Food-Ordering Software Firm Olo Jumps After $450 Million IPO
(Bloomberg) -- Olo Inc., the food-ordering software company whose board members include Shake Shack Inc. founder Danny Meyer, climbed 39% in its trading debut Wednesday after raising $450 million in an initial public offering.
The New York-based company sold 18 million shares for $25 each on Tuesday after marketing them for $20 to $22, a range it had earlier elevated from $16 to $18. Olo’s shares opened at $32 and closed at $34.75 in New York, giving it a market value of $4.93 billion.
The company’s software powers loyalty programs and allows restaurants to manage orders and set customized menus, according to its website. Olo, whose name is derived from “online ordering,” partnered with Uber Technologies Inc. in 2019 to allow consumers to place Uber Eats orders directly into restaurants’ systems, according to an earlier statement.
Olo’s customers include restaurant chains such as Five Guys Holdings Inc., California Pizza Kitchen Inc. and The Cheesecake Factory Inc.
Like other businesses with a hand in food delivery, Olo has surged during the coronavirus pandemic. After losing $8.3 million on $51 million in revenue in 2019, Olo had net income of $3 million on $98 million in revenue last year, according to its filings.
Grubhub Inc. shares have fallen from a peak in October but remain up 61% in the past year. DoorDash Inc. soared 78% in its trading debut in December. Its shares are still up 31% from its IPO price.
”When the pandemic hit, Olo was ready,” said Morad Elhafed, general partner at Olo-investor Battery Ventures.
Olo will continue to benefit from changes to the restaurant industry as the pandemic ebbs, Elhafed predicted. “The restaurant industry is resilient,” he said. “I don’t think we’re going back to wanting to wait in line.”
Olo was founded in 2005 as a text-message food-ordering service. It received a $40 million investment from the Raine Group in 2016 and $18 million from Tiger Global Management in 2019, according to company statements. Raine Group will remain Olo’s biggest shareholder after the listing and will have 27% of the voting power, according to the filings. Other investors include RRE Ventures and Raqtinda Investments.
Meyer, chief executive officer of Union Square Hospitality Group, owns about 1.1% of Olo’s Class B shares, the filings show.
Olo’s offering was led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Royal Bank of Canada. The shares are trading on the New York Stock Exchange under the symbol OLO.
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