OLO Part 3 – Failed Acquisition

By | May 13, 2024
olo restaurant

Exposing Olo Part 3: Dropping 40% of Olo’s Enterprise Value into Wisely

Both McDonalds and Five Guys Burgers and Fries compete on a daily basis to offer the public hamburgers and fries. In 2014, McDonald’s spent more than $988 million on advertising. Five Guys Burgers and Fries, in the same year, spent exactly $0. Continuing analysis of Olo by Reforming Retail.

Here’s a summary of the key points:

  • Olo’s Acquisition of Wisely: Olo spent 40% of its enterprise value to acquire Wisely, a restaurant marketing tool, but the acquisition has not been successful in generating the expected revenue1.
  • Management Decisions: The article criticizes Olo’s management for poor decision-making and execution post-acquisition, leading to underperformance and shareholder dissatisfaction.
  • Technical Challenges: There were technical issues between Wisely and Olo, particularly with payment token data integration, which hindered Wisely’s effectiveness.
  • Comparison with PAR: The article contrasts Olo’s acquisition of Wisely with PAR’s acquisition of Punchh, highlighting PAR’s better management and transparent reporting leading to revenue growth.

RR provides an in-depth analysis of Olo’s business decisions and their impact on the company’s performance.

Let’s look at a totally different acquisition in the same, terrible restaurant industry: PAR acquired Punchh, a loyalty marketing platform in mid-2021 and since then Punchh has more than doubled revenue to $64M, representing a 29% IRR (we can ascertain this because PAR reports business lines separately and transparently).

This points to the biggest culprit being Olo’s management, both in their decisions on what assets to acquire, and post-acquisition execution (or lack thereof).

The second red flag was/is the legitimate technical hiccup between Wisely and Olo.

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