Each year more than $14.3 billion is lost in the $376 billion foodservice industry due to inefficiencies in the supply chain, according to industry experts. Today Restaurantpro.com(TM) revealed its plans to significantly reduce this waste with a business-to-business (B2B) marketplace customized for the needs of foodservice operators.
Restaurantpro.com connects restaurants and suppliers in a secure extranet online marketplace that allows them to work together more efficiently and enhance existing relationships. The company provides a complete B2B solution that is free to targeted, full-service independent restaurants, including a PC, high-speed Digital Subscriber Line (DSL) Internet access, and an e-procurement service that brings efficiencies, control and enhanced supplier communication to the ordering process.
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A number of industry-leading companies have partnered with Restaurantpro.com, including Bank of America, Commerce One, Inc., OpenTable.com, LMKI, Inc., chefstore.com and Cambridge Technology Partners. These companies offer significant technical and marketing contributions and enable broad based scalability.
“Restaurantpro.com delivers a turnkey, Internet-enabled service that is tailored for restaurants and suppliers,” said Christopher R. Hemmeter, president and CEO, Restaurantpro.com. “We’re focusing on the $108 billion independent full-service segment, where supply chain inefficiencies are the greatest and where gross margins are relatively robust. By delivering our solution totally free to the restaurants, we will aggregate the independent segment, creating a compelling value proposition for supply chain participants.”
Restaurantpro.com is initially targeting independent full-service restaurants, with plans for chains and institutions in the works. Although full-service independent restaurants are typically high margin accounts for distributors, traditional procurement practices are grossly inefficient – voicemail orders transcribed by hand — resulting in significant added costs.
This spring Restaurantpro.com will launch in San Francisco, where the service is currently operating on-site at local restaurants and suppliers, and where more than 50 customers have already committed to utilizing the service. The company has opened regional offices in Chicago, New York and Phoenix and plans to launch its service in these markets this summer. National expansion efforts are expected later this year.
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In addition to offering restaurants a free PC, DSL Internet access and e-procurement services, Restaurantpro.com manages system installation, provides on-site user training, and offers 24/7 customer support. Through a strategic alliance with Bank of America, Restaurantpro.com provides the complete solution free of charge to targeted restaurants that use credit card processing services from BA Merchant Services, Inc., a wholly owned subsidiary of Bank of America.
As the principal merchant processing supplier on the Restaurantpro.com marketplace, BA Merchant Services, Inc. pays a transaction fee to Restaurantpro.com for each credit card purchase. It is expected that as a result of the Restaurantpro.com platform, significant volume will be brought to BA Merchant Services, Inc. This arrangement helps to offset the cost of providing free hardware, connectivity and services to Restaurantpro.com customers. More than 80 percent of customer transactions in full-service independent restaurants are processed via credit card.
For the first time, restaurant credit card transactions will be processed via high-speed DSL Internet connections using proprietary, patent-pending technology developed by Restaurantpro.com. These Internet transactions will utilize existing POS hardware.
The company’s alliance with Bank of America also involves a cross-sales effort leveraging Restaurantpro.com’s sales force and BA Merchant Services, Inc.’s 350 sales representatives nationwide to deploy both companies’ services in markets across the country.
E-Procurement Service
Restaurantpro.com’s e-procurement service, incorporating the latest technologies from Commerce One, features a customized extranet-based ordering system, tracking and analysis tools, and a centralized back-office data management and communications platform. Restaurantpro.com integrates the restaurant’s preferred supplier list, pre-populated order forms, and updated negotiated pricing into a private, password-protected account on the service. Order history data is easily accessible online, so restaurants can better analyze and control costs. Distributor pricing is not pooled for bid or auction-based buying.
Restaurantpro.com will continue to add features to the marketplace, including staffing and training resources, valuable community content, and an e-auction service.
Value-Added Supplier Solution
Restaurantpro.com enrolls foodservice suppliers at no set-up costs, including a PC, DSL Internet access, system installation, on-site user training and 24/7 customer support. In addition, Restaurantpro.com also provides suppliers with their own online storefront featuring company and product information. The publicly accessible storefront can generate sales leads for suppliers by making it easy for new customers to find them via Restaurantpro.com’s online search features.
For suppliers, the Restaurantpro.com service reduces order errors and cuts the time required for receiving orders, giving sales representatives more time to proactively sell. It also creates a direct communications channel to restaurants, so suppliers can send product updates or notifications of specials, promotions or substitutions right to the online order forms at specific restaurants. Suppliers are charged a small transaction fee for all orders received through the system.
Strategic Alliances
Restaurantpro.com also plans to work with Commerce One (NASDAQ:CMRC), the leader in global e-commerce solutions for business, to connect buyers and suppliers over the Internet. Commerce One’s technology can streamline and stabilize the process of managing supplier catalog and pricing information and restaurant buying preferences in a Web-ready format. Commerce One currently provides technology and services to regional and industry B2B marketplaces in the energy, automotive and aerospace industries, among many others worldwide.
Cambridge Technology Partners (NASDAQ:CATP), a leading management consulting and systems integration company, will oversee the implementation of the Commerce One technology in the Restaurantpro.com service.
LMKI, Inc. (OTCBB:LMKI), a leading provider of broadband communications solutions, is Restaurantpro.com’s DSL service provider and is furnishing a Real Private Network (RPN). Using the RPN means that Restaurantpro.com customer information will not travel over the public Internet, making the service more secure.
Restaurantpro.com is working with OpenTable.com, the nation’s leading provider of online reservations and customer yield management tools to restaurants. Both companies provide value-added services using DSL Internet connectivity. The partnership is expected to generate significant sales, marketing and system deployment efficiencies for both companies.
Chefstore.com will be the first e-commerce merchant to make its wares available on the Restaurantpro.com public marketplace. Chefstore.com is an online source for professional kitchen equipment, supplies, tabletop items, specialty foods and chef’s products.
Financing
Restaurantpro.com announced $9 million of financing in February through private investors and the venture capital firms of Canaan Partners, Boulder Ventures and Advent International. Commerce One also invested in this round. The company currently is seeking to close its next round of funding, which is expected to raise up to $50 million and will include participation from all of its current venture capital investors.
About Restaurantpro.com
Restaurantpro.com is a privately held service company leveraging the Internet to help restaurants and suppliers do business together online more efficiently and effectively. The company will build and manage the dominant B2B marketplace for the $376 billion foodservice industry. Restaurantpro.com’s board of directors includes Jed Smith, founder of Drugstore.com, John V. Balen, from Canaan Partners, Peter Roshko from Boulder Ventures and Christopher R. Hemmeter. The Restaurantpro.com web site is located at www.restaurantpro.com.
Forward Looking Statements
Certain statements made in this press release by Commerce One are not historical facts but are “forward looking statements” and may involve risks and uncertainties which could cause actual future results to differ materially and adversely from those anticipated by such statements. Included among the factors that could affect Commerce One’s performance are: product demand and market acceptance; general economic conditions; fluctuations in operating results; its ability to effectively manage future growth, to retain and efficiently integrate its executive management team, and to identify, hire, train and retain, in a highly competitive market, individuals highly skilled in the Internet and its rapidly changing technology; significant revenue concentration in a limited number of clients etc. For a discussion of these and other risk factors that could affect Commerce One’s business, see “Risk Factors” in Commerce One’s filings with the Securities and Marketplace Commission, including its annual report on Form 10-K for the year ended December 31, 1999.
