After a tumultuous year that led to notable staff cutbacks, hospitality industry tech startups Mr Yum and me&u have confirmed they are in merger negotiations amid a race to profitability for the rival business models.
Katrina Barry, the CEO of me&u, says the companies are in ‘early and exploratory merger conversations’.
“We are frequently engaged with various partnership opportunities and always open to potential growth options, but at this stage no decisions have been made regarding any potential merger with Mr Yum,” Barry says in a statement.
Me&u says it does not plan to make any further comment at this stage.
With both me&u and Mr Yum making inroads into international markets and growing volumes domestically, profitability is a key focus for their respective businesses which have garnered some serious backing from venture capital investors.
But ambitious expansion plans that were not supported by business growth led Mr Yum to cut about 17 per cent of its workforce early last year. Me&u also announced layoffs, but to a significantly lesser degree.
Mr Yum's co-founder and CEO Kim Teo told Business News Australia last year that the cutbacks reflected an overestimation of the company’s expansion needs.
Both Mr Yum and me&u offer QR code platforms for restaurants and pubs to facilitate online meal and beverage ordering and payments.
Mr Yum last year acquired MyGuestlist in a bid to diversify its offering to the industry. The acquisition brought on board the customer relationship management platform Sprout, which is used by brands such as Nando’s, Shake Shack and Accor Hotels across Australia, the UK and the US.
Mr Yum’s growth has been driven by more than $100 million in capital raisings since the company was founded in 2018, with the most recent being an $89 million Series A in December 2021. The monster raising was led by US venture capital firm Tiger Global.
Acron Capital led the most recent raise by me&u, a $30 million top-up in December last year, as the company revealed it was eying its first profit in FY24. Among the company's high-profile backers is Merivale CEO Justin Hemmes,
Business News Australia has sought comment from Mr Yum on the merger talks.
The company, which was co-founded by Teo, Adrian Osman, Kerry Osborn and Andrei Miulescu, recorded 135 per cent year-on-year revenue growth in calendar 2022, with Mr Yum revealing that the Australian market contributed as much to that growth as its offshore push into the US and UK.
A potential merger could see the rivals consolidate their expansion plans as the US and UK are also key targets for me&u.
Just as Mr Yum has discovered, while these markets are ripe for the picking, establishing foundations in the Australian market remains a prime objective, Me&u CEO Barry has previously noted that Australians remain the most tech savvy consumers in the company’s customer base, making the take-up of the company's technology domestically easier than some offshore markets.
Between them Mr Yum and me&u service about 6,000 locations in Australia, the US and UK.
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