F&B Startup Hungry for Growth, Eyes Big City

7shifts, a mobile- and web-based restaurant scheduling company based in Saskatoon, has recently established a two-person sales team in Toronto — the company’s latest move in an effort to compete with industry leader, Austin-based HotSchedules.

In addition to the expansion into Toronto, which has the density of restaurants 7shifts requires for business development, CEO Jordan Boesch is bulking out his company’s Saskatoon development team to speed up integration of 7shifts with partner platforms including TouchBistro, an iPad-based point-of-sale solution for restaurants. Boesch is using the remainder of a round of angel investment 7shifts received in 2014 to add five more developers to the team, bringing the total to 14.

“We’re slowly nipping at [HotSchedules’] heels, and getting some good traction,” Boesch said in an interview. “Stuff we’re missing to become the greatest [restaurant scheduling platform] is in development right now, especially around reporting.”

Why Restaurants Need Scheduling Software

Restaurant scheduling sounds simple until you try it. A busy restaurant can have dozens of hourly staff, many of them part-time students or people juggling a second job, and their availability changes week to week. Managers have long built schedules on paper or in spreadsheets, then fielded a stream of texts and phone calls about swaps and missed shifts.

Software like 7shifts moves that work into an app. Managers build the schedule and approve requests, and staff see their upcoming shifts on their phones and ask for changes there. Connecting the scheduling tool to the point-of-sale system matters too, because sales data is what tells a manager how many people they actually need on a Tuesday lunch versus a Saturday night. That’s why integrations with platforms like TouchBistro were a priority for Boesch’s growing development team.

‘Looking For Apps’

The growth of 7shifts, as it competes in the sector, reflects the economic benefit at the intersection of cloud-based connectivity and demographic change. Millennials are stepping into management positions in the food and beverage sector, and “they’re looking for apps,” Boesch said. Although tiny now, 7shifts might become a significant employer for Saskatoon and Toronto if the company gets out in front of HotSchedules.

Boesch is in talks with potential investors, seeking additional capital to improve the platform. Meanwhile, 7shifts continues to bring on additional customers, about 90% of which are in the U.S. The company recently signed 90 Burger King locations in Alabama, which would bring in revenues from US$2,250 to US$6,300 per month, depending on the level of service selected.

In an increasingly cautious funding atmosphere, where analysts are writing down the values of Netflix and Hootsuite for stressing user growth over revenues, 7shifts’ conservation of seed capital while taking on paying clients will be crucial in helping the company secure additional funding.

“Founders are realizing the need to rethink prior assumptions about prioritizing growth above all else, and are increasingly focusing on burn rate, profitability and the path toward self-sufficiency,” First Round Capital said in a letter to its partners in February.

“We’ve managed to hit good revenue targets, so we’re not burning a ton of cash, which puts us in a good place for raising more capital,” Boesch said.

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What Happened Next

Boesch’s talks with investors paid off quickly. In May 2016, 7shifts announced a $1.2 million seed round led by Relay Ventures, with Globalive Capital, Boost VC and Tim Draper taking part. Boesch said the company had seen revenue growth of 300 percent over the previous year, and that it would use the money to expand its sales team and add features. At the time, more than 1,900 restaurants in North America, Scandinavia, the Middle East and Australia were using the platform, and it had integrations with point-of-sale companies including TouchBistro, Toast and Cake.

The rounds kept getting bigger. In August 2017, 7shifts raised $4.5 million from Tandem Capital and Relay Ventures. In January 2019, it closed a US$10 million Series A led by Napier Park Financial Partners, with plans to grow its sales and product teams in Saskatoon and Toronto, the same two cities at the centre of this story.

The road wasn’t smooth. According to Restaurant Technology News, the company had to furlough a quarter of its employees around 2020 because of weak revenue, before getting back on track. The pandemic then pushed restaurants to look harder at labour costs, which played to 7shifts’ strengths.

In 2021, 7shifts raised a $21.5 million Series B led by Enlightened Hospitality Investments, the fund linked to Danny Meyer’s Union Square Hospitality Group. Then, in February 2022, it raised an $80 million Series C led by SoftBank Vision Fund 2. By then, the company said its platform was used by more than 650,000 restaurant professionals across 27,000 locations, and that it planned to double the size of its team.

What Became of the Rivalry

The competitor 7shifts was chasing in 2016 changed shape too. In July 2019, HotSchedules merged with Fourth, another restaurant and hospitality software company, in a deal backed by Marlin Equity Partners and Insight Partners. The combined company served 120,000 locations, with tools covering scheduling, hiring, training, inventory and payroll.

That merger shows how the market developed. Rather than standalone scheduling apps, restaurant tech companies moved toward broader platforms that try to handle everything to do with a restaurant’s staff. 7shifts followed the same path, describing its 2022 plans as building tools for the whole employee lifecycle, from hiring and onboarding to scheduling, pay and retention.

What It Means for Founders

The 2016 version of 7shifts offers a useful lesson. Boesch went into a cautious funding market with paying customers, a modest burn rate and a clear niche. That made the company easier to back, and it raised money within weeks of this interview.

Focus helped too. 7shifts built only for restaurants, chose its sales city based on where restaurants were densest, and invested early in connecting to the point-of-sale systems its customers already used. For a small company competing with a much bigger rival, picking a narrow market and serving it well can be a better bet than trying to match the leader feature for feature.