As a restaurant owner, I am constantly approached by promoters of smartphone apps and websites offering discounts to restaurants. These youthful founders - they tend to be straight out of uni - believe that they are the first geniuses to think of discounting food to bring in punters. I’ve scared most of them away by asking ‘how are you going to market this?’ The idea that their app won’t be immediately successful has never occurred to them. I’ve never heard of most of them again. But don’t get me wrong. This is an interesting space as consumers changing tastes slowly move our services off our high streets to be replaced by restaurants.
Which brings us to BigDish plc (DISH), a restaurant services company newly entered onto the Standard List. At an IPO price of 4.5p, it is capitalised at £12.9 million. I spoke to Aidan Bishop, founder and chairman about how BigDish works and where it fits in between existing restaurant plays Groupon (NASDAQ:GRPN), Deliveroo, and Just Eat (JE.). (For the avoidance of doubt, I don’t have any shares in BigDish, nor is my restaurant on its platform. FIML, which is owned by a Trust for Tom Winnifrith's dependants, does have £1,000 of shares because Steve Moore chose them in his Dragon’s Den segment at the UK Investor Show. )
Bishop considers BigDish as the restaurant version of airline seat pricing, where airlines discount their seats at certain times to avoid flying empty. Similarly, restaurants that find themselves overbooked on Friday and Saturday evenings may be paying staff to look at their smartphones during a Monday afternoon or an hour before closing. BigDish allows its restaurant members to set discounts from 10% to 50% on times and dates that they would like to bring in more business - since the gross margin at a restaurant should be 70%, even at the top discount the place would be generating some profit to help cover fixed overheads (staff). Restaurants can limit it to one or two tables or welcome all comers. BigDish makes its money by a circa £1 per head charge on successful bookings. I pointed out that EasyJet founder Stelios Haji-Ioannou has fallen in love with unit management but other than EasyJet itself, it has not worked as well in his cinema, car hire and Internet cafe ventures. Bishop says that BigDish is working with businesses that are already successful and, unlike the Easy businesses, do not need to actually deliver the product to the end customer.
After several years of serving SouthEast Asia (BigDish is based in Manila, where Bishop says tech costs are much lower), the company has purchased a similar Bournemouth-based company called TablePouncer, which will immediately be rebranded to the company standard. Bishop says that 10,000 people per month use the TablePouncer service. As to my deal-breaking question: how will you market this, Bishop says that’s what the money from the IPO is for. Is it worth investing in? It will be down to execution. The idea is a sound one: restaurants do need to bring in customers during slow periods. But the idea is easy to replicate - BigDish is actually buying a company doing the identical thing that it does to enter the UK market - so it’s going to be whoever spends enough to consolidate the market that will win. But food delivery company Deliveroo, car sharer Uber, and takeaway booker Just Eat have all found profitability elusive on their way to number one.
Filed under: BigDish, Argo, Tern, Seeing Machines, Union Jack Oil, TomWinnifrith.com, Greek Hovel
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