Building any type of business is hard. But keeping a restaurant afloat can be particularly grueling.
20 percent of restaurants close within a year and 60 percent shutter within five years, according to the U Bureau of Labor Statistics. On top of that, the average full-service restaurant carried $51,863 in debt at the end of last year.
The culprits? Labor, overhead…and importantly, the rising cost of food. Restaurant operators are spending up to 13 percent more on food costs alone since the start of last year.
“Labor and overhead are largely dictated by the market and regulation, but restaurants can do something about their food spend,” says Florida-based entrepreneur Michael Otis.
Otis is working on this food pricing problem with FareFood, a newly-launched app-based startup that allows restaurants to order from multiple food distributors in one place. This helps streamline how suppliers and restaurants connect, making the ordering process easier and more affordable.
Know FareFood Fights Food Costs
Every restaurant is different, Otis explained. But each restaurant owner can work with a handful or more of different suppliers which each have their own sales reps, invoicing systems, and processes. On the other side of the equation, distributors traditionally don’t have an easy way to scale into new restaurants.
The platform gives restaurant owners the “convenience of one distributor but the competitive pricing of multiple distributors,” Otis added.
“What’s beautiful about what we’re doing is it’s hugely valuable for the suppliers too. We’re giving restaurants a new, easier way to buy from distributors and distributors a new, easier way to grow their business.”
Otis said the FareFood platform can help restaurants save as much as 27 % on their food spend.
While Otis just started working on FareFood earlier this year, he has already built a profitable business and has brought in impressive partnerships with national distributors like Gordon Food Service, US Foods, Performance Food Group, and Sysco.
Lessons From A Second-Time Founder
Helping restaurants succeed is personal for Otis. A foodie at heart, he keeps a Notion database of his favorite restaurants in different cities. After building his career at Atlanta-based tech companies Rubicon and Stord, Otis launched Protoco. The startup went through the popular startup accelerator Y Combinator in 2021 and was ultimately acquired earlier this summer by Florida-based supplier enablement solution Bedrock.
Otis worked with restaurants throughout his Protoco days, though the procurement-focused startup was not exclusively focused on the industry. When he was thinking about launching a new startup in the restaurant space but before writing any code, Otis spoke with 47 restaurants in the Tampa area to better understand their needs.
“A restaurant owner actually suggested the idea,” Otis added in a press statement about the launch. “He said he’d been looking for something like this for years and every restaurant would use it if someone just built it.”
Now as a second-time founder, Otis that the “learning cycling is much more condensed,” which has helped Otis launch in only a matter of months. “Things that took months during Protoco is taking days,” he added.
The startup is growing within Tampa and St. Petersburg at the start, but the team is already eyeing expansion across other cities in Florida moving forward.