Technology

PAR acquires Punchh for $500M

April 8, 2021

After dropping $500 million in cash and shares, PAR Technology Corporation, a global provider of restaurant software, now owns Punchh Inc., a loyalty and guest engagement solution company.

"Today there is a conflict between restaurants and technology," Savneet Singh, PAR CEO and president, said in a company press release. "The quantity of new software applications is making it difficult for restaurants to navigate complex integration networks and taking away from focusing on their guests."

Meanwhile, online marketplaces are becoming intermediaries between restaurants and their guests.

"With the Punchh acquisition, we are building a platform that enables restaurants to scale quickly, own their path to innovation, and take back their guest relationship," Singh said. "This eliminates the need for juggling disjointed vendors, developing cumbersome point-to-point integrations, and relying on 3rd party dependencies. At the same time, Punchh advances our ability to provide customers with an end-to-end solution, from guest-to-kitchen, through one unified data source."

Singh, who called Punchh the "pre-eminent loyalty and CRM SaaS provider", said the company has a blue-chip roster of customers, industry-leading growth, 100%+ net dollar retention and very high customer NPS scores.

"Punchh's highly experienced team are among the industry's best – we're beyond excited to have them join us on our ambitious journey," he said. "I am also pleased to report that the combined companies, on a pro-forma basis, at the end of 2020, would have generated $65 million in run-rate ARR, while maintaining our growth and net dollar retention."

PAR financed the cash consideration of the purchase price through a combination of equity and debt, including proceeds from the sale of $160 million of PAR common stock to PAR Act III LLC; funds and accounts advised by T. Rowe Price Associates Inc.; and a $180 million senior secured term loan under a credit agreement, with Owl Rock First Lien Master Fund, L.P., as administrative and collateral agent.

"With its Brink POS, PAR has been a Punchh partner for many years," Shyam Rao, Punchh co-founder and president, said in the release. "We've gotten to know them while jointly servicing customers and have always been impressed with their focus on their customer's success. PAR's point-of-sale and back-office solutions combined with our loyalty and engagement platform give customers an end-to-end solution for top-line growth, profitable guest relationships and operational efficiencies. We're excited to join the PAR team and further our offerings to the hospitality industry."

Keith Pascal, Act III partner, has joined PAR board of directors, and Ron Shaich, Act III managing partner and founder of Panera Bread, is taking a board observer seat.

"As a founder and long-time CEO of a large restaurant company, I understand first-hand the struggles of trying to power a large enterprise by gluing together disparate technologies from multiple vendors which results in silos of data, increased management costs and barriers to agile innovation," Shaich said in the release. "However, those restaurant brands that can create a differentiated guest experience, aided by seamless omnichannel technology and a superior understanding of their guests' preferences and behaviors, will be best positioned to win in the ever-increasingly competitive restaurant marketplace. I believe PAR's vision of a unified commerce cloud will enable more restaurant enterprises to compete effectively and efficiently in the digital arms race."

Goldman Sachs & Co. LLC served as financial advisor to PAR Technology Corporation, and as sole placement agent in connection with the concurrent financing transactions. Gibson, Dunn & Crutcher LLP served as legal counsel to PAR Technology Corporation in connection with the acquisition and financing transactions

J.P. Morgan Securities LLC served as exclusive financial advisor and Fenwick & West LLP as legal counsel to Punchh.

PAR Technology Corporation, through its wholly owned subsidiary ParTech Inc., is a global technology company with over 100,000 restaurants in more than 110 countries using its point-of-sale hardware and SaaS software.