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Arlington Tech Firm Raises $3M to Go National with its Restaurant Management Software

February 20, 2018

By Rebecca Cooper - Senior Staff Reporter, Washington Business Journal

At the beginning, Wasabi Sushi founder Bo Davis was just looking for a way to streamline the accounting at his own restaurants, a chain of conveyor-belt sushi spots. But when fellow restaurateur Roy Phillips came in and saw his system, which included hiring a cadre of workers in India to process invoices, they got an idea for a whole separate business.

That was the beginning of MarginEdge, a collaboration between Davis, Phillips and two other partners, Mike Spitalney and Sam Leiber, that just closed a $3 million funding round led by IrishAngels. The Arlington firm plans to use the money to expand nationally.

Phillips knew the challenges of high-volume restaurants from his time as the venture partner for more than a dozen locations of Bonefish Grill. Davis had a background in tech before he jumped into the restaurant business, and he used that to create the MarginEdge platform in 2015. (He had also pared down the Wasabi business; there are now just two locations, one in Tysons Corner Center and another in a mall in Massachusetts.)

MarginEdge allows owners and managers to snap photos of all invoices and upload them to be processed in either India or Cuba, where MarginEdge now has offices. The software also integrates with a restaurant’s point-of-sale system, which leads to daily reports on what was purchased and what was sold.

“It provides them all their food costs, reports, recipes, inventories, all of the stuff that they need to do in their back offices, but lowers their workload rather than increasing the workload,” Davis said. The system can also use the overseas employees to place orders for the restaurant without vendors having to be part of MarginEdge.

Davis says it’s an improvement on many of the competitors because it doesn’t require manual entry or coding of invoices, receipts or inventory. The software is integrated with 20 different POS systems and seven different accounting systems; MarginEdge is currently processing approximately 7,000 invoices per week for about 400 restaurants.

That includes many in Greater Washington, including all locations of District Taco, buzzy Italian spot Red Hen and Greg Casten’s family of restaurants, including Nick’s and Tony & Joe’s on the Georgetown waterfront. Casten was an early adopter and invested in the company as part of this round.

Other investors include the New Dominion Angels, Mike Isabella Concepts CFO Yohan Allender and Tim McLaughlin, co-founder of Caboose Brewing.

After its launch in 2015, MarginEdge grew slowly, with the founders’ friends first testing in their restaurants. Growth has sped up, however, with the company seeing a 400 percent increase in revenue in 2017 over the prior year.

The firm will use the funding to grow nationwide; it's currently serving restaurants in New York, Boston, Minnesota. MarginEdge recently hired a full-time sales person in D.C. and another in New York, and plans to add more in new markets.

“We want to grow 400 percent this year, so it’s going to take a little more boots on the ground to do that,” Davis said.

Washington DC