SousZen intends to raise funds for development of the Expeditor app and is doing so through a convertible note at a $7 million valuation cap with a 20% discount. The discount rate is attractive, and SousZen’s valuation is reasonable for this kind of business at this stage of development. Additionally, the company has begun to see positive revenue figures. Therefore, SousZen’s price rating is strong.

It will come as no surprise to any American that the U.S. and global restaurant industries are absolutely massive. The global food service market as a whole was valued at $3.1 trillion in 2018, though estimates of future growth are incredibly difficult to make now due to the COVID-19 pandemic. SousZen’s product is specifically marketed towards fresh food restaurants with multiple locations — a considerably smaller, but still ample, market size. Cutting down that size still further, SousZen is intending to take a slice out of money spent on digitization tools, which SousZen itself estimates to be 1%. Although it is very possible that restaurant digitization will continue to grow in the coming years, the market is still niche in nature. Thus, the market score for SousZen is its lowest across all five metrics.

SousZen’s team remains small so far. CEO Stephen King holds an M.A. from Pacifica Graduate Institute and has an exceptional record of business exits. King has been working in leadership roles for tech companies since the late 1980s, mostly across the West Coast of North America. King’s most significant exit was Imedia, a producer of routing and re-multiplexing systems for digital video in 1999. The company was sold to Terayon for $100 million. In more recent years, he has worked in leadership roles in automation, data analysis, and venture development firms. King currently serves as chairperson for non-profit Relay Resources, which cultivates work for individuals with disabilities. While King has little in the way of direct restaurant experience (he does own a multi-location restaurant business), the multiple exits on his record speak well of SousZen’s chances.

CTO Josh Groves is an experienced technology executive with two decades of experience in engineering and development. Like King, Groves has experience with successful exits, being part of the team that led Oilgear to acquisition by Texas Hydraulic Holdings. Groves’ most relevant experience would likely be his one-and-a-half year stint as CTO for Smarter Sorting, where he worked to develop a decision engine for optimizing sorting decisions.

While SousZen’s full staff remains a small group, it includes some heavy hitters with peripheral team members offering valuable additional experience. The team score for the company is high in reflection of this well-qualified team.

SousZen has a strong differentiation rating from KingsCrowd and deservedly so. Its decision engine is patent-pending, and at present, there exists no offering like it for automating restaurant business on the back-end. Right now, automation solutions are largely centered on the customer experience, offering touch menus for customers to order meals and so forth. While it remains unclear how useful the Advisor app’s data-driven business development advice will prove to be, the Expeditor and Management apps appear incredibly useful for restaurant operations and are likely to be a game-changer.

SousZen also has an industry behemoth at its back in its strategic partnership with PepsiCo, the second-largest food and beverage company in the world. It has established contracts with PepsiCo to provide its Manager and Advisor apps to the company’s 13,000 Tosticentro restaurant trucks in Mexico, providing both an early source of revenue and a generous testing ground for the SousZen solution. Due to SousZen’s first-mover advantage, the company’s differentiators score is very strong.

SousZen’s early performance appears to be impressive for a startup at this stage. There is currently little revenue data to analyze and no financial figures as yet for 2020. In its founding year of 2019, SousZen took in $176,201 in revenue with $161,958 in COGS. The company suffered a net loss of $294,016 that year, which isn’t terrible. SousZen did have to take on some short-term debt — $496,422 — to make up for these early costs.

In addition to the company’s partnership with PepsiCo, SousZen has also established product trials for three locations in the U.S. and two pilots in Australia, which bodes well for potential international market penetration. With all this strong early traction (especially given how young the company is), SousZen’s performance score is well above average.

At present, there doesn’t appear to be much in the way of SousZen’s runaway success. The team is proven, the tech is defensible, and the market is hungry for innovative solutions. SousZen’s only real avenue of concern is the possibility that innovative competitors might start to spring up as inventors spot flailing restaurants and identify room for new product offerings. Additionally, SousZen may face some adoption difficulties. While restaurants have been quick to adopt technological solutions for public-facing needs, kitchens are often slower to accept new processes. The outcome of SousZen’s early pilot program may help decide how open other restaurants are to the company’s solutions. Investors should also note that a lack of 2020 financials means we are unable to accurately gauge SousZen’s financial performance year-over-year, so the company could have significant problems we are unaware of.

There’s nothing quite like investing in a game-changing application with little market competition in a dynamically shifting space. SousZen has the potential to become the dominant kitchen-management software in the restaurant industry, breaking into a massive untapped market across the world. While the technology is still in the stage of demos and pilots, in the next few years it could quickly see revenues spiking as restaurants hungry for cost-saving measures invest in artificial infrastructure. This rapid growth potential could result in investors seeing significant returns in the years to come. Though nothing is certain in startup investing, SousZen certainly seems to have potential for dominance.

SousZen is bringing automation to the commercial kitchen with a three-part application-based solution for the challenges facing restaurants. The startup is targeting restaurants that prepare fresh, locally-sourced organic foods. These restaurants can ideally manage inventory and menus for multiple locations, expedite meal preparation in the kitchen itself, and offer data-driven analysis for the purpose of business development.

Thanks to a strategic partnership with PepsiCo, SousZen’s promising leadership team is off to a strong start with test programs and contracts secured in North America and Australia. The solution’s decision engine is patent-pending, and the tech is highly differentiated. Combined with a reasonable valuation and with a note of caution due to still-unseen 2020 financial data, SousZen seems on a course to dominate its chosen space. For these reasons, SousZen has been rated a Deal to Watch.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Benjamin Potts.