Why Giftify Could Be the Next Olo in the Restaurant Tech Consolidation Boom

Right now, retail investors are sleeping on a massive investment theme that’s creating some rare opportunities, and Restaurant.com operator, Giftify, Inc. [NASDAQ: GIFT], is fast shaping up as one of the highlights in the space.

The theme in question is a mass consolidation we’re starting to see in the restaurant tech space. And here, there are a few drivers, some of which we’ll talk a bit more about a little later. But, for now, this is a very high-level overview of what’s happening:

• VC funding flooded into the restaurant tech space during the COVID years.
• A bunch of overly-specialized startups doing everything from marketing and rewards to online orders cropped up.
• VC funding dried up post-2022 for basically anything that wasn’t AI.
• Investors started demanding that restaurant tech startups start focusing on profits over growth.
• Restaurants started demanding more integrated solutions rather than a cobbled-together hodgepodge of overly-specialized solutions.

The effects of this have been twofold on valuations for restaurant tech platforms.

On one hand, we’re starting to see some massive valuations for some restaurant tech platforms. Most recently, PE firm Thoma Bravo agreed to acquire Olo Inc. [NYSE: OLO] in a $2 billion cash deal — a 65% premium over the stock’s closing price ahead of the deal, and a 7x multiple on its 2024 revenue ($285 million).

On the other hand, we’re also seeing the exact opposite — massively depressed valuations. Giftify’s recent acquisition of TakeOut7 for just 350,000 shares of its common stock (worth about $600k at the time) is exemplary of this.  While we don’t have exact numbers, we do know TakeOut7 was founded in late 2018 (its seed round was in Nov. 2018) and has generated about $300 million in revenue since then, which would tend to suggest its current valuation is just a fraction of its annual revenue.

In short, we’re seeing a two-sided valuations dynamic emerge in the restaurant tech sector, where some companies are fetching premium valuations while others are getting snapped up at a steep discount. And it is this exact dynamic that’s setting Giftify up as such a special case in the restaurant tech consolidation space.

A Tale of Two Valuations — Or How Giftify Is Gearing Up to Follow in Olo’s Footsteps

As Restaurant Technology News reported last month, restaurants are currently driving “a broader push to reduce vendor complexity.” Ultimately, “managing multiple disconnected systems… has become increasingly untenable” for them, with the result of this being increasing demand for “integrated solutions that reduce tech sprawl and streamline operations.”

This trend is one of the key pieces in understanding the dual-sided valuation story in restaurant tech right now.

To illustrate, take the Giftify [NASDAQ: GIFT] acquisition of TakeOut7 as a case in point. At its heart, TakeOut7 is an online ordering platform. And that really is about it, aside from a small handful of digital marketing features which mostly revolve around email reminders/promotions. (Note: TakeOut7 also has a separate, more comprehensive marketing platform named Platr — which Giftify also acquired in the deal — although this was never integrated with TakeOut7.)

Given this narrow focus and the current demand for more integrated restaurant tech, it should thus come as no surprise that TakeOut7 was valued at such a steep discount.

Now contrast that with Olo [NYSE: OLO]. Olo is a platform that “powers the full guest journey… with a unified platform built for restaurant brands”, of which online ordering is but one of many components. Given the growing demand for unified platforms — which Olo is — investors were willing to pay a steep premium.

Of course, at this point, it’s tempting to think that there must be something more behind such disparities in valuation. And, to an extent, that’s true. However, that “something more” has little to do with the companies themselves — the closer you look at the fundamentals, the more they start to look similar in all other respects. For instance, Olo made a net loss of $897,000 in 2024 — i.e., near break-even — whereas TakeOut7 was “operating near break-even”.

Instead, what’s likely driving the deep disparities in valuations is the post-2022 evaporation of VC funding in the space. This evaporation is making it impossible for companies like TakeOut7 to continue competing against the larger, more integrated platforms that are set to dominate the market in the coming years. When competing in the current market demands building out more comprehensive, integrated platforms, merely breaking even makes this difficult without access to additional funding.

As such, what we’re starting to see are founders and early investors in more specialized restaurant tech platforms finding themselves in a desperate search for a quick liquidity event — a way to get out before the inevitable domination of larger integrated restaurant tech platforms takes place. And, for companies like Giftify, this is creating a golden opportunity.

