Figure it could be helpful to post notable additions / removals from InKind.
Pasjoli was just added.
Additionally, Costco just went live with the several-times-per-year sale of $100 InKind credit for $64.99. Now through 9/13. Limit 5 per member. Time to load up!
https://www.costco.com/p/-/inkind-one-egift-card-thousands-of-restaurants-100-value/4000233859
Can someone explain the economic model of this to me? This all seems too good to be true and I’d feel bad taking money from deserving restaurants
Pasting what I posted in the Pasjoli thread, with some additional commentary.
“InKind provides restaurants with $x of cash in exchange for $2x of F&B credit. It’s essentially a super high interest rate financing instrument, though it’s technically not debt or on the capital structure at all. It’s expensive but easy money, and often but not always means cheaper financing options were not available, or the need for cash was so urgent.
There are some “not bad” reasons for taking out InKind financing, like needing a small amount of cash in a pinch for a repair, or opening a new location, or some big groups with huge spaces and massive fixed costs use it just to get people in the door and fill up the room.
But when a place like Pasjoli is taking InKind money, it’s often (though not always) an indicator that they’re in a precarious financial position.”
While I can see why one might feel using InKind is “bad”, I don’t see it that way whatsoever. Restaurants make operations and financing decisions all the time, this is just the rare opportunity that we’re privy to some of the details. It’s no different, really, then if a restaurant sold discounted gift cards. When a restaurant is on InKind they have already received the cash, the outstanding F&B credit is a liability, and by dining with them and paying with InKind you are reducing that liability.
By no means am I suggesting it’s righteous or chivalrous, I just think it’s totally neutral. I wouldn’t ever hesitate to use a restaurant gift card because I worried it would hurt a restaurant. They made an informed decision, and unlike a loan InKind financing doesn’t accrue interest so it’s not like it will slowly suffocate them over time. Taking out InKind cash will not cause a restaurant to go under - and probably won’t change the trajectory of the restaurant at all, the only thing it might do is prolong the inevitable if the restaurant was already heading towards insolvency.
From InKind’s perspective, they pay $x for $2x of F&B credit, which they then go sell to people like us for more than they paid but less than the value of the F&B credit (y, x<y<2x), which we’re happy to do because it’s an immediate discount.
Thanks for the business model behind this. It explains things that otherwise seemed odd.
Is it necessarily a bad a sign regarding a restaurant’s situation? Certainly lots of good places have been on there for years. Maybe some can negotiate better terms if they are an asset to the network? Inkind can always file the expense under marketing/expansion (I.e. burn investor cash).
The phase of venture/big corp growth-chasing is probably the only time I don’t feel like I’m in some kind of exploitative zero-sum game. I hope that’s what’s happening here, and both the customer and small business are better off in this phase.
I see places on there that opened just pre-pandemic and have now established themselves. I’m sure this form of financing was/is a real lifeline (and a much better alternative to desperation loans/credit cards)
Not at all. Broadly, if a restaurant takes InKind cash for capex (e.g. opening or expansion) or marketing to fill a few more seats in a big space (e.g. José Andrés group) it’s not necessarily a bad sign. If a restaurant takes InKind cash to meet payroll or pay vendors, it’s almost certainly a bad sign.
The rub with Pasjoli specifically is that it’s not a new restaurant, it’s not renovating, it’s not expanding, it’s not a huge space with a massive cost fixed base where filling a few extra seats that are paying mostly or entirely with credit wouldn’t hurt, it’s already changed concepts multiple times, and Beran has been open about Pasjoli’s financial struggles in recent years. I could still be wrong, of course, but the signs are clearly pointing in one direction.
I imagine InKind also markets their service as a way to get a new audience into the restaurant since the whole deal with InKind for the consumer is they get a discount or bonus on purchases of InKind funds. Just like DineLA, I’m sure they also claim to do marketing for their clients as well. In both cases part of the value proposition is you’re providing a discount to consumers to entice them to visit. Presumably they make some math claims to count some of their margin as a marketing expense for the restaurant, making the multiplier on funds borrowed from InKind look more appealing.
If it actually pays off and results in decent conversion of new customers to returning ones, it can also be a rational marketing expense for a restaurant.
breadhead is on inkind!
InKind no longer allows stacking credit + other promotion codes like 15 off 30, or 50 off 150, a shame.
But, still free savings if you plan it right. On our trip through CA, we didn’t end up using it at all, since our most interested stuff weren’t on it. But in NYC and DC we’ve had some pretty good nights (or it helped ease the hurt of disappointing places)
Might be worth grabbing the Costco gift cards just for that.
If you go to NYC or DC, inKind is worth stocking up on. The Modern, Cosme, Kappo Sono, all Jose Andres places including minibar, Xiquet (meh), Imperfecto (meh), Gramercy Tavern are all on there. Xian famous foods is also on there.
In LA, the only two I’d want to go to are Camphor and Damien (mostly because I’ve heard Damien > Cosme).
Yes, but the Blackbird deal is so much better - it includes a drink and chips for the same price as just a sandwich (if you pay using Blackbird).
Yes, but the Blackbird deal is so much better - it includes a drink and chips for the same price as just a sandwich (if you pay using Blackbird).
Marea
Mother Wolf
Go Get Em Tiger
Van Leewun
For The Win
Lugay’h
La Sorted
Tacos 1986
Pizzana
Gjelina, holy basil, camphor
Are you guys saying that the loan is for $100k and then the business has the pay to next $200k in sales back to InKind? That’s insane. Or is that $200k spread out over time, and if so what time period, or is it a percentage of sales?
It doesn’t seem to be necessarily the next $200k in sales. It might be based on customer redemptions. There must be some combination of spreading it out over time and redemptions, but I don’t know how it works. I would love to see the terms
This is kind of what’s crazy to me, is that if it’s inkind redemptions paying off the loan then popular restaurants that attract a ton of folks are going to be paying it off earlier (have effectively much larger interest rates?) vs other places. Matthew Kang has a nice article about this where it seems like the restaurant doesn’t get cash for inkind redemptions; so inkind redemptions must pay off their principal? Obviously I don’t know all the details (there must be some kind of set repayment period or rate throttling!)
I see a couple of bucks in my inKind account right now.. looks like my next 2 inKind meals will be at Firstborn and Kali, not bad not bad
well the idea is that the business is technically only out the food costs.
Marginal cost of financing
The cost to your restaurant is the cost of the food and beverage you serve as customers redeem the credit they were sold by inKind. If you’re running 30% COGS, servicing $100 of credit will cost $30 + tax.
It’s like selling gift certificates in bulk at a discount. Get paid now, serve meals later.
Though the combination deals with Seven Rooms or whatever, who knows? Could be those aren’t discounted.
Maketto in DC might be our favorite asian fusion place in the US. 8282 in NYC not far behind. Both on inKind.