Instill Corp

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INSTILL CORP.

Instill Corp. offers e-commerce technology and services that streamline the supply chain processes—including procurement, tracking and analysis, and demand forecasting—used by businesses of the $376 billion food service industry. Clients in the early 2000s included Applebee's Neighborhood Bar & Grill, Bon Appetit, Delaware North Companies, Fine Host Corp., Five Star, Harrah's, Hilton, Marie Callender's, Marriott, Subway, and Tricon.

Instill was established in Redwood City, California, by Mack Tilling, the former operations director of California-based brewery restaurant chain Gordon Biersch Brewing Co., and his partner, Ted Daley, in 1993. Tilling came up with the idea for his business after recognizing that the supply chain used by restaurant operators, food service distributors, and food product manufacturers, was highly inefficient. After securing capital from several investors, including Altos Ventures, Aspen Ventures, Charles River Ventures, Deutsche Bank, Applebee's International, and Intel Corp., Tilling and Daley began working on developing a universal product code system for merchandise offered by various food service distributors.

In 1995, Instill began offering an automated procurement solution and landed its first major account: Marriott. According to InternetWeek writer John Evan Frook, Instill was able to streamline the food service industry's supply chain by acting as an "on-line middleman whose service performs the mundane function of automating the ordering of food and supplies, such as aprons and dishwashing detergent, from suppliers and distributors by customers in the food service industry." Rather than manually ordering merchandise from several suppliers and processing the resulting pile of paperwork, restaurant operators like Marriott could simply send purchase orders to Instill, which charged a monthly fee to route these orders to various distributors. The data Instill compiled while handling procurement for its clients eventually allowed the firm to begin offering additional services, such as purchase and order fulfillment tracking, market analysis, and demand forecasting. In October 1997, Instill began offering its procurement services via the World Wide Web through a service known as Instill Purchase Web. By the beginning of the following year, Instill boasted 1,000 customers. Branch offices operated in Atlanta, Georgia; Chicago, Illinois; New York, New York; and Washington, D.C.

Instill launched an Internet-based purchase analysis service in 1999, called Instill Purchase Insight, marketing it to clients as a subscription ranging in price from $2,000 to $50,000 each month, depending on the number of purchases a client typically completed. The new product reviewed past purchases and indicated where clients might be spending more money than necessary. In May of 2000, Instill worked in conjunction with the National Restaurant Association, Nation's Restaurant News, Hewlett Packard, and other partners to create Foodscape.com, a Web portal serving independent restaurants. By then, employees totaled roughly 180.

In early 2001, the firm laid off 36 employees, roughly 17 percent of its work force, as it discontinued its market analysis services, which were known as Instill Market Intelligence. Instill refocused its efforts on its core supply chain management operations, and via a joint venture with Manugistics Group Inc., added demand forecasting technology to its suite of products and services. Refocusing efforts continued in 2001, when Instill shut down the Foodscape.com operations. By mid-2001, the firm's offerings centered around three major solutions. Instill Purchase Web allowed purchasers to access all suppliers, including those not on the Web, from a single site. Services included automated invoicing approval and payment and delivery tracking. Instill Purchase Insight consolidated the purchase order and invoice data into a single system that allowed for purchasing pattern analysis. Collaborative planning services included demand forecasting and automated replenishment, tools which allowed businesses to reduce inventory and increase their ability to stock the items their customers wanted. A direct sales force marketed Instill's products and services to clients; those who signed up were assigned a project manager who oversaw implementation.

In April of 2001, Instill secured the purchasing arm of Tricon Global Restaurants—the second-largest restaurant chain operator in the U.S.—as a client. As a result, more than 18,000 restaurants, including KEG, Pizza Hut, and Taco Bell, began using Instill Purchase Insight to scrutinize their major purchases. Having secured four of the 15 largest accounts in the food service industry, Instill continued to focus on acquiring other leading accounts, as well as on achieving profitability by the end of 2002.