A founder who has carved out a name for himself building products to help restaurants connect better with would-be diners has raised $50 million for his latest startup: a new take on the idea of customer loyalty.
Blackbird Labs has built a payments-meets-loyalty-meets-blockchain platform for restaurants to grow repeat business while reducing some of the friction around transactions. Now, with with some 1,000 restaurants signed up, CEO Ben Leventhal said Blackbird plans to use the money to launch its newest product, a cross-restaurant “points” service it’s calling Blackbird Club, as well as to expand into more markets outside of New York (its Homebase), San Francisco and Charleston, South Carolina.
(Charleston, you ask? “Charleston punches above its class,” Leventhal said in an interview. “It’s a great restaurant city for its size.” It also appears to the be Blackbird’s equivalent of New Zealand for Meta, with Leventhal calling it “a good test market for us.”)
Spark Capital, a new backer, is leading this latest round, with participation also from Coinbase Ventures, Amex Ventures and Andreessen Horowitz, three investors that backed Blackbird in its $24 million Series A in 2023. Valuation is not being disclosed but for a point of reference, PitchBook notes that the startup was valued at around $124 million in that last round. The startup has raised $85 million to-date.
Coinbase and Amex are strategic names in that list.
Amex acquired Resy, a reservations platform that Leventhal previously founded, in 2019. The two companies — Resy and Blackbird — are not integrating now but “It’s fair to say we will,” Leventhal said. Previous to Resy, the third restaurant-focused startup Leventhal founded, the food blog Eater, was also acquired: it’s now part of Vox. No plans on how and if to partner there.
Meanwhile, Blackbird describes its Flynet payment service as an layer-three transaction protocol built on Coinbase’s BASE. Diners can use it to pay for meals at the table via Blackbird’s app, as well as to redeem loyalty points when they visit restaurants.
It’s worth asking whether blockchain was strictly a necessary part of the mix? There are plenty of other loyalty and payment programs in the market — include a number that are direct competitors to Blackbird like Punchh, Toast, Lightspeed, etc. — that are built on more conventional financial structures.
“I don’t think it necessarily ‘has to be built on blockchain,’” Leventhal said. “Visa’s network, more or less, was created using the same principles that we’re using for Flynet, and obviously they didn’t have blockchain.”
But he pointed out too that “there are a few things that we do believe that over time will be important opportunities, and those opportunities will be based on being on-chain.” These include how Blackbird and restaurants hold customer profiles and activity, he said. “Consumers will be able to continue to own that profile.” It also relates to how Blackbird envisions its engagement with restaurants, he said: each restaurant customer ultimately will be a shareholder of Blackbird.
You might think that with two startups dedicated to the consumer-facing side of the restaurant trade that Leventhal might have had his fill of the business. As it turns out, he’s still hungry for more.
Owning restaurants has long been a challenging enterprise, but the economy and changing consumer habits have especially knocked the world of restaurants around a lot in the last few years.
Leventhal cites figures that note that the average profitability of restaurants these days is under 5%, compared to an average of around 20% in the early Noughties. While platforms like Instagram and TikTok have turned the world into armchair foodies, producing legions of people who virally flock to the latest and coolest cafe, they are doing this amid a time of rapidly declining margins and heightened price sensitivity.
“There is a disconnect in the restaurant industry between the popularity and the intensity of consumer love for restaurants and ultimately the profitability of the industry,” he said.
That disconnect, of course, in startup thinking means opportunity.
“The restaurant industry is made up of millions of local, small business owners around the world. Those restaurants are at the mercy of tech platforms that can charge a large, and often growing, percentage of a restaurant’s margin,” Arianna Simpson General Partner at a16z crypto, told Madconsole over email. She believes this is specifically where blockchain can play a role: improving that margin structure. “Ben’s vision is for a network that is owned by the restaurants and the diners themselves, which is something that only blockchains enable.” Today, Blackbird is already saving its restaurant customers 3-4% in payment processing fees, she said.
