How Restaurant Startup Dinner Lab Blew Through $10 Million

In 2012, former teacher Brian Bordainick created Dinner lab, an innovative startup that produced one-off dining events in multiple cities across the US. With hopes to build the world’s first data-driven restaurant, the company raised over $10 million in funding, gained over 150,000 members, and had a presence in almost 30 cities! However, despite this tremendous growth and demonstrated consumer interest, the company abruptly shut down within just four years. While the business’s closure was blamed on the loss of an investor, there was more to it. Let’s shed light on the company’s origin story, how the business initially grew, the challenges that Bordainick gradually faced, and how the company ultimately blew through $10 million.

What Was Dinner Lab?

When Bordainick launched the first iteration of Dinner Lab in August 2012, it was introduced as a solution to the lack of late-night dining options in New Orleans. While New Orleans is known to be a food city, most restaurants closed early, and late-night food was limited to just a few options. Bordainick envisioned setting up pop-up dinners at midnight, which would eventually turn into brick-and-mortar restaurants with time. However, the idea was unsustainable. Not only did guests arrive drunk, but running an operation that served dinner at midnight proved exhausting. It definitely made sense to serve meals earlier on the day. As a result, Bordainick pivoted early. Dinner Lab’s new model was a social dining experiment that united undiscovered chefs with adventurous diners looking for something different from the traditional restaurant setup. In exchange for paying an annual membership fee of approximately $150 plus $65 per diner event, members would gain access to pop-up dinner parties held every couple of weeks at unconventional locations, including helipads, motorcycle dealerships, abandoned churches, parking garages, local theatres, and more! Each event would bring a group of interesting strangers around a common table to share a five-course meal with an open bar crafted by up-and-coming chefs seeking to develop a restaurant concept. At the end of each course, diners were obliged to give feedback on cards on the quality and originality of their meal which would help chefs understand specific consumer preferences, and further refine their menu before taking the risk of opening their own restaurant. This model worked. Despite the high membership fees, word of mouth spread, and people were signing up for Dinner Lab’s off-beat, quirky, and experience-driven events quickly. In less than two years, the company had gone from running out of Bordainick’s basement apartment to a rapidly growing venture-backed company with national reach. Dinner Lab first expanded to Austin, followed by Nashville, New York, Los Angeles, and 26 more cities! It even got into corporate catering for companies like Google and Pandora, and served food at Beyonce’s sister, Solange Knowles’ wedding.

3 Reasons Why Dinner Lab Failed

Dinner Lab felt like a social foodie’s dream event. However, despite the promising value capture opportunities, Dinner Lab folded mid-2016. So, what exactly went wrong? Why didn’t the company survive?

1.   – Value Capture

The company became obsessed with the data it collected from diners at every event. While the data collected helped chefs working at Dinner Lab to curate a menu based on their diner’s preferences, the company overestimated its value as it could not monetize it with third parties, such as current restaurant owners. The CEO subsequently admitted that the “juice wasn’t worth the squeeze” and “most restaurants have menus they’re already happy with.” Bordainick had actually failed to understand that the restaurant business is more of an art than science. The industry is not the ideal candidate for crowdsourcing data as a restaurant’s success depends on many other factors than the simple alignment of dining preferences.

2.   – Logistical Nightmare

While a couple of Dinner Lab chefs, including Kwame Onwuachi on Top Chef, went on to have successful careers, the company had trouble finding a sustainable model. The company had planned to have membership fees cover overheads and at least break-even on events. However, producing unique events presented significant challenges. The company found it hard to handle its ever-changing landscape of staff, supplies, locations, and dinner registrations.. The company decided to hire contract workers instead of full-timers with the hope that it would decrease the cost. However, the venture could not scale profitably and ended up bleeding cash. Difficulties in logistics were further reflected when customers complained that there were never enough tickets or events going on. Some claimed that despite having paid the full subscription, there was only one event every few weeks. To date, we are not sure whether Dinner Lab plans to refund customers with memberships or tickets to cancelled events.

3.   – Investors Lost Interest

While the company had a successful first quarter of 2016, it wasn’t enough to profit or secure enough funding. Unfortunately, the food venture ecosystem of other food-focused companies like Kitchensurfing, Storefront, and SpoonRocket were failing as Dinner Lab was trying to build their own. And while Dinner Lab’s concept was innovative, investors lost faith in these types of services due to its logistical challenges. It’s clear that food tech startups will have to step up their game if they want to thrive in the future.

Final Words

Bordainick’s Dinner Lab was definitely a unique and exciting concept. However, it turned out to be a business that was hard to grow, scale, and make a profit with. Despite the company’s failure, Bordainick is proud of the food community it formed in an overwhelmingly digital world. In an interview, he revealed that he doesn’t see why he shouldn’t start another company as ”the high outweighed the lows”, and he’s “learned thousands of lessons.” Now, that’s the spirit!  What business lessons have you learned from Dinner Lab? Please share with us in the comment section below.