Online restaurant booking service Chope raises $8M, revenue doubled in past year

Chope, a Singapore-headquartered startup, has new ammunition to expand aggressively in China and Southeast Asia in its bid to become the region’s dominant restaurant management and marketing platform. It raised S$11 million (US$8 million) in a series C round co-led by F&H Fund Management, a fund chaired by pioneering Alibaba CTO John Wu, and NSI Ventures. The money will go entirely towards expansion.

Existing investor Singapore Press Holdings joined the round, with first-timers DSG Consumer Partners and Frontier Ventures participating. Unnamed Chinese investors were also involved. Chope also snagged Duncan Robertson, former CFO of the world’s largest restaurant booking site OpenTable, as a director to help shape its strategy.

The new investment caps off a past year of rapid expansion in Asia. Originally available in Singapore and Hong Kong, the service has since offered restaurants in Shanghai, Beijing, and Bangkok.

According to accounting records which Tech in Asia obtained, the startup made about S$519,000 (US$385,000) in 2013, a 50-fold increase over the previous year. Chope co-founder Arrif Ziaudeen says the startup’s annual revenue doubled from 2013 to 2014, which means Chope made roughly US$770,000 last year. Ziaudeen can’t reveal definite figures though as the accounts are still being audited.

“We are impressed by Chope’s revenue traction since our last investment. This investment is a signal of our confidence in Chope’s team and their ambition to become the go-to restaurant booking application in Southeast Asia,” says Hian Goh, founder and general partner of NSI Ventures, in a statement. But like any growth stage startup, Chope wasn’t exactly profitable, with an earnings before interest and tax (EBIT) of negative S$1.32 million (US$980,000) in 2013.

Hockey stick

Chope has so far helped 20 million diners make bookings through its apps. The pace of reservations has accelerated. It did the last 10 million in less than a year, while the first 10 million was achieved in three years. Ziaudeen claims its no-show rate is lower than phone bookings.

Chope is shaping up to become not just a booking service, but a comprehensive restaurant management and marketing platform. Its revenues are split roughly equally between a monthly fee for its operations management features and booking fees from its reservation service, which Ziaudeen considers a marketing channel for eateries.

Recently, it acquired queue management app Ticktok in an all-share deal. It also launched a digital vouchers feature. Social is something Chope is experimenting with. It launched a beta timeline feature showing where a user’s friends are dining at, and that is viewable on the web and even on an Apple Watch app.

“The new funding enables us to get more of this experimental product R&D in motion. The biggest challenge is anticipating how people are going to use technology in four to eight years time. Everyone’s building apps, crazy as it sounds that’s already old news. So the funds help us reach further into the future,” says Ziaudeen.

Betting on growth

He declined to comment on exact valuations, but says it’s based on “publicly-known benchmarks from many transactions that have happened in the global restaurant reservation space in the last year or so.”

“I joked that it was a great valuation for our investors, as between the time it was agreed and our closing our revenue and transactions had gone up something like 30 percent,” he says.

Judging by the distribution of shares in the accounting records, I’d estimate that the postmoney valuation is somewhere between US$20 million to US$30 million. Assuming its revenue doubles this year to US$1.4 million, we’d be looking at a 14x to 19x revenue multiple. That’s frothier than OpenTable’s valuation at the time it was acquired last year, indicating investors are confident it can expand rapidly in Asia.

Southeast Asia seems like a highly competitive market, with Reserveit and HungryGoWhere battling for dominance in Singapore, as well as Malaysia’s OffPeak and Thailand’s Eatigo working the driving-footfall-during-offpeak-hours angle.

Speaking of China, he argues that the restaurant business has more similarities than differences regardless of country. While some may say restaurants in China are rarely fully-booked, and that explains the lack of a prominent online booking service in China, Ziaudeen begs to differ.

“Chinese diners hate queueing as much as Singaporeans, and are willing to claw each others’ eyes out for that elusive table at that crazy busy restaurant. The emergence of an online restaurant booking service in China is as inevitable and predictable as online hotel bookings, food delivery, taxi ordering, restaurant reviews, and mobile messaging,” he says.