At a high level, the play here is relatively simple — it’s effectively a “the whole is greater than the sum of its parts” play. Essentially, by finding a bargain-basement acquisition target that’s complementary to its existing restaurant tech platform (Giftify operates the popular restaurant.com platform), Giftify can rapidly (and just as importantly, cheaply) develop a much richer restaurant tech ecosystem. In effect, Giftify is exploiting current market dynamics to leverage its way to increased platform demand and, ultimately, the sort of premium valuation Olo recently saw.

Beyond TakeOut7 — Giftify Signaling Strategic Inflection Point for Restaurant.com Business

Following on the back of the TakeOut7 acquisition news, Giftify [NASDAQ: GIFT] announced just this week the launch of its Restaurant Management Center (RMC) extension to its Restaurant.com platform.

To add some background context to this, Giftify’s Restaurant.com platform, in its current incarnation, is a restaurant meal-deal marketplace. At a high level, the core concept of the platform is to help restaurants both market themselves to new customers and to manage periods of low demand. Primarily, this is achieved by offering a discounts platform where customers can search for meal deals in their area.

The recently announced Restaurant Management Center (RMC) upgrades this in a major way and brings much deeper, integrated functionality for restaurateurs. Some highlights include:

• Streamlined management tools for multi-location restaurants
• A self-service portal, cutting down the need for phone calls and paperwork
• Real-time insights into customer behavior and review trends
• A review management system allowing restaurants to engage directly with customers

In the context of Giftify’s acquisition of TakeOut7, the RMC should serve as a powerful integration layer sitting between demand generation (Restaurant.com), order execution (TakeOut7), and broader online marketing layers (Platr, also acquired in the TakeOut7 deal). As a result, Giftify is creating a true end-to-end SaaS-style value chain for restaurants that covers everything from marketing through to order fulfillment and retention.

Taken alone, this rapid expansion of Giftify’s restaurant tech business and deeper RMC integration should serve as a powerful growth catalyst for the company. It is, after all, delivering to the restaurant market exactly what it’s demanding — deeper, more integrated functionality. However, there’s more to the growth story here than first meets the eye.

Immediately, Giftify’s restaurant strategy will reshape its revenues. Currently, its Restaurant.com business is heavily reliant on commissions on sales, leaving Giftify exposed to customer-side demand variations. With its expanded SaaS offerings, however, the company will open up a new revenue stream that will transition it away from its current commission-heavy model towards a more predictable, year-round SaaS style model.

However, the strategy should bring with it more than just new revenue streams. Notably, it also marks the creation of a significant, two-pronged moat built on switching costs and data ownership.

On the switching costs side, Giftify is effectively assembling a restaurant tech ecosystem with strong platform lock-in. By offering real-time analytics, marketing tools, direct messaging, and a whole host of other solutions within one unified platform, Giftify is essentially building in high switching costs. The effect will be that established Restaurant.com partners, even if they’re only currently there for the leads, are more likely to stay around for the platform. 

As for the data side, as restaurants and clients interact with an increasing number of touchpoints throughout Giftify’s restaurant tech ecosystem, Giftify will increasingly gain granular insight into partner behavior, performance, and engagement patterns. Besides creating a significant value-add that it can offer to its clients, this could also form the basis for future expansion into AI tools, dynamic pricing, and other data-driven innovations.

Exploiting its Edge — Why Giftify’s 25% Market Ownership & Existing Tech Matters

At this time, there are approximately 750,000 restaurants spread across the United States. Of those, Giftify currently counts 184,000+ as partners on its Restaurant.com platform, effectively giving Giftify a direct, preexisting relationship with approximately 25% of all restaurants within the United States.

Going forward, as Giftify continues to build out its Restaurant.com business to meet current market demands, this should give Giftify a huge leg up over competing restaurant tech platforms. As it builds out its RMC and works to realize synergies with its recent TakeOut7/Platr acquisition, Giftify will be well-positioned to exploit these preexisting relationships to rapidly onboard new clients into its expanding ecosystem.

For a large number of restaurateurs already using the Restaurant.com platform, the offer should be quite compelling. Having the ability to cover more of their bases with a single vendor with which they’re already engaged and familiar will be a tempting offer in a market where fatigue with tech sprawl is the dominating narrative. If Giftify manages to communicate this value proposition clearly and effectively to its existing client base, we should expect to see a period of strong growth with minimal outlay on sales and marketing.

