RDE, Inc. (OTCQB: RSTN), owner of Restaurant.com, shares could be preparing to enter rally mode. And deservedly so. In addition to benefiting from a hospitality industry showing accelerating signs of recovery, RSTN has done an excellent job beefing up its asset arsenal to take advantage of the sector's resurgence.
In fact, while the industry was slowed in 2020-21, RSTN was not. They attracted several impressive brand Ambassadors, inked important deals to expedite revenue growth, and perhaps best of all, are leveraging the best name in the business, Restaurant.com, to spearhead a potentially exponential period of growth for the company. Better still, they intend to do so from a position of strength.
Restaurant.com has little to no debt, no convertible warrants or debt instruments, and is completing a Reg A offering that may actually come to a successful conclusion sooner rather than later. And, while shares may be off of their $4.50 high over the past 52-weeks, expect that with a sector recovery well in progress, it can rebound as quickly or even faster than other hospitality stocks. Why?
Because RSTN offers sector exposure with far mitigated risk. That's important to investors. Moreover, its balance sheet is strong, and they offer a platform that can represent a limitless number of brands needing to advertise. It's fair to say that every participant in the hospitality sector can become a client. And they may consider doing so.
After all, the industry is recovering, but there is still work to do. And not being aggressive with a will to survive could be a costly decision to many. Moreover, because many Restaurant.com services can cost net-zero in the long run, not doing so would be foolish. However, if they don't, RSTN won't be to blame. It's doing its part to make inclusion as easy as a few clicks away. Hence, there should be no reason for restaurateurs of any size to feel the powers of Restaurant.com are out of their reach.
The best news is that RSTN and Restaurant.com present a win-win proposition. That is to say, RSTN can help the industry thrive and provide investors with an opportunity for appreciable returns. Actually, the investment side may benefit sooner rather than later. In fact, with RSTN having less than 13 million shares outstanding, any spark of new investor interest could send share prices soaring toward 52-week highs of $4.50. If so, a more than 164% increase could be in the crosshairs. That result is more likely than not.
A Sector Rebounds at Accelerating Pace
After all, Restaurant.com is targeting the right sector at its most opportune time. After more than eighteen months of pandemic-related shutdowns, capacity modifications, and indoor dining restrictions, the restaurant industry is nearing its day for service freedom. For consumers and RSTN, it's excellent news. And while better news for restaurant owners, it does expose the need for them to utilize the best marketing tools available as they face the most aggressive competitive landscape in decades. The adage has never been more true- out of sight, out of mind. Hence, in many markets, even long-time favorites must start from ground zero to regain their share of markets once taken for granted.
One thing is for sure. There's a hard way and easy way to get the results intended. Utilizing the strength of Restaurant.com makes it easy, efficient, cost-effective, and seamless. Hence, it's an obvious choice. The better news is that the entire sector understands what's at stake. Thus, while power in numbers is great for the industry, it's also excellent news for Restaurant.com and RSTN investors.
And Restaurant.com is getting noticed. Last week, RSTN announced a collaboration with multi-billion-dollar industry giant Performance Foodservice, a Performance Food Group Company (NYSE: PFGC), to provide Restaurant.com marketing services to its restaurant customers. It's a potentially massive deal and one that offers an immediate pathway for RSTN to touch more than 125,000 customers through 100 Performance locations nationwide.
The news gets better- it's a plan in motion. And RSTN benefits quickly by tapping into Performance Foodservice's One Source Solution Partners Program, a much-needed initiative helping restaurateurs navigate mounting issues inherent to an uber-competitive landscape that has been transformed over the past year.
More directly, it ties Restaurant.com into a program that gives every PFG client the resources needed to support marketing, operations, and staffing solutions by providing tools to help restaurants increase exposure, generate more business, and regain their market footprint. Even better, if used to its potential, the program can expedite a resurgence of any size restaurant. Best of all, there are no exclusions. Restaurants and foodservice businesses, large and small, can utilize this powerful business-generating and management program. Thus, best practices would suggest that no owner/operator pass on the opportunity.
RDE, Inc. Is A Winner Too
Still, it's not all about the players; RSTN stock can be a winner, too. By working with Performance Foodservice and its One Source program, RSTN expects to create significant near-term shareholder value by leveraging the strength of its Restaurant.com platform to thousands of Performance clients. Moreover, the deal is accretive to both companies sharing a common goal to help restaurants find new diners, turn customers into regulars, and build their restaurant business. The kicker, though, is that the team can produce better results faster and with substantially less cost than competing platforms by utilizing best-in-class digital tools. And with dollars being stretched as it is, don't underestimate the importance of that detail.
