Butler Hospitality confirmed Friday that it raised a $15 million Series A round.
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The New York-based company is a “ghost kitchen” operator, which means it takes over a hotel kitchen on one property and uses it to provide meal delivery services to in-house guests there and in nearby hotels, founder Tim Gjonbalic said in an interview.
The Kraft Group, &vest, Scopus Ventures and Mousse Partners all participated. The new funding brings the 4-year-old company’s total amount raised to $20.2 million, which includes a seed round and bootstrapped funding from himself, Gjonbalic said.
The new investment will be used to increase the company’s hotel partnerships in new markets. Butler Hospitality already operates out of four New York hotel kitchens and plans to expand into Chicago, Miami, Washington, D.C., and San Francisco by the end of the year, Gjonbalic said. In addition, the company doubled its executive team and employs 250 people, all full-time employees—something he said he is excited to be able to do in this environment.
“It’s a tough time for the hospitality industry to recruit people when you don’t know what the market is going to do,” he said.
The timing of this investment is interesting because both the hospitality and hotel industries are not doing well as the COVID-19 pandemic has continued, a McKinsey report revealed Friday. The research firm estimates that it will take until 2023 to see the industry return to pre-COVID-19 levels.
One of the areas Gjonbalic sees as inhibiting the industry is that hotels were not able to figure out what to do. Many experimented with grab-and-go meals or changing its room service, but failed due to long wait times and costly service fees. In contrast, Butler Hospitality is providing a seamless experience, charging orders directly to the person’s hotel bill and delivering the food in under 30 minutes.
“We are coming in and showing what the experience should be,” Gjonbalic said. “You don’t need a cart in the room or a $20 service charge to deliver food. Guests want good packaging, a good menu, price transparency, and to be able to track their order. This should have been happening a long time ago.”
Meanwhile, Butler Hospitality’s revenue has doubled every year, and now that the company has figured out the integration, experience, packaging and menu design, it is ready to scale into new markets, he said.
The company’s next steps will be to deepen its customer experience. That includes tapping into frequent travelers’ food and beverage preferences so when they check into a hotel partner, Butler Hospitality can engage the customer with that knowledge.
“That is where we want to add value,” Gjonbalic said. “Let the hotels provide the room and the bed, and we will provide the food and beverage service from there. We want to control the in-room hospitality.”
Photo of Tim Gjonbalic courtesy of Butler Hospitality
Blogroll illustration: Li-Anne Dias