Top Deal: Flipping the QSR Industry on Its Head with Flippy

80M

Key Stats:

Raise to Date

885,100

Investment Minimum

1,500

Minimum Raise

N/A

Pre Money Valuation

80M

Raising Platform

SeedInvest

Security Type

Preferred Equity

Target Summary

$30,000,000


Summary

Miso Robotics has been selected as a “Top Deal” by KingsCrowd. This distinction is reserved for deals selected into the top 10% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to hello@kingscrowd.com.

The Problem

Humans are inherently imperfect. Although there’s nothing wrong with imperfection, our inherent imperfection and proclivity to make mistakes and become exhausted become an issue in several industries. People make mistakes when driving vehicles, manufacturing, and even making hamburgers when driven to exhaustion. The additional expenses associated with human labor from wages, customer complaints, and more cost businesses. The simple act of flipping hamburgers is a tedious task that is an essential part for many businesses in the $273B Quick Service Restaurant industry

The Quick Service Restaurant industry is plagued by increasingly tight margins due to rising wages and a workforce shortage. Despite 45% of American diners eating out multiple times a week, it’s become increasingly more difficult for restaurants to hire kitchen staff. 

*Taken from Miso Robotics Pitch Deck

In a world where Americans eat over 50B burgers a year, of which the majority is made at quick service restaurants, how do businesses meet the growing demand for fast food with the short supply of labor?

The Solution

*Taken from Miso Robotics Pitch Deck

Meet Flippy, Miso Robotics’ solution to the shortage of kitchen chefs in QSRs and wage tightening. Flippy is designed to cook alongside chefs in commercial kitchens. Flippy’s computer and thermal vision allow it to cook food perfectly and consistently every time. According to the CEO of CaliGroup, implementing Flippy will reduce kitchen labor expenses by over 65% while increasing efficiency and the amount of food cooked by 23% (it should be noted that Flippy’s pilot was implemented in a CaliBurger which Caligroup owns and operates). 

Miso Robotics’ Flippy is currently flipping burgers at a few CaliBurger locations and is also used at Dodgers Stadium to fry food. CaliBurger, however, has ordered two Miso Robots for over 50 of its worldwide restaurants resulting in a $11M contract for Miso Robotics. 

According to Miso Robotics, implementing Flippy increases current industry-average profits of 5% to a healthier 14% and labor from 26% to 16% which translates to a 3x increase in EBITDA. Miso Robotics’ business model involves installing Flippy for $50K with a recurring $1K/month for what we assume is maintenance/upkeep. We like that there’s potential to add different versions of Flippy that will enable QSR chains to become even more efficient while also increasing the QSR industry’s dependency on Flippy/Miso Robotics.

The Deal

Miso Robotics is offering a straightforward capital raise. The company is raising a $30M Series C in preferred equity at a pre-money valuation of $80M. To date, the company has received a $.885M reservation through SeedInvest.

The Team

Buck Jordan is the co-founder and CEO of Miso Robotics. Buck is a Partner at Wavemaker Partners and was a Managing Partner at Canyon Creek Capital, an early stage venture fund. Buck gained operational expertise during his time in management consulting and in private equity. 

Ryan Sinnet is the co-founder and CTO of Miso Robotics. Sinnet has experience at NASA Johnson Space Center teaching the Valkyrie robot to walk. Additionally, he worked at eSolar where he was responsible for many of the control algorithms and software systems that ensure the safe operation of utility-scale solar power plants.

Robert Anderson is the co-founder and Head of Mechanical Engineering at Miso Robotics. Rob leads the hardware development of Miso’s autonomous cooking platform. Prior to Miso Robotics, Rob worked at Microsoft where he supported the development of Microsoft’s manufacturing lines. Rob was also an intern at SpaceX where he helped develop internal tools to understand component lifetime after multiple rocket launches.

John Miller is the last co-founder of Miso Robotics and an Advisor. John is the Chairman and CEO of CaliGroup. Prior to founding CaliGroup, John was the 2nd employee at Arrowhead where he headed the formation, growth, and sale of Arrowhead’s electronics business unit. John graduated from Stanford Law School.

Overall, Miso Robotics has a very capable team and are backed by traditional as well as strategic investors. If Miso Robotics plans on branching out of their current products/services, they may need to find additional investors or strategics related to the expansion.