Giftify’s ready access to a huge market might begin with its existing restaurant relationships isn’t the only ace up its sleeve, either. One element which we’ve yet to touch on up until this point is its CardCash.com business — a hugely popular gift card marketplace where consumers can buy and sell unwanted gift cards.

Here, there are many ways in which Giftify could exploit its CardCash.com business within its restaurant tech ecosystem. In just focusing on the tech side, for instance, it could offer restaurants a facility that would allow customers to pay for their meals with a huge variety of gift cards, whether they be Amazon, Walgreens, or any number of other brands.

This gift card facility could look similar to some solutions it has already implemented, such as its CVS gift card exchange portal, where customers can exchange gift cards from over 200 merchants to pay for their CVS purchases. With the tech already in place to do it, there’s little stopping Giftify from bringing this over to its restaurant offering.

Alternatively, there’s also no reason why Giftify couldn’t also leverage its CardCash.com technology in the restaurant space more directly. With most of the technology stack already in place, it could rapidly build out a restaurant gift card platform where restaurants wishing to sell regular gift cards could easily do so.

However, it’s not just the preexisting tech stack that makes this such a potentially powerful combination. The ready access to a huge customer base also allows it to build out any number of additional marketing tools for restaurants. For example, if a CardCash.com customer had recently purchased a discount Buffalo Wild Wings gift card, it could retarget that customer with “you might also like” offers — naturally, at a cost to the restaurants being promoted in these offers.

This, of course, is all hypothetical for the moment — Giftify hasn’t yet signaled any additional moves beyond the RMC launch and its TakeOut7/Platr acquisition. However, if, in the coming months, we see further announcements about the expansion of its platform, it will certainly be a reliable signal that even bigger things are ahead.

Giftify Offers Investors a Rare Opportunity to Gain Exposure to Restaurant Tech Rollups

With the current rate at which competitors like Olo [NYSE: OLO] are getting rolled up into PE, Giftify [NASDAQ: GIFT] is beginning to stand out as one of the few public plays in restaurant tech right now. With its growing vertically integrated stack covering everything from marketing to ordering, the company is certainly rising to current marketplace demands in the restaurant tech space.

Importantly for investors, Giftify offers exposure to the consolidation theme that’s currently driving premium valuations for similar vertically-integrated restaurant tech companies. What’s more, this exposure is available at an early stage — a stage where Giftify still has a relatively low valuation compared to others in the space, particularly given its extensive data, considerable tech stack, and the preexisting relationships it currently enjoys with 25% of US restaurants.

Of course, a bet on Giftify is not without its risks. While we have little reason to doubt Giftify’s ability to execute its restaurant tech expansion strategy, a major hurdle it will still have to overcome is shaking off its existing image as a meal-deal platform. And while there may be nothing wrong with that in and of itself — Restaurant.com is, after all, the leading provider in the space by a long shot — it might present an initial handicap in some respects.

The immediate hurdle will, of course, be selling restaurant operators on the idea that it’s no longer a narrowly-focused, single-solution vendor. Fortunately, Giftify’s decision to launch its RMC platform as a direct Restaurant.com integration should help to overcome this rapidly. With 25% of U.S. restaurants already using the platform, Giftify isn’t going to need to try too hard to convince a large user base to at least give its expanded RMC platform a try. From here, upselling additional solutions within its ecosystem (online ordering, sophisticated online marketing, etc.) should then be a breeze.

What might take slightly longer to overcome, however, is investor inertia. The restaurant tech consolidation theme, which has driven premium valuations for players like Olo, is still very much an institutional trend that’s yet to hit retail investors’ radars. However, as the theme continues to play out over the course of the next year or so, that should slowly begin to shift.

Alternatively, it’s also not outside the realm of possibility that Giftify itself could become an acquisition target early on. Even in leaving its growing ecosystem of restaurant tech out of the equation for the moment, the value of Giftify’s customer data and preexisting relationships with such a large swathe of American restaurants alone is worth a huge premium to a certain category of buyers. For a larger tech company or private equity firm, Giftify’s data and relationships alone represent an absolute goldmine. And as Giftify scales up and achieves consistent growth through its platform expansion initiatives, the premium that goldmine can already command will only continue to grow.

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(Featured image by Possessed Photography via Unsplash)

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