Published in Food/Agribusiness
Joe Gallagher, left, and Daniel Estrada, right, founded 86 Repairs Inc. to help ease the burden of equipment maintenance and repair for restaurant owners. The Grand Rapids-based company recently raised $1.5 million from investors as it prepares to expand its presence in new and existing markets. Joe Gallagher, left, and Daniel Estrada, right, founded 86 Repairs Inc. to help ease the burden of equipment maintenance and repair for restaurant owners. The Grand Rapids-based company recently raised $1.5 million from investors as it prepares to expand its presence in new and existing markets. PHOTO: VICTORIA MESSINA/1871

VC-backed 86 Repairs helps restaurants manage equipment maintenance

BY Sunday, May 26, 2019 10:57pm

GRAND RAPIDS — In the restaurant business, nothing can mess up a night like the broiler breaking down just before the dinner hour on a busy weekend.

Or the ice machine in the bar going down. Or the walk-in cooler or freezer failing. Or the kitchen ventilation system malfunctioning.

Those are situations that Daniel Estrada and Joe Gallagher believe their startup company can help to fix and avoid.

A year ago, the partners launched 86 Repairs Inc., a Grand Rapids-based service provider that essentially acts as a third-party contract maintenance manager for restaurants, taking over what at times can become a time-consuming and frustrating job for operators.

When a restaurant has a problem, they call or text 86 Repairs, which Estrada and Gallagher plan to grow from their base in Grand Rapids. An 86 Repairs operator troubleshoots the problem and, if needed, bids out the work and schedules a service visit through a network of preferred vendors and repair contractors.

The company also manages ongoing maintenance for restaurants, scheduling routine service on food and beverage equipment, everything from coolers, freezers, stoves and ovens to electrical, plumbing, HVAC and fire suppression. The goal is to save clients time and money down the line by avoiding breakdowns.

“Restaurant operators count on us to handle their repairs from beginning to end, so they can focus their time, money and a lot of their frustration on what they do best, which is delivering a great guest experience,” said Estrada, the CEO and co-founder of 86 Repairs. “We manage all of those headaches and take all of
that responsibility off of their shoulders so they can focus on their guests.

“These people should not be spending their time chasing after leaky faucets and broken ice machines. They should be focusing their time on strategic work like growing the restaurant world, opening new locations, doing buildouts. Lowering repair and maintenance costs, that’s an area where we can help.”

86 Repairs charges restaurants a monthly subscription fee, depending on size, location and the equipment they use. Launched in May 2018, the company has picked up business through referrals and word of mouth. It has contracts with more than 100 restaurants in five major markets: Detroit, Chicago, Atlanta, Minneapolis, Minn., and Jacksonville, Fla.

The company’s client roster ranges from high-end steakhouses to small diners and franchises such as Jimmy John’s sandwich shops.

The market opportunity for 86 Repairs looms large. The National Restaurant Association projects sales to hit $863 billion in 2019. That equates to a $26 billion opportunity, as restaurants spend about 3 percent of annual revenue on repairs and maintenance.

Time savings

One of the early clients for 86 Repairs was Peas and Carrots Hospitality LLC, a Bloomfield Hills-based owner and operator of 11 restaurants in Detroit, Chicago and Grand Rapids, including Social Kitchen and Bar at the Grand Rapids Downtown Market.

Josh Humphrey, COO for Peas and Carrots Hospitality, estimates that contracting with 86 Repairs saves him 15 hours per week in dealing with equipment issues. That’s time he can spend on “big picture stuff” such as mentoring staff and managers or planning with his chefs.

When 86 Repairs came calling last year and explained the service, “we really liked what they had to offer,” Humphrey said. Contracting with the service “was a no-brainer for me.”

“They’re way better at that (maintenance) than I am,” he said. “I feel it’s going to save me a significant amount of money.”

The amount Social Kitchen could save remains to be seen. Peas and Carrots has contracted with 86 Repairs for about six months, and Humphrey said he wants to get in a full year before drawing conclusions on the financial benefit.

At Butcher’s Union, a gastropub on Bridge Street west of downtown Grand Rapids, 86 Repairs “basically streamlined everything” for equipment maintenance and repairs, said General Manager Andy Sigmon. 86 Repairs now deals with equipment vendors on behalf of Butcher’s Union and maintains maintenance records, Sigmon said.

If equipment such as a cooler has continual problems, 86 Repairs can look up previous work to see what occurred and if it was done properly.

“It’s almost like adding another layer of management that we don’t necessarily have to manage,” Sigmon said. “The big thing it has done is take the time I normally spend calling people, trying to find quotes, trying to find people to come out. It allows me more time out front with the staff and with the guests, assuring that operations are taken care of.

“Any time you take time and divert it to more important areas, it’s huge.”

Finding backing

Backed by a recent injection of $1.5 million in capital raised from investors, 86 Repairs is now focused on expanding its saturation in existing markets and growing elsewhere. The capital also will pay for marketing campaigns, accelerating growth through direct sales, and developing a software platform and new service offerings for preventative maintenance.

Estrada expects 86 Repairs to begin pushing into new markets by the end of 2019.

“Growth is definitely number one on our priority list, strategically,” he said.

Estrada declined to share data on the company’s first-year revenue, but said 86 Repairs is meeting the partners’ business plan and “doing very well.”

New investors in the business with the recent capital raise include individual investors, venture capital firms and several angel investors. Among them are lead investor Tamarind Hill Ventures in Ann Arbor and Columbus, Ohio, Invest Detroit Ventures, and Chicago-based venture capital firms MATH Venture Partners GP II LLC, Network Ventures GP LLC and M25 Group LLC.

86 Repairs has a “huge potential to improve ‘back-of-house’ operations, an area of the industry that has long been overlooked,” said Ben Trumbull, a partner at Tamarind Hill.

“There’s a tremendous opportunity to build insights around data that has never existed, to save operators real dollars and transform the repair experience through conversational AI and predictive analytics,” he said.

86 Repairs also has backing from Gordon Food Service Inc., the Grand Rapids-based food distributor that’s part of a Chicago business accelerator and innovation hub for food startups. The program, known as The Food Foundry, offers participants education, networking and a small equity investment. 86 Repairs was one of the first five startups to go through the 16-week program that finishes this month.

Expansion ahead?

The idea for 86 Repairs originated with Gallagher, who worked in the food equipment business and was general manager in charge of parts and repairs at a large company that made slicers. About 30 percent of the time on service calls for a repair covered under warranty, a technician didn’t show up, was not trained on the equipment, or lacked the right parts.

Gallagher and Estrada figure that if the problem was painful for a large company, “it must be worse for a restaurant operator to manage and that much more expensive and painful,” Estrada said. They spent months researching the problem and talking to restaurant operators and service providers before forming 86 Repairs.

The company so far has saved client restaurants an average of $390 a month in invoiced costs for equipment repairs, which equates to an estimated $80,000 cumulatively in the first year, Estrada said.

In the years ahead, the partners hope to extend the 86 Repairs service across the U.S. The future could include expanding into adjacent market segments with commercial kitchens such as caterers, banquet halls, assisted-living centers and school cafeterias.

“Our vision in a broad sense is to transform the way back-of-house operations are managed throughout the restaurant industry,” Estrada said. “We’re really focused on expanding nationally. We think this is a pain point across the country and across the restaurant industry. It doesn’t matter if you’re a small independent operator with four or five locations or you’re a major chain with franchises or corporate locations all over the country: This is a big problem everywhere.”

Read 3844 times Last modified on Saturday, 25 May 2019 17:55