Why We Like it

  1. Traction: After a successful pilot in CaliBurger’s Pasadena location, the restaurant chain signed a $11M purchase order (not a contract) to implement two of Miso’s Flippy at each of its 50+ locations. Additionally, Flippy has served over 60K lbs of fried foods and 12K burgers at high profile locations like CaliBurger as well as at Dodgers Stadium and Chase Field. We like that Miso Robotics has proven Flippy’s capability in high-profile locations that also see a lot of traffic. The traffic not only tests Flippy, but also results in organic marketing opportunities when people see Flippy preparing their food. We believe that Miso Robotics’ relationship with CaliBurger and athletic stadiums will extend to others in due time because of the clear value Flippy brings.
  2. Product-Market Fit: Miso Robotics has found incredible product-market fit with Flippy. The Quick-Service Restaurant industry is suffering from a wage and labor crunch wherein wages are steadily on the rise while labor is hard to find. With Flippy, QSR businesses can implement a robotic chef that solves the wage and labor problems QSRs are facing. QSR businesses can redeploy the staff that work the dirty job of frying food or flipping burgers to other parts of the business while maintaining or even improving the quality and consistency of their food to improve the customer experience.
  3. Growth: The growth opportunities with Flippy are obvious and incredibly lucrative for Miso Robotics. On the product side, Miso Robotics has expanded past just flipping burgers with Flippy also frying food. We can see Miso Robotics adding different/additional functionalities like Flippy assembling burgers and other foods. Flippy can put together orders and even place them in bags in the future. On the business side, Miso Robotics can sell to other QSR chains like McDonald’s, Burger King, and plenty others which provides a massive opportunity for Miso Robotics. Needless to say, but the growth opportunities in a $273B industry are massive and present numerous opportunities for this business to succeed.

    *Taken from Miso Robotics Pitch Deck

  4. Exit Opportunities: The exit opportunities for a company like Miso Robotics are also attractive options. Should Miso continue succeeding, we can see a chain like McDonald’s or any other chain acquire Miso’s Flippy to implement across all their restaurants. McDonald’s, for example, has recently stepped back into the mergers and acquisitions space with their 2019 acquisition of Dynamic Yield and their minority stake in Apprente. Before then, however, McDonald’s previous acquisitions were over 20 years ago. It remains to be seen whether or not McDonald’s appetite for M&A will continue, but we believe their foray into M&A presents a great opportunity for a startup like Miso Robotics. We believe, however, that Miso Robotics truly has the potential to go public and serve as the QSR industry’s remedy to the wage and labor problems. According to Miso Robotics, the recurring revenue opportunity in the industry presents a $6.3B opportunity. There is plenty of room and opportunity for Miso to grow out of their current products and offerings and offer multiple solutions as well.

The Rating: Top Deal

Miso Robotics operates in a market beset by rising wages and labor shortages. With Flippy, Miso is becoming the solution for QSRs to save money as well as replace crucial job functions for many QSRs. The cost savings also come with an increased consistency in service and quality that also improves the customer experience. Miso Robotics has the opportunity to become the solution for a $273B industry.

Miso Robotics, however, faces stiff competition in the space. Miso Robotics is not the first, nor will it be the last company attempting to flip the industry on its head. With competitors like Spyce Kitchens, Creator, and many others, Miso may not become the winner that QSRs turn to in the space. Miso Robotics, however, has made great strides with successful pilots at CaliBurger along with being implemented at a couple high-profile athletic stadiums in the US. Lastly, the Miso team received a $11M purchase order from CaliBurger and will hopefully make inroads with other QSR chains looking to cut costs. 

Additionally, it should be noted that as a robotics startup, Miso Robotics is an immensely capital intensive business. The company will assuredly need to raise additional capital in the future in order to continue development of Flippy and future products as well as execute on its business plan. Prospective investors should consider that future capital raises will dilute current and future investors and will yield lesser returns. 

We believe Miso Robotics is an attractive business that has the potential to reach unicorn status. The company has found incredible product-market fit and is making progress with businesses like CaliGroup and athletic stadiums. The executive team of Miso Robotics is also very experienced across all facets from technology to business. Additionally, Miso has allied itself with strategic and traditional investors that provide standard capital as well as guidance, expertise, and relationships in the QSR industry. The $80M pre-money valuation given its lack of revenues leave much to be desired. The $11M purchase order with CaliGroup is a good first step that will hopefully lead to a domino effect of contracts with other QSRs looking to implement cost-saving solutions. Lastly, the exit opportunities are attractive with a big player like McDonald’s recently rejoining the M&A space providing a nice early exit opportunity or, in the long-term, going public.

8
About: Francis vu

An investment professional with a background in private equity and venture capital having spent time conducting investments at VU Venture Partners and Pacific Oak LLC with a finance and management degree from Tulane University.

View Francis vu's deals

This is a Kingscrowd Pro Article

Gain access to the best rated startups across all major platforms including Wefunder, Republic, StartEngine, SeedInvest, Netcapital and more...