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Inside The Near-Death, Resurrection, And Triumph of Zenchef

The restaurant tech startup probably should have folded long ago. Instead, a belief in its mission, support from investors, and intensely loyal customers resulted in a €100 million exit deal that is just the start of a more ambitious future.

ZenChef co-founders (left to right): Xavier Zeitoun, Julien Balmont, and Thomas Zeitoun.
Zenchef co-founders (left to right): Xavier Zeitoun, Julien Balmont, and Thomas Zeitoun.

In the 11 years since co-founding Zenchef, Xavier Zeitoun remembers crying twice.

The first time was announcing a painful round of layoffs in 2018. He had to cut 20 people to save cash as the restaurant booking platform was failing to hit its growth projects and its future was in doubt.

"I recognized the mistakes we made in front of all the employees during an all-hands meeting," Zeitoun recalled.

The second time was just as Covid hit two years later. Zenchef had stabilized the previous year and become profitable. Now, with a national lockdown in France, the company appeared to be doomed just when big success seemed to have been in reach.

"I worked on the business plan for Zenchef, the re-forecast," he said. "And it was over. We would be dead in six months. And I was so disappointed because we thought we would be successful and then something hits us that we couldn't do anything about."

Those brushes with failure, coupled with more than a decade of pivots and recalibrations, should have been by all rights a fatal recipe. Instead, this long and rocky road has turned out to be just the opening act for an improbable future. Last week, PSG Equity announced a €100 million deal to acquire Zenchef and make it the foundation of a global restaurant tech giant it intends to build through acquisitions.

After scrapping to build Zenchef since 2011, Zeitoun has been anointed to lead this effort and oversee the creation of a company that could dwarf anything he could have imagined creating. He now has the resources of PSG, one of the world's largest private equity funds, at his disposal along with its deal-making savvy and hunger to win big.

The story of Zenchef is a reminder that there is more than one path to startup success, and that it is rarely a straight line. In this case, amid setbacks, the company created a fiercely loyal customer base that convinced investors to stick with the startup even as it appeared to sputter. And Zenchef's journey is particularly instructive at a moment when an era of relatively easy fundraising has ended and founders are going to have to focus more on financial fundamentals.

"You can't imagine how many entrepreneurs sent me emails or called me in the past few days just to ask about the experience of going through all these phases," he said. "Because now there will be a lot of entrepreneurs who will start that journey of trying to be profitable and to optimize everything. So they are interested in the Zenchef story because of that and they asked for advice. It's a good time for what I would call the cockroaches who can survive even during nuclear attacks."

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