Partner

Winter 2022

2 min read

There are few industries with greater inertia than restaurants–a shame for a nearly $1T U.S. industry employing 15M people and serving as a cherished pinnacle of culture. The business model is, and has always been, low-margin and high-failure. This is thanks to fierce competition, the inherent challenges of four-wall economics (especially in cities), high labor turnover and shortages, and, more recently, the reality that new platforms often hurt restaurants’ profit margins instead of help. So many restaurants, even the best-of-the-best, are scrambling to make ends meet month-to-month on their low-single-digit operating margins—if they can make it at all. Four out of five restaurants fail before their fifth birthday.

Tech has helped the industry progress, no doubt, but the P&L hasn’t gotten better, nor has the experience been reimagined for consumers beyond the transaction moment or the locus of consumption (i.e., your couch, instead of the restaurant). Notably, the proliferation of delivery apps promised a new day for restaurants and their reach, and while the order volumes have materialized, they’ve come at the cost of margins in an industry with famously razor-thin ones.  

Then came the pandemic, which was immensely disruptive to the industry in so many ways over the past couple of years; closures, the abrupt shift to delivery, labor shortages, and inflation pressured profits and wreaked havoc. The industry model was already unsustainable, and then the Pandemic laid it bare.

Sam Bernstein and his co-founders saw their original startup–a housing marketplace for college students–brought to a standstill by the pandemic. As they were searching for a way to pivot toward a new model that could empower small businesses they cared about to succeed in a go-forward world, they saw an opportunity to bring membership to restaurants. We’re obsessed with loyalty at Forerunner—consumers are looking for more meaningful ways to espouse the brands they share values with, and it’s in brands’ best interests to nurture this dynamic. With Table22, the founders saw a way to realize this in the nearly $1T U.S. restaurant industry via memberships, with restaurant and consumer pull towards this new business model accelerated by macro events.

Launched May 2020, Table22 enables restaurants to build, manage, and grow subscription offerings for consumers, via a purpose-built platform. Today these offerings run the gamut of products and experiences brought to life by all kinds of restaurant(s) and F&B proprietors, with physical offerings like L’Oco de Oro’s Regional Italian Pasta Club, Lost Lake’s Cocktail Club, and The Joint’s Fishmonger Feast, rounded out by subscriber perks like members-only pricing in restaurants, exclusive invites to in-house events and tastings, and cooking demonstrations. 

When I met Sam in late 2020 (thanks to round lead Nikhil Basu Trivedi, longtime Forerunner co-investor in The Farmer’s Dog), he and his team had scrapped together a product resonating with a diverse roster of restaurants, from Che Fico in SF–their pantry provisions box is the best thing landing on my doorstep monthly–to Frankies Spuntino in Brooklyn. Customers loved the product. Marquee programs were driving hundreds of thousands of dollars in annualized subscription revenue to restaurants, with strong retention on both sides of the marketplace.

Fast forward a year, and Table22 is powering offerings for 175 merchants. Subscription revenue is up 7x since our Seed investment closed, despite the constant wrenches thrown at the industry in the intervening period—variant after variant, debilitating labor shortages, waxing and waning indoor dining capacity constraints, and beyond. Most excitingly, as we’ve begun to see the light at the end of the pandemic tunnel, pull from consumers and restaurants is stronger than ever, with demand and retention on both sides as good as it’s ever been.

We couldn’t be more excited about Table22’s future as it builds the next generation of commerce tools for the millions of independent restaurants in the U.S. The team has already minted a new, durable model for the restaurant industry that better meets the modern consumer where they’re at, while meaningfully adding to restaurants’ bottom line–and things are just getting started.

Table 22 is hiring actively across sales, account management, engineering, and product – check out open roles here.

Unique people. Unique approaches.

We’re a diverse team of visionaries and veterans who looked at the VC industry and said: “We can do more.” Together, we’re redefining what VC can be — for consumers who deserve better.

We’re a diverse team of visionaries and veterans who looked at the VC industry and said: “We can do more.” Together, we’re redefining what VC can be — for consumers who deserve better.