Green, fast and tech-centric. Those appear to be the key attributes for an attractive investment in the out-of-home market these days, judging by the serious amounts of cash being put behind the growth of Neat Burger, a fledgling London-based vegan burger chain.
The eyebrow raising aspect of the latest funding deal for the Lewis Hamilton backed business, however, was the valuation it put on the company – US$70m for an operation that currently only has five restaurants in the capital. Yes, that’s definitely in tech stock realms.
Perhaps that’s not surprising, as this current injection of US$7m into Neat Burger was led with a private investment from Rajeev Misra, a senior executive at SoftBank, one of the world’s biggest investors in technology companies.
Apparently, Misra, who is based in London, decided to invest part of his personal fortune in the vegan business after hearing about Neat Burger from his children – which is another important aspect of the story.
So, are the global banking boss and Britain’s top motor racing ace – Lewis Hamilton, who is a vegan, and was an earlier investor – really onto something?
Neat Burger’s story feeds into some of the hottest trends of the moment – and ones that have only accelerated during the pandemic. The first is health and the move away from meat eating.
There’s plenty of consumer data that shows consumers want a healthier lifestyle and are willing to forsake meat eating for at least part of the time. This is particularly true of younger generations, who also have a greater awareness of green issues in general. Rajeev Misra’s children presumably fall into that category. Yes, you need to listen to your offspring at least some of the time.
The fact that Wagamama, now very much a mainstream brand, has a menu with 50% of its dishes plant-based, probably says more about the long term drift away from meat eating. Positive positioning of vegetarian and vegan dishes as ‘plant-based’ rather than ‘meat-free’ is also a subtle way of not offending meat-eaters who may want to partake.
Since 2017, Wagamama has launched lines including watermelon ‘tuna’, a vegan ‘egg’, vegan ‘ribs and squid’ and ‘chicken’ – and has just launched an advert to support the move featuring a vegan dinosaur. Ok, you need to watch it yourself.
Neat Burger also ticks the fast-food and tech trend boxes. Food-to-go and delivery have been real winners of Covid times, not least because operations offering those services have been able to trade much more freely than eat-in pubs or casual dining.
But it is a habit that has stuck with the public. Latest data from the Coffer CGA Tracker shows that delivery now accounts for twice the share of sales it did pre-pandemic even across casual dining groups.
As well as trading strongly, the food-to-go leaders in quick service and fast-casual have also continued to innovate, with drive-thrus, click’n’collect, order and payment apps, voice recognition, and more in the pipeline – all designed to speed systems, save time and maximise labour efficiency.
With Tortilla just floated on the stock market, Burger King’s UK operation rumoured to be ready for a £600m IPO and Leon now backed by the billionaire Issa brothers, owners of Asda, the appetite for the convenience end of eating-out among investors is only growing.
The fact that roll-out plans are now couched in how many drive-thrus or, in the case of Neat Burger, delivery kitchens are set to be opened, as well as dine-in sites, says everything about the change in the market. Neat Burger has tied up with Deliveroo and virtual kitchen partner Reef to try and drive its delivery reach to every part of the capital by early next year.
And don’t forget its retail ambitions; the other piece in the omni-channel jigsaw. Neat plans to launch its pea protein burgers in several major UK supermarkets in the coming year.
Whether a purely vegan business can flourish outside major metropolitan areas is debatable, but perhaps it doesn’t need to. Neat Burger plans to use its investment to grow to 19 dine-in sites and 16 delivery kitchens all in London by the end of 2022. The company then aims to open in Italy, the US and the UAE.
Neat Burgers might prove to be an expensive punt or a timely intervention into a changed and evolving market.
