Restaurant platform MarginEdge completes another funding raise

By Rebecca Cooper  – Senior Staff Reporter, Washington Business Journal
Mar 21, 2019, 1:24pm EDT

Arlington restaurant software platform MarginEdge Inc. has raised $2.5 million for its next round of growth, including from a venture firm and some familiar names in the D.C. restaurant industry. 

The second seed round includes investments from Greg Casten of Nick’s, Tony & Joe’s and Ivy City Smokehouse; Geoff Tracy of the Chef Geoff’s Deluxe Hospitality Group; and Tim McLaughlin, founder of Caboose Brewery and GoTab. Other investors included Nigel Morris, co-founder of Capital One Financial Corp.; and Yohan Allender, most recently of chef Mike Isabella’s restaurant group. 

Osage Venture Partners also participated in the round, which was oversubscribed, according to CEO Bo Davis. 

MarginEdge, which provides back-end management software that streamlines inventory, ordering, billing and accounting for restaurants, plans to use the money to continue to expand its product and also its customer base, Davis said. 

Among the new offerings coming down the pike for the software are the ability for restaurants to create a digital recipe book so restaurant kitchens can have fewer of those big binders that become a prep cook’s bible. The company recently piloted the program at Old Ebbitt Grill, and now the restaurant, which is one of the highest-grossing independent restaurants in the country, has a fully digitized recipe book available on each prep station’s touch-screen tablet. 

Next up is integrating payroll management. “The next big piece will be payroll integration, helping restaurants manage staffing expenses,” Davis said. Restaurants will still use a payroll provider, but feeding the payroll into the system will help them analyze ways they could save, Davis said. 

The other part will be continuing to grow MarginEdge’s client list. It's currently in about 600 restaurants — triple what it was a year ago. The company hopes to triple its footprint again in 2019, with 1,800 to 2,000 restaurants by the end of the year. MarginEdge focuses on restaurants and restaurant groups with between one and 50 units, and has a mix of fast-casual and full-service clients.

MarginEdge already has restaurants in 33 states, including markets such as Chicago, Minneapolis-St. Paul, Boston, New York and various parts of Florida. There are currently about 150 employees, with most of them in the countries where data processing is performed: India, Bangladesh and Cuba. There are about 25 employees at MarginEdge's Arlington headquarters. 

Davis declined to disclose MarginEdge’s revenue, and said it was not yet profitable. He expects the $2.5 million to take the company through the middle of next year. Davis does expect to pursue a Series A round before that, however, given that the company will need additional capital to continue to grow.