Australian tech scale-ups me&u and Mr Yum are merging to create the world’s largest ordering and payments platform for the hospitality industry, cementing a deal after more than four months of negotiations.
The all-stock merger is expected to achieve the elusive goal of profitability in 2024 with the combined entity processing more than $2 billion in transactions across 6,000 venues in Australia, New Zealand, the UK and US. The merged entity will generate US$25 million ($39 million) a year in revenue.
The merger, which was first flagged in May, is expected to see the former rivals consolidate their expansion plans in the US and UK where Mr Yum has made bigger inroads over the past four years than me&u.
The Sydney-based me&u and Melbourne’s Mr Yum were both founded in 2018. Mr Yum CEO and co-founder Kim Teo will lead the expanded group while Stevan Premutico, me&u’s founder, will take a seat on the board as a non-executive director.
“We're both incredibly excited to join forces with another leader in this category. Over the years of competing in the marketplace, we’ve always had a deep respect for each other and are excited to learn from each other,” Teo says.
“From our international expansion efforts, we learnt that Australia has the highest penetration of QR code table ordering globally. We’re humbled that two Aussie-founded companies have built the best and most adopted platforms in our sector - used by thousands of venues and millions of guests.”
Mr Yum earlier this year revealed it had recorded 135 per cent year-on-year revenue growth in calendar 2022, with growth driven by more than $100 million in capital raisings since the company was founded. The company has ailed to hit profitability over the past five years, but me&u had previously indicated that it was expecting to be in the black in 2024.
Ambitious growth plans by both companies led Mr Yum and me&u to cut staff numbers last year, with Mr Yum facing the worst of it by laying off 17 per cent of its workforce.
Premutico describes the merger as a ‘rare opportunity to see two strong Australian companies coming together to take on the world’.
“A shared ambition to blend together technology and great experiences to build a better, smarter future for our industry, today’s announcement marks the beginning of a crazy exciting new era that will benefit customers and business owners around the world,” he says.
The merger will drive synergies for the companies through accelerated product innovation and a collective investment in one set of features that eliminates duplications between the platforms.
“Four types of customers interact with our products today - the venue operator, guests, staff and head office teams,” Teo says.
“Over the next few months, our combined company will launch a number of new products and features focused on elevating the interactions between staff and guests, as well as marketing tools to help increase foot traffic and revenue.”
Robert Routley, the CEO of Acorn Capital which led the most recent raise by me&u - a $30 million top-up in December last year - describes the merger as an ‘audacious move on the part of the founders and shareholders of both companies’.
“The combined business is an even more formidable force in spearheading the global transformation of technology-driven hospitality services, Routley says. “Acorn looks forward to continuing to support this remarkable Australian success story.”
Hospitality group Merivale, led by Justin Hemmes, has been along for the me&u ride from the very beginning.
“Used across countless venues and our stadia offerings, it has been a game-changer to our business and transformative to the customer experience, providing guests with a best-in-class ordering and payment system,” Hemmes says.
“It’s exciting to see two Aussie-born start-ups join forces to unlock the future of hospitality on a global scale. Together they are revolutionising service, operations and experience in the hospitality industry.”
Andrei Miulescu, Kim Teo, Kerry Osborn and Adrian Osman founded Mr Yum to give restaurants, bars and hotels the chance to improve customer convenience and spend through QR code ordering, along with delivery and pick-up options. The company has made a selective push into international markets, some of which have been slow to take up the digital ordering system.
Milestones for me&u include a partnership in 2021 with Australian Leisure & Hospitality (ALH), which is now under the Endeavour Group (ASX: EDV) banner.
The merger comes on the heels of the $100 million union of Ordermentum and Foodbomb, announced yesterday, in another sign of consolidation in the hospitality tech space.
Ordermentum's merger will create Australia’s leading ordering and payments platform for the wholesale food and beverage industry reaching a base of 40,000 venues.
In July, Melbourne-based loyalty and engagement platform Liven announced the acquisitions of Australian-based OrderUp and Abacus, Singapore-based Zeemart and Silicon Valley-based Copper to make it the largest end-to-end hospitality technology group.
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