Marginedge Raises $18M to Revolutionize Restaurant Management

MarginEdge Secures $18 Million in Series B Funding

MarginEdge, a company focused on providing financial clarity to restaurant operators, announced on Monday the completion of an $18 million Series B funding round.

The company was established in 2015 by Bo Davis, alongside Roy Phillips and Brian Mills.

Founders' Restaurant Industry Background

Both Davis and Phillips bring significant experience from within the restaurant sector.

Davis previously founded the Wasabi conveyor belt sushi restaurant chain.
Phillips held an executive position at Bloomin Brands.

Their combined expertise highlighted a critical need among independent restaurants.

These establishments often faced challenges with essential workflows, such as invoice management and food cost tracking.

Consequently, they either developed custom internal tools or relied on outdated methods like manual paperwork and spreadsheets.

Focus on Product Development

“Our initial strategy centered on creating a solution that would resonate with our peers,” Davis explained to TechCrunch.

The team dedicated three years to product development, collaborating with 20 restaurants to refine the software.

This iterative approach prioritized accuracy and usability over a rapid market launch.

MarginEdge's Restaurant Management App

MarginEdge offers a restaurant management application designed to integrate with a business’ point of sale (POS) system.

This integration streamlines key processes, including inventory management, cost tracking, ordering, and recipe management, effectively eliminating paper-based workflows.

The tool automatically captures and processes all invoices, receipts, and bills, converting them into detailed line-item data within a 24-hour timeframe.

It is specifically tailored for independent restaurant owners operating fewer than 50 locations, according to Davis.

Growth and Funding

Since the app’s launch in 2018, the Virginia-based company has expanded its platform to serve over 2,500 restaurants.

Prior funding rounds included a Series A in 2019 and an A2 round in 2020.

With this latest investment, led by Schooner, MarginEdge has now raised a total of $25 million.

Investor and Customer Perspective

IGC Hospitality, a restaurant property operator, serves as both an investor and a customer.

Jeffrey Brosi, founder and managing partner of IGC Hospitality, stated that the company was seeking a comprehensive solution for managing its entire inventory process.

“Davis delivered an impressive presentation,” Brosi added. “The platform’s user-friendliness was a major factor for us, along with MarginEdge’s excellent customer support.”

Brosi emphasized their experience investing in hospitality companies and understanding key pain points.

Impact of the Pandemic

Like many businesses, MarginEdge reassessed its strategy during the global pandemic.

Despite the challenges faced by the restaurant industry, Davis attributes the company’s subsequent growth to restaurants re-evaluating their operational processes.

“We were fortunate to have sufficient capital to retain our team,” he noted.

While revenue initially declined, the company experienced 45% growth even during the pandemic and reported 200% annual growth in Q1.

Future Investments

MarginEdge currently employs over 400 people and processes approximately 45,000 invoices weekly.

Davis plans to allocate the new funding towards strengthening the leadership team, enhancing product development, and introducing new features for back-office operations and data science.

He recently completed an advanced degree in data science.