By: Serach Nissim
New York’s tech startups are betting that the city’s craving for food delivery services will extend beyond the COVID-19 pandemic.
Olo, a B2B SaaS platform powering digital ordering and delivery programs for restaurant brands, is joining the list of firms headed for initial public offerings. The company, founded in 2005 by Noah Glass, is hoping to raise up to $324 million, with an IPO offering on Monday morning. As reported by Crain’s NY, shares are being priced at $16 to $18, with an expected sale of roughly 18 million shares.
Headquartered in Manhattan’s 1 World Trade Center, Ola, has been in business longer than Doordash, and almost as long as Grubhub, but has yet to gain the name recognition. That’s probably because Olo focuses on the back end of the transactions, rather than the customer placing orders. The company’s software offers a central system for eateries to manage the multiple ways which customers make orders, whether it be directly via the website, through a brand’s custom app, or using Grubhub and Doordash. Olo’s software boasts some 400 restaurants and chains as paying clients, including Shake Shack, The Cheesecake Factory, Denny’s, Five Guys and Applebee. Olo charges eateries subscription fees for its software, and also receives a percentage of the transactions it helps to process.
Olo actually turned a profit in 2020, as opposed to Doordash and Grubhub. As per the company’s IPO prospectus filed with the SEC, it brought in $98 million in revenue, and netted a $3 million profit in 2020. The company had not turned a profit in 2019 or 2018, but the pandemic spurred a spike in online ordering, which led transaction fees to jump. In 2020, transaction fees accounted for 43 percent of Olo’s revenue, up from 19 percent in 2019. This growth includes a note a caution— as the pandemic eases with an increased number of people getting vaccinated, online transactions may dwindle with the return of in-person dining. “Although we are optimistic that the emphasis on on-demand commerce in the food services industry will be an enduring trend, we do not have certainty on the long-term impact these developments will have on the industry,” Olo noted in its prospectus.
Olo’s debut on to the New York Stock Exchange is slated for later this month, using the ticker symbol OLO. Other NY technology startups to launch IPOs in the coming months include: Insurer Oscar Health; Real estate firm Compass, and cloud-services provider DigitalOcean.
