Kiwi SOS restaurant voucher scheme gifted to US startup
SOS Business, the local restaurant voucher scheme created during the first Covid-19 lockdown, has been transferred to an American startup as part of a $5 million package for local businesses.
The non-profit platform was created by David Downs, Joyce Quah and Naadei Atafu just minutes after the level four announcement in mid-March, offering cafe and restaurant vouchers online that could be redeemed post-lockdown to help businesses pay rent through the period of zero revenue.
The platform has since expanded to include 2,400 businesses, ranging from wildlife parks to barbershops and bars, and has sold $2m in vouchers.
The deal will see the platform's ownership transfer free-of-charge to Texas-based restaurant investor inKind, in exchange for it committing to buying $5m of vouchers from its roster of New Zealand businesses.
Downs, who is also chairman of the Well Foundation and NZTE general manager of projects, said he started the platform after trying to order lunch from the café down the road online before realising most hospitality businesses didn't have online order capability.
"Of course, he's a café guy, not a website guy and I used to be a tech guy, so I set up a website to sell coffee for him, then I rung around all the locals and it snowballed from there."
So far only about 40%-50% of vouchers had been redeemed, which Downs said showed people were more interested in supporting their local haunts than getting a cheap meal.
He will stay on at SOS/inKind in an advisory role and believed inKind would bring significant value for members on the platform.
"The whole SOS thing was set up as a non-profit to help small business so I didn't want to suddenly change it to a commercial model. I was looking for someone that was going to keep the charitable side of the game but also bring something of value."
inKind runs a service that helps restaurants get off the ground or upgrade their premises by buying a certain value of vouchers at a discount, then selling them through its platform at a margin, which chief executive Johann Moonesinghe said worked out to be cheaper than interest rates from traditional lending.
Moonesinghe said while many restaurateurs might be great chefs, many don't know about payroll systems, labour costs and managing overheads.
"Restaurant finance in the US is broken, it's usually high-interest loans or taking a percentage of the profits from the business. Neither of those normally work out well for the operator."
So far it has financed over 400 restaurants this way, with most of its recent funding going towards retrofitting restaurants to comply with Covid-19 distancing requirements. Moonesinghe said the company will offer this service alongside SOS Business's original service, as well as marketing support for restaurants.
"SOS has been a massive help for restaurants, cafes, and other businesses Kiwis love. Our plan is to expand the SOS offering, and help support New Zealanders as they work through another lockdown, and come out the other side," Moonesinghe said.
SOS Business and inKind connected after inKind saw some of the extensive media coverage around SOS and called Downs for advice on Save Hospitality, a similar programme it runs in Australia.
Downs said handing the non-profit over to inKind made sense, particularly as it had been interested in the New Zealand market for some time.
"I talked to these guys and there was a good cultural alignment, Johann is a restaurateur himself and I used to be many years ago; they understood that we were only doing this to help the businesses, [and] there was no profit in it for us."
He said Auckland relapsing into alert level three and social distancing requirements elsewhere highlighted that the hospitality industry still needed support from the public, and $5m injection would be well received.
"My perception is it's a mental health challenge for many of these businesses, as much as it is an economic one," Downs said.