September 24, 2015
"We are delighted to have completed the acquisition of Cover, the first major step in accelerating our international roll-out," said Alex Macdonald, Velocity Co-Founder and Co-CEO. "With the acquisition, we are excited to bring our suite of loyalty, CRM, and analytics tools to restaurateurs in the US, enabling them to identify, attract, and retain high value, trend-setting customers. We see ourselves as a hospitality company first, and a technology company second – a value shared with our newly expanded US team."
Cover became the leading restaurant payment app in its own right and has raised $7 million in investor funding, prior to the acquisition. While the company processed over $10 million in transactions since the beginning of 2015, Cover only kept about a third of the fee and passed the other two-thirds to banks and other financial institutions. Payment-processing providers are continuously diversifying product offerings to increase profitability and appeal across multiple industries. However, hospitality proves to be a niche market that requires industry insights to fully yield success.
"We are helping leading restaurants improve yield by driving more revenue per cover and attracting influencers," said Zia Yusuf, Velocity Co-Founder and Co-CEO. "Meanwhile, the global spenders and tastemakers want access to the sought-after tables at the best venues. Harnessing mobile payments enables customers to leverage their profiles across the globe, we are building an international hospitality brand to connect these two constituencies."
Regardless of the size, most restaurants have small profit margins, so it is imperative that providers offer a strong differential value. New customer acquisition via the app’s discovery feature, enables geo-targeting to customers already in the area. For businesses seeking to improve client retention, the app builds loyalty through tailored status and rewards incentives programs at the world's leading venues.
"The Velocity users are trendsetting, global jetsetters, which is an attractive audience for our restaurants," said John McDonald, owner of the Mercer Street Hospitality restaurant group. "Most importantly, through mobile payments we know that users associated with the Velocity brand spend materially more than our average cover."
For merchants looking to gain the appeal and visibility of tech savvy, local, affluent patrons, it is crucial to connect with this audience right from their device. According to the announcement, Velocity diners spend 14% more than the average guest, which is a huge opportunity, when transaction volume equals profitable gain.
US Cover employees are expected to join the Velocity team across multiple disciplines, and Velocity will invest in the Cover mobile apps and payment infrastructure. Current Cover Venues will have the option to keep the stand-alone iPad-based solution or upgrade to Velocity's payment and loyalty platform fully integrated with their PoS (Point of Sale). Both apps have a similar look and feel even down to the purple color theme, so I don’t anticipate users to have app withdrawal when they receive the update.
Velocity is the world's leading international digital hospitality service. Velocity partners with the world's best venues and empowers them to attract, delight, and retain high-value global customers. Velocity enables diners to leverage an international dining profile wherever they go, rewarding them for their global hospitality engagement. Velocity is the 2015 Headline Partner for Action Against Hunger. Velocity is a Spark portfolio company, with other shareholders including OATV and Lerer Ventures, as well as prominent angel investors such as Lars Christensen (CEO of Saxo Bank), Tom Glocer (former CEO of Thomson-Reuters), and Shukri Shammas (Partner, Initial Capital). www.velocityapp.com