Milwaukee startup Restaurant Private I Inc. is working to raise $40 million in cryptocurrency to launch its secret shopper service.
The company recently submitted notice of its offering to the SEC, indicating the securities it will offer are cryptocurrency.
Restaurant PI has 13 employees. It was founded in May 2017 by Jeffery Varnado, who plans to launch the secret shopper platform in October.
The ICO (initial coin offering) commenced on June 5, and will end Sept. 1. The proceeds of the offering will mainly be used for software development and operational costs, including establishing a physical Milwaukee headquarters, Varnado said. So far, there are nine investors in the offering.
“We have an app, but it’s going to be redeveloped. That’s what we’re raising funds for,” he said.
Varnado admitted Restaurant PI may not attain $40 million in the offering, but he wants to try to get as many funders on board as possible.
“Maybe (we will get) half,” he said. “We’re aiming a little higher than what we possibly think we’ll get.””
Initial coin offerings are a relatively new financing vehicle whereby companies skip traditional bank and investor funding, and instead receive investments directly from customers via a token sale. Varnado said because of uncertainty regarding SEC rules, U.S. residents will not be able to participate in the funding round.
“What we want to do is we want to bring it worldwide,” Varnado said. “My team is from all different countries and we want to be able to hire different personnel elsewhere, too.”
Restaurant PI will offer secret shopper services to restaurants so they can independently evaluate their service and customer experience. Restaurant PI would bring on restaurants through a monthly subscription fee. The restaurant would use its app to hire secret shoppers to visit the restaurant during certain time ranges.
Restaurant PI has a cryptocurrency token, which it calls Lunch Money, it will use to pay its secret shoppers for going to do the reviews. They would also receive in-app free meals and coupons from the restaurants in return for the reviews.
The service would give restaurants a more solid customer base and additional revenue, and help them improve their service, Varnado said. The customers would receive free food and an anonymous vehicle for feedback on their restaurant experiences.
“What we’re trying to do is improve customer service everywhere, as well as making it a win-win for the business and the customer,” he said.
Restaurant PI’s Lunch Money token can be used as a widely accepted ethereum currency in transactions, Varnado said.
A similar ICO by California food review company Munchee, was halted by the SEC in December because the company violated the Howey Test by not filing any exemptions or notifying the SEC of the offering related to the securities. Varnado said Restaurant PI has avoided those pitfalls by registering with the SEC and meeting the Howey Test in its whitepaper.
According to the SEC, “Munchee was seeking $15 million in capital to improve an existing iPhone app centered on restaurant meal reviews and create an ‘ecosystem’ in which Munchee and others would buy and sell goods and services using the tokens. The company communicated through its website, a white paper, and other means that it would use the proceeds to create the ecosystem, including eventually paying users in tokens for writing food reviews and selling both advertising to restaurants and ‘in-app’ purchases to app users in exchange for tokens.”