Performance Foods appears to be paying attention. In a release last week, Fred Sanelli, Performance Foodservice Senior Vice President Marketing, Brand & Sales Development, said, "We are excited to work with RDE, Inc. and offer their Restaurant.com marketing services and deals to our customers. We believe Restaurant.com is a different solution that will provide added value and drive additional revenue for them." Coming from an industry giant, it's quite an endorsement.
And the value of Performance choosing Restaurant.com to help spearhead a program as necessary as this should not go unnoticed. Nor should the value it can deliver on a revenues front for RSTN. In fact, once investors digest how this deal is immediately accretive to RSTN, returning back toward 52-week highs wouldn't be surprising. Still, even then, the stock may be appreciably undervalued.
A Valuation Disconnect On Multiple Fronts
That's because RSTN has done tremendous work to create value and strengthen its team over the past year. RSTN added Kevin Harrington (of shark tank fame) and Chef Fabio Viviani to its Board of Directors and Advisory board, respectively. It followed that with Bo Jackson, a famous athlete and entrepreneur, joining as an ambassador. All three add a significant amount of business and hospitality experience to RSTN and are expected to accelerate RSTN's mission to become the world's leading digital dining deals and services provider. Restaurant.com, by the way, is already the most prominent US dining deals brand. However, by expanding its team that has international appeal, global expansion is part of the plan. And deals are happening.
Earlier this year, RSTN announced partnering with AMAC, the Association of Mature American Citizens, and its 2.3 million members, providing a targeted pathway for RSTN to reach the senior adult population. The organization plays a vital role in helping build the services that will enrich the lives of America's seniors, and as a 501 (C)(4), advocates for issues important to its membership on Capitol Hill and locally through grassroots activism. But, for both, it's a win-win deal.
For AMAC, it extends Restaurant.com's national restaurant-focused digital discounts to its 2.3 million members. And for RSTN adds an additional target audience that can drive revenues and enhance long-term shareholder value by sharing its digital deals and providing access to discounted deals at local and national restaurants. While the agreement with AMAC is significant, they made a second and third deal.
A partnership with MemberHub adds the largest and fastest-growing community engagement software company for K-12 parent groups. That deal puts RSTN in an enviable position to target millions of customers through an array of digital deal offerings. MemberHub currently serves over 12,800 organizations that engage with more than 2.8 million K-12 parents. As noted, there's more.
A third deal connected Restaurant.com with Rosebud Restaurants to provide marketing services on its digital deals platform for its six Rosebud and two Carmine locations across Chicagoland. Combined, the three arrangements, and the newest with Performance, can be instrumental and quick to add substantial revenue-generating firepower to RSTN. The better news is that other deals are likely to follow. After all, it's no secret that marketing will be the most critical tool to separate winners from losers in 2022.
The more exciting part is that these services can cost virtually net-zero in the long run to RSTN clients. Hence, not inquiring can be a costly decision.
Momentum From A Recovering Restaurant Sector
By the way, RSTN investors are a big part of the equation. As restaurant owners and foodservice providers join Restaurant.com, its revenue-generating power can translate to share price growth. For a public company, even one on a socially-important mission, that's important. Investors want returns. And RSTN is in its best position ever to deliver on that initiative.
In fact, with an extremely small outstanding share count in the public float and investor interest returning to the sector, a price surge is expected. Consider this, too. The value in its name alone is likely worth upwards of 20X its current market cap. Cars.com was valued at $863 million but was actually sold for more than $2 billion. Las Vegas.com, Insurance.com, and other names also sold for at least triple Restaurant.com market cap. Hence, it's fair to say that RSTN's market cap in asset ownership alone substantially misses the mark on valuation. Comparably speaking, Restaurant.com is probably worth more than $10 per share in the current market. That assumption, by the way, might be conservative.
But, consider that as holding a straight flush up its sleeve. Its name value is in addition to a pipeline of assets created to generate value. And with a hospitality market in a bullish mood, enthusiasm for the entirely of what RSTN offers could appeal to hungry investors. It would make sense.
Right Markets, Right Time
There's no disputing that Restaurant.com is in the right sector at the right time. And while 2020 and most of 2021 were perhaps the most challenging years on record for the industry, 2022 is setting up to be a period of massive growth with a surge of new dollars coming back into the market. For sure, the word "normalcy" has never sounded better. And for businesses, consumers, marketers, and suppliers, it's a word that can translate into long-awaited and much-needed revenues.
Thus, Restaurant.com is more than a brand in the right place at the right time. They will grow from having an industry-best platform to help expedite a rebound in the most valuable industry worldwide. And by doing so, they can help thousands of businesses and generate enormous value for themselves simultaneously.
So, while the Restaurant.com investment proposition was inviting before the pandemic-related intrusion, it's outright compelling at current prices. And with investors still focused on other markets, taking advantage of their blind side and jumping on appreciably undervalued RSTN prices may be the right play for a profit-hungry portfolio.
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