This Stock Is Radically Transforming a Multitrillion-Dollar Industry


Let me tell you a story. A YouTube star known as “MrBeast” wanted to profit off his massive number of followers. Over 66 million people subscribe to his channel, and his videos have had over 11 billion views. So, MrBeast decided to create a fast food franchise overnight. Using Robert Earl’s Virtual Dining Concepts (VDC), he was able to start up his own virtual kitchen, MrBeast Burgers, and in December he opened his first “pop-up” restaurant in Greenville, North Carolina.

Via the VDC ghost-kitchen network, MrBeast Burgers opened virtually in almost 300 locations simultaneously. At the time, his food delivery app was the most downloaded app on Apple‘s iTunes Store and Alphabet‘s Google Play. And 100% of MrBeast Burgers were ordered online, via the Olo (NYSE:OLO) platform.

Regardless of what happens with the MrBeast chain, online ordering is clearly the wave of the future. And Olo (short for “On ‘line’ Ordering”) is the platform that will make it happen. Here’s why you might want to invest in Olo now, while it’s still small (with a market cap of $5.5 billion).

Image source: Getty Images

“It was like a great science experiment. It worked like crazy.”

Noah Glass, the founder and CEO of Olo, described what happened with MrBeast in an interview with QSR magazine:

I had never heard of MrBeast. It was just an incredible thing we witnessed. The MrBeast Burger app was built on top of the Olo platform. The marketplace is send-to-order into MrBeast restaurants’ production kitchens, I guess you could call them. Those are all going through Olo. One hundred percent order volume is happening through Olo. Now, they’ve processed a million transactions…

One of the new concepts in the restaurant industry is the “ghost kitchen,” an anonymous facility that cooks food for delivery orders. One ghost kitchen might provide the food for multiple restaurant menus. Robert Earl, the former CEO of Hard Rock Cafe and the founder of Planet Hollywood, is now running Virtual Dining Concepts, the company that helped create the MrBeast menu. A restaurant entrepreneur who wanted to start up a ghost kitchen could sign up with VDC and start cooking today.

Not surprisingly, ghost kitchens really came to prominence during the pandemic, when many restaurants had to shift to online options and delivery in order to stay in business. It’s estimated there are over 100,000 virtual kitchens now, and more are appearing every day. Key players in this rising industry include DoorDash; Uber Technologies subsidiary Postmates; Kitchens United; and CloudKitchens, started by Uber founder Travis Kalanick.

The internet is an incredible opportunity for some companies, a threat for others

The restaurant industry is a massive, multitrillion-dollar sector of the world economy. And the internet is radically changing this industry, as it’s done to many already. A couple of decades ago, Amazon used the internet to transform how we shop, and Booking Holdings and Expedia did the same with travel.

The downside is that a lot of the brick-and-mortar world has seen its profit margins squeezed tighter. Famous hotel brands saw their businesses become commodities, used by these internet powers; now the hotel industry is fighting to reclaim its own customers. Brick-and-mortar retailers are using Shopify to fight back against Amazon.

So the restaurant industry is a bit leery of all the online delivery shops. Many restaurants want to protect their brands and customer relationships. That’s why Olo’s software-as-a-service (SaaS) offerings are so powerful. Like Shopify, Olo operates entirely on the back end and has no interest in moving into the business-to-consumer (BTC) space.

Olo creates an interface between the restaurant and delivery outfits like DoorDash or Uber Eats. A restaurant can tap into Olo’s Dispatch network and match it with the best available courier based on the restaurants’ wants and needs. By doing so, the restaurant retains control of the relationship with the consumer. And using Olo’s Rails platform, the restaurant can shut marketplaces off entirely, or lower the amount of capacity they get, so that supply and demand can stay in balance. 

By keeping the power in the hands of the individual restaurants, Olo’s platform will protect the restaurant’s brand and its connection with customers. This is important because in other industries, like the hotel industry, internet players have seized the customer relationship and taken a lot of profits from the hotels. In Olo’s hand, that won’t happen to restaurants.

All signs point to go

Olo is seeing powerful growth right now, with quarterly revenue growth of 124%. It’s already signed up almost 10% of all the restaurants in the U.S. As more and more of the restaurant business heads online, it’s vital for restaurants to retain their connection with the customer and protect their brand (and their margins). As the SaaS provider that empowers restaurants in the internet channel, Olo clearly has a bright future ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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