Tech supplier LoopAI has raised $6 million for software that can automate the complicated process of third-party delivery accounting. The funding round was led by venture capital firm Base10.
Loop was co-founded in 2022 by a trio of tech experts-turned-restaurateurs. Anand Tumuluru, Sundar Annamalai and Vinod P worked at companies including Uber and Google, and in 2019 opened a delivery-only restaurant in India serving South Indian vegetarian food.
The mix of experiences revealed a big challenge for restaurants that do third-party delivery. Namely, it has an entirely different financial model than the rest of the restaurant.
The ins and outs of the typical restaurant P&L are well-established: There are tried and true benchmarks for food and labor costs, plus rent, utilities and other expenses. What’s left over is profit.
Third-party delivery is different. It generally includes a commission of 30% as well as credit card fees, chargebacks and more. There are also packaging and labor costs for the restaurant to consider. And there is the issue of who is responsible for paying sales taxes, which differs by state and even by delivery service.
“All of these things are fundamental changes to restaurants’ model of financial operations,” Tumuluru said. “There isn’t a clear sense of what the profit margin is and what it isn’t.”
When all is said and done, there can be up to 15 different line items that determine a restaurant’s final payout from a delivery provider, Tumuluru said. Reconciling all of those charges against a restaurants’ own books can be complex and time-consuming, especially across multiple locations. And as delivery has become a bigger revenue stream for many operators, getting it right is more important.
LoopAI is designed to automate that process and ensure that restaurants get what they are owed by the delivery provider. It also consolidates a restaurants’ third-party delivery sales into a single, real-time dashboard, so operators can keep closer tabs on their delivery business. Typically, restaurants only get a payment summary and deposit from delivery providers every seven to 10 days.
Loop is also built to cut down on costly operational mistakes. As its name suggests, LoopAI uses artificial intelligence to scan customer reviews and feedback for errors and other issues. The AI then generates a summary for operators so they can address the problems.
For instance, Loop might specify that there were three orders where customers reported soggy fries around 8 p.m. Complaints like that can lead to chargebacks that cost the restaurant money.
Loop currently works with 100 brands across 4,000 locations, including Dave’s Hot Chicken and Freddy’s Frozen Custard and Steakburgers. It plans to use the fresh capital to continue developing its product and expand its customer base.